|Bid||23.300 x 0|
|Ask||23.300 x 0|
|Day's Range||23.050 - 23.250|
|52 Week Range||9.810 - 25.900|
|Beta (5Y Monthly)||0.79|
|PE Ratio (TTM)||21.73|
|Earnings Date||Mar 25, 2021|
|Forward Dividend & Yield||0.35 (1.51%)|
|Ex-Dividend Date||May 28, 2021|
|1y Target Est||13.58|
S.F. Express, the top integrated logistics company in China is expanding globally to compete with established titans FedEx (NYSE: FDX), UPS (NYSE: UPS) and DHL, and analysts say this week's investment in Kerry Logistics gives it the firepower to be a one-stop shop for logistics services. The addition of an international freight forwarder deal immediately vaults S.F. Express to the top echelon of ocean freight management companies and one of the leading warehouse, trucking and e-commerce providers in Asia. And S.F. Airlines gives Kerry Logistics Network Limited (OTC:KRRYF) access to airfreight capacity that is in very short supply. Parent company SF Holdings had $3.4 billion in gross revenue in 2019 and Kerry Logistics' sales were $5.3 billion. The combined company will be the second largest third-party logistics provider in Greater China behind Sinotrans at $11 billion, according to data from Armstrong & Associates. Brittain Ladd, an e-commerce consultant who was an executive at Amazon, called the tie-up "an ideal fit." S.F. Holdings, the largest courier, expedited shipping and e-commerce operator in China — and the primary delivery provider for online shopping giants Alibaba Group and JD.com — on Wednesday announced plans to acquire a 51.5% stake in Hong Kong-based Kerry Logistics for HK$17.5 billion ($2.3 billion). Once that is complete, the combined companies will be a dominant logistics provider in Asia. S.F. Holdings had nearly 115,000 employees and $17.4 billion in sales as of May, according to Forbes. About a half million independent couriers deliver packages for S.F. The merger reflects the ongoing consolidation in China's logistics sector due to the growth in e-commerce. Business-to-consumer package volume was forecast to grow about 15% per year before the coronavirus pandemic greatly accelerated the trend. Online shopping platform Alibaba's logistics arm, Cainiao, is also rapidly expanding its service offerings and geographic footprint with a strategy that resembles that of Amazon.com, Inc. (NASDAQ: AMZN) in the U.S. Alibaba (NYSE: BABA) has reduced its reliance on S.F. Express since 2017. "Frankly, we don't have a global footprint at this moment; we are in only about 20% of the countries that DHL and FedEx are in. In 10 years, I believe we will have at least comparable capability to the big three [DHL, FedEx and UPS]," Assistant CEO Eddie Huang said in a November 2019 interview with McKinsey & Co. Cracking the international freight management business takes longer because of long-term existing relationships between many cargo owners and their logistics providers, he acknowledged. "Our long-term aspiration is to make the logistics service almost zero-cost for our customers," Huang said. Kerry Logistics Kerry Logistics will become S.F. Express' international arm, operating under an asset-light model common among freight forwarders. Toward that end, the cash deal requires Kerry Logistics to sell off its Hong Kong warehouses and its entire business in Taiwan to parent company Kerry Group, a conglomerate controlled by Robert Kuok, one of the richest men in Southeast Asia. Kerry Group holdings include malls, hotels, media, commodities and real estate. After starting as a local contract logistics provider focused on the garment and textile industries, Kerry has grown into a global multimodal freight forwarder and one of the top asset-heavy logistics providers in Asia, with extensive capabilities in e-commerce, merchandising, last-mile fulfillment, trucking and brokerage. It has locations in 59 countries and territories and 52 million square feet of warehouse space, logistics centers and port facilities worldwide. Kerry Logistics offers courier services. (Photo: Kerry Logistics) Much of Kerry's international growth, especially in Southeast Asia and Europe, has come since becoming a publicly traded company in 2013. It has acquired freight forwarders in Spain, Italy, Germany, Africa, Turkey and the U.S. A joint venture with Dubai-based GlobalLink Logistics DWC LLC, expanded its coverage in Central Asia. Last March, Kerry completed the acquisition of U.S.-based Apex, the third largest ocean freight consolidator in terms of volume from Asia to the U.S. Kerry Logistics currently ranks as the fifth largest ocean freight forwarder with 1.25 million TEUs handled annually. Its international freight forwarding division accounts for 52% of revenues, with the rest generated by value-added warehousing and distribution. The Greater China region generates about 50% of Kerry's gross revenues, according to analysis by Milwaukee-based Armstrong & Associates. Kerry Logistics generated revenue of more than $5 billion in 2019 and is the largest logistics company on the Hong Kong Stock Exchange. "Kerry specializes in serving companies in industries that are expanding rapidly in Asia like consumer product goods, retailers, electronics, fashion brands and food companies, making Kerry Logistics a vital part of the SF business," Ladd told FreightWaves. "Combining both companies makes strategic sense." In addition to domestic express delivery, S.F. Holding Co.'s services in China include freight transport, cold chain, international express, warehouse management, sales forecasting, intra city delivery and supply chain management. S.F. in 2019 bought Deutsche Post DHL's supply chain division in China.The combined entity will have a very large warehousing network in China. S.F.'s in-house airline has the largest freighter fleet in China, with 57 all-cargo aircraft flying to more than 60 cities at home and abroad, including Los Angeles and New York. Kerry, which has been expanding more into airfreight, will be able to