The parcel locker downstairs is going to Hong Kong for an IPO

Author | Huang Yu

Editor | Liu Baodan

Following SF Holding, SF Real Estate Investment Trust, Kerry Logistics, and SF Express, SF's leader Wang Wei is about to welcome his fifth listed company in his life.

On August 30th, Hive Box Holdings Limited (referred to as "Hive Box") officially submitted its application to the Hong Kong Stock Exchange for a main board listing, with Huatai International as the sole sponsor.

A company that primarily operates parcel lockers and was once caught in a "removal of lockers" crisis earlier this year is now planning to go public. Surprisingly, this "parcel locker big brother" that has been in the red for many years has turned a profit this year after seizing the opportunity of "reverse logistics".

The entire express delivery industry is entering a new round of capital operation peak. SF Holding, also part of the SF Group, is seeking a secondary listing in Hong Kong. After the initial application was unsuccessful, it submitted another application to the Hong Kong Stock Exchange in June.

The express delivery industry is gearing up for a new round of competition, and even Hive Box, which focuses on end delivery, cannot avoid being involved. Faced with external challenges such as fee disputes and intensifying competition, Hive Box undoubtedly hopes to enhance its competitive advantage by financing through listing.

Gong Fuzhao, a logistics industry expert and chief consultant of Double One Consulting, told Wall Street News that the last financing for Hive Box was in 2021. Parcel lockers are a long-term investment project with slow returns that require long-term capital support.

However, against the backdrop of the slow recovery of the Hong Kong stock market, in order to gain favor from the capital market, Hive Box must tell a more attractive business story.

Established in 2015, when e-commerce was booming and parcel delivery volume surged, end delivery became a bottleneck for logistics efficiency.

To address this issue, logistics giants including SF, STO, ZTO, YTO, and Prologis announced a 500 million yuan investment to establish Hive Box. Among them, SF holds 35%, while STO, ZTO, YTO each hold 20%, and Prologis holds 5%.

However, in 2018, the "Tongda Group" completely withdrew from Hive Box. Insiders speculated that this was mainly related to Cainiao's involvement in the smart parcel locker business. In this market competition, the "Tongda Group" deeply tied to Alibaba had to choose to align with Cainiao.

The last financing for Hive Box was in January 2021. According to SF's announcement, Hive Box will complete a $400 million strategic financing this time, with a post-investment valuation of approximately $3.4 billion, equivalent to over 24 billion yuan.

According to Hive Box's prospectus, Wang Wei and his wholly-owned Mingde Holdings are the controlling shareholders of Hive Box, holding a combined 48.45% through a concerted action arrangement with other shareholders.

Backed by SF and Wang Wei, Hive Box has accelerated its expansion in the parcel locker market in recent years. In 2020, Hive Box also merged with China Post Express Easy, the second-largest market share holder at the time.

As the world's largest intelligent parcel locker network operator, as of May 31, 2024, Hive Box operates 330,000 sets of intelligent parcel lockers with approximately 29.9 million compartments, covering around 209,000 communities in 31 provinces in China Despite this, the business of parcel lockers is not very profitable. Due to the huge investment in building parcel lockers, Hive Box has been in a loss-making state. It incurred losses of 2.071 billion yuan, 1.166 billion yuan, and 542 million yuan in 2021, 2022, and 2023 respectively, totaling approximately 3.78 billion yuan.

On the eve of its listing, Hive Box turned losses into profits, making a profit of 71.6 million yuan in the first five months of this year. In response to this, Hive Box stated that the improvement in profitability is mainly due to the significant growth in the profitability of parcel delivery services at the end of the express delivery chain, the rapid growth of consumer intelligent delivery services and value-added services, and the improvement in operational efficiency.

Against the backdrop of stagnant revenue growth in parcel delivery services at the end of the express delivery chain, consumer intelligent delivery services are currently the most appealing growth story for Hive Box.

Consumer intelligent delivery services refer to the services where consumers send parcels to lockers. The parcel volume of this part of Hive Box's business is growing rapidly, reaching approximately 114 million pieces in 2021 and 233 million pieces in 2023.

In terms of revenue, in 2022 and 2023, consumer intelligent delivery services brought in revenues of 300 million yuan and 1.02 billion yuan to Hive Box respectively. By the first five months of this year, the revenue from these services increased by 109% year-on-year to 690 million yuan, accounting for 36.3% of the total revenue, almost catching up with the 40.8% share of revenue from parcel delivery services at the end of the express delivery chain.

The significant growth of consumer intelligent delivery services is mainly attributed to the increase in consumers' return and exchange demands.

Hive Box pointed out that in recent years, the booming development of e-commerce through influencer live streaming and short video sales has greatly promoted the surge in product sales, which in turn has driven the increase in return and exchange demands, opening up a broad market opportunity for "reverse logistics".

Data from Burning Rock Consulting shows that from 2019 to 2023, the annual compound growth rate of reverse e-commerce items in China has grown rapidly at 22.7%, and it is expected to maintain a compound growth rate of 20.7% in the next five years, while forward e-commerce items are only growing at around 11.2%.

Hive Box has seized the great opportunity of "return and exchange", and it has successfully built deep cooperation with leading e-commerce platforms to seamlessly integrate e-commerce return and exchange comprehensive services and processes, becoming an indispensable choice for return and exchange.

However, Gong Fuzhao pointed out that the sustainability of Hive Box's new business, as well as how Hive Box will prevent further shrinkage of its core business in the increasingly dense courier stations, will be the challenges it faces next.

In order to find new growth points, starting from 2022, Hive Box has been leveraging its community scene advantages to enter the laundry and home life services.

It is worth mentioning that under the new wave of Chinese companies going global, Hive Box has not been absent. In 2022, it had already expanded its intelligent locker network overseas. According to the prospectus, as of May 31, 2024, Hive Box had deployed 200 sets of intelligent lockers in Thailand, but the scale is still very small.

To maintain its leading position in the fierce market competition, both the sinking market and the overseas market will be the focus of Hive Box's future efforts