SF Holdings makes flat debut amid tepid market sentiment

SF Holdings ended on par with its offering price on Wednesday, its first trading day, after raising HK$5.83 billion in its initial public offering in the Hong Kong Exchange amid the sluggish investors’ confidence.

The stock ended flat at its IPO price of HK$ 34.3, trading at a 25% discount on its A shares listed on the Shenzhen Stock Exchange. Peaking with a 3.5% increase to HK$ 35.5 after official trading, it cooled down to the same price as the opening price at the close.

Trading under the 6936 code, the company is the first mainland Chinese company in the courier industry to conduct dual listing, known as “A+H” stock, issuing stocks for public subscription both in mainland China and Hong Kong. SF Holdings was officially listed in Shenzhen in 2017.

“SF Holdings’ market cap is relatively big, and the weakening of yuan’s performance dampens international investors' risk appetite. These all added to the mediocre performance on its debut,” said Louis Wong, the director of Phillip Securities (HK).   

Zou Xin, the Associate Professor of the Department of Accountancy, Economics and Finance at Hong Kong Baptist University, said the unideal performance of SF today may be due to its time to debut in Hong Kong.  

Beijing’s earlier economic stimulus strategies have helped boost the market, fueling investors’ confidence. However, the market fever broke as no extra fiscal buffers were announced afterwards, and trade tensions increased after Donald Trump won the White House.

“The market sentiment has been rather bloomy recently as the Hang Seng Index has hovered between 19,000 and 19,300, as a current tepid market can also influence investors’ mood,” added Wong. 

Hang Seng Index closed with a 2.32% increase at 19,603.13, while CSI 300, replicating the performance of the top 300 stocks in mainland China, rose 1.74% to 3,907.04 as of the market close. 

SF Holding’s A shares fell 0.21% to 41.86 yuan (HK$ 44.92) at the market close, according to the Shenzhen Stock Exchange. 

SF Holdings completed its listing with two tries, as the initial one failed in August 2023. During its IPO, the company succeeded in raising HK$5.83 billion to be the city’s second-largest IPO after Midea Group in 2024. 

Wang Wei, founder and chairman of SF Holdings, said in the prospectus that the money raised would be allocated to expand its eastern Asia business and to improve the company’s international competitiveness.

Wong said the company’s IPO performance is a positive sign brought to the local market: "The listing of higher quality companies would boost investor demand.”

“We remain upbeat about the outlook of the Hong Kong IPO market because regulators are increasingly keen on helping companies list here as part of a wider Stock Connect program,” he added. 

SF Holdings’ revenue achieved an 8% increase to 134 billion yuan (HK$ 143.8 billion) with a net profit of 4.76 billion yuan (HK$5.1 billion) in the first six months of 2024. The company was the largest integrated logistics service provider in Asia and the fourth largest in the world by 2023 revenue, the company said, citing data from the consultancy Frost & Sullivan.

Founded in 1993 in the southern province of Guangdong, SF Holdings, now dual-listed in Hong Kong, owns three other Hong Kong-listed companies, including KerryLogistics, SF Intra-city Industrial, and SF Real Estate Investment Trust. The company’s partnership includes China's e-commerce giants, such as Alibaba and JD.com.