take advantage of the partnership to get access to airlift that is difficult to secure secure with about a quarter of the international passenger fleet still grounded due to the downturn in travel caused by COVID-19, Armstrong & Associates President Evan Armstrong said. S.F. Express is scheduled this year to begin operating a new hub for its air network at Hubei International Airport, in central China. The hub will increase the company's ability to make faster deliveries. It includes two runways, a 24,000-square-meter warehouse, an apron with 124 aircraft parking slots and offices. S.F. is targeting 3.3 million tons of cargo by 2030. In China, 12-hour delivery for parcels will be the standard in five years, Huang predicted. S.F.'s international logistics services are concentrated on moving products in and out of China. Kerry's network will enable the company to operate within other markets. In 2017, S.F. Express and UPS established a joint venture to provide international delivery services initially from China to the U.S. Through the agreement, the parties agreed to leverage their networks, service portfolios, technologies and logistics expertise. Under the proposed division of labor, Kerry Logistics will be responsible for international operations for the combined group, while S.F. focuses on China, Hong Kong and Macau. Kerry Logistics will be represented on the board, according to the announcement. In December, Kerry Logistics announced it will build a 538,000-square-foot bonded, refrigerated warehouse in the Hainan free trade zone The Chinese government last summer issued a master plan for the Hainan to be a major port by 2050, with certain categories of goods to enjoy zero tariffs and taxes. Imported goods with more than 30% value-added processing in the trade zone will be exempt from tariffs when sold to other areas in China. Shopping is tax-free on Hainan Island up to certain limits. Kerry Logistics provides logistics services for two duty-free shopping centers in Hainan and recently won contracts to do the same for three newly registered malls. Company officials have expressed confidence in duty-free consumption in Hainan, attracting duty-free e-commerce shipments. S.F.'s acquisition is subject to shareholder and regulatory approval, which is expected to take six months, officials said. Click here for more FreightWaves and American Shipper stories by Eric Kulisch. RECOMMENDED READING: Chinese all-cargo carrier to start US operations in 2020 Alibaba moves into Japan with third-party logistics service Alibaba launches South Korea logistics service See more from BenzingaClick here for options trades from BenzingaForward Air Announces Acquisition, Unit Divestiture With Q4 EarningsXPO Executives See The Future — And It's Bullish© 2021 Benzinga.com. Benzinga does not provide investment advice. 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JPMorgan did not carry out key checks when employing the son of a potential client, a prosecutor told a Hong Kong court on Monday, the first day of a bribery trial of the bank's former Asia investment banking vice-chairwoman, Catherine Leung. Leung, who repeated a not guilty plea on Monday, is charged with bribing the then chairman of Kerry Logistics Network Ltd, Ang Keng-lam, by employing his son at the U.S. investment bank's Hong Kong office in 2010.
Kerry Logistics Network Limited (OTC: KRRYF) scored a first-half-year net profit of HK$845 million (US$109 million), up 26% over the same period last year, despite a significant downturn in warehouse business caused by the coronavirus pandemic.A decline in logistics revenue from operating fewer warehouses in Hong Kong was offset by strong growth in last-mile fulfillment and e-commerce logistics.Demand for general warehousing and regional distribution centers plummeted this year across Asia with the coronavirus' impact on global manufacturing and consumption patterns. Kerry Logistics said it quickly exited several warehouses in Hong Kong and pivoted to handle logistics for pandemic-related medical gear and other essential supplies.The Hong Kong-based third-party logistics company credited the financial success to its freight forwarding operation, which generated a 40% increase in first-half net profit."Kerry Logistics leveraged its unique market position as one of the very few Asia-based global freight forwarders, with broad exposure in key gateways across continents and ability to capture new business opportunities as the pandemic spread," the company said in a press release on Thursday.The 3PL said its airfreight forwarding business experienced a big rise in volume between March and May, while ocean freight forwarding saw an increase in freight volumes as shippers started replenishing their inventories in May and June.Kerry Logistics also pointed to the positive impact of its March acquisition of Apex, making it one of the largest freight consolidators by volume from Asia to the U.S.Kerry Logistics in May acquired a 42% share of a private express company in Vietnam which currently handles about 800,000 parcels a day.With the increase in warehouse service across Asia since April, the 3PL expects that its full-year results will continue to improve.Kerry Logistics continues to reorganize its Asia operations, recently completing the disposal of a warehouse operation in Adelaide, Australia, and initiating the spinoff of Kerry Express Thailand from the Securities and Exchange Commission of Thailand.Related newsTrans-Pacific ‘going crazy' as demand defies pandemic pessimistsExpedited trans-Pacific LCL filling a growing nicheMore air cargo finds its sea legs during COVID-19Click for more FreightWaves/American Shipper articles by Chris Gillis.See more from Benzinga * LTL, Parcel Carriers Close Up As Laura Moves Through * Daily Infographic: Hurricane Laura Makes Landfall * Laura Pushes Houston Into Oversupply – FreightWaves NOW(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.