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Stock Code : 6936
(A joint stock company incorporated in the People’s Republic of
China with limited liability)
順豐控股股份有限公司
S.F. Holding Co., Ltd.
GLOBAL
OFFERING
Joint Sponsors, Overall Coordinators,
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
(in alphabetical order)
Overall Coordinators, Joint Global Coordinators,
Joint Bookrunners, Joint Lead Managers and Financial Advisers
(in alphabetical order)
Joint Bookrunners and Joint Lead Managers
(in alphabetical order)


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IMPORTANT : If you are in any doubt about any of the contents of this prospectus, you should obtain professional independent advice.
S.F. Holding Co., Ltd.
ʮ̡
(A joint stock company incorporated in the People’ s Republic of China with limited liability)
Global Offering
Number of Offer Shares under the
Global Offering
: 170,000,000 H Shares (subject to the
Over-allotment Option)
Number of Hong Kong Offer Shares : 16,150,000 H Shares (subject to
reallocation)
Number of International Offer Shares : 153,850,000 H Shares (subject to
reallocation, and the Over-allotment
Option)
Maximum Offer Price : HK$36.30 per H Share, plus brokerage
of 1.0%, SFC transaction levy of
0.0027%, Hong Kong Stock Exchange
trading fee of 0.00565% and AFRC
transaction levy of 0.00015% (payable
in full on application in Hong Kong
dollars and subject to refund)
Nominal value : RMB1.00 per H Share
Stock code : 6936
Joint Sponsors, Overall Coordinators, Joint Global Coordinators,
Joint Bookrunners and Joint Lead Managers
(in alphabetical order)
Overall Coordinators, Joint Global Coordinators,
Joint Bookrunners, Joint Lead Managers and Financial Advisers
(in alphabetical order)
Joint Bookrunners and Joint Lead Managers
(in alphabetical order)
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsib ility
for the contents of this prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for an y loss howsoever
arising from or in reliance upon the whole or any part of the contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in “Appendix V — Documents Delivered to the Registrar of Companies and Avai lable
on Display” in this prospectus, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up a nd
Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the Registrar of Com panies
in Hong Kong take no responsibility as to the contents of this prospectus or any other documents referred to above.
The Offer Price is expected to be determined by agreement between the Overall Coordinators (on behalf of the Underwriters) and our Company on the Price
Determination Date. The Price Determination Date is expected to be on or around Monday, November 25, 2024 (Hong Kong time) and, in any event, not later t han
12:00 noon Monday, November 25, 2024 (Hong Kong time). The Offer Price will not be more than HK$36.30 per Offer Share and is currently expected to be not
less than HK$32.30 per Offer Share unless otherwise announced. If, for any reason, the Offer Price is not agreed by 12:00 noon Monday, November 25, 2024 (Hong
Kong time) between the Overall Coordinators (on behalf of the Underwriters) and our Company, the Global Offering will not proceed and will lapse.
The Overall Coordinators, on behalf of the Underwriters, may, where considered appropriate and with the consent of our Company, reduce the number of H ong Kong
Offer Shares and/or the indicative Offer Price range below that is stated in this prospectus (being HK$32.30 per Offer Share to HK$36.30 per Offer Shar e) at any
time prior to the morning of the last day for lodging applications under the Hong Kong Public Offering. In such case, notices of the reduction in the numb er of Hong
Kong Offer Shares and/or the indicative Offer Price range will be published on the website of our Company at www.sf-express.com
and on the website of the Hong
Kong Stock Exchange at www.hkexnews.hk as soon as practicable following the decision to make such reduction, and in any event not later than the morning of
the last day for lodging applications under the Hong Kong Public Offering. For further details, see “Structure of the Global Offering” and “How to Appl y for Hong
Kong Offer Shares” in this prospectus.
The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Overall Coordinators (on b ehalf
of the Underwriters) if certain events occur prior to 8:00 a.m. on the Listing Date. For details, see “Underwriting” in this prospectus.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws in the United States and may not be
offered, sold, pledged or otherwise transferred within the United States, except pursuant to an available exemption from, or in a transaction not sub ject to,
the registration requirements of the U.S. Securities Act and in accordance with any applicable state securities laws in the United States. The Offer S hares
may only be offered and sold (a) in the United States to QIBs in reliance on Rule 144A or another available exemption from registration requirements und er
the U.S. Securities Act, and (b) outside the United States in offshore transactions in reliance on Regulation S. No public offering of the Offer Shares will be
made in the United States.
IMPORTANT
November 19, 2024


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IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering. We will not provide printed copies of the Prospectus in relation to
the Hong Kong Public Offering.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “ HKEXnews > New Listings > New Listing
Information ” section, and our website at www.sf-express.com. Y ou may download
and print from these website addresses if you want a printed copy of the Prospectus.
To apply for the Hong Kong Offer Shares, you may:
(1) apply online via the HK eIPO White Form service at www.hkeipo.hk ;o r
(2) apply electronically through the HKSCC EIPO channel and cause HKSCC
Nominees to apply on your behalf by instructing your broker or custodian
who is a HKSCC Participant to give electronic application instructions via
HKSCC’s FINI system to apply for the Hong Kong Offer Shares on your
behalf.
We will not provide any physical channels to accept any application for the Hong
Kong Offer Shares by the public. The contents of the electronic version of the Prospectus
are identical to the printed prospectus as registered with the Registrar of Companies in
Hong Kong pursuant to Section 342C of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
If you are an intermediary , broker or agent , please remind your customers, clients
or principals, as applicable, that the Prospectus is available online at the website
addresses stated above.
IMPORTANT


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Y our application through the HK eIPO White Form service or the HKSCC EIPO channel
must be for a minimum of 200 Hong Kong Offer Shares and in one of the numbers set out in
the table. If you are applying through the HK eIPO White Form service, you may refer to the
table below for the amount payable for the number of Shares you have selected. Y ou must pay
the respective maximum amount payable on application in full upon application for Hong Kong
Offer Shares. If you are applying through the HKSCC EIPO channel, you are required to
prefund your application based on the amount specified by your broker or custodian, as
determined based on the applicable laws and regulations in Hong Kong.
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
200 7,333.22 4,000 146,664.34 60,000 2,199,965.14 800,000 29,332,868.40
400 14,666.43 5,000 183,330.42 70,000 2,566,625.99 900,000 32,999,476.96
600 21,999.65 6,000 219,996.52 80,000 2,933,286.85 1,000,000 36,666,085.50
800 29,332.86 7,000 256,662.60 90,000 3,299,947.70 2,000,000 73,332,171.00
1,000 36,666.08 8,000 293,328.69 100,000 3,666,608.56 3,000,000 109,998,256.50
1,200 43,999.31 9,000 329,994.77 200,000 7,333,217.10 4,000,000 146,664,342.00
1,400 51,332.52 10,000 366,660.85 300,000 10,999,825.66 5,000,000 183,330,427.50
1,600 58,665.74 20,000 733,321.71 400,000 14,666,434.20 6,000,000 219,996,513.00
1,800 65,998.95 30,000 1,099,982.56 500,000 18,333,042.76 7,000,000 256,662,598.50
2,000 73,332.17 40,000 1,466,643.42 600,000 21,999,651.30 8,075,000
(1) 296,078,640.41
3,000 109,998.25 50,000 1,833,304.28 700,000 25,666,259.86
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is 50% of the Hong Kong Offer
Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy. If your application is successful, brokerage will be paid to the Exchange Participants (as
defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for applications made through
the application channel of the HK eIPO White Form Service Provider) while the SFC transaction levy, the
Stock Exchange trading fee and the AFRC transaction levy will be paid to the SFC, the Stock Exchange and
the AFRC, respectively.
No application for any other number of the Hong Kong Offer Shares will be considered
and any such application is liable to be rejected.
IMPORTANT


