S.F. Holding, Chinese rival to Fedex, to spin off US$786 million of logistics assets in Hong Kong REIT listing plan

Shenzhen-listed S.F. Holding submitted a Hong Kong listing application for the REIT unit on April 23, according to filing
Assets to be sold to REIT unit at a slight discount based on proposed offering price of REIT units, may be adjusted based on approved terms

E-commerce

Eric Ng

Published: 9:46am, 29 Apr 2021

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S.F. Holding, China’s largest listed courier provider, plans to inject three logistics centres worth HK$6.1 billion (US$786 million) into an offshore real estate investment trust (REIT) to be listed in Hong Kong as part of a plan free up cash from its assets.

A listing application for SF Real Estate Investment Trust has been submitted to the bourse operator Hong Kong Exchanges & Clearing on April 23, and relevant agreements on its proposed listing will be signed soon, S.F. Holding said in an exchange filing late Wednesday.

A REIT listing will help expand the group’s financial channels, enhance fund utilisation and further support its strategic assets investment and business expansion, it added.

The Shenzhen-listed group, which operates SF Express and dubbed the Fedex of China, is founded by 50-year old Wang Wei, China’s fifth richest billionaire with a net worth of US$26.6 billion according to Forbes.

Wang Wei, Chairman of SF Express, looks on during a ceremony for the company’s listing at Shenzhen Stock Exchange on February 24, 2017 in Shenzhen, Guangdong Province of China.

Under the REIT plan, S.F. Holding will sell one of its crown jewels, a 15-storey Asia Logistics Hub-SF Centre in Tsing Yi, Hong Kong valued at HK$5.29 billion. It has 160,322 square metres of floor space comprising an automated parcels sorting facility, and a distribution and warehousing facility.

The other two properties are a warehousing and distribution centre in Wuhu, Anhui province worth about HK$264.7 million, and a distribution centre in Foshan, Guangdong province estimated at HK$549.2 million, according to the filing.

The three properties will be sold to the REIT at a provisional price of HK$5.71 billion, which is based on the intended minimum selling price of the REIT units to investors. The price may be adjusted according to the listing terms, it added.

They had a net asset value of HK$2.24 billion on March 31. They generated a combined unaudited profit of HK$32.8 million on HK$77.6 million of revenue in the first quarter this year. Audited net profit in 2020 was HK$26.9 million on HK$279 million of revenue.

S.F. Holding expects to book a one-off gain of not less than HK$800 million from the spin-off exercise. After the listing of SF Real Estate Investment Trust, the three properties will be leased back to the S. F. Holding group at market rents.

S.F. Holding posted a net loss of 989 million yuan last quarter, compared to a profit of 907 million yuan a year earlier. This is despite a 44 per cent year-on-year rise in business volume growth and a 27 per cent revenue growth to 42.6 billion yuan.

It blamed the loss on higher depreciation charges from facilities and equipment upgrade to enable automated operations, higher labour costs to meet higher service demand, and greater volume of lower cost courier packages.

Warning by the company of the quarterly loss earlier this month led to an over 20 per cent slump in its share price in a space of six trading days. It last traded at 65.48 yuan on Wednesday, or 46 per cent below its record-high on February 10.

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