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If there is any change to the expected timetable of the Hong Kong Public Offering,
we will issue an announcement on the respective websites of the Company at
www.sf-express.com and the Stock Exchange at www.hkexnews.hk .
The Hong Kong Public Offering commences ................... .9:00 a.m. on Tuesday,
November 19, 2024
Latest time to complete electronic applications under
the HK eIPO White Form service through
the designated website at www.hkeipo.hk (2) .................. 1 1:30 a.m. on Friday,
November 22, 2024
Application lists open (3) .................................... 1 1:45 a.m. on Friday,
November 22, 2024
Latest time to (a) complete payment for HK eIPO White Form
applications by effecting Internet banking transfer(s)
or PPS payment transfer(s) and (b) to give electronic application
instructions to HKSCC
(4) ............................... .12:00 noon on Friday,
November 22, 2024
Application lists close (3) .................................. .12:00 noon on Friday,
November 22, 2024
Expected Price Determination Date ..................................... Monday,
November 25, 2024
Announcement of the Offer Price ...........................1 1:00 p.m. on Tuesday,
November 26, 2024
Announcement of the level of indications of interest in the
International Offering, the level of applications
in the Hong Kong Public Offering, and the basis of
allocation of the Hong Kong Offer Shares to be
published on the website of the Stock Exchange at
www.hkexnews.hk and the website of the
Company at www.sf-express.com on or before ...............1 1:00 p.m. on Tuesday,
November 26, 2024
EXPECTED TIMETABLE (1)
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Results of allocations in the Hong Kong Public Offering
to be available through a variety of channels as described
in the section headed “How to Apply for Hong Kong
Offer Shares — B. Publication of Results” from .........................T uesday,
November 26, 2024
H Share certificates in respect of wholly
or partially successful applications to be
dispatched or deposited into
CCASS on or before
(5) ............................................T uesday,
November 26, 2024
HK eIPO White Form e-Auto Refund payment instructions/refund
cheques in respect of wholly or partially successful
applications if the final Offer Price is less than
the maximum Offer Price per Offer Share initially
paid on application (if applicable) or wholly
or partially unsuccessful applications to be
dispatched on or before
(6) ........................................W ednesday,
November 27, 2024
Dealings in the H Shares on the Stock Exchange
expected to commence at .............................. .9:00 a.m. on Wednesday,
November 27, 2024
Notes:
(1) All times and dates refer to Hong Kong local times and dates unless otherwise stated.
(2) Y ou will not be permitted to submit your application under the HK eIPO White Form service through the
designated website at www.hkeipo.hk after 11:30 a.m. on the last day for submitting applications. If you have
already submitted your application and obtained an application reference number from the designated website
at or prior to 11:30 a.m., you will be permitted to continue the application process by completing payment of
application money until 12:00 noon on the last day for submitting applications, when the application lists
close.
(3) If there is a “black” rainstorm warning signal, a tropical cyclone warning signal number 8 or above and/or
Extreme Conditions in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Friday, November
22, 2024, the application lists will not open or close on that day. For further information, please refer to the
section headed “How to Apply for Hong Kong Offer Shares — E. Bad Weather Arrangements” in this
prospectus.
(4) If you instruct your broker or custodian who is a HKSCC Participant to give electronic application
instructions via CCASS terminals to apply for the Hong Kong Offer Shares on your behalf, you should contact
your broker or custodian for the latest time for giving such instructions which may be different from the latest
time as stated above.
(5) H Share certificates will only become valid evidence of title at 8:00 a.m. on the Listing Date, which is expected
to be on or around Wednesday, November 27, 2024, provided that the Global Offering becomes unconditional
in all respects on or before then. Investors who trade H Shares on the basis of publicly available allocation
details prior to the receipt of H Share certificates or prior to the H Share certificates becoming valid do so
entirely at their own risks.
EXPECTED TIMETABLE (1)
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(6) e-Auto Refund payment instructions/refund checks will be issued in respect of wholly or partially unsuccessful
applications and in respect of wholly or partially successful applications pursuant to the Hong Kong Public
Offering if the final Offer Price is less than the maximum Offer Price payable per Offer Share on application.
Part of the applicant’s identification document numbers, or, if the application is made by joint applicants, part
of the identification document numbers of the first-named applicant, provided by the applicant(s) may be
printed on the refund check, if any. Such data would also be transferred to a third party for refund purposes.
Banks may require verification of an applicant’s identification document numbers before encashment of the
refund checks. Inaccurate completion of an applicant’s identification document numbers may invalidate or
delay encashment of the refund checks.
The above expected timetable is a summary only. For details of the structure of the
Global Offering, and the conditions and procedures for applications for Hong Kong Offer
Shares, please read “Underwriting”, “Structure of the Global Offering” and “How to
Apply for Hong Kong Offer Shares” carefully.
EXPECTED TIMETABLE (1)
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IMPORTANT NOTICE TO PROSPECTIVE INVESTORS
This prospectus is issued by us solely in connection with the Hong Kong Public
Offering and the Hong Kong Offer Shares and does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the Hong Kong Offer Shares offered
by this prospectus pursuant to the Hong Kong Public Offering. This prospectus may not
be used for the purpose of making, and does not constitute, an offer or invitation in any
other jurisdiction or in any other circumstances. No action has been taken to permit a
public offering of the Hong Kong Offer Shares in any jurisdiction other than Hong Kong
and no action has been taken to permit the distribution of this prospectus in any
jurisdiction other than Hong Kong. The distribution of this prospectus for purposes of a
public offering and the offering and sale of the Hong Kong Offer Shares in other
jurisdictions are subject to restrictions and may not be made except as permitted under
the applicable securities laws of such jurisdictions pursuant to registration with or
authorization by the relevant securities regulatory authorities or an exemption therefrom.
You should rely only on the information contained in this prospectus to make your
investment decision. The Hong Kong Public Offering is made solely on the basis of the
information contained and the representations made in this prospectus. We have not
authorized anyone to provide you with information that is different from what is
contained in this prospectus. Any information or representation not contained nor made
in this prospectus must not be relied on by you as having been authorized by us, any of
the Joint Sponsors, the Overall Coordinators, the Capital Market Intermediaries, the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, any of our or their respective directors, officers, employees, agents, or
representatives of any of them or any other parties involved in the Global Offering.
Page
Expected Timetable ................................................. i
Contents .......................................................... i v
Summary ......................................................... 1
Definitions ........................................................ 2 5
Glossary of Technical Terms ........................................... 4 1
Forward-Looking Statements .......................................... 4 5
Risk Factors ....................................................... 4 7
Waivers and Exemptions .............................................. 9 0
Information About this Prospectus and the Global Offering ................... 1 1 6
CONTENTS
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Directors, Supervisors and Parties Involved in the Global Offering ............. 1 2 1
Corporate Information ............................................... 1 3 3
Industry Overview .................................................. 1 3 6
Regulatory Overview ................................................ 1 6 6
History, Development and Corporate Structure ............................. 1 9 4
Business .......................................................... 2 1 6
Directors, Supervisors, Senior Management and Employees ................... 2 9 2
Relationship with the Controlling Shareholders ............................ 3 1 4
Connected Transactions .............................................. 3 2 4
Substantial Shareholders .............................................. 3 5 1
Share Capital ...................................................... 3 5 9
Financial Information ................................................ 3 6 2
Cornerstone Investments .............................................. 4 2 8
Future Plans and Use of Proceeds ...................................... 4 3 9
Underwriting ...................................................... 4 4 3
Structure of the Global Offering ........................................ 4 5 6
How to Apply for Hong Kong Offer Shares ............................... 4 6 7
Appendix I Accountant’s Report ........................................ I - 1
Appendix IA Unaudited Interim Condensed Consolidated Financial Information .... IA-1
Appendix II Unaudited Pro Forma Financial Information ..................... II-1
Appendix III Summary of Articles of Association ........................... III-1
Appendix IV Statutory and General Information ............................ I V - 1
Appendix V Documents Delivered to the Registrar of Companies and
Available on Display ............................................... V - 1
CONTENTS
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This summary aims to give you an overview of the information contained in this
prospectus. As this is a summary, it does not contain all the information that may be
important to you. You should read the entire prospectus before you decide to invest in the
Offer Shares.
There are risks associated with any investment. Some of the particular risks in
investing in the Offer Shares are set out in the section headed “Risk Factors.” You should
read that section carefully before you decide to invest in the Offer Shares.
OVERVIEW
Growth
11.7%
Revenue CAGR, 2021-2023
31.9%
Net Profit Attributable to Owners of
Our Company CAGR, 2021-2023
16.3%
EBITDA5 CAGR, 2021-2023
Largest in Asia
Scale
4th Largest Globally
Integrated logistics service provider1
Leadership1
No. 1 in Asia
Express, LTL Freight, Intra-city On-demand2,
International3
No. 1 in China
Express, LTL Freight, Cold Chain,
Intra-city On-demand
2,S u p p l yC h a i n4
Global Coverage
Brand
No. 1
Customer satisfaction for express services in
China as published by the State Post Bureau
15 years
in a row
Profitability
RMB8.2bn
Net Profit Attributable to Owners of
Our Company in 2023
RMB29.4bn
EBITDA5 in 2023
202
Countries and regions covered
99 aircraft
Largest air cargo fleet in Asia
186k vehicles
Largest ground delivery fleet in the world
Notes:
1 According to Frost & Sullivan, in terms of revenue in 2023, with a market share of 0.7% globally
2 Among third-party intra-city on-demand delivery service providers
3 Among Asia integrated logistics players
4 Among non-state-owned independent third-party supply chain solutions providers
5 For details, see “Financial Information — Non-IFRS Measures” in this document
We are a leading global integrated logistics service provider (i.e. logistics service
provider that offers a full spectrum of domestic and international logistics services, including
but not limited to, express delivery services, freight delivery services, cold chain logistics
services, intra-city on-demand delivery services, supply chain services and international
logistics services, and provide one-stop solutions to multinationals, large corporations, small
and medium enterprises and retail customers), the largest player in China and Asia, and the
fourth largest player globally, in terms of revenue in 2023, according to Frost & Sullivan. We
are a Fortune Global 500 company with market leadership in five logistics sub-segments in
China and four in Asia, offering a complete range of logistics services including express,
freight, cold chain, intra-city on-demand, supply chain solutions and international logistics
services.
SUMMARY
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We have a premium brand that is widely recognized for top-notch services (i.e. superior
and leading service quality) and is a commonly used verb in Chinese, with “Let me SF this to
you” having become synonymous with “Let me express mail this to you.” We were the only
logistics company recognized as one of the Top Five Most Admired Chinese Companies by
Fortune Magazine in 2024. As of June 30, 2024, we had an extensive global delivery network
covering 202 countries and regions, supported by 99 aircraft and over 186,000 vehicles, the
largest air and ground delivery fleet in Asia, according to Frost & Sullivan. We are also a
technology-driven company with 4,199 patents and patent applications as of June 30, 2024, and
we continuously leverage proprietary technologies to deliver innovative solutions and
execution excellence. We had approximately 2.2 million customers with active credit accounts
and approximately 699 million retail customers as of June 30, 2024, both of which were the
highest among all logistics service providers in Asia, according to Frost & Sullivan.
Our business model has three key attributes: direct operations, integrated capabilities, and
third-party independence. First, we directly operate the entire end-to-end delivery process from
first-mile pickup to last-mile delivery. This enables strong operational control, high network
visibility and agile resource allocation to support industry-leading speed, cost and reliability.
Second, our integrated capabilities enable us to offer a full-spectrum of services, standardized
or customized, to address a full range of customers’ logistics needs, capture greater wallet
share, and achieve above-industry growth. Third, we are the only integrated logistics service
provider of scale in China that is independent of major e-commerce platforms
*, allowing us to
serve our customer base impartially, capture new emerging opportunities, and build long-term
sustainable relationships.
Time Period
Geography
Strategic
Focus
1993 - 2012
Build a strong foundation
Establish market leadership
Build our brand
Country
Leadership
Incubate new products
Invest in infrastructure
Gain market share
Building
Capabilities
China Express Logistics Invest in the Future Global Integrated Logistics
erutuF-32023202-2102
China and AsiaChina China, Asia and Global
Global
Expansion
Harvest prior investment
Enhance profitability
Strengthen cost disciplineWe have dedicated over three decades to building our logistics network and investing in
logistics infrastructure, which has given us a unique position today in Asia as an industry-
defining player. Our flagship product is time-definite express, in which we commanded a
market share of 63.9% in China in 2023, according to Frost & Sullivan. Leveraging our
time-definite capabilities, we employed a “1-to-n” growth strategy (our growth and expansion
strategy that leverages our time-definite express delivery service as the bedrock to incubate
new service offerings, enter adjacent logistics segments, and further complement our integrated
capabilities) to enter into adjacent products and geographies in a strategic and cost-effective
manner. Following this strategy, our capabilities and product offerings are becoming
Note:
* According to Frost & Sullivan, in 2023, we were the only integrated logistics service provider in China that
is independent of major e-commerce platform, which recorded revenue exceeding RMB200 billion.
SUMMARY
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increasingly comprehensive and sophisticated each day, expanding from time-definite to
economy express, from small light-weight items to large heavy parcels, from standard delivery
to specialized services with temperature or humidity precision, from China to Asia and then to
the world. Today, most of our service offerings have reached scale and market leadership,
achieved profitability, and are poised for growth.
As a leading global integrated logistics service provider, we have always had a vision to
become the leader in global logistics, expanding our reach in our home market Asia and
broadening our presence globally. Global logistics represents an enormous market opportunity,
with an estimated US$11.1 trillion spent on logistics in 2023, of which Asia is the largest
regional market accounting for US$5.1 trillion in logistics spend in 2023, according to Frost
& Sullivan. The logistics industry is going through several paradigm shifts which presents us
with multiple opportunities. As the logistics needs of businesses become increasingly complex
and diverse, customer demand is shifting towards logistics players that provide a full spectrum
of service offerings, high-quality services and global reach. In our home market of Asia, the
logistics industry as a whole and most of its sub-sectors remains highly fragmented. As
single-market single-product players become increasingly disadvantaged due to lack of
capabilities, strategic consolidation opportunities continue to emerge for leading integrated
players. We started our international business in 2010, primarily serving Chinese customers’
outbound logistics needs. Today, as Chinese enterprises expand globally, the international
supply chain has significant opportunities for transformation. In 2021, our acquisition of Kerry
Logistics further strengthened our domestic and cross-border express operations in Southeast
Asia, international supply chain and freight forwarding capabilities. Successful integration of
Kerry Logistics into our existing international operations further solidified our global
integrated logistics capabilities and customer base, empowering our global expansion strategy
and vision. In 2023, we had the largest international operations among all Asia-based
integrated logistics service providers in terms of international revenue, according to Frost &
Sullivan. Together with the commencement of operations of the logistics complex in the Ezhou
cargo hub, we believe we are able to consolidate the market and capture opportunities both
domestically and internationally, with our extensive product portfolio, integrated global
capabilities, experience in merger and acquisitions, operational excellence and strong cost
discipline. We are well-positioned to capture a greater proportion of future logistics demand
due to our years of prior investment and the capabilities we have built, which cannot be easily
replicated.
Looking ahead, we aim to become the leader in global logistics and connect Asia with the
world. We will reinforce our market leadership in China, expand our reach in Asia, and broaden
our presence globally. In Asia, we will replicate our success in China and expand in selected
high-growth markets. In markets outside of Asia, we aim to achieve high-quality growth by
leveraging our highly recognized brand, leadership in cost efficiency and integrated
capabilities to provide one-stop services. We strive to become the go-to-logistics partner of
businesses and individuals worldwide, offering market-leading logistics services that empower
their success.
SUMMARY
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Our Journey
In our 31 years of development, we always strive to make our service offerings
increasingly more sophisticated, accommodating customers’ diverse requirements in time,
weight, frequency, distance, condition, and geography. As we develop new features for existing
service offerings, we are also constantly accumulating capabilities to enter adjacent segments
and establish market leadership quickly.
We were founded in Shunde, Guangdong Province in 1993. Three decades later, we have
become a global integrated logistics player with market leadership across multiple logistics
segments in China and Asia.
We have achieved strong growth over the past decade through both organic development
and strategic initiatives. Today, a majority of our business customers use more than one of our
services.
Our management team has pioneered many innovations that have transformed China’s
logistics industry and have become the industry standard:
 In the late 1990s, according to Frost & Sullivan, we pioneered the courier incentive
model that tied courier compensation to parcel volume, aligning the interest of
couriers with company performance. This incentive model was later adopted across
the entire logistics industry in China.
 In 2003, according to Frost & Sullivan, we revolutionized the logistics industry in
China by adopting handheld terminals, which boosted our operational efficiency and
facilitated the collection and tracking of express delivery routing information for the
first time in China.
 In 2009, we became the first private logistics service provider in China to establish
our own cargo airline, SF Airlines.
 In 2012, according to Frost & Sullivan, we were the first to use e-waybill in China,
which enhanced automation and real-time tracking of parcels.
SUMMARY
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Our Global Network
Our logistics network is vast and comprehensive. As of June 30, 2024, we covered all
cities and 98.1% counties in China, and 202 countries and regions globally. As of June 30,
2024, we were the largest shipper of air cargo in China with a fleet of 99 all-cargo aircraft, and
accounted for 32.0% of the air cargo volume in China in the first half of 2024, according to
Frost & Sullivan. As of the same date, our ground network was enabled by the largest ground
fleet in Asia, according to Frost & Sullivan, consisting of over 86,000 line-haul and short-haul
trucks and over 100,000 first and last-mile delivery vehicles globally. The Ezhou cargo hub is
expected to enable us to further increase the differentiation versus our competitors in terms of
delivery speed and global network coverage.
Our Proprietary Technology
Technology lies at the core of everything we do. Our proprietary “SF Smart Brain”, a
data-driven middle platform system, has enabled effective management of our highly complex
operations across a vast network, leading to operational efficiencies and optimized costs. Our
couriers are equipped with a set of proprietary and comprehensive technology tools to optimize
delivery efficiency and ensure exceptional services. We also harness technology to push the
boundaries of our services capabilities and incubate new offerings. Our technology capabilities
and continuing research and development efforts ensure we remain at the forefront of smart
logistics.
Our Value Proposition
We pride ourselves on providing top-notch services to our customers. We believe the
following distinctive value proposition set us apart from competitors and enable us to uphold
premium pricing:
 Fast. We provide fast and time-definite delivery for our customers. Our time-
definite express product is what we are best known for and the foundation of our
integrated logistics services.
 Reliable . Our services are consistently reliable. Our directly operated business
model ensures full control over our operations and resource allocation.
 Customer-centric. We put our customers’ interests first and believe in shared
growth. We can only succeed if our customers succeed. Our couriers promote a
customer-centric culture and strive to form personal connections with our
customers, providing warm services.
SUMMARY
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Our Scale, Growth, and Profitability
We have achieved significant scale, growth and profitability. Our revenue increased from
RMB207.2 billion in 2021 to RMB258.4 billion in 2023, representing a CAGR of 11.7%; our
revenue also increased by 8.1% from RMB124.4 billion for the six months ended June 30, 2023
to RMB134.4 billion for the same period in 2024. Our profit for the year attributable to owners
of our Company was RMB4.7 billion, RMB6.2 billion and RMB8.2 billion in 2021, 2022 and
2023, respectively, representing a CAGR of 31.9% from 2021; our profit for the period
attributable to owners of our Company also increased by 15.1% from RMB4.2 billion for the
six months ended June 30, 2023 to RMB4.8 billion for the same period in 2024. Our EBITDA
(non-IFRS measure) increased from RMB21.8 billion in 2021 to RMB29.4 billion in 2023,
representing a CAGR of 16.3%; our EBITDA (non-IFRS measure) also increased by 8.2% from
RMB14.7 billion for the six months ended June 30, 2023 to RMB15.9 billion for the same
period in 2024.
We also have a strong emphasis on shareholder return, having declared annual dividends
every year since we became a public company. Our dividend payout ratio increased from 20%
(from 2017 to 2022) to 35% in 2023, and we aim to steadily increase this over the next five
years.
We believe we are at an inflection point today for high-quality and sustainable growth.
The period of heavy capital expenditure has now passed and we have implemented many
operational efficiency initiatives that are bearing fruit. We have also achieved a number of
breakthroughs in our businesses, including the following:
 Market share gains as our broader portfolio of logistics services and industry-
specific packaged solutions enable us to serve a more diverse customer base across
different industries and capture greater customer wallet share;
 Enhanced profitability as our newer logistics services have grown in scale and
achieved breakeven, any further growth will be accretive to our bottom line;
 Improved cost efficiency as integration of our aviation, ground and information
networks and resource sharing lead to increased cost synergies; and
 Accelerated global expansion as we ramp up the operations of the Ezhou cargo hub
to improve connectivity between China and Asia, within Asia, and Asia with the
world.
SUMMARY
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Our Commitment to ESG
We are deeply committed to building a green and sustainable world as well as bringing
positive impact to our people, community, and stakeholders. Our longstanding ESG
commitment is widely accredited. We have been named on Fortune Magazine’s China ESG
Influential List for three consecutive years since 2022, and are the only express logistics
company on the list. We were also named among the World’s Best Employers by Forbes in
2022.
Our Culture and Social Responsibility
The logistics industry plays a vital role in the overall economy and serves various
industrial and consumer sectors, facilitating manufacturing upgrade and improving everyone’s
day-to-day life.
As the leading player in the logistics industry, our development has been closely linked
to our commitment to social responsibility. Our couriers, who are fondly referred as “Yige ( ɓ
ࡩYijie ( ɓ֎)”, not only fulfill their daily duties, but also always extend help to communities
in times of need. They foster a genuine sense of warmth and care, and are returned with deep
trust. During major emergencies such as earthquakes or floods, we are always at the forefront
to shoulder social responsibilities, saving lives and facilitating rapid resumption of normal
production. In addition, through our various logistics services, we empower rural revitalization
and agricultural digitalization to help farmers diversify sales channels and generate additional
income, fostering shared growth.
Our strong corporate culture sets us apart from our peers and serves as the backbone of
our success. We value and are genuinely thankful to our people’s contributions and dedications.
Our culture embodies the principles and fundamental beliefs that we uphold. It serves as our
compass, guiding our efforts towards realizing our vision.
OUR STRENGTHS
We believe that the following competitive strengths contribute to our success and
differentiate us from our competitors:
 Asia’s largest integrated logistics service provider;
 Winning business model – directly operated, integrated and independent;
 Global gateway connecting Asia and the world;
 Go-to brand for differentiated and premium services;
SUMMARY
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 Technology and innovation driven operations; and
 Visionary management promoting a people-centric culture.
OUR STRATEGIES
To achieve our vision and mission, we intend to pursue the following strategies:
 Further strengthen and optimize our network and service offerings;
 Continue to enhance efficiency and productivity;
 Continue to invest in technology to build a smart logistics network and offer
pioneering solutions;
 Expand our international and cross-border capabilities; and
 Grow business and consumer mindshare as “ the One in Asia. ”
OUR BUSINESS MODEL
Our business model combines direct operations, integrated capabilities, and third-party
independence, enabling us to maintain control and autonomy over our operations, offer a wide
portfolio of service offerings, and serve customers impartially.
Directly Operated Model
Our operations pivot around a directly operated model, integrating aviation, ground, and
information networks under one unified command. We directly operate the entire delivery
process from first-mile pickup to last-mile delivery with minimum reliance on franchisees.
This model ensures strong operational control and high visibility over our entire logistics
network and infrastructure, including service outlets, sorting centers, warehouses, and
line-haul transport, empowering us to effectively allocate resources and deliver speedy and
reliable services. For example, we fully integrate resources across our aviation and ground
network with our data network to efficiently serve our entire portfolio of services. In addition,
with direct operations, we are able to ensure business resilience and sustain service quality
throughout changing business environments and market conditions.
SUMMARY
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Integrated Capabilities
Anchored by our directly operated model, we deliver a comprehensive portfolio of
logistics and supply chain solutions to a diverse customer base globally. Leveraging our
time-definite capabilities as a foundation, we have expanded strategically into economy
express, freight delivery, cold chain logistics, intra-city on-demand delivery, and supply chain
and international services, catering to the evolving and diverse logistics needs of our customers
across industry verticals. We have been building our capabilities in a strategic, meticulous, and
cost-effective way, leveraging our established competitive strengths and networks to enter
adjacent products. This approach unlocks network synergies and optimizes resource allocation,
simultaneously reinforcing the foundation of our time-definite delivery and fostering the
growth of our other businesses. The following diagram illustrates the full cycle of our
integrated service offerings:
Supply chain
service
Distribution solutions Consumption and after-sales solutionsProcurement and manufacturing solutions
Express,
freight and
cold chain
Intra-city
on-demand
Pick-up Sorting & transportation Delivery
Hubs and
sorting centers
RecipientsBusiness customers/
Retail customers
Service outletsHubs and
sorting centers
Service outlets
First-mile Short-haul Line -haul Short-haul Last-mile
Domestic
suppliers
Overseas
suppliers
Factories
OEM
manufacturers
Domestic
distribution hubs
Overseas
distribution hubs
Enterprise
recipients
Individual
recipients
Warehouse
Bonded
warehouse
Stores
E-commerce
distribution centers
Regional
distribution centers
International
delivery
service
International
freight
forwarding
service1
Domestic
Overseas
Enterprise/Retail
customers Domestic hubs and
sorting centers
Line-haul
shipping
Overseas hubs and
sorting centers
Consignee
Custom
clearance
Custom
clearance
Pick-up
Delivery
Business
customers
Trucking
company
Terminal
operator
Customs
broker
Carriers/
Shipping lines
Customs
broker
Trucking
company
Consignee
Transportation
arrangement
Warehousing &
ground handling
Documentation
preparation and
customs clearance
Air/Ocean Warehousing &
ground handling
Transportation
arrangement
Terminal
operator
12 3
Documentation
preparation and
customs clearance
32 1
Cross-border Overseas
Cross-borderDomestic
Cross-border
E-commerce platform
Offline
Online
Pick-up
Place order
Merchants Rider Recipients
SF Intra-city
Place shopping
or food orders
DeliveryCollection
Place delivery order/tailored solutions1 Order dispatch2
34
Individual
Customers Place delivery order/individual services1
Consumers
Note:
Our international services in general adopt an asset-appropriate approach. In particular , our international freight
forwarding service is asset-light, whereby a majority of transportation needs are provided by external carriers, and
customs clearance is partly outsourced to external customs brokers.
SUMMARY
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--- page 19 ---
With a comprehensive portfolio of logistics and supply chain solutions, we can select and
combine our capabilities, which are operationally standardized to us, to provide differentiated
and tailored solutions to address the specific logistics needs of our customers across various
industries. As a result, the number of our customers with active credit accounts amounted to
approximately 2.2 million as of June 30, 2024, the highest among all logistics service providers
in Asia, according to Frost & Sullivan.
Independent Third-Party Logistics Service Provider
The express delivery industry in China has grown rapidly due to the rise of e-commerce
platforms. As various e-commerce platforms and merchants continue to emerge and develop,
they generally prefer logistics partners that are not affiliated with incumbent e-commerce
players to form long-term trusted relationships free of potential conflicts of interest, perceived
or otherwise. Unlike the majority of our domestic Chinese peers, we are positioned in the
industry as an independent third-party logistics service provider neutral to platforms and
merchants. We are not affiliated with any e-commerce platform, which enables us to provide
impartial services to all our customers. We aim to provide unbiased, inclusive, high-quality
services to all our partners and empower their success.
Our business model, combining direct operations, integrated services capabilities, and
third-party independence, has enabled us to achieve today’s success as an industry frontrunner
and will further empower us to capture evolving customer needs and continue our expansion.
COMPETITIVE LANDSCAPE
Global logistics represents an enormous market opportunity, with an estimated US$11.1
trillion spent on logistics in 2023, according to Frost & Sullivan. Outsourcing logistics
requirements to third-party providers is a secular trend across the world, resulting in
sustainable growth in global logistics spending and emergence of leading third-party logistics
service providers. Nevertheless, the overall logistics market remains highly fragmented, with
a majority of third-party logistics service providers small in scale and either focused on a
particular sub-sector or a particular region or country. Globally, there are only around ten
integrated logistics service providers that are able to provide a full spectrum of logistics
services including express, freight, cold chain logistics, intra-city on-demand delivery services,
supply chain solutions, and international logistics services, among others. Among the global
leading integrated logistics service providers, a vast majority operate on a directly operated
model with high ownership and control of all processes across end-to-end supply chain. The
directly operated model allows integrated logistics service providers to achieve superior
service quality, provide customized and integrated solutions for customers’ evolving logistics
needs, and maximize cost efficiencies through integrating multiple networks.
SUMMARY
–1 0–


--- page 20 ---
We were Asia’s largest and the world’s fourth largest integrated logistics service provider
in terms of revenue in 2023, according to Frost & Sullivan. According to the same source, we
were also the fastest growing integrated logistics service provider among the global top four
integrated logistics service providers, in terms of revenue growth from 2021 to 2023. In China,
we operate in a number of sub-sectors, including express, LTL freight, cold chain logistics,
intra-city on-demand, and end-to-end supply chain solutions, and command leading positions
with a market share of 11.7%, 1.7%, 2.2%, 13.8% and 3.2%, respectively, in each of these
sub-sectors, in terms of revenue in 2023, according to Frost & Sullivan. Across various services
and geographies, we primarily compete with three major types of logistics service providers,
namely, leading global integrated logistics service providers, China-based integrated logistics
service providers, and single-product logistics service providers. For details regarding our
industry and competitive landscape, see “Industry Overview” in this prospectus.
OUR CUSTOMERS AND SUPPLIERS
Our Customers
We have fostered an extensive customer base covering various industries around the
world. We adopt a tiered approach for both business customers and retail customers. We serve
a wide range of blue-chip business customers across various industries, including many of the
Top 500 Enterprises in China. In 2023, 476 of these enterprises were our customers, and they
spread across all industry verticals. We have the highest coverage for blue-chip customers
among integrated logistics service providers in Asia, which reflects our commitment to
providing high-quality services.
We take pride in having a diverse customer base, which means we do not depend on a
single customer and thus have low concentration risk. Our top five customers for each
year/period during the Track Record Period accounted for 5.6%, 5.0%, 9.2% and 9.1% of our
total revenue for the respective period, respectively.
Our Procurement and Suppliers
We mainly adopt a centralized procurement approach, which includes screening,
tendering and bidding, and procuring various assets, consumables, and services used in our
business, including but not limited to, sorting equipment, vehicles, waybills, barcode scanners
and uniforms.
Our top five suppliers for each year/period during the Track Record Period accounted for
13.6%, 16.8%, 22.0% and 21.5% of our total purchases for the respective period, respectively.
SUMMARY
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--- page 21 ---
SUMMARY OF HISTORICAL FINANCIAL INFORMATION
The following tables set forth summary financial data from our financial information
during the Track Record Period, extracted from the Accountant’s Report set out in Appendix
I to this prospectus. The summary financial data set forth below should be read together with,
and is qualified in its entirety by reference to, our financial statements in this prospectus,
including the related notes. Our financial information was prepared in accordance with IFRS.
Consolidated Statements of Profit or Loss
The following table sets forth a summary of our consolidated statements of profit or loss
with line items in absolute amounts and as percentages of our revenue for the years/periods
indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Revenue ................. 207,186,647 100.0 267,490,414 100.0 258,409,403 100.0 124,365,598 100.0 134,409,720 100.0
Cost of revenue ............. (181,409,103) (87.6) (234,478,008) (87.7) (225,775,678) (87.4) (107,767,733) (86.7) (116,096,281) (86.4)
Gross profit ............... 25,777,544 12.4 33,012,406 12.3 32,633,725 12.6 16,597,865 13.3 18,313,439 13.6
Selling and marketing expenses ..... (2,837,899) (1.4) (2,784,114) (1.0) (2,991,589) (1.2) (1,392,755) (1.1) (1,470,892) (1.1)
General and administrative expenses . . (15,115,275) (7.3) (17,694,719) (6.6) (17,766,049) (6.9) (8,999,978) (7.2) (9,049,272) (6.7)
Research and development expenses . . (2,154,839) (1.0) (2,222,865) (0.8) (2,285,314) (0.9) (1,174,970) (0.9) (1,301,455) (1.0)
Net (impairment losses)/reversal on
financial assets and contract assets . . (579,851) (0.3) (825,170) (0.3) 33,480 0.0 66,022 0.1 (159,872) (0.1)
Other income .............. 2,089,534 1.0 2,494,659 0.9 2,281,202 0.9 880,404 0.7 572,750 0.4
Other gains, net ............. 1,956,535 1.0 831,262 0.3 408,474 0.3 257,072 0.2 293,793 0.2
Operating profit ............ 9,135,749 4.4 12,811,459 4.8 12,313,929 4.8 6,233,660 5.1 7,198,491 5.3
Finance income ............. 187,794 0.1 345,662 0.1 633,373 0.2 292,849 0.2 415,064 0.3
Finance costs .............. (1,562,963) (0.8) (2,054,360) (0.8) (2,269,700) (0.9) (1,092,673) (0.9) (1,230,918) (1.0)
Share of profit/(loss) of associates and
joint ventures, net ........... 42,660 0.0 7,549 0.0 (67,190) (0.0) (13,486) (0.0) (62,580) (0.0)
Impairment provision for investments
in associates and joint ventures .... (52,384) (0.0) (72,474) (0.0) (123,907) (0.0) – – – –
Profit before income tax ........ 7,750,856 3.7 11,037,836 4.1 10,486,505 4.1 5,420,350 4.4 6,320,057 4.7
Income tax expense ........... (3,368,762) (1.6) (3,980,922) (1.5) (2,574,896) (1.0) (1,526,110) (1.3) (1,559,135) (1.2)
Profit for the year/period ....... 4,382,094 2.1 7,056,914 2.6 7,911,609 3.1 3,894,240 3.1 4,760,922 3.5
Attributable to:
Owners of our Company ....... 4,731,979 2.3 6,227,058 2.3 8,234,493 3.2 4,176,282 3.4 4,806,714 3.6
Non-controlling interests ....... (349,885) (0.2) 829,856 0.3 (322,884) (0.1) (282,042) (0.3) (45,792) (0.1)
4,382,094 2.1 7,056,914 2.6 7,911,609 3.1 3,894,240 3.1 4,760,922 3.5
SUMMARY
–1 2–


--- page 22 ---
Non-IFRS Measures
To supplement our consolidated financial statements which are presented in accordance
with IFRS, we also use certain non-IFRS measures, namely, EBITDA (non-IFRS measure) and
EBITDA margin (non-IFRS measure), as additional financial metrics. These non-IFRS
measures are not required by or presented in accordance with IFRS.
We believe that these non-IFRS measures facilitate comparisons of our operating
performance by eliminating potential impacts of certain items listed below. We also believe
that such non-IFRS measures present useful information in understanding and evaluating our
consolidated results of operations in the same manner as they help our management. However,
our presentation of such non-IFRS measures may not be comparable to similarly titled
measures presented by other companies. The use of these non-IFRS measures has limitations
as an analytical tool, and you should not consider it in isolation from, or as substitute for
analysis of, our results of operations or financial condition as reported under IFRS.
The following table reconciles EBITDA (non-IFRS measure) to our profit for the
year/period, presented in accordance with IFRS, for the years/periods indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Profit for the year/period .. 4,382,094 7,056,914 7,911,609 3,894,240 4,760,922
Add:
Depreciation and
amortization* ........... 12,654,902 16,241,432 17,319,107 8,498,107 8,789,650
Finance costs, net ......... 1,375,169 1,708,698 1,636,327 799,824 815,854
Income tax expense ........ 3,368,762 3,980,922 2,574,896 1,526,110 1,559,135
EBITDA (non-IFRS
measure) .............. 21,780,927 28,987,966 29,441,939 14,718,281 15,925,561
Note:
* Depreciation and amortization equals the sum of depreciation of right-of-use assets and depreciation and
amortization (excluding right-of-use assets).
EBITDA margin (non-IFRS measure) represents our EBITDA (non-IFRS measure) for a
relevant year divided by revenue for the same year, expressed as a percentage. Our EBITDA
margin (non-IFRS measure) was 10.5%, 10.8%, 11.4%, 11.8% and 11.9% in the years ended
December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024,
respectively.
SUMMARY
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--- page 23 ---
Revenue
During the Track Record Period, we generated revenue primarily from our (i) express and
freight delivery segment, (ii) intra-city on-demand delivery segment, and (iii) supply chain and
international segment. The following table sets forth a by-segment breakdown of our revenue,
in absolute amounts and as percentages of our total revenue, for the years/periods indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Express and freight delivery
segment (1) ............... 160,675,510 77.6 169,764,860 63.5 186,890,137 72.4 90,058,986 72.5 96,820,175 72.1
Time-definite express services .... 98,961,735 47.8 105,696,512 39.5 115,456,067 44.7 56,069,720 45.1 59,185,770 44.0
Economy express services ....... 25,428,003 12.3 25,551,306 9.6 25,051,548 9.7 12,129,430 9.8 13,254,012 9.9
Freight delivery services ....... 27,290,961 13.2 27,917,012 10.4 33,078,821 12.8 15,120,722 12.2 17,554,101 13.1
Cold chain and pharmaceutical
logistics services .......... 7,802,610 3.8 8,612,665 3.2 10,312,988 4.0 5,338,545 4.3 5,062,524 3.8
Others (2) ............... 1,192,201 0.5 1,987,365 0.8 2,990,713 1.2 1,400,569 1.1 1,763,768 1.3
Intra-city on-demand delivery
segment ................ 5,117,905 2.5 6,567,057 2.4 7,371,250 2.8 3,406,837 2.8 4,022,952 2.9
Intra-city on-demand delivery
services ............... 5,003,156 2.4 6,436,102 2.4 7,249,500 2.8 3,339,291 2.7 3,956,020 2.9
Others (2) ............... 1 14,749 0.1 130,955 0.0 121,750 0.0 67,546 0.1 66,932 0.0
Supply chain and international
segment ................ 39,979,632 19.3 89,916,599 33.6 62,859,302 24.3 30,283,063 24.3 32,914,104 24.5
Supply chain and international
services ............... 39,203,772 18.9 87,866,143 32.8 59,978,741 23.2 28,857,391 23.2 31,195,538 23.2
Others (2) ............... 775,860 0.4 2,050,456 0.8 2,880,561 1.1 1,425,672 1.1 1,718,566 1.3
Undistributed units (3) ......... 1,413,600 0.6 1,241,898 0.5 1,288,714 0.5 616,712 0.4 652,489 0.5
Total ................... 207,186,647 100.0 267,490,414 100.0 258,409,403 100.0 124,365,598 100.0 134,409,720 100.0
Notes:
(1) We adjusted our reportable segments in 2023 by merging two segments, previously named as “express delivery
segment” and “freight delivery segment,” into “express and freight delivery segment.” As a result, our segment
information for the years ended December 31, 2021 and 2022 has been restated, see Note 5 to the Accountant’s
Report in Appendix I to this prospectus.
(2) Others primarily represents our ancillary non-logistics services, such as sales of goods, provided under the
banner of the relevant segment. Primarily incidental to our comprehensive supply chain solutions, we at times
provided, as per our key accounts’ requests, certain raw materials and machineries.
(3) Undistributed units primarily include our non-principal businesses, such as leasing and provision of
technology services.
SUMMARY
–1 4–


--- page 24 ---
We acquired and consolidated Kerry Logistics in September 2021, and accordingly
recorded revenue contribution by Kerry Logistics of RMB20.3 billion, RMB74.3 billion,
RMB45.9 billion, RMB22.5 billion and RMB24.0 billion, representing 9.8%, 27.8%, 17.8%,
18.1% and 17.8%, of the total revenue of our Group in 2021, 2022, 2023 and the six months
ended June 30, 2023 and 2024, respectively. Revenue contribution by Kerry Logistics
decreased in 2023, as the international sea and air freight market experienced a slowdown,
primarily due to the softening demand, and the de-stocking in certain countries, as the global
supply chain continued to normalize gradually post-pandemic. Revenue contribution by Kerry
Logistics increased during the first half of 2024, as compared to the same period in 2023,
benefitting from (i) the recent market rebound which gave rise to increases in fee rates, as well
as (ii) the growth initiatives we took in relation to key and emerging trends including Chinese
companies’ overseas expansions, and imports of fresh and seasonal food.
Profit for the Y ear/Period
Our profit for the year increased from RMB4.4 billion in 2021 to RMB7.1 billion in 2022,
primarily attributable to: (i) our consolidation of Kerry Logistics for the full year of 2022,
while we only consolidated Kerry Logistics since September in 2021; (ii) our efforts to
optimize our product mix through, among other things, strategically focusing on mid to
high-end service offerings, which generally demonstrated higher profitability; and (iii)
efficiency gains achieved through the integration of our logistics networks, infrastructure and
service capabilities, and through our pursuit of lean management.
Our profit for the year increased from RMB7.1 billion in 2022 to RMB7.9 billion in 2023,
primarily attributable to: (i) the further improvement in the overall profitability of our express
and freight delivery segment and intra-city on-demand delivery segment; and (ii) efficiency
gains achieved through the further integration of our logistics networks, infrastructure and
service capabilities, and through our continuous pursuit of lean management.
Our profit for the period increased from RMB3.9 billion for the six months ended June
30, 2023 to RMB4.8 billion for the six months ended June 30, 2024. The increase was primarily
driven by efficiency gains achieved through, among other things, our continuous efforts in
multi-network integration and the pursuit of lean management.
Consolidated Statements of Financial Position
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Total non-current assets ........... 1 15,734,564 126,169,214 130,499,975 126,786,160
Total current assets .............. 94,112,124 90,673,493 90,990,680 93,079,771
Total assets ................... 209,846,688 216,842,707 221,490,655 219,865,931
Total non-current liabilities ......... 35,963,106 40,879,749 44,217,354 43,965,280
Total current liabilities ............ 76,021,629 77,676,909 73,989,641 76,989,301
Total liabilities ................. 111,984,735 118,556,658 118,206,995 120,954,581
Net current assets .............. 18,090,495 12,996,584 17,001,039 16,090,470
Net assets .................... 97,861,953 98,286,049 103,283,660 98,911,350
SUMMARY
–1 5–


--- page 25 ---
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Equity attributable to equity holder
of the Company
Share capital ................... 4,906,213 4,895,202 4,895,202 4,815,911
Less: Treasury shares ............. (394,993) (2,040,377) (2,575,532) (378,490)
Reserves ...................... 50,186,242 50,037,565 51,634,675 43,385,333
Retained earnings ............... 28,192,470 33,371,351 38,835,999 40,748,443
Equity attributable to owners of
our Company ................. 82,889,932 86,263,741 92,790,344 88,571,197
Non-controlling interests .......... 14,972,021 12,022,308 10,493,316 10,340,153
Total equity ................... 97,861,953 98,286,049 103,283,660 98,911,350
Our net current assets decreased from RMB18.1 billion as of December 31, 2021 to
RMB13.0 billion as of December 31, 2022, primarily due to (i) a decrease of RMB5.0 billion
in trade and note receivables, resulting from our efforts to accelerate the collection of trade and
note receivables; (ii) a decrease of RMB3.0 billion in financial assets at fair value through
profit or loss, resulting from a decrease in our structured deposits, which was in accordance
with our cash management plan; and (iii) an increase of RMB3.0 billion in other payables and
accruals, primarily attributable to an increase in current salaries, wages and benefits, and an
increase in current consideration payable for business combinations, resulting from our
acquisitions of certain subsidiaries in 2022. The foregoing changes were partially offset by (i)
an increase of RMB5.5 billion in our cash and cash equivalents, partially due to our withdrawal
of structured deposits, which was in accordance with our cash management plan, and (ii) a
decrease of RMB2.4 billion in our current borrowings, primarily attributable to our repayment
of borrowings.
Our net current assets increased from RMB13.0 billion as of December 31, 2022 to
RMB17.0 billion as of December 31, 2023, primarily attributable to (i) a decrease in our other
payables and accruals from RMB20.0 billion in 2022 to RMB17.6 billion in 2023, primarily
attributable to a decrease in current salaries, wages and benefits, a decrease in current
consideration payable for business combinations, and a decrease in payable for purchase of
property, plant and equipment, (ii) a decrease in our borrowings from RMB23.3 billion as of
December 31, 2022 to RMB22.3 billion as of December 31, 2023, primarily attributable to our
repayments of certain corporate bonds and short-term debentures in 2023; (iii) an increase in
our restricted cash from RMB874.9 million as of December 31, 2022 to RMB1.6 billion as of
December 31, 2023, mainly representing an increase in our statutory reserve deposits with the
PBOC; and (iv) an increase in our inventories from RMB1.9 billion as of December 31, 2022
to RMB2.4 billion as of December 31, 2023. The foregoing was partially offset by (i) a
decrease in our financial assets at fair value through profit or loss from RMB7.4 billion as of
December 31, 2022 to RMB6.8 billion as of December 31, 2023, primarily driven by a decrease
in our structured deposits in 2023, which was in accordance with our cash management plan;
SUMMARY
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and (ii) a decrease in our trade and note receivables from RMB25.8 billion as of December 31,
2022 to RMB25.4 billion as of December 31, 2023, resulting from our continued efforts to
accelerate the collection of trade and note receivables.
Our net current assets remained relatively stable at RMB17.0 billion and RMB16.1 billion
as of December 31, 2023 and June 30, 2024, respectively.
Our net assets remained relatively stable at RMB97.9 billion, RMB98.3 billion,
RMB103.3 billion, and RMB98.9 billion as of December 31, 2021, 2022 and 2023 and June 30,
2024, respectively. The moderate fluctuations in our net assets during the Track Record Period
corresponded to the changes in our total equity. Our total equity increased from RMB97.9
billion as of December 31, 2021 to RMB98.3 billion as of December 31, 2022, and further to
RMB103.3 billion as of December 31, 2023, primarily attributable to the increases in our
retained earnings. Our total equity remained relatively stable at RMB98.9 billion as of June 30,
2024.
Consolidated Statements of Cash Flows
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net cash generated from operating
activities ................. 16,078,955 32,702,947 26,569,819 13,824,827 13,722,269
Net cash used in investing
activities ................. (17,131,227) (12,091,458) (13,505,617) (13,633,590) (15,444,553)
Net cash generated from/(used in)
financing activities .......... 20,498,576 (16,016,950) (12,994,685) (4,963,638) (6,181,865)
Net increase in cash and cash
equivalents ................ 19,446,304 4,594,539 69,517 (4,772,401) (7,904,149)
Cash and cash equivalents at the
beginning of the year/period .... 15,466,484 34,813,768 40,279,947 40,279,947 40,448,308
Exchange (losses)/gains on cash
and cash equivalents ......... (99,020) 871,640 98,844 127,046 (28,170)
Cash and cash equivalents at the
end of the year/period ....... 34,813,768 40,279,947 40,448,308 35,634,592 32,515,989
SUMMARY
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Key Financial Ratios
The following table sets forth a summary of our key financial ratios for the years/periods
indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
(unaudited)
Gross profit margin (1) .......... 12.4% 12.3% 12.6% 13.3% 13.6%
Net profit margin (2) ............ 2.1% 2.6% 3.1% 3.1% 3.5%
EBITDA margin (non-IFRS
measure) (3) ................ 10.5% 10.8% 11.4% 11.8% 11.9%
Notes:
(1) Represents gross profit for the year/period divided by revenue for the same year, expressed as a percentage.
(2) Represents profit for the year/period divided by revenue for the same year, expressed as a percentage.
(3) For details, see “— Non-IFRS Measures.”
RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE
Recent Developments
Unaudited Financial Information for the Nine Months Ended September 30, 2024
Our revenue increased by 9.4% from RMB189.0 billion for the nine months ended
September 30, 2023 to RMB206.9 billion for the same period in 2024, primarily attributable
to (i) an increase in revenue from our express and freight delivery segment, driven by the
further expansion of our highly diversified service scenarios, catering to customers in the
emerging and high-growth sectors, such as manufacturing and consumer goods industries, as
well as our enhanced time-definite service capabilities, complimented by further improved cost
efficiency, boosting the attractiveness of our service offerings, and (ii) an increase in revenue
from our supply chain and international segment, driven by the recent market rebound which
gave rise to increases in fee rates and demand, and our synergistic operational model which
enabled the continuous fortification and expansion of our global presence. Our cost of revenue
increased by 8.3% from RMB164.8 billion for the nine months ended September 30, 2023 to
RMB178.5 billion for the same period in 2024, in line with the growth of our business.
Adhering to our pursuit of lean management, we invested in our core competitiveness,
empowering us to garner long-term, sustainable growth, while applying enhanced cost controls
including, among other things, the continuous integration and optimization of our logistics
networks. As a result of the foregoing, our gross profit increased by 17.2% from RMB24.2
billion for the nine months ended September 30, 2023 to RMB28.4 billion for the same period
in 2024.
SUMMARY
–1 8–


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Our net profit increased by 28.0% from RMB6.0 billion for the nine months ended
September 30, 2023 to RMB7.7 billion for the same period in 2024, primarily attributable to
the robust growth in revenue, our pursuit of lean management and our technology enabled cost
controls. For the same reasons, our net profit margin increased from 3.2% for the nine months
ended September 30, 2023 to 3.7% for the same period in 2024.
To supplement our unaudited interim consolidated financial information which are
presented in accordance with IFRS, we also use certain non-IFRS measures, namely, EBITDA
(non-IFRS measure) and EBITDA margin (non-IFRS measure), as additional financial metrics.
For details on our rationale for adopting these non-IFRS measures and their inherent
limitations, please see “— Non-IFRS Measures.” The following table reconciles EBITDA
(non-IFRS measure) to our profit for the period, presented in accordance with IFRS, for the
periods indicated:
Nine months ended
September 30,
2023 2024
RMB’000 RMB’000
(unaudited) (unaudited)
Profit for the period ....................................... 5,994,485 7,673,004
Add:
Depreciation and amortization* .............................. 12,885,331 13,004,964
Finance costs, net ........................................... 1,251,810 1,317,783
Income tax expense ......................................... 1,934,368 2,474,554
EBITDA (non-IFRS measure) .............................. 22,065,994 24,470,305
Note:
* Depreciation and amortization equals the sum of depreciation of right-of-use assets and depreciation and
amortization (excluding right-of-use assets).
Our EBITDA margin (non-IFRS measure) increased from 11.7% for the nine months
ended September 30, 2023 to 11.8% for the same period in 2024.
Our capital expenditures decreased by 13.6% from RMB8.1 billion for the nine months
ended September 30, 2023 to RMB7.0 billion for the same period in 2024. Our capital
expenditures consist of additions of freehold land and buildings, aircraft, aircraft engines,
rotables and high-value maintenance, machinery and equipment, transportation vehicles,
computers and electronic equipment, office and other equipment, leasehold improvements and
construction in progress.
Our total assets remained stable at RMB214.0 billion as of September 30, 2024 as
compared to RMB219.9 billion as of June 30, 2024. Our total liabilities remained relatively
stable at RMB112.6 billion as of September 30, 2024 as compared to RMB121.0 billion as of
June 30, 2024. Our total equity remained relatively stable at RMB101.5 billion as of September
30, 2024 as compared to RMB98.9 billion as of June 30, 2024.
SUMMARY
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For the nine months ended September 30, 2024, our net cash generated from operating
activities amounted to RMB22.6 billion.
Our unaudited interim consolidated financial information for the nine months ended 30
September 2024 has been reviewed by our Reporting Accountant in accordance with
International Standard on Review Engagements 2410 “Review of Interim Financial
Information Performed by the Independent Auditor of the Entity” issued by the International
Auditing and Assurance Standards Board. For details, see Appendix IA to this prospectus.
Declaration of Dividends
To further increase the investment return for our Shareholders, the resolution of an
interim dividend of approximately RMB1.9 billion, representing a dividend payout ratio of
approximately 40% in respect of the six months ended June 30, 2024, and a special dividend
of approximately RMB4.8 billion was passed at the Shareholders’ general meeting on October
29, 2024. These dividends have been paid in full on November 7, 2024.
No Material Adverse Change
Our Directors confirm that, as of the date of this prospectus, there has been no material
adverse change in our financial or trading position, indebtedness, mortgages, contingent
liabilities, guarantees or prospects since June 30, 2024, the end of the period reported on the
Accountant’s Report in Appendix I to this prospectus.
OUR CONTROLLING SHAREHOLDERS
As of the Latest Practicable Date, the equity interest in our Company was controlled
directly and indirectly (through Shenzhen Weishun) as to approximately 55.27% by Mingde
Holding, and Mr. Wang Wei directly held 99.90% of the equity interest in Mingde Holding.
Immediately following completion of the Global Offering (without taking into account any
Shares which may be allotted and issued by our Company pursuant to the exercise of the
Over-allotment Option or may be issued by our Company pursuant to the exercise of any
options under the 2022 Stock Option Incentive Plan), Mr. Wang Wei and Mingde Holding will,
directly and indirectly (through Shenzhen Weishun), control approximately 53.39% of the
voting rights in our share capital through Mingde Holding. As such, Mr. Wang Wei, Mingde
Holding and Shenzhen Weishun will remain as our Controlling Shareholders immediately upon
the completion of the Global Offering.
LISTING EXPENSES
We expect to incur a total of approximately RMB155.9 million of listing expenses in
connection with the Global Offering, representing approximately 2.9% of our gross proceeds
from the Global Offering (assuming an Offer Price of HK$34.30 per Offer Share, being the
mid-point of the indicative Offer Price range between HK$32.30 and HK$36.30, and assuming
SUMMARY
–2 0–


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that the Over-allotment Option is not exercised). Listing expenses include (1) underwriting-
related expense (including sponsor fees and underwriting commissions, SFC transaction levy,
AFRC transaction levy, and Stock Exchange trading fees for all Offer Shares) of approximately
RMB80.8 million, and (2) non-underwriting related expenses of approximately RMB75.1
million, which consist of (i) fees for legal advisors and the reporting accountants of
approximately RMB55.2 million, and (ii) other fees unrelated to the underwriting of RMB19.9
million.
During the Track Record Period, listing expenses in an aggregate of RMB0.6 million were
incurred as of June 30, 2024 and charged to our consolidated statement of profit or loss. We
estimate that RMB13.0 million of listing expenses will be charged to our consolidated
statement of profit or loss for the year ended December 31, 2024. The remaining RMB142.3
million is directly attributable to the issue of our H Shares to the public and is expected to be
deducted from equity.
The listing expenses above are the best estimate as of the Latest Practicable Date and for
reference only. The actual amount may differ from this estimate.
OFFERING STATISTICS
All statistics in the following table are based on the assumptions that (i) the Global
Offering has been completed and 170,000,000 H Shares are issued pursuant to the Global
Offering, (ii) the Over-allotment Option is not exercised, and (iii) 4,986,186,983 Shares are
issued and outstanding following the completion of the Global Offering:
Based on an
Offer Price of
HK$32.30 per
H Share
Based on an
Offer Price of
HK$36.30 per
H Share
Market capitalization of our Shares (1) HK$161,054
million
HK$180,999
million
Unaudited pro forma adjusted net tangible
asset per Share (2)
RMB15.32
(HK$16.67) (3)
RMB15.44
(HK$16.80) (3)
Notes:
(1) The calculation of market capitalization of our Shares is based on 170,000,000 H shares and
4,816,186,983 A shares expected to be in issue (representing 4,986,186,983 Shares expected to be in
issue and outstanding) immediately following the completion of the Global Offering (assuming the
Over-allotment Option is not exercised). For details, see “Share Capital — Upon Completion of the
Global Offering” in this prospectus.
(2) The unaudited pro forma adjusted net tangible asset per Share as of June 30, 2024 is calculated after
making the adjustments referred to in “Appendix II — Unaudited Pro Forma Financial Information” in
this prospectus. The number of shares used in deriving pro forma net tangible asset are 4,975,711,636
Shares (representing 4,815,911,220 Shares in issue as of June 30, 2024, excluding 10,199,584 treasury
shares as of June 30, 2024, adding 170,000,000 Offer Shares) which were in issue, assuming that the
SUMMARY
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Global Offering had been completed on June 30, 2024 but does not take into account of any Shares
which may be allotted and issued by our Company pursuant to the exercise of the Over-allotment Option
or may be issued by our Company pursuant to the exercise of any options may be granted under the 2022
Stock Option Incentive Plan.
(3) The estimated net proceeds from the Global Offering are translated into Renminbi at the rate of
RMB0.91906 to HK$1.00, the exchange rate set by the PBOC prevailing on November 8, 2024.
No representation is made that the Hong Kong dollar amounts have been, could have been or could be
converted to Renminbi at that rate or at any other rate.
USE OF PROCEEDS
We estimate the net proceeds of the Global Offering which we will receive, assuming an
Offer Price of HK$34.30 per Offer Share (being the mid-point of the indicative Offer Price
range), will be approximately HK$5,661.3 million, after deduction of underwriting fees and
commissions and other estimated expenses in connection with the Global Offering assuming
the Over-allotment Option is not exercised. We intend to use the net proceeds of the Global
Offering for the following purposes:
 Approximately 45.0% of the net proceeds, or HK$2,547.6 million, will be used for
strengthening our international and cross-border logistics capabilities;
 Approximately 35.0% of the net proceeds, or HK$1,981.5 million, will be used for
strengthening and optimizing our logistics network and service offerings in China;
 Approximately 10.0% of the net proceeds, or HK$566.1 million, will be used for the
research and development of advanced technologies and digital solutions to upgrade
our supply chain and logistics services and implement ESG-related initiatives; and
 Approximately 10.0% of the net proceeds, or HK$566.1 million, will be used for
working capital and general corporate purposes.
See “Future Plans and Use of Proceeds” in this prospectus for further information relating
to our future plans and use of proceeds from the Global Offering, including the adjustment on
the allocation of the proceeds in the event that the Offer Price is fixed at a higher or lower level
compared to the mid-point of the indicative Offer Price range.
OUR LISTING ON THE SZSE
As of the Latest Practicable Date, our Company was listed on the SZSE, and our Directors
confirmed that we had no instances of non-compliance with the rules of the SZSE and other
applicable PRC securities laws and regulations in any material respects since the completion
of the Material Asset Restructuring and our listing on the SZSE and, to the best knowledge of
our Directors having made all reasonable enquiries, there was no material matter that should
be brought to the investor’s attention in relation to our compliance record on the SZSE, and
SUMMARY
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nothing has come to the Joint Sponsors’ attention that would reasonably cause them to disagree
the Directors’ view. Our PRC Legal Adviser is of the view that the confirmation of our
Directors above with regard to our compliance record is accurate and reasonable.
DIVIDENDS AND DIVIDEND POLICY
Our Company declared dividends of RMB874.5 million, RMB1.2 billion and RMB2.9
billion in respect of the financial years ended December 31, 2021, 2022 and 2023, respectively,
representing dividend payout ratios of 20%, 20% and 35%, respectively. As of the Latest
Practicable Date, we have paid the dividends declared in respect of the financial years ended
December 31, 2021, 2022 and 2023 in full. See Note 12 to the Accountant’s Report in
Appendix I to this prospectus. To further increase the investment return for our Shareholders,
the resolution of an interim dividend of approximately RMB1.9 billion, representing a dividend
payout ratio of approximately 40% in respect of the six months ended June 30, 2024, and a
special dividend of approximately RMB4.8 billion was passed at the Shareholders’ general
meeting on October 29, 2024. These dividends have been paid in full on November 7, 2024.
After completion of the Global Offering, our Shareholders will be entitled to receive dividends
we declare. We may distribute dividends by way of shares or cash, or a combination of both
shares and cash. Pursuant to our Articles of Association, our Board may declare dividends in
the future after taking into account our results of operations, financial condition, cash
requirements and availability and other factors as it may deem relevant at such time. Any
declaration and payment as well as the amount of dividends will be subject to our constitutional
documents, applicable PRC Law and approval by our Shareholders.
We intend to distribute cash dividends to our Shareholders at least on an annual basis,
subject to the discretion of our Directors in accordance with our Articles of Association and the
applicable laws and regulations in the PRC and Hong Kong.
Our dividend payout ratio increased from 20% (from 2017 to 2022) to 35% in 2023, and
we aim to steadily increase this over the next five years. Decisions to declare or to pay any
dividends in the future, will depend on, among other things, our Company’s profitability,
operations and development plans, external financing environment, costs of capital, our
Company’s cash flows and other factors that our Directors may consider relevant.
Our future declarations of dividends may not be in line with our historical declaration of
dividends and will be subject to the approval of our Shareholders. See “Risk Factors — Risks
Relating to the Global Offering — Our historical dividends may not be indicative of our future
dividend policy, and there can be no assurance that we will declare and distribute any amount
of dividends in the future” in this prospectus.
SUMMARY
–2 3–


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RISK FACTORS
Our operations and the Global Offering involve certain risks and uncertainties, which are
set out in the section headed “Risk Factors” in this prospectus. Y ou should read that section in
its entirety carefully before you decide to invest in our Shares. Some of the major risks we face
include:
 Our business and growth are materially affected by macroeconomic and other
factors that affect demand for logistics services in the countries and regions where
we operate;
 Any service disruptions impacting our ground fleet, our air cargo fleet, sorting
centers, warehouses or service outlets may adversely affect our business operations;
 We may encounter challenges in managing the expansion of our logistics
infrastructure and networks, which, if not dealt with effectively, could materially
and adversely affect our business, results of operations, financial condition and
growth prospects;
 We may record impairments of non-current assets, such as our intangible assets
(other than goodwill) and goodwill; and
 Competition in the industries where we operate is intense, and any failure to
compete effectively could adversely affect our customer base, profitability and
market share.
SUMMARY
–2 4–


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In this prospectus, unless the context otherwise requires, the following terms and
expressions shall have the meanings set out below.
“2021 Mingde Exchangeable
Bonds”
the exchangeable bonds issued by Mingde Holding on
November 23, 2021 and listed on the SZSE under the
ticker “21 Mingde EB (21ᅃ EB)”. See “Substantial
Shareholders — Exchangeable Bonds Issued by Mingde
Holding — 2021 Mingde Exchangeable Bonds” in this
prospectus for further details
“2022 Stock Option Incentive
Plan”
the stock option incentive plan approved and adopted by
our Company on April 28, 2022, and subsequently
amended on May 30, 2022, October 28, 2022 and
August 1, 2023, for the benefit of any executive
Directors, senior management members, key
management members and key employees; a summary of
the principal terms is set out in “Statutory and General
Information – 4. Our Incentive Schemes and Particulars
of our Capital under Option — A. 2022 Stock Option
Incentive Plan” in Appendix IV to this prospectus
“2024 Mingde Exchangeable
Bonds”
the exchangeable bonds issued by Mingde Holding on
May 23, 2024 and listed on the SZSE under the ticker “24
Mingde EB (24ᅃEB)”. See “Substantial Shareholders
— Exchangeable Bonds Issued by Mingde Holding —
2024 Mingde Exchangeable Bonds” in this prospectus for
further details
“A Share(s)” ordinary shares issued by our Company, with a nominal
value of RMB1.00 each, which are listed on the SZSE
and traded in Renminbi
“affiliate(s)” with respect to any specified person, any other person,
directly or indirectly, controlling or controlled by or
under direct or indirect common control with such
specified person
“AFRC” Accounting and Financial Reporting Council
“Articles” or “Articles of
Association”
the articles of association of our Company adopted on
August 17, 2023 with effect upon Listing (as amended
from time to time), a summary of which is set out in
Appendix III to this prospectus
DEFINITIONS
–2 5–


--- page 35 ---
“associate(s)” has the meaning ascribed thereto under the Listing Rules
“Audit Committee” the audit committee of the Board
“Board” or “Board of Directors” the board of Directors of the Company
“Board of Supervisors” the board of Supervisors of the Company
“Business Day” a day on which banks in Hong Kong are generally open
for normal business to the public and which is not a
Saturday, Sunday or public holiday in Hong Kong
“BVI” British Virgin Island
“CAAC” Civil Aviation Administration of China (҅)
“CAC” the Cyberspace Administration of China ( ʕശɛ͏΍ձ
܃)
Capital Market
Intermediary(ies)”, “capital
market intermediary(ies)” or
“CMI(s)”
the capital market intermediaries as named in the section
headed “Directors, Supervisors and Parties Involved in
the Global Offering”
“Cayman Companies
Act/Companies Act”
the Companies Act, Cap. 22 (Law 3 of 1961, as
consolidated and revised) of the Cayman Islands, as
amended, supplemented or otherwise modified from time
to time
“Cayman Islands” the Cayman Islands, a British Overseas Territory
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“Celestial Ocean” Celestial Ocean Investment Limited, a company
incorporated in the British Virgin Islands and an indirect
wholly-owned subsidiary of our Company
“Chengxingye International
Delivery”
Shenzhen Chengxingye International Delivery Limited*
(ʮ̡), the predecessor of SF
Express (Group) and Mingde Holding
“China” or “the PRC” the People’s Republic of China, except where the content
or context requires otherwise
DEFINITIONS
–2 6–


--- page 36 ---
“close associate(s)” has the meaning ascribed thereto under the Listing Rules
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended, supplemented or otherwise
modified from time to time
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance”
the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong
Kong), as amended, supplemented or otherwise modified
from time to time
“Company” or “our Company” S.F. Holding Co., Ltd. (ʮ̡),
formerly registered under the name Maanshan Dingtai
Rare Earth & New Materials Co., Ltd.* ( ৵ቧʆཻइ೽ɺ
ʮ̡), a joint stock company with
limited liability established in the PRC on May 22, 2003,
the A Shares of which have been listed on the SZSE
(stock code: 002352.SZ)
“connected person(s)” has the meaning ascribed thereto under the Listing Rules
“connected transaction(s)” has the meaning ascribed thereto under the Listing Rules
“Controlling Shareholder(s)” has the meaning ascribed to it under the Listing Rules and
unless the context otherwise requires, refers to Mr. Wang,
Mingde Holding and Shenzhen Weishun
“core connected person(s)” has the meaning ascribed thereto under the Listing Rules
“COVID-19” a viral respiratory disease caused by the severe acute
respiratory syndrome coronavirus 2 (SARS-CoV-2)
“CSRC” China Securities Regulatory Commission ( ʕ਷ᗇՎ္ຖ
ึ)
“DHL” DHL International GmbH., a division of the German
logistics company Deutsche Post DHL, which is Europe’s
leading postal and parcel service provider
“Dingtai New Materials” Ma’anshan Dingtai Rare Earth & New Materials
Co., Ltd.* (ʮ̡), the
predecessor of our Company
“Director(s)” the director(s) of our Company
DEFINITIONS
–2 7–


--- page 37 ---
“EB Pledge Agent” Huatai United Securities Co., Ltd.* (ࠢ
ப΂ʮ̡), the pledge agent of the holders of the 2021
Mingde Exchangeable Bonds and the 2024 Mingde
Exchangeable Bonds
“EIT” enterprise income tax
“EIT Law” the PRC Enterprise Income Tax Law ( ʕശɛ͏΍ձ਷
)
“ESG” Environmental, Social and Corporate Governance
“Extreme Conditions” the occurrence of “extreme conditions” as announced by
any government authority of Hong Kong due to serious
disruption of public transport services, extensive
flooding, major landslides, large-scale power outage or
any other adverse conditions before Typhoon Signal No.
8 or above is replaced with Typhoon Signal No. 3 or
below
“Fengyi Technology” Fengyi Technology (Shenzhen) Co., Ltd. (Ҧ(ଉ
έ)ʮ̡), an indirect non-wholly owned subsidiary
of the Company
“Fini” “Fast Interface for New Issuance”, an online platform
operated by HKSCC that is mandatory for admission to
trading and, where applicable, the collection and
processing of specified information on subscription in
and settlement for all New Listings
“Flourish Harmony” Flourish Harmony Holdings Company Limited (ٰ
ʮ̡), an indirect wholly-owned subsidiary of the
Company incorporated in the Cayman Islands
“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co.
“F&S Report” the industry report prepared by Frost & Sullivan, which
we commissioned Frost & Sullivan to prepare on the
global logistics market
“GDP” gross domestic product
“General Rules of HKSCC” General Rules of HKSCC published by the Stock
Exchange and as amended from time to time
DEFINITIONS
–2 8–


--- page 38 ---
“Global Offering” the Hong Kong Public Offering and the International
Offering
“Group”, “our Group”, “our”,
“we”, or “us”
our Company and its subsidiaries, or any one of them as
the context may require, and where the context requires,
in respect of the period before our Company became the
holding company of any of its present subsidiaries, such
present subsidiaries of our Company, the businesses
carried on by such subsidiaries and (as the case may be)
their predecessors
“Guide” the Guide for New Listing Applicants published by the
Stock Exchange (as amended, supplemented or otherwise
modified from time to time)
“Guidelines on Articles” Guidelines for Articles of Association of Listed
Companies (ˏ), as amended,
supplemented or otherwise modified from time to time,
issued by the CSRC on January 5, 2022 and effective on
the same date in place of the Mandatory Provisions for
Companies Listing Overseas ( Ցྤ̮ɪ̹ʮ̡௝೻̀௪
ૢಛ)
“H Share(s)” overseas listed foreign ordinary share(s) in the share
capital of our Company with a nominal value of
RMB1.00 each, which are to be subscribed for and traded
in Hong Kong dollars and to be listed on the Hong Kong
Stock Exchange
“H Share Registrar” Tricor Investor Services Limited
“HA VI Group” HA VI Group, LP , a global supply chain management and
marketing service provider
“HK eIPO White Form ” the application for Hong Kong Offer Shares to be issued
in the applicant’s own name, submitted online through
the designated website at www.hkeipo.hk
“HK eIPO White Form Service
Provider”
the HK eIPO White Form Service Provider designated
by our Company, as specified on the designated website
at www.hkeipo.hk
DEFINITIONS
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“HKFRS(s)” Hong Kong Financial Reporting Standards, amendments
and interpretations issued by the Hong Kong Institute of
Certified Public Accountants
“HKSCC” the Hong Kong Securities Clearing Company Limited, a
wholly owned subsidiary of Hong Kong Exchanges and
Clearing Limited
“HKSCC EIPO” the application for the Hong Kong Offer Shares to be
issued in the name of HKSCC Nominees and deposited
directly into CCASS to be credited to your or a
designated CCASS Participant’s stock account through
causing HKSCC Nominees to apply on your behalf, by
instructing your broker or custodian who is a HKSCC
Participant to give electronic application instructions via
Fini to apply for the Hong Kong Offer Shares on your
behalf
“HKSCC Nominees” HKSCC Nominees Limited, a wholly owned subsidiary
of the HKSCC
“HKSCC Operational
Procedures”
the Operational Procedures of HKSCC in relation to
CCASS, containing the practices, procedures and
administrative requirements relating to operations and
functions of CCASS, as from time to time in force
“HKSCC Participant” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the
PRC
“Hong Kong dollars” or “HK$” Hong Kong dollars and cents respectively, the lawful
currency of Hong Kong
“Hong Kong Offer Shares” the 16,150,000 H Shares being initially offered by us for
subscription pursuant to the Hong Kong Public Offering
(subject to reallocation as described in the section headed
“Structure of the Global Offering” in this prospectus)
DEFINITIONS
–3 0–


--- page 40 ---
“Hong Kong Public Offering” the offer for subscription of the Hong Kong Offer Shares
to the public in Hong Kong, on and subject to the terms
and conditions described in the section headed “Structure
of the Global Offering” in this prospectus
“Hong Kong Stock Exchange” or
“Stock Exchange”
The Stock Exchange of Hong Kong Limited, a wholly
owned subsidiary of Hong Kong Exchanges and Clearing
Limited
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering as
listed in the section headed “Underwriting” in this
prospectus
“Hong Kong Underwriting
Agreement”
the underwriting agreement dated November 18, 2024
relating to the Hong Kong Public Offering entered into
by, among others, the Company and the Overall
Coordinators (for themselves and on behalf of the Hong
Kong Underwriters)
“IASB” International Accounting Standards Board
“IFRS” the IFRS Accounting Standards, which as collective term
includes all applicable individual International Financial
Reporting Standards, International Accounting Standards
and Interpretations issued by the IASB
“IIT Law” the Individual Income Tax Law of the PRC ( ʕശɛ͏
)
“Independent Third Party(ies)” any person(s) or entity(ies) who is not a connected person
of the Company within the meaning of the Listing Rules
“International Offer Shares” the 153,850,000 H Shares being initially offered by us for
subscription under the International Offering (subject to
reallocation as described in the section headed “Structure
of the Global Offering” in this prospectus) together with
any additional Shares that may be allotted and issued
pursuant to the exercise of the Over-allotment Option
DEFINITIONS
–3 1–


--- page 41 ---
“International Offering” the conditional placing of the International Offer Shares
at the Offer Price (a) in the United States to QIBs in
reliance on Rule 144A or another available exemption
from the registration requirements of the U.S. Securities
Act and (b) outside the United States in offshore
transactions in reliance on Regulation S, in each case on
and subject to the terms and conditions described in the
section headed “Structure of the Global Offering” in this
prospectus
“International Underwriters” the underwriters of the International Offering listed in the
International Underwriting Agreement
“International Underwriting
Agreement”
the underwriting agreement relating to the International
Offering which is expected to be entered into on or
around November 25, 2024 by, among others, the
Company and the Overall Coordinators (for themselves
and on behalf of the International Underwriters)
“Joint Bookrunners” Goldman Sachs (Asia) L.L.C., Huatai Financial Holdings
(Hong Kong) Limited, J.P . Morgan Securities (Asia
Pacific) Limited (in alphabetical order) , China
International Capital Corporation Hong Kong Securities
Limited, UBS AG Hong Kong Branch (in alphabetical
order) , ABCI Capital Limited, BOCI Asia Limited, CMB
International Capital Limited, DBS Asia Capital Limited,
GF Securities (Hong Kong) Brokerage Limited and ICBC
International Securities Limited (in alphabetical order)
“Joint Global Coordinators” Goldman Sachs (Asia) L.L.C., Huatai Financial Holdings
(Hong Kong) Limited, J.P . Morgan Securities (Asia
Pacific) Limited (in alphabetical order) , China
International Capital Corporation Hong Kong Securities
Limited and UBS AG Hong Kong Branch (in
alphabetical order)
DEFINITIONS
–3 2–


--- page 42 ---
“Joint Lead Managers” Goldman Sachs (Asia) L.L.C., Huatai Financial Holdings
(Hong Kong) Limited, J.P . Morgan Securities (Asia
Pacific) Limited (in alphabetical order) , China
International Capital Corporation Hong Kong Securities
Limited, UBS AG Hong Kong Branch (in alphabetical
order) , ABCI Securities Company Limited, BOCI Asia
Limited, CMB International Capital Limited, DBS Asia
Capital Limited, GF Securities (Hong Kong) Brokerage
Limited and ICBC International Securities Limited (in
alphabetical order)
“Joint Sponsors” Goldman Sachs (Asia) L.L.C., Huatai Financial Holdings
(Hong Kong) Limited and J.P . Morgan Securities (Far
East) Limited (in alphabetical order)
“Kerry Holdings” Kerry Holdings Limited (ʮ̡), one of the
controlling shareholders of Kerry Logistics
“Kerry Logistics” Kerry Logistics Network Limited, a company listed on
the Main Board of the Stock Exchange (stock code:
0636.HK), an indirect non-wholly-owned subsidiary of
the Company
“Kerry Properties” Kerry Properties Limited (ʮ̡), a
substantial shareholder of Kerry Logistics and a company
listed on the Main Board of the Stock Exchange (stock
code: 0683.HK)
“KEX Thailand” KEX Express (Thailand) Public Company Limited, a
company listed on the Stock Exchange of Thailand (stock
code: KEX.BK)
“Latest Practicable Date” November 10, 2024, being the latest practicable date for
the purpose of ascertaining certain information contained
in this prospectus prior to its publication
“Listing” listing of the H Shares on the Main Board of the Stock
Exchange
“Listing Committee” the listing committee of the Hong Kong Stock Exchange
DEFINITIONS
–3 3–


--- page 43 ---
“Listing Date” the date, expected to be on or about Wednesday,
November 27, 2024, on which the H Shares are listed and
on which dealings in the H Shares are first permitted to
commence on the Hong Kong Stock Exchange
“Listing Rules” or “Hong Kong
Listing Rules”
the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited (as amended,
supplemented or otherwise modified from time to time)
“Macau” the Macau Special Administrative Region of the People’s
Republic of China
“Main Board” the stock exchange (excluding the option market)
operated by the Hong Kong Stock Exchange which is
independent from and operates in parallel with the GEM
of the Hong Kong Stock Exchange
“Material Asset Restructuring” the material asset restructuring arrangements carried out
by our Company and completed in December 2016, see
“History, Development and Corporate Structure — Major
Share Capital Changes of our Company — Material Asset
Restructuring in 2016 and our A Share Listing on the
SZSE in 2017” in this prospectus for further details
“Material Asset Swap and Share
Subscription Agreement”
an agreement entered into by the then-shareholders of SF
Holding (Group), Dingtai New Materials, LIU Jilu and
LIU Lingyun in June 2016 to implement the Material
Asset Restructuring
“Measures for the Administration
of Equity Incentives of Listed
Companies”
Measures for the Administration of Equity Incentives
of Listed Companies (ج)
published on July 13, 2016 and amended on August 15,
2018 by the CSRC
“MIIT” the Ministry of Industry and Information Technology of
the PRC (ʷ௅)
“Mingde Holding” Shenzhen Mingde Holding Development Co., Ltd.* ( ଉέ
ʮ̡), a limited liability company
established under the laws of the PRC on November 5,
1997, one of our Controlling Shareholders and owned
directly as to 99.90% by Mr. Wang and as to 0.1% by Mr.
Lin Zheying as of the Latest Practicable Date
DEFINITIONS
–3 4–


--- page 44 ---
“Mingde Holding Group” Mingde Holding and its subsidiaries
“MOF” Ministry of Finance of the PRC (௅)
“MOFCOM” Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷ਠਕ
௅)
“Mr. Wang” Mr. W ANG Wei, chairman of our Board, an executive
Director, general manager of our Company and one of our
Controlling Shareholders
“NAFR” National Administration of Financial Regulation of the
PRC (ፄ္ຖ၍ଣᐼ҅) (which
was established on the basis of the China Banking and
Insurance Regulatory Commission (ᎈ္ຖ၍
ึ))
“NDRC” the National Development and Reform Commission of
the PRC (ึ)
“Nomination Committee” the nomination committee of the Board
“Offer Price” the final offer price per Offer Share (exclusive of
brokerage fee of 1.0%, SFC transaction levy of 0.0027%,
Hong Kong Stock Exchange trading fee of 0.00565% and
AFRC transaction levy of 0.00015%) at which the Offer
Shares are to be subscribed for and issued pursuant to the
Global Offering as described in the section headed
“Structure of the Global Offering” in this prospectus
“Offer Shares” the Hong Kong Offer Shares and the International Offer
Shares, together with, where relevant, any additional H
Shares which may be issued by our Company pursuant to
the exercise of the Over-allotment Option
“Over-allotment Option” the option to be granted by us to the International
Underwriters exercisable by the Overall Coordinators (on
behalf of the International Underwriters) under the
International Underwriting Agreement, to require our
Company to allot and issue up to an aggregate of
25,500,000 additional H Shares at the Offer Price,
representing 15% of the total number of Offer Shares
initially available under the Global Offering to, among
others, cover over-allocations in the International
Offering, if any; for further details, see “Structure of the
Global Offering” in this prospectus
DEFINITIONS
–3 5–


--- page 45 ---
“Overall Coordinators” the overall coordinators of the listing of the H Shares on
the Hong Kong Stock Exchange as named in “Directors,
Supervisors and Parties Involved in the Global Offering”
“Overseas Listing Trial
Measures”
The Trial Measures for the Administration on Overseas
Securities Offering and Listing by Domestic
Companies ( ྤʫΆุྤ̮೯БᗇՎձɪ̹၍ଣ༊Б፬
) promulgated by the CSRC on February 17, 2023
and became effective on March 31, 2023
“PBOC” the People’s Bank of China ( ʕ਷ɛ͏ვБ), the central
bank of the PRC
“PRC Company Law” the Company Law of the People’s Republic of China ( ʕ
ج)
PRC Data Compliance Legal
Adviser”
Grandall Law Firm (Beijing), the legal adviser to our
Company as to PRC data compliance laws
“PRC GAAP” Generally accepted accounting principles of the PRC
“PRC Government” the central government of the PRC and all governmental
subdivisions (including provincial, municipal and other
regional or local government entities) and
instrumentalities thereof or, where the context requires,
any of them
“PRC Legal Adviser” CM Law Firm, the PRC legal adviser to our Company
“Price Determination Agreement” the agreement to be entered into between our Company
and the Overall Coordinators on behalf of the
Underwriters on the Price Determination Date to record
and fix the Offer Price
“Price Determination Date” the date, expected to be on or about Monday, November
25, 2024 on which the Offer Price is to be fixed by
agreement between our Company and the Overall
Coordinators (on behalf of the Underwriters)
“prospectus” this prospectus being issued in connection with the Hong
Kong Public Offering
“Qualified Institutional Buyers”
or “QIBs”
qualified institutional buyers within the meaning of Rule
144A
DEFINITIONS
–3 6–


--- page 46 ---
“Regulation S” Regulation S under the U.S. Securities Act
“Relevant Persons” the Joint Sponsors, the Overall Coordinators, the Joint
Global Coordinators, the Joint Bookrunners, the Joint
Lead Managers, the Underwriters, the Capital Market
Intermediaries, any of their or the Company’s respective
directors, officers, employees, partners, agents, advisers
and any other parties involved in the Global Offering
“Remuneration Committee” the remuneration committee of the Board
“RMB” or “Renminbi” Renminbi, the lawful currency of the PRC
“Rule 144A” Rule 144A under the U.S. Securities Act
“SAFE” the State Administration of Foreign Exchange of the PRC
(ʕശɛ͏΍ձ਷̮ි၍ଣ҅)
“SAIC” the State Administration of Industry and Commerce
of the PRC (၍ଣᐼ҅),
currently known as the SAMR
“SAMR” the State Administration for Market Regulation of the
PRC (̹ఙ္ຖ၍ଣᐼ҅)
“SA T” the State Administration of Taxation of the PRC ( ʕശɛ
೼ਕᐼ҅)
“Securities and Futures
Commission” or “SFC”
the Securities and Futures Commission of Hong Kong
“Securities Law” the Securities Law of the PRC (ج,)
as amended, supplemented or otherwise modified from
time to time
“SF Express” S.F. Express Co., Ltd.* (ʮ̡), an indirect
wholly-owned subsidiary of the Company
“SF Express (Group)” SF Express (Group) Limited* ( නᔮ஺༶(ණྠ)ʮ̡),
the predecessor of Mingde Holding
“SF Holding (Group)” SF Holding (Group) Co., Limited* (ٰ(ණྠ)΅
ʮ̡), the predecessor of SF Taisen
DEFINITIONS
–3 7–


--- page 47 ---
“SF Holding (HK)” SF Holding (HK) Limited (ٰ(ಥ)ʮ̡), an
indirect wholly-owned subsidiary of the Company,
formerly known as SF Holding Limited (ʮ
̡)
“SF Intra-city” or “Intra-city
Industrial”
Hangzhou SF Intra-city Industrial Co., Ltd. (ψනᔮΝ
ʮ̡), a company listed on the Main
Board of the Stock Exchange (9699.HK), an indirect
non-wholly owned subsidiary of the Company
“SF REIT” SF Real Estate Investment Trust, listed on the Main
Board of the Stock Exchange (2191.HK), is an associate
of the Company
“SF Taisen” Shenzhen S.F. Taisen Holding (Group) Co., Ltd.* ( ଉέ
ٰ(ණྠ)ʮ̡), previously known as SF
Holding (Group) Co., Limited* (ٰ(ණྠ)΅Ϟ
ʮ̡), a direct wholly-owned subsidiary of the
Company
“SF Technology” SF Technology Co., Ltd.* (ʮ̡), an
indirect wholly-owned subsidiary of the Company
“SFO” the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended, supplemented or
otherwise modified from time to time
“Share(s)” ordinary share(s) in the capital of our Company with a
nominal value of RMB1.00 each, including both A Shares
and H Shares
“Shareholder(s)” holder(s) of the Share(s)
“Shenzhen Fengchi” Shenzhen Fengchi Shunxing Information Technology
Co., Ltd.* (ʮ̡), an
indirect wholly-owned subsidiary of the Company
“Shenzhen SF Cold Chain” Shenzhen SF Cold Chain Co., Ltd.* (ࠢ
ʮ̡), an indirect wholly-owned subsidiary of the
Company
“Shenzhen Shunlu” Shenzhen Shunlu Logistics Co., Ltd.* (Ϟ
ʮ̡), an indirect wholly-owned subsidiary of the
Company
DEFINITIONS
–3 8–


--- page 48 ---
“Shenzhen Weishun” Shenzhen Weishun Enterprise Management Co., Ltd.*
(ʮ̡), a limited liability
company established under the laws of the PRC on
January 31, 2023, one of our Controlling Shareholders
and owned as to 100% by Mingde Holding as of the
Latest Practicable Date
“Stabilizing Manager” J.P . Morgan Securities (Asia Pacific) Limited
“State Council” the State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫)
“State Post Bureau” the State Post Bureau of the PRC (࢕
҅)
“subsidiary(ies)” has the meaning ascribed thereto under the Listing Rules
“substantial shareholder(s)” has the meaning ascribed thereto under the Listing Rules
“Supervisor(s)” member(s) of the Board of Supervisors
“SZSE” Shenzhen Stock Exchange
“Taihai Investment” Shenzhen Taihai Investment Limited* ( ଉέ̹इऎҳ༟
ʮ̡), the predecessor of SF Holding (Group) and
SF Taisen
“Takeovers Code” or “Hong
Kong Takeovers Code”
the Codes on Takeovers and Mergers and Share Buybacks
issued by the SFC, as amended, supplemented or
otherwise modified from time to time
“Track Record Period” the financial years ended December 31, 2021, 2022 and
2023 and the six months ended June 30, 2024
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
“United States” or “U.S.” the United States of America, its territories and
possessions, any State of the United States, and the
District of Columbia
DEFINITIONS
–3 9–


--- page 49 ---
“UPS” United Parcel Service, a global leading logistics service
provider
“U.S. dollars”, “US$” or “USD” United States dollars, the lawful currency of the United
States
“U.S. Securities Act” the U.S. Securities Act of 1933, as amended,
supplemented or otherwise modified from time to time,
and the rules and regulations promulgated thereunder
“V A T” value-added tax
For ease of reference, the names of PRC laws and regulations, governmental authorities,
institutions, nature persons or other entities (including our subsidiaries) have been included in
this prospectus in both the Chinese and English languages and in the event of any
inconsistency, the Chinese versions shall prevail.
* For identification purpose only
DEFINITIONS
–4 0–


--- page 50 ---
This glossary of technical terms contains explanations of certain technical terms
used in this prospectus in connection with our Company and our business. Such
terminology and meanings may not correspond to standard industry meanings or usages
of those terms.
“1-to-n growth strategy” our growth and expansion strategy that leverages our
time-definite express delivery service as the bedrock to
incubate new service offerings, enter adjacent logistics
segments, and further complement our integrated
capabilities
“3C electronics” computer, communication, and consumer electronics
“App” application software designed to run on smartphones and
other mobile devices
“ASEAN” Association of Southeast Asian Nations, including
Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar,
the Philippines, Singapore, Thailand and Vietnam
“B2B” business to business
“B2C” business to customer
“C2C” customer to customer
“CAGR” compound annual growth rate
“consolidated air freight
services”
grouping together of smaller consignments of goods into
a large consignment for carriage as a larger unit in order
to obtain a favorable rate through various airlines to
various destinations
“customers with active credit
accounts”
customers that have a credit account with us and
transacted with us within the most recent one-month
period, among which substantially all are business
accounts
“customs brokerage” the services of handling customs clearance and other
customs-related services for importers and exporters by
customs brokers
GLOSSARY OF TECHNICAL TERMS
–4 1–


--- page 51 ---
“customs clearance” the process of clearing imports and exports through
customs
“dividend payout ratio” calculated as our dividends paid in respect of a financial
year divided by the profit attributable to owners of our
Company for the same year, expressed as a percentage
“Double Eleven” one of the largest online shopping festivals in China in
November
“e-waybill” electronic waybill, a digital document that contains
essential information of a delivery, such as origin,
destination and contents
“Ezhou cargo hub” the cargo hub located in Ezhou, Hubei Province, which
mainly comprises of Ezhou Huahu International Airport
and our logistics complex
“Ezhou Huahu International
Airport”
a cargo-focused airport located in Ezhou, Hubei
Province, in which we hold a minority interest
“FCL” full container load, measuring cargo in the required
maximum quantity for the application of a container load
rate
“first-mile pickup” initial collection of a parcel and transport to the local
pickup outlet
“freight forwarding” professional intermediary services for enterprises to
ensure efficient connection along the logistics chain and
smooth international transportation, which mainly
include goods transportation, logistics related
documentation and customs clearance
“FTL” full truckload, the transportation of goods that requires a
full truckload
“global top four integrated
logistics service providers”
top four integrated logistics service providers globally in
terms of revenue in 2022, according to Frost & Sullivan
“handheld terminal” a portable electronic device used by couriers to collect
and transmit data relating to delivery and tracking, which
is often equipped with barcode scanners and wireless
communication capabilities to facilitate real-time
information flow
GLOSSARY OF TECHNICAL TERMS
–4 2–


--- page 52 ---
“integrated logistics service
providers”
logistics service providers that offer a full spectrum of
domestic and international logistics services, including
but not limited to, express delivery services, freight
delivery services, cold chain logistics services, intra-city
on-demand delivery services, supply chain services and
international logistics services, and provide one-stop
solutions to multinationals, large corporations, small and
medium enterprises and retail customers
“IoT” Internet of things, the collective network of connected
devices and the technology that facilitates
communication between devices and the cloud, as well as
between devices themselves
“IT” information technology
“IVD” in vitro diagnostics
“kWh” kilowatt-hour, a measure of electrical energy equivalent
to a power consumption of one thousand watts for one
hour
“last-mile delivery” transportation of a parcel from the local pickup outlet to
the final delivery destination
“LCL” less than container load, measuring cargo in a quantity
less than required for the application of a container load
rate
“logistics” a comprehensive, system-wide view of the entire supply
chain as a single process, from raw materials supply
through finished goods distribution. All functions that
make up the supply chain are managed as a single entity,
rather than managing individual functions separately
“logistics complex” ultra-large warehouse, sorting and transit hub, integrating
diverse logistics operations
“LTL” less-than-truckload, the transportation of goods that do
not require a full truckload
“parcel volume” the number of parcels processed in a given period
GLOSSARY OF TECHNICAL TERMS
–4 3–


--- page 53 ---
“registered merchants” the accumulated merchant accounts on SF Intra-City
platform
“retail customer(s)” registered user(s) on our mobile application and WeChat
Mini-Program, among which substantially all are
individual accounts
“reverse logistics” logistics services that manage the movement of goods
from consumers back to manufacturers or sellers,
generally for purposes including returns, recycling, or
repairs
“SaaS” abbreviation for Software as a Service, a business
delivery model in which software is licensed on a
subscription basis and is centrally hosted
“sorting center” transshipping and operating centers that connect
transportation resources including that for centralized
parcel sorting, distribution and transshipment
“Southeast Asia” a subregion of Asia that consists of 11 countries: Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand, Timor-Leste, and
Vietnam
“supply chain” a complex logistics system that consists of facilities that
convert raw materials into finished products and
distribute them to end consumers
“TEU” twenty-foot equivalent unit, a standard unit of
measurement of the volume of a container with a length
of 20 feet, height of eight feet six inches and width of
eight feet
“Tongda Operators” the five express delivery service providers who utilize the
“network partner model” in China, namely ZTO Express
(Cayman) Inc.* ( ʕஷҞ჈(කਟ)ʮ̡) (2057.HK,
ZTO.NYSE), YUNDA Holding Co., Ltd.* (΅
ʮ̡) (002120.SZ), YTO Express Group Co., Ltd.*
(ʮ̡) (600233.SH), STO Express
Co., Ltd. *(ʮ̡) (002468.SZ) and
J&T Global Express Limited (1519.HK)
GLOSSARY OF TECHNICAL TERMS
–4 4–


--- page 54 ---
We have included in this prospectus forward-looking statements. Statements that are
not historical facts, including statements about our intentions, beliefs, expectations or
predictions for the future, are forward-looking statements.
This prospectus contains certain forward-looking statements relating to our Company, our
subsidiaries and consolidated affiliated entities that are based on the beliefs of our management
as well as assumptions made by and information currently available to our management. When
used in this prospectus, the words “aim”, “anticipate”, “believe”, “could”, “expect”, “going
forward”, “intend”, “may”, “ought to”, “plan”, “project”, “seek”, “should”, “will”, “would”
and the negative of these words and other similar expressions, as they relate to our Group or
our management, are intended to identify forward-looking statements. Such statements reflect
the current views of our management with respect to future events, operations, liquidity and
capital resources, some of which may not materialize or may change. These statements are
subject to certain risks, uncertainties and assumptions, including the other risk factors as
described in this prospectus. Y ou are strongly cautioned that reliance on any forward-looking
statements involves known and unknown risks and uncertainties. The risks, uncertainties and
other factors facing our Group which could affect the accuracy of forward-looking statements
include, but are not limited to, the following:
 changes in the macro environment, regional and global economy, as well as industry
trends related to our operations;
 our ability to successfully implement our business plans, strategies, objectives and
goals;
 our ability to obtain adequate capital resources to fund future development plans;
 our ability to control costs, as well as to achieve and maintain operational efficiency;
 changes in our customers’ demands and expectations;
 changes in the competitive landscape of the industries where we operate;
 our ability to protect our reputation and brand image, as well as trademarks,
technologies, knowhow, patents and other intellectual property rights;
 changes in local economic and political conditions and changes in compliance with
international laws and regulations in the countries and regions where we operate;
 developments in technology and our ability to successfully keep up with
technological advancement;
FORW ARD-LOOKING STATEMENTS
–4 5–


--- page 55 ---
 our ability to attract and retain experienced professionals and other qualified
employees and key personnel;
 changes in currency exchange rates; and
 the other risk factors discussed in this prospectus as well as other factors beyond our
control.
The forward-looking statements are based on our current plans and estimates and speak
only as of the date they were made. Nonetheless, due to the risks, uncertainties and
assumptions, the forward-looking events and circumstances discussed in this prospectus might
not occur in the way we expect, or at all. Further, subject to the requirements of applicable
laws, rules and regulations, we do not have any and undertake no obligation to update or
otherwise revise the forward-looking statements in this prospectus, whether as a result of new
information, future events or otherwise.
Accordingly, you should not place undue reliance on any forward-looking statements in
this prospectus. All forward-looking statements contained in this prospectus are qualified by
reference to this cautionary statement.
FORW ARD-LOOKING STATEMENTS
–4 6–


--- page 56 ---
An investment in our H Shares involves significant risks. You should carefully
consider all of the information in this prospectus, including the risks and uncertainties
described below, before making an investment in our H Shares. The following is a
description of what we consider to be our material risks. Any of the following risks could
have a material and adverse effect on our business, financial condition and results of
operations. In any such case, the market price of our H Shares could decline, and you
may lose all or part of your investment. These factors are contingencies that may or may
not occur , and we are not in a position to express a view on the likelihood of any such
contingency occurring. The information given is as of the Latest Practicable Date unless
otherwise stated, will not be updated after the date hereof, and is subject to the
cautionary statements in the section titled “Forward-Looking Statements” of this
prospectus.
We believe there are certain risks and uncertainties involved in our business operations,
some of which are beyond our control. We have categorized these risks and uncertainties into:
(i) risks relating to our business and industry, (ii) risks relating to doing business in the
countries and regions where we operate, and (iii) risks relating to the Global Offering. Y ou
should consider our business and prospects in light of the challenges we face, including the
ones discussed in this section.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
Our business and growth are materially affected by macroeconomic and other factors that
affect demand for logistics services in the countries and regions where we operate.
We offer integrated logistics services to meet our customers’ needs globally. As such, our
business depends on the continued development of commercial activities in the countries and
regions where we operate. Prospects of commercial activities in the countries and regions
where we operate are subject to the influence of a number of macroeconomic and other factors
that are beyond our control, such as economic conditions, consumption power and disposable
income of consumers, urbanization, inflation, currency and interest rate fluctuations, labor
supply, development and deployment of technology, government policies as well as political
issues, including potential military conflicts, political turmoil and social instability. If
commercial activities in the countries and regions where we operate do not develop as we
expect, our business and prospects could be adversely impacted.
Further, the logistics industry is highly sensitive to changes in macroeconomic conditions.
During economic downturns in the countries and regions where we operate, reduced overall
demand for logistics services will likely exert downward pressures on our service prices and
margins. On the other hand, in periods of strong economic growth, demand for limited
transportation resources can also lead to increased network congestion and operating
inefficiency. In addition, as the logistics industry is labor-intensive, it could be difficult for us
to match our staffing levels to our evolving business needs, in particular during labor shortages
resulting from changes in macroeconomic conditions. Moreover, as our directly operated
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model is capital intensive and we have significant investments in assets, we may not be able
to nimbly adjust our logistics infrastructure and networks in response to fluctuations in
demand. If any of the foregoing risks were to occur or persist, our business, financial condition
and results of operations could be materially and adversely affected.
Any service disruption of our ground fleet, air cargo fleet, sorting centers, warehouses or
service outlets may adversely affect our business operations.
Our daily operations heavily rely on the orderly performance of our ground fleet, air cargo
fleet, sorting centers, warehouses and service outlets. Any service disruption due to weather
conditions, a failure in our automated facilities, under-capacity during peak parcel volume
periods, force majeure events, third-party sabotage, employee delinquency or strike,
governmental inspections of properties or governmental orders that mandate any service halt
or temporary or permanent shutdown could adversely impact our business operations. In case
of any service disruption to our ground fleet and air cargo fleet, parcels will need to be
redirected to other flights or transported by other methods, and such re-routing of parcels will
likely increase transportation costs, risks of delay and errors in delivery. In case of any service
disruptions at our sorting centers, warehouses or service outlets, parcel sorting or parcel pickup
and delivery at the affected sites may be delayed, suspended or stopped. Parcels will need to
be redirected to other nearby sorting centers, warehouses or service outlets, and such re-routing
of parcels will likely increase risks of delay and errors in delivery. At the same time, increased
parcel sorting or pickup and delivery pressure on nearby sorting centers, warehouses or service
outlets may negatively affect our performance, incur additional costs and spread adverse
effects further across our network. Any of the foregoing events may result in operational
interruptions and slowdowns, customer complaints and reputational damage.
We may encounter challenges in managing the expansion of our logistics infrastructure
and networks, which, if not dealt with effectively, could materially and adversely affect
our business, results of operations, financial condition and growth prospects.
Deeply rooted in the logistics services industry for 31 years, we have established an
efficient, reliable and synergistic logistics infrastructure network with extensive geographical
coverage globally, integrating aviation, ground and information networks into one unified
service network. As we continue to add logistics and warehouse capability, our logistics
network becomes increasingly complex and challenging to operate. We cannot assure you that
we will be able to set up logistics infrastructure or lease suitable facilities on commercially
acceptable terms, or at all. Moreover, any new additions to our logistics infrastructure and
networks might not create additional revenue streams as expected, or operate in a cost-efficient
manner. We may not be able to recruit a sufficient number of qualified employees in connection
with the expansion of our logistics infrastructure. In addition, the expansion of our logistics
infrastructure may strain our managerial, financial, operational and other resources. The
foregoing and other challenges, if not dealt with effectively, could materially and adversely
affect our growth potential, business, financial condition and results of operations. Even if we
manage the expansion of our logistics infrastructure successfully, it may not give us the
competitive advantage that we expect.
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Our historical results of operations and financial performance may not be indicative of
our future growth.
We have achieved high-quality and sustainable growth during the Track Record Period.
Our revenue increased from RMB207.2 billion in 2021 to RMB258.4 billion in 2023,
representing a CAGR of 11.7%; our revenue also increased by 8.1% from RMB124.4 billion
for the six months ended June 30, 2023 to RMB134.4 billion for the same period in 2024. Our
profit for the year attributable to owners of our Company was RMB4.7 billion, RMB6.2 billion
and RMB8.2 billion in 2021, 2022 and 2023, respectively, representing a CAGR of 31.9% from
2021; our profit for the period attributable to owners of our Company also increased by 15.1%
from RMB4.2 billion for the six months ended June 30, 2023 to RMB4.8 billion for the same
period in 2024. Our EBITDA (non-IFRS measure) increased from RMB21.8 billion in 2021 to
RMB29.4 billion in 2023, representing a CAGR of 16.3%; our EBITDA (non-IFRS measure)
also increased by 8.2% from RMB14.7 billion for the six months ended June 30, 2023 to
RMB15.9 billion for the same period in 2024. However, our historical results of operations and
financial performance may not be indicative of future growth. As the market and our business
evolve, we may modify our operations, data and technology, sales and marketing, solutions and
services. These changes may not achieve expected results and may have a material and adverse
impact on our results of operations and financial condition. Our expenses may grow faster than
our revenue, and our expenses may increase or may be greater than we expected. We cannot
assure you that we will be able to achieve similar results or grow at the same speed as we did
in the past or at all. Rather than relying on our historical operating and financial results to
evaluate us, you should consider our business prospects in light of the risks and difficulties we
may encounter as a company operating in emerging markets and dynamic industries, including,
among other factors, (i) macroeconomic and other factors that affect logistics markets in the
countries and regions where we operate, (ii) our ability to expand our customer base, and to
retain and grow the wallet share of our existing customers, (iii) our ability to maintain and
expand our logistics infrastructure and networks, (iv) our ability to management and further
improve operational efficiency, and (v) our ability to execute acquisitions and investments, as
well as successful integration. We may not be able to successfully address these or other
challenges, which could adversely impact our business, results of operations and financial
condition.
Our continuing success depends in significant part on our ability to meet evolving
customer demands and expectations, as well as our ability to attract and retain customers.
Our continuing success depends in significant part on our ability to continually innovate
in response to intense market competition and evolving customer demands and expectations.
We may not be able to successfully address evolving customer demands, and our existing
logistics infrastructure and network may not be adaptable enough to accommodate new
demands and expectations. We may not be able to respond to challenges swiftly and effectively
due to numerous factors, some of which are beyond our control. In addition, innovations may
not succeed or integrate well with our existing systems and infrastructure, and even if
integrated, may not function as expected or may not be able to enhance our operational
efficiency and competitiveness, or reduce our operational costs. Any failure on our part to
respond swiftly and effectively to changes in market competition or customer demands may
materially and adversely affect our business, financial condition and results of operations.
Our success also depends in part on our ability to attract and retain new customers and
enhance engagement with existing customers by providing distinctive and premium services in
a cost-effective manner. During the Track Record Period, we were successful in increasing our
cooperation with existing customers. We believe that our effective marketing strategies,
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distinctive and premium services, and nimble responses to evolving customer demands have
been critical in promoting our services and brand recognition, which in turn drive customer
growth and engagement. While we currently believe we can achieve further growth through,
among other things, further penetration and expansion of our customer base, we may not be
able to effectively and successfully implement our plans and realize our goals. If our marketing
strategies do not work efficiently, we may not be able to maintain our selling and marketing
expenses at a reasonable level. In addition, if customers do not perceive our services and
solutions to be distinctive and premium, we may not be able to attract and retain customers and
increase their use of our services and solutions. In addition, we may fail to further diversify our
service offerings, pursue new business opportunities, or otherwise achieve further business
growth. Any of the aforementioned failures could materially and adversely affect our business,
financial condition and results of operations.
Competition in the industries where we operate is intense, and any failure to compete
effectively could adversely affect our customer base, profitability and market share.
The industries where we operate are highly fragmented and competitive. Our integrated
logistics services encompass a wide range of services, and as a result we primarily compete
with (i) other global integrated logistics service providers; (ii) other China-based integrated
logistics service providers; and (iii) single product logistics service providers. In addition to
multiple existing market players, there may be new entrants emerging in each of the industries
where we operate. We compete with them based on a number of factors, such as services
quality, service price, business model, operational capabilities and cost control. If we cannot
adjust our operating strategies and take effective countermeasures in a timely manner in
response to market changes, our business growth rate may slow down, and our market share
and profitability may decline.
Any significant increase in competition may have a material adverse effect on our revenue
and profitability as well as on our business and prospects. We cannot assure you that we will
be able to continuously distinguish our services from those of our competitors, to preserve and
improve our relationships with various participants in the logistics industry, or to increase or
even maintain our existing market share. We may lose market share, and our financial condition
and results of operations may deteriorate if we fail to compete effectively.
Furthermore, as we diversify our service offerings and further expand our customer base
in the logistics markets in China, Asia and globally, we may face competition from existing or
new players in those markets. Similarly, existing players in an adjacent or sub-market may
choose to enter into alliances with other transportation or logistics service providers, leverage
their existing infrastructure and expand their services to penetrate into our business or serve
our existing or potential customers. If these players succeed in doing so, our business could be
adversely affected.
Certain of our current and potential competitors may have greater resources, longer
operating histories, larger customer bases and greater brand recognition than us. They may be
acquired by, receive investment from or enter into strategic relationships with, established and
well-financed companies or investors that could help enhance such competitors’
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competitiveness. Some of our competitors in China, across Asia or globally may adopt more
aggressive pricing policies than we do. Accordingly, if we cannot effectively control our costs
to remain competitive, our market share and revenue may decline. Further, our competitors
may make more sizable investment or capital expenditure or devote greater resources to
marketing and promotional campaigns than we do. We may not be able to compete successfully
against current or future competitors, and competitive pressures may have a material and
adverse effect on our business, financial condition and results of operations.
We may face challenges associated with expanding or diversifying our service offerings
and exploring new business.
During the Track Record Period, we have further diversified our service offerings, such
as through the expansion of our time-definite express service offerings. New service offerings
or new lines of business may involve risks and challenges we do not currently face. Such new
initiatives may require us to devote significant financial and managerial resources and may not
perform as well as expected. Our existing logistics infrastructure and network may not be
adaptable to new service offerings or new business. For example, our different service
offerings may require different deployment of logistics infrastructure and network, different
services standards, which in turn may require significant time and costs to implement. We may
also be inexperienced with the operating models and cost structures associated with new
service offerings or new lines of business. In addition, we may not be able to assure adequate
service quality, and accordingly may receive complaints or costly liability claims, which would
harm our overall reputation and financial performance. Further, we may not be able to achieve
profitability or recoup our investments with respect to any new service offerings or new lines
of business in time, or at all.
If our customers reduce their expenditure in third-party logistics services, our business,
financial condition and results of operations may be adversely affected.
As an integrated logistics service provider, our business strategies are partially based on
the assumption that the trend toward outsourcing of logistics and supply chain activities will
continue. Third-party service providers like us are generally able to provide logistics services
more efficiently than otherwise could be provided “in-house,” primarily as a result of our
expertise, technology and cost efficiency. However, many factors could cause a trend reversal.
For example, our customers may see risks in relying on third-party service providers, or they
may begin to define logistics and supply chain activities as within their own core competencies
and decide to perform logistics and supply chain operations themselves. If our customers are
able to improve the capabilities and cost structure of their in-house logistics and supply chain
activities, our logistics services may not be deemed as an attractive alternative meeting our
customers’ demands. If our customers in-source significant aspects of their logistics and supply
chain operations, or if potential new customers decide to continue to perform their own
logistics and supply chain activities, our business, financial condition and results of operations
may be materially and adversely affected.
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Our business model involves substantial capital expenditures, which may not generate
returns or achieve intended economic benefits in the short term, or at all.
Our business model involves substantial capital expenditures, including expenditures on
purchases of aircraft and equipment, as well as construction of warehouses, sorting centers and
industrial parks in connection with the growth of our business. As the leading Asia-based
integrated logistics service provider with a directly operated model, we enjoy greater control
over and stability from our network. However, the directly operated model requires us to incur
higher capital expenditures than our competitors who rely more on a franchising model.
Substantial capital expenditures are associated with certain inherent risks. The amount
and timing of capital expenditures depend on various factors, including, among other things,
the projected growth in our parcel volume. We must estimate our parcel volume and the
corresponding requirements for logistics infrastructure and network, and make capital
commitments for aircraft and other assets based on these projections years before they are
actually needed. Missing our projections could result in too much or too little capacity relative
to our parcel volume. Over-capacity could lead to asset dispositions, as well as a negatively
impact on our operating margins, while under-capacity could negatively impact service levels.
In addition, as a result of the high capital intensity and uncertainties inherent to our projections
of future capital investment requirements under our directly operated model, we may be slower
in expanding our logistics infrastructure and network in response to changing market demand
than our competitors who rely more on a franchising model. As a result, we may lose market
share or business opportunities to our competitors, and our business, financial condition and
results of operations may be materially and adversely affected.
We have historically funded our capital expenditures primarily with cash generated from
our operating activities, and proceeds from external debts and other fundraising activities. We
cannot assure you that these sources of financing will be sufficient to fund our expansion plans.
Our access to external funding is subject to various factors that are beyond our control,
including market conditions, government approval, credit supply and interest rates. If we are
unable to secure sufficient external funds to finance our capital investments, our business,
financial condition and results of operations could be materially and adversely affected.
Even if we have sufficient funding, assets that best suit our needs may not be available
at reasonable prices, or at all. For example, due to local zoning plans or other regulatory
requirements, land resources may be scarce in an area that best fits our network expansion plan.
In addition, we are likely to incur capital expenditures earlier than the realization of any of the
anticipated benefits, and the return on these investments may be lower, or may be realized more
slowly, than we expected. Although our capital investments may not generate any return in the
short term, we will still incur financing and other costs on the capital investments, which may
materially and adversely affect our business, operation results, financial condition and growth
prospects. Moreover, actual costs of our capital projects may exceed our original budgets. Due
to project delays, cost overruns, market fluctuations or other unexpected circumstances, we
may not be able to achieve the intended economic benefits or maintain commercial viability of
these projects, which in turn may materially and adversely affect our business, results of
operations, financial condition and growth prospects. In addition, carrying value of the related
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assets may be subject to impairment, which may adversely affect our financial conditions and
results of operations. Furthermore, our continued investment in land, construction and delivery
infrastructure may put us at a competitive disadvantage against competitors who spend less on
these assets but focus more on improving other aspects of their business that are less capital
intensive.
There is no assurance that we could successfully enter into necessary or desirable
strategic alliances, acquisitions or minority investments, and we may not be able to
achieve the anticipated benefits from the strategic alliances, acquisitions or minority
investments that we make.
We may evaluate and consider strategic investments and acquisitions or enter into
strategic alliances to implement our development strategies, such as expanding the breadth and
depth of our service matrix, and enhance our competitive advantages. Investments or
acquisitions involve numerous risks, including but not limited to: (i) potential failure to
achieve the expected results of the integration or acquisition; (ii) difficulties in, and the cost
of, integrating operations, technologies, services and personnel; and (iii) potential write-offs of
acquired assets or investments. These transactions will also divert the management’s time and
resources from our normal course of operations, and we may have to incur unexpected
liabilities or expenses. Strategic alliances with third parties, on the other hand, could subject
us to a number of risks, including risks associated with non-performance by the counterparty
and an increase in expenses in establishing new strategic alliances, any of which could
materially and adversely affect our business.
We have historically expanded our businesses in part through acquisitions, and we may
continue to pursue suitable acquisition opportunities to implement our strategies. For instance,
we acquired a 51.5% equity interest in Kerry Logistics in September 2021 to further enhance
the strategic layout of our freight forwarding and international business. However, the
integration of newly acquired businesses may be costly and time-consuming, and each
acquisition could present us with risks and challenges in various respects, including but not
limited to:
 integrating the operations and personnel of the acquired businesses and information
systems, procedures and policies;
 retaining relationships with key employees, customers, business partners and
suppliers of the acquired businesses;
 successfully entering a business segment or geographic market in which we have
limited prior experience;
 achieving the anticipated synergies and strategic or financial benefits from the
acquisitions; and
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 addressing the economic, political, regulatory and foreign exchange risks associated
with the relevant jurisdictions where the acquired businesses are located.
Our business, financial condition and results of operations could be materially and
adversely affected if we are unable to integrate, or benefit from, the acquired businesses.
In addition, we have acquired, and may continue to acquire, non-controlling interests in
companies operating as our associates. As we do not control their operational and financial
policies, it is uncertain whether we will be able to achieve the intended objectives or benefits
of those minority investments. As a result, we cannot assure you that any of our historical or
future acquisitions or investments will be successful.
Our business, financial condition and results of operations could be adversely affected if
we experience any negative publicity that results in severe damage to our brand image or
reputation.
We believe that our brand image and corporate reputation plays an increasingly important
role in enhancing our competitiveness and maintaining our business growth. Our ability to
manage our brand image depends on whether we could successfully provide distinctive and
premium services to our customers, conduct marketing activities, and manage complaints and
events of negative publicity, including those associated with or from our franchisees, and
maintain positive perception of us. Furthermore, many other factors, some of which are beyond
our control, may negatively impact our brand image and corporate reputation if not properly
managed. Service quality issues, actual or perceived, even when false or unfounded, could
tarnish the image of our brand and may cause customers to use other companies. Also, adverse
publicity surrounding labor relations, environmental concerns, security matters and the like, or
attempts to connect us to these sorts of issues, in the countries and regions where we operate,
could negatively affect our overall reputation and acceptance of our services by customers.
Damage to our reputation and loss of brand equity could reduce demand for our services and
thus have an adverse effect on our business, financial condition and results of operations, and
could require additional resources to rebuild our reputation and restore the value of our brand.
In addition, our brand image or reputation may be materially and adversely affected by
adverse news, scandals or other incidents associated with the logistics industry. Incidents that
cast doubt on the safety of cargo and parcels or the safety of delivery personnel in the logistics
industry, including incidents involving our competitors, have been, and may continue to be,
subject to media attention and widespread coverage. Such incidents may damage the reputation
of not only the parties involved, but also the logistics industry in general and us, even if such
parties or incidents have no relation to us, our management, employees, suppliers or other
business partners.
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Changes or slowdown in the e-commerce industry in China and globally could negatively
affect our business and growth prospects.
We also serve customers in the e-commerce industry in China and globally. As such, our
business and growth are affected by the viability and prospects of the e-commerce industry in
China and globally. Development of the e-commerce industry in China and globally is affected
by a number of factors, most of which are beyond our control. These factors include:
 the consumption power and disposable income of e-commerce consumers in China
and globally, as well as changes in demographics and consumer tastes and
preferences;
 the availability, penetration, reliability and security of e-commerce platforms;
 the selection, price and popularity of products offered on e-commerce platforms;
 the emergence of alternative channels or business models that better suit the needs
of consumers in China and globally;
 the development of fulfillment, payment and other ancillary services associated with
e-commerce; and
 changes in laws and regulations, as well as government policies that govern the
e-commerce industry.
Changes or slowdown in the e-commerce industry in China and globally could materially
and adversely affect our growth and profitability.
We face risks associated with our international operations.
As of June 30, 2024, we had an extensive global delivery network covering 202 countries
and regions. Risks associated with our international operations may include, among other
things: (i) changes in economic and political conditions in those markets; (ii) increasing costs
and efforts in relation to compliance with international laws and regulations, restrictions or
requirements relating to foreign investment; (iii) increasing expenses relating to trade
agreements and taxations; (iv) difficulties in managing or overseeing our international
operations; and (v) complexities relating to compliance with applicable anti-bribery laws and
regulations, and export control restrictions and sanctions (economic or otherwise) imposed by
certain countries or self-regulated organizations against dealings with other countries,
individuals or entities which may limit our ability to conduct our business with such countries,
individuals or entities, or to obtain funding for certain overseas businesses. The occurrence,
persistence or consequences of any of these risks may restrict our ability to operate in the
affected market, or reduce the profitability of our operations in that market, which in turn
would negatively affect future prospects of our international operations.
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Our international operations are also susceptible to uncertainties in the international
financial environment and increased foreign exchange risks stemming from the volatility of
foreign exchange rates and changes of foreign exchange controls. We may not be able to adjust
our business practices in time to avoid or mitigate adverse effects from any of the foregoing
risks, and accordingly, our business, financial condition and results of operations could be
materially and adversely affected.
Our long-term growth and competitiveness are highly dependent on our ability to control
costs.
Compared with our competitors who rely more on the franchising model, we bear more
costs due to our directly operated business model, and therefore our ability to ensure effective
cost-control measures could have a more direct impact on our business. As such, in order to
maintain competitive pricing and enhance our profit margins, we must continually exert greater
control over our costs than our competitors who rely more on the franchising model. We have
adopted various cost-control measures, and will continue to add new ones as necessary and
appropriate. However, the measures we have adopted or will adopt in the future may not be as
effective as expected. For the years ended December 31, 2021, 2022 and 2023 and the six
months ended June 30, 2023 and 2024, our gross profit amounted to RMB25.8 billion,
RMB33.0 billion, RMB32.6 billion, RMB16.6 billion and RMB18.3 billion, respectively,
representing a gross profit margin of 12.4%, 12.3%, 12.6%, 13.3% and 13.6% for the same
periods, respectively. If we are not able to effectively control our costs, our profitability and
cash flow may be adversely affected.
Overall tightening of the labor market, increases in labor costs or any possible labor
unrest may adversely affect our business, financial condition and results of operations as
we operate in a labor-intensive industry.
We operate in a labor-intensive industry. Our business requires a substantial number of
staff, and we compete with other companies in the same industry and other labor-intensive
industries for labor. Any failure to retain stable, competent and dedicated labor may lead to
disruption to, or delay in, our services provided to customers. In addition, we often need to hire
additional or temporary workers to handle the significant increase in parcel volume following
special promotional events or during peak seasons of e-commerce. Although we have not
experienced any labor shortage to date, we have observed an overall tightening and
increasingly competitive labor market. We have experienced, and expect to continue to
experience, increases in labor costs due to increases in market salary, benefit level and/or our
headcount.
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Significant fluctuations in transportation costs may materially and adversely affect our
business, financial condition and results of operations.
Transportation costs are a major component of our cost of revenue. For the years ended
December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024, our
transportation costs amounted to RMB70.9 billion, RMB106.8 billion, RMB82.9 billion,
RMB39.3 billion and RMB42.8 billion, respectively, representing 39.1%, 45.6%, 36.7%,
36.5% and 36.8% of our total cost of revenue, respectively.
Our transportation costs are subject to a variety of factors, such as fluctuations in the
price and availability of fuel, air and sea freight fee rates, the imposition of, or increases in,
import or export taxes, vehicle taxes and duties. The price and availability of fuel are subject
to political, economic, and market factors that are beyond our control. In the event of
significant increases in fuel prices, our transportation costs may increase and gross profits may
decrease, if we are unable to adopt any effective cost control measures or pass on the
incremental costs to our customers in the form of service surcharges. In addition, the air and
sea freight industries are highly cyclical, with prices for and supply of cargo space affected by
many factors such as the level of international trade activities, global and regional economic
and political conditions, economic sanctions, outbreak of war, changes in regulatory regimes
and extreme weather conditions. These factors are beyond our control and the nature, timing
and degree of changes in industry conditions are largely unpredictable. The inability to pass on
to our customers any significant increases in transportation costs could therefore materially and
adversely affect our business, financial condition and results of operations.
Our results of operations are subject to seasonal fluctuations.
We experience seasonality in our business. We typically experience a seasonal surge in
volume of orders during the second and fourth quarters of each year when major online retail
and e-commerce platforms launch special promotional campaigns, for example, around June 18
of each year. We may experience capacity and resource shortages in fulfilling orders during the
period of such seasonal surge in our business. Conversely, activity levels across our business
lines are typically lower around Chinese national holidays, including Chinese New Y ear in the
first quarter of each year, primarily due to weaker consumer spending, lower user activity
levels and decreased availability of delivery personnel and warehouse staff during these
holiday seasons. This pattern may result in fluctuations in our operating results, and therefore,
comparing our results of operations across the different periods of a given year as an indicator
of our performance may not be meaningful and should not be relied upon as indicators of future
performance.
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Information technology is critical to our business operations and growth prospects. Any
failure in maintaining, protecting and making timely enhancements and upgrades to our
information technology system or introducing innovative additions could adversely affect
our business, results of operations, financial condition and growth prospects.
The satisfactory performance, reliability and availability of our technology system are
critical to our ability to provide high-quality services. We rely on our advanced technology
systems, such as our end-to-end DataOps one-stop data development platform, SF Smart Brain,
as well as our smart tools and applications. See “Business — Technology and Research and
Development” in this prospectus. Our technology systems support the smooth performance of
certain key functions of our business, such as order tracking, fleet dispatching and
management, route planning as well as smart supply chain services. In addition, the
maintenance and processing of various operational and financial data is essential to our
day-to-day operations and formulation of our business strategies. Therefore, our results of
operations and growth prospects depend, in part, on our ability to maintain and make timely
and cost-effective enhancements and upgrades to our technology systems and to integrate
technological innovations that can meet our evolving operational needs. Failure to do so could
cause economic losses and put us at a disadvantage to our competitors. There is no assurance
that we will be able to keep up with technological developments, or that technologies
developed by others will not render our services less competitive.
Moreover, any interruptions that result in the unavailability or slowdown of our
centralized system could materially and adversely affect a significant portion, if not all, of our
logistics infrastructure and network. If we cannot successfully execute system maintenance and
repair, our business operations could be adversely affected and we could be subject to liability
claims. Any such occurrences could disrupt our services, damage our reputation and harm our
results of operations.
Research and development in new technologies for logistics services are costly and
time-consuming, and the outcome is uncertain.
Our success and long-term competitiveness depend in part on our ability to develop or
adopt new technologies to enhance our operational efficiency and reduce operational costs.
Areas of focus of our technological developments include data analyses, SF Smart Brain
(which focuses on the upgrade of the digitalized and intelligent logistics network), and smart
supply chain services, as well as our smart tools and applications. See “Business — Technology
and Research and Development” in this prospectus. For the years ended December 31, 2021,
2022 and 2023 and the six months ended June 30, 2023 and 2024, our research and
development expenditures, comprising our research and development expenses and additions
of development expenditures, amounted to RMB3.7 billion, RMB3.5 billion, RMB3.4 billion,
RMB1.8 billion and RMB1.6 billion, respectively, of which 39.2%, 35.9%, 32.1%, 32.2% and
18.7% had been capitalized in the same periods, respectively.
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The development and commercial application of new technologies is complex, time-
consuming and costly, and the results are unpredictable. We cannot assure you that our research
and development activities will enable us to successfully develop new technologies, or
otherwise integrate technological developments into our systems. Even if we successfully
develop or adopt a new technology, we cannot assure you that it will be successfully
implemented to enhance our operational efficiency and reduce operational costs. Competition
in the logistics industry is intense, and our competitors may constantly launch new services and
implement new technologies. Accordingly, competitive landscape of the logistics industry may
differ significantly from what we had projected, and technologies we develop or adopt may no
longer hold the competitive advantages in enhancing operational efficiency or reducing
operational costs. If any of the new technologies developed, adopted or implemented by us fails
to perform as anticipated, we may not be able to recoup our significant investment in research
and development, and our business, financial condition and results of operations may be
materially and adversely affected.
Compliance with applicable data-related laws and regulations could require additional
expenditures and consequently affect our business, financial condition and results of
operations.
Laws and regulations governing cybersecurity, information security, privacy and data
protection, and the use of the internet as a commercial medium are rapidly evolving, extensive,
and complex. The important PRC laws and regulations on data protection, data privacy, and/or
information security currently in effect that we are subject to include, among others, the
Cybersecurity Law (), which took effect on June 1, 2017
Personal Information Protection Law (), or the PIPL,
which took effect on November 1, 2021; and the Data Security Law (ʕശɛ͏΍ձ਷ᅰኽ
), which took effect on September 1, 2021. For details, see “Regulatory Overview —
Regulations Relating to Internet Information Security” in this prospectus. When providing
logistics services, we may need to process various operational and other data of our customers,
business partners, employees and other individuals or businesses.
In addition, on December 28, 2021, thirteen PRC governmental and regulatory agencies,
including the Cyberspace Administration of China (the “ CAC”), promulgated the Measures for
Cybersecurity Review (), which came into effect on February 15, 2022
and required that any network platform operator who possesses the personal information of
over one million users and seeks a “foreign listing” ( ਷̮ɪ̹) shall be subject to cybersecurity
review. As advised by our PRC Data Compliance Legal Adviser and according to an interview
with the competent regulatory authority, China Cybersecurity Review, Certification and Market
Regulation Big Data Center (previously known as China Cybersecurity Review Technology
and Certification Center), on August 18, 2023, we are not required to apply for a cybersecurity
review by the Cybersecurity Review Office for the Listing, because a listing on the Stock
Exchange does not constitute a “foreign listing” under the Measures for Cybersecurity Review .
As of the Latest Practicable Date, we had not received any notice that we are required to
conduct a cybersecurity review, had not received any notices that our data processing activity
affects or may affect national security. However, the interpretation and implementation of these
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laws and regulations keep evolving. Any potential or perceived non-compliance with
data-related laws and regulations may prevent us from using or providing certain products and
services, and may result in fines or other penalties such as making certain required changes to
our business, suspending our relevant lines of business, taking down our website or shutting
down our operations, reputational damages or proceedings or actions against us by regulatory
authorities, customers or others, which may have a material adverse effect on our business,
operation or financial conditions. Furthermore, on February 24, 2023, the CSRC released the
Provisions on Strengthening the Confidentiality and Archives Administration Related to the
Overseas Securities Offering and Listing by Domestic Enterprises (̋੶ྤʫΆุྤ̮
), which came into effect on March 31,
2023. For details, see “Regulatory Overview — Regulations on Securities and Overseas
Listings” in this prospectus. However, there were no further explanations or detailed rules or
regulations with respect to such opinions or provisions, and the interpretation and
implementation of these opinions and provisions may keep evolving.
These and other similar legal and regulatory developments could affect how we design
our information systems, how we operate our business, and how we process and use data. As
our customers may also be required to comply with relevant laws and regulations, in the event
that our services are perceived to be exposing our customers to potential compliance risks,
demand for our services might be affected. We may incur additional costs to comply with such
laws and regulations, to meet the demands of our customers relating to their own compliance
with applicable laws and regulations, and to establish and maintain internal compliance
policies.
We may not be able to obtain adequate financing when desired or on favorable terms.
We need to make continued investments in equipment, land, facilities and technological
systems to remain competitive. However, we cannot assure you that we will be able to obtain
adequate financing on commercially reasonably terms, or at all, if and when required,
especially if we experience unsatisfactory results of operations. If adequate financing is not
available to us as required, our ability to fund our operations, take advantage of potential
business opportunities, develop or enhance our logistics infrastructure and network or respond
to competitive pressures could be limited. If we fail to obtain necessary funding in a timely
manner or on favorable terms, we may be unable to meet the demands of existing and
prospective customers, which in turn could adversely affect our business, financial condition
and results of operations.
We face risks associated with the handling and transportation of parcels and other risks
inherent in the logistics industry, such as property damage, personal injury and delivery
of prohibited or restricted items.
We handle a large volume of parcels across our logistics network, and have adopted
various internal control policies and measures to manage risks inherent in the handling and
transportation of parcels. We face challenges with respect to the protection and examination of
these parcels. Parcels in our network may be stolen, damaged or lost for various reasons, and
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we may be perceived or found liable for such incidents. In addition, we may fail to screen
parcels and detect unsafe, prohibited or restricted items. Unsafe items, such as flammables and
explosives, toxic or corrosive items and radioactive materials, may injure recipients or our
staff, or damage our assets or other parcels in our network. Furthermore, if we fail to prevent
prohibited or restricted items from entering into our network, or if we participate in the
transport and delivery of such items, we may be subject to administrative or even criminal
penalties, and if there is any resulting any personal injury or property damage, we may be
further liable for civil compensation.
Delivery of parcels also involves inherent risks. We constantly have a large number of
aircraft, vehicles and staff in transit, and therefore need to face numerous transportation safety
issues, which may not be fully covered by the insurances that we routinely maintain. From time
to time, our vehicles and staff may be involved in transportation incidents or accidents, and the
parcels carried by them may be lost or damaged. Our staff may also get injured during delivery
of parcels. In addition, frictions or disputes may occasionally arise from the direct interactions
between our pickup and delivery staff with parcel senders and recipients. Personal injuries or
property damages may arise if such frictions or disputes escalate.
Any of the foregoing could disrupt our services, cause us to incur substantial expenses
and divert the time and attention of our management. We may face claims and incur significant
liabilities if found liable or partially liable for any personal injuries, property damages or
economic losses. Claims against us may exceed the amount of our insurance coverage, or may
not be covered by insurance at all. Governmental authorities may also impose significant fines
on us or require us to adopt costly preemptive measures. Furthermore, if our services are
perceived to be insecure or unsafe by our customers, our parcel volume may significantly
decline, and our business, financial condition and results of operations may be materially and
adversely affected.
We have a limited history of operating cargo airline and civil aviation infrastructure, and
we face risks inherent to the aviation industry, such as extensive regulations, high fixed
costs, aircraft incidents or accidents, and the threat of terrorist attacks.
We established our SF Airlines in 2009, and have a limited history of operating cargo
airlines and civil aviation infrastructure. We are exposed to risks inherent to the aviation
industry, including: (i) extensive regulations and substantial regulatory influence over the
aviation industry, rendering us under significant constraints on our flexibility and ability to
further develop our air cargo fleet and air routes; (ii) competition over flight schedules and air
routes; (iii) high fixed costs, including depreciation expenses, interest expenses, pilot training
costs and operating lease payments, which do not vary proportionately with cargo volumes
actually carried; (iv) terrorist attacks, aircraft accidents or incidents, which could result in
significant property damages and claims relating to personal injuries or deaths; and (v)
difficulties in obtaining airline insurance with reasonable coverage at commercially feasible
prices.
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Moreover, we are currently responsible for operating the sorting center in the Ezhou cargo
hub. We are exposed to risks inherent to the operation of civil aviation infrastructure,
including: (i) extensive and evolving regulations over civil aviation infrastructure, and the
potential unfavorable changes in such regulations, such as an increase in aeronautical fees; and
(ii) aircraft incidents or accidents, the threat of terrorist attacks, or natural disasters that could
cause material damage to the civil aviation infrastructure.
The occurrence, persistence or consequences of any of the foregoing risks may restrict our
ability to operate our air cargo fleet or civil aviation infrastructure, or reduce the profitability
of our operations, which in turn could materially and adversely affect our business, financial
condition and results of operations.
The regulatory environment for global aviation or other transportation rights may impact
our operations and increase our operating costs.
Our right to provide logistics services involving overseas destinations is subject to
government approvals. In addition, we must obtain the permission of the relevant overseas
jurisdictions to provide specific flights and services. Our international operations are also
subject to current and potential regulations, including certain postal regulations and licensing
requirements, that restrict, make difficult, and sometimes prohibit, the ability of foreign-owned
companies to compete effectively in parts of the global logistics market. Regulatory or
executive actions affecting global aviation or transportation rights or a failure to obtain or
maintain aviation or other transportation rights in important international markets could impair
our ability to operate our network. Further, our ability to obtain or maintain aviation or other
transportation rights internationally may be adversely affected by changes in international
trade policies and relations. See “Regulatory Overview — Regulations on Transportation” in
this prospectus.
Our operation of SF Airlines is subject to other extensive regulatory and legal compliance
requirements that may result in significant costs. High-profile accidents, catastrophes, or
incidents involving aircraft may trigger increased regulatory and legal compliance
requirements. Requirements can be issued, amended or restated from time to time, or can
otherwise impact our ability to efficiently or fully utilize our aircraft, and in some instances
could result in the temporary grounding of aircraft types altogether if we fail to comply with
the applicable laws and regulations. See “Regulatory Overview — Regulations on
Transportation” in this prospectus.
Our business and reputation may be harmed by unlawful, unethical or anticompetitive
conducts within or in connection with our logistics network, operations and other
activities.
We have adopted various policies, operational manuals and disciplinary measures
regarding the conduct of our employees, consultant, agents and other third parties.
Nonetheless, there is no assurance that such measures would be sufficient to prevent and deter
our employees, consultant, agents or other third parties from acting unlawfully or unethically.
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Such misconduct may include non-compliance with applicable laws and regulations pertinent
to parcel collection and delivery processes, mishandling of funds or unlawful kickbacks during
our procurement of raw material or equipment. We also have little control over third parties
involved in unlawful, unethical or anti-competitive conducts targeted at or in connection with
our logistics network, operations and other activities, such as non-compliance with laws, or
third-party sabotage or allegations intended to harm us. We may incur substantial monetary
losses, suffer reputational damage, be subject to administrative penalties and fines, have our
licenses and permits revoked, or even be ordered by regulatory authorities to suspend our
operations due to misconduct. We may also be required by regulatory authorities in the relevant
jurisdictions to allocate significant resources and incur additional costs to prevent any
unlawful, unethical or anti-competitive conducts by our employees or third parties.
We endeavor to comply with the anti-monopoly and anti-unfair competition laws and
regulations of the jurisdictions where we operate, such as the Anti-Monopoly Law of the PRC
() and the Anti-Unfair Competition Law of the PRC (ʕശɛ͏
). Nonetheless, we may be required by competent regulatory
authorities to adjust our business practices, or may be subject to penalties, such as confiscation
of incomes or potential fines, if any of our past or future acquisitions or investments, or any
other business practices involving us, is deemed to be non-compliant with any anti-monopoly
and anti-unfair competition laws and regulations. We may also be subject to claims from our
competitors or users, which could affect our business and operations. The competent regulatory
authorities may keep supervising the competition compliance issues, and we may receive
greater attention from regulators, which may increase our compliance costs and subject us to
heightened risks and challenges. We may have to spend much more personnel cost and time
evaluating and managing these risks and challenges in connection with our products and
services as well as our investments in our ordinary business course to avoid any failure to
comply with these laws and regulations. Any failure or perceived failure by us to comply with
the anti-monopoly and anti-unfair competition laws and regulations may result in governmental
investigations or enforcement actions, litigations or claims against us and could affect our
business, financial condition and results of operations.
We face potential risks associated with outsourcing in our business operations.
We engage service providers that provide pick-up and delivery services to us, as well as
outsourced transportation service providers. We only enter into agreements with the service
providers, and therefore do not have any direct contractual relationship with the personnel from
these service providers. Since such personnel are not directly employed by us, our control over
them is more limited as compared to our own employees. We cannot fully rule out the
possibility of any personnel from these service providers failing to operate or perform their
duties in accordance with our policies and guidelines, in which event our market reputation,
brand image and results of operations could be adversely affected.
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If the service providers violate any relevant requirements under the applicable laws and
regulations, including labor laws, or their employment agreements with the personnel placed
with us by these service providers, such personnel may claim compensation from us as they
provide their services at our logistics facilities. As a result, we may incur legal or financial
liabilities, and our reputation, brand image as well as our business, financial condition and
results of operations could be adversely affected.
Trade restrictions and changes in international trade policies and relations could reduce
the volume of goods transported globally and adversely affect our international
operations.
Our international operations may be affected by trade restrictions implemented by
countries or regions where our customers are located or where our customers’ products are
manufactured or sold. For example, we are subject to risks relating to changes in trade policies,
tariff regulations, embargoes or other trade restrictions adverse to our customers’ business.
Actions by governments that result in restrictions on movement of cargo or otherwise could
also impede our ability to carry out our international operations. In addition, international trade
and political issues, tensions and conflicts may cause delays and interruptions to cross-border
transportation and result in limitations on our insurance coverage. If we are unable to transport
cargo to and from countries with trade restrictions in a timely manner or at all, our business,
financial condition and results of operations could be materially and adversely affected.
Fluctuations in exchange rates may adversely affect our results of operations.
A substantial portion of our revenues and cost of sales is denominated in RMB. However,
as we also operate a part of our business in certain geographic markets outside of mainland
China, we are subject to risks associated with foreign currency exchange fluctuations.
Changes in the value of foreign currencies could affect the results of our overseas
operations (namely, operations outside of mainland China). Our overseas operations recorded
revenue denominated in foreign currencies of RMB18.2 billion, RMB58.9 billion, RMB34.9
billion, RMB17.0 billion and RMB18.4 billion in 2021, 2022 and 2023, and the six months
ended June 30, 2023 and 2024, respectively, accounting for 8.8%, 22.0%, 13.5%, 13.7% and
13.7% of our total revenue for the same years/periods, respectively. Foreign currency-
denominated income from the principal businesses of our overseas operations primarily
consisted of freight charges. Such income is denominated primarily in HKD and USD. In
managing the foreign exchange risks, we preferentially deploy natural hedges, and may also
deploy a netting pool to net-off the foreign exchange risk exposures of account receivables and
account payables in the same currencies. Moreover, foreign exchange risks also arise from
foreign currency-denominated debts undertaken by our overseas operations. These debts are
mainly denominated in USD. Based on the foregoing, and considering that USD is pegged
against HKD at a rate ranging from 7.75 to 7.85, we believe our foreign exchange risk exposure
is manageable. In addition, where necessary, we may deploy hedging instruments depending on
the nature of transaction and financial market conditions after conducting a detailed
assessment.
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It is difficult to predict how external factors may impact the exchange rate of RMB to
HKD, USD or other foreign currencies in the future. Further appreciation of RMB against
foreign currencies may affect our overseas operations. Conversely, if we decide to convert our
RMB into Hong Kong dollars for the purpose of making payments for dividends on our H
Shares or for other business purposes, any depreciation of RMB against the Hong Kong dollar
would have a negative effect on the value of, and any dividends payable on, our H Shares.
During the Track Record Period, we have maintained certain hedging policies in an effort
to reduce our exposure to foreign exchange risks, and we may maintain, or further enhance, our
hedging policies in the future. For details, see “Financial Information — Qualitative and
Quantitative Disclosure About Financial Risks — Market Risks — Foreign Exchange Risk” in
this prospectus. However, the availability and effectiveness of these hedging measures may be
limited, and we may not be able to adequately cover our exposure or at all.
Security breaches and attacks against our system and network, and any failure to protect
confidential and proprietary information, could damage our reputation and adversely
affect our business, financial condition and results of operations.
We rely on technologies to provide high-quality logistics services. However, our
technology operations are vulnerable to potential disruptions arising from human errors,
natural disasters, power failures, computer viruses, spam attacks, unauthorized access and
other similar events. Disruptions to, or instability of, our technology or external technology
that supports the offering of our services and solutions could materially harm our business and
reputation.
Our cybersecurity measures may not detect or prevent all attempts to compromise our
systems, including distributed denial-of-service attacks, viruses, malicious software, break-ins,
phishing attacks, social engineering, security breaches or other attacks and similar disruptions
that may jeopardize the security of information stored in and transmitted by our systems or that
we otherwise maintain. Breaches of our cybersecurity measures could result in unauthorized
access to our systems, misappropriation of information or data, deletion or modification of
customer information, or a denial-of-service or other interruption to our business operations.
As techniques used to obtain unauthorized access to or sabotage systems change frequently and
may not be known until launched against us, we may be unable to anticipate, or implement
adequate measures to protect against, these attacks. During the Track Record Period, we had
not been subject to these types of attacks that had materially and adversely affected our
business operations. However, there can be no assurance that we would not in the future be
subject to such attacks that may result in material damages or remediation costs. If we are
unable to avert these attacks and security breaches, we could be subject to significant legal and
financial liability, our reputation would be harmed and we could sustain substantial revenue
loss from lost sales and customer dissatisfaction.
In addition, although we have adopted various measures and technologies that allow us
to instantly detect potential cyber-attacks and protect our data and information networks, it
remains possible that we cannot anticipate or prevent rapidly evolving types of cyber-attacks.
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Cyber-attacks may target us, our customers, or the information infrastructure on which we
depend. Actual or anticipated attacks and risks may cause us to incur significantly higher costs,
including costs to deploy additional personnel and network protection technologies, train
employees, and engage third-party experts and consultants. Cybersecurity breaches may harm
our reputation and business, and materially and adversely affect our financial condition and
results of operations.
Our business generates and processes a large quantity of personal and transactional data.
We face inherent risks when handling and protecting such large volumes of data, including
protecting the data stored in our system, detecting and prohibiting unauthorized data share and
transfer, preventing attacks on our system by outside parties or fraudulent behavior or improper
use by our employees, and maintaining and updating our database. Any system failure, security
breach or third parties attacks or attempts to illegally obtain the data that results in any actual
or perceived release of user data could damage our reputation and brand, deter current and
potential customers from using our services, damage our business, and expose us to potential
legal liability.
We are subject to various PRC laws and regulations relating to the collection, use,
storage, processing and security of personally information with respect to our customers and
employees, including regulatory requirements by competent authorities relating to such data.
Further, PRC regulators have been increasingly focused on regulation in the areas of data
security and data protection. For details, see “— Risks Relating to Our Business and Industry
— Compliance with applicable data-related laws and regulations could require additional
expenditures and consequently affect our business, financial condition and results of
operations” and “Regulatory Overview — Regulations on Internet Information Security and
Privacy Protection” in this prospectus.
Any deficiencies in the telecommunications and Internet infrastructure in the
jurisdictions where we operate could impair the functioning of our technology system and
our business operations.
Our business depends on the performance and reliability of the telecommunications and
Internet infrastructure in the jurisdictions where we operate. The availability and reliability of
our website, mobile application, customer service hotline and technology system depend on
telecommunications carriers and other third-party providers for communications and storage
capacity, including bandwidth and server storage, among other things. If we are unable to enter
into and renew agreements with these providers on acceptable terms, or if any of our existing
agreements with such providers are terminated as a result of our breach or otherwise, our
ability to provide our services to our customers could be adversely affected. In addition, any
service interruptions at the underlying external telecommunications service providers, such as
the Internet data centers and broadband carriers, could result in interruptions to our services.
Frequent service interruptions could frustrate customers and discourage them from using our
services, which could cause us to lose customers and could harm our operating results.
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Some of our services utilize third-party applications and services that we do not control.
In addition, we face risks related to regulatory and public scrutiny on our third-party
service providers. If such parties, their associates and/or network members are subject to
regulatory or public scrutiny, such as investigations and negative publicity, our
reputation, business and results of operations may be adversely affected.
We utilize third-party applications and services to ensure the smooth performance of
certain functions of our business. For example, we collaborate with social media access portal
providers for embedding our mini-programs and payment processing providers. We also
depend in part on mobile operating systems, such as Android and iOS, and their respective
application marketplaces to make our applications available to merchants, consumers, our
employees and couriers. Any interruption or delay, most of which are beyond our control, in
the functionality of these third-party applications and services may lead to interruptions to our
system, website or mobile application slowdown or unavailability, delays or errors in
transaction processing, loss of data, or the inability to accept and fulfill orders. In addition, if
any third-party application and service providers withdraw their authorization to use from us,
or if their services become limited, restricted, curtailed or less effective in any way, or
otherwise become unavailable to us for any other reasons, our customer base and customer
engagement may be harmed. We may not be able to promptly find alternative ways to offer
services in a timely, reliable and cost-effective manner, or at all, which in turn may materially
and adversely affect our business, financial condition and results of operations.
In addition, we rely on major third-party payment channels to facilitate and collect
customers’ payment for our services. We are subject to various risks and uncertainties
associated with these third-party online payment channels. Any disruption to their payment
services could materially and adversely affect our payment collection, and, in turn, our results
of operations. Further, when it comes to online payment transactions through third-party
payment channels, secured transmission of customers’ confidential information is essential for
maintaining customer confidence. We do not have control over the data security measures of
the third-party payment channels, and their security measures may not be adequate at present,
or may not remain adequate in light of the expected increased use of online payment systems.
Furthermore, these payment channels are subject to various laws and regulations regulating
electronic funds transfers and virtual currencies, which could change or be reinterpreted in a
way that will materially and adversely affect their compliance. If these payment channels
experience any non-compliance incidents, they may be subject to fines or penalties, charge
higher transaction fees due to regulatory or commercial reasons, or even suspend or terminate
their operations, with or without prior notice to us, which in turn would materially and
adversely affect our performance and results of operations.
Furthermore, we engage third-party service providers for certain professional services,
such as audit and legal services. Our third-party service providers and/or their associates may,
from time to time, be subject to regulatory and public scrutiny, which includes complaints to
regulatory agencies, investigations, negative media coverage and malicious allegations. For
example, a network firm of our Reporting Accountant has recently been the subject of
investigations by the PRC authorities in respect of its audit work for a PRC company unrelated
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to our Group, as a result of which the PRC authorities imposed fines, sanctions and a six-month
business suspension, as well as local office closure on the network firm. Our Reporting
Accountant is also being investigated by the AFRC in Hong Kong for audit work for a related
entity of the same PRC company, according to the press statement issued by the AFRC. As of
the Latest Practicable Date, the investigation is still in progress. We are monitoring this
development to assess its potential impact, if any. We may consider taking specific measures,
including, if deemed necessary, to engage a new auditor in the future.
We may not have effective or sufficient control over our franchisees. Any breach of the
franchise agreements or any violation of relevant laws and regulations by our franchisees
may have a negative impact on our business operations and reputation.
We maintains direct control of our operations, with minimal reliance on franchisees. We
identify and select the franchisees in compliance with the requirements under relevant laws and
regulations as well as our internal guidelines. We also enter into franchise agreements with our
franchisees which require them to, among other things, maintain all required permits, licenses
and certificates, recruit qualified staff and implement our pricing policies. In addition, while
our franchise agreements stipulate a franchisee’s obligations, we cannot assure you that the
franchisees will fully fulfill their contractual obligations, or strictly follow our guidelines.
Moreover, we may not be able to ensure the franchisees’ full compliance with relevant laws and
regulations. If our franchisees fail to operate in accordance with our franchise agreements, or
violate any relevant laws and regulations in the relevant jurisdictions, our reputation, business,
financial condition and results of operations may be adversely affected.
We face risks associated with force majeure events, severe weather conditions and other
natural disasters, health epidemics and other outbreaks, which could significantly disrupt
our business operations.
Our business could be adversely affected by severe weather conditions and natural
disasters or the outbreak of avian influenza, severe acute respiratory syndrome, H1N1, H7N9,
the COVID-19 pandemic or any other epidemics. Any of such occurrences could cause us to
incur additional costs and cause severe disruption to our daily operations, and may even require
a temporary closure of our business or facilities. Such closures may disrupt our business
operations and adversely affect our results of operations. In particular, our couriers are
generally exposed to public environments and are relatively susceptible towards outbreak of
public health threats. Our business operations could be disrupted if our couriers or employees
are suspected of having contagious disease or condition, since we could require such couriers
or other employees to be quarantined. Infection prevention and control measures could
adversely affect our operations and the operations of our customers, and in turn affect our
financial condition and results of operations. Our operations could also be disrupted if our
suppliers, customers or business partners were affected by such natural disasters or health
epidemics.
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Our success depends in significant part on the continuing efforts of our senior
management and other key personnel, and our business operations would be adversely
affected if we fail to retain them.
We depend to a significant degree on the continued services of our experienced senior
management and other key personnel. In particular, we rely on the expertise and experience of
our general manager and other members of our senior management team. We have adopted
various talent retention measures. Nonetheless, there is no assurance that our senior
management and other key personnel will always be able to, or willing to, continue their
employment with us. In that case, we may not be able to replace them in a timely manner, or
at all. We may incur additional costs to recruit and retain qualified replacements. Our business
may be severely disrupted and our financial condition and results of operations may be
materially and adversely affected. We enter into confidentiality and non-compete agreements
with our key personnel. However, in the event that any of our senior management or other key
personnel joins a competitor or forms a competing business, we may lose customers,
know-how, key professionals or other staff members. We provide no assurance that we will be
able to successfully enforce our contractual rights included in the employment agreements we
have entered into with our senior management and other key personnel. As a result, our
business may be severely disrupted.
There is no assurance that we will continue attracting, training, motivating and retaining
qualified personnel.
We intend to hire and retain additional qualified employees to support our business
operations and drive future expansion. Our future success depends, to a significant extent, on
our ability to attract, train and retain qualified staff, particularly management and operational
staff with expertise in the logistics industry or other areas we expand into. Our experienced
mid-level managers are instrumental in executing our business plans, implementing our
business strategies and supporting our business operations and growth, and we cannot assure
you that we will be able to attract or retain these qualified staff.
There is no assurance that we could continue maintaining our corporate culture.
Since our inception, our corporate culture has been defined by our mission, vision and
values, and we believe that our culture has been critical to our success. In particular, our
corporate culture has helped us to serve our customers, attract, retain and motivate employees,
and create value for our Shareholders. We face a number of challenges that may affect our
ability to maintain our corporate culture, such as:
 competitive pressures to move in directions that may divert us from our mission and
values;
 the continued challenges of an ever-changing business environment;
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 potential pressure from the public markets to focus on short-term results instead of
long-term value creation; and
 the increasing need to develop expertise in new areas of business that affect us.
If we are not able to maintain our corporate culture or if our culture fails to deliver the
long-term results we expect to achieve, our business, results of operations, financial condition
and prospects may be materially and adversely affected.
We may not be able to prevent unauthorized use of, or other forms of infringement on, our
intellectual property, which could harm our business and competitive position.
We regard our trademarks, domain names, trade secrets, proprietary technologies and
other intellectual property as critical to our business. We rely on a combination of intellectual
property laws and contractual arrangements to protect our proprietary rights. However, we may
not be able to register, maintain and enforce our intellectual property rights in a timely manner,
or at all, under the laws and regulations in the countries and regions where we operate.
Confidentiality agreements and license agreements may be breached by counterparties, and
there may not be adequate remedies available to us for any such breach. Policing any
unauthorized use of, or other forms of infringement on, our intellectual property is difficult and
costly, and the steps we have taken may be inadequate to prevent the misappropriation of our
intellectual property. In the event that we resort to litigation to enforce our intellectual property
rights, such litigation could result in substantial costs and a diversion of our managerial and
financial resources. We cannot provide any assurance that we will prevail in such litigation. In
addition, our trade secrets may be leaked or otherwise become available to, or be independently
discovered by, our competitors. Any failure in protecting or enforcing our intellectual property
rights could have a material adverse effect on our business, financial condition and results of
operations.
We may be subject to intellectual property infringement claims, which may be expensive
to defend and may disrupt our business operations.
There is no assurance that our operations or any aspects of our business do not or will not
infringe upon or otherwise violate patents, copyrights or other intellectual property rights held
by third parties. We may be subject to legal proceedings and claims relating to the intellectual
property rights of others. In addition, there may be other third-party intellectual property that
is infringed by our services or solutions, the services or solutions provided by third-party
merchants through our logistics infrastructure and network, or other aspects of our business.
There could also be existing patents of which we are not aware that our services or solutions
may inadvertently infringe. We cannot assure you that holders of patents purportedly relating
to some aspects of our technology platform or business, if any such holders exist, would not
seek to enforce such patents against us. Further, the application and interpretation of patent
laws and the procedures and standards for granting patents in the countries and regions where
we operate may keep evolving, and we cannot assure you that relevant courts or regulatory
authorities would agree with our analysis. If we are found to have violated the intellectual
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property rights of others, we may be subject to liability for our infringement activities or may
be prohibited from using such intellectual property, and we may incur licensing fees or be
forced to develop alternatives of our own. In addition, we may incur significant expenses, and
may be forced to divert management’s time and other resources from our business and
operations to defend against these third-party infringement claims, regardless of their merits.
Successful infringement or licensing claims made against us may result in significant monetary
liabilities and may materially disrupt our business and operations by restricting or prohibiting
our use of the intellectual property in question. Finally, we use open-source software in
connection with our services and solutions. Companies that incorporate open-source software
into their services and solutions have, from time to time, faced claims challenging the
ownership of open-source software and compliance with open-source license terms. As a result,
we could be subject to suits by parties claiming ownership of what we believe to be
open-source software or noncompliance with open-source licensing terms. Some open-source
software licenses may require users who distribute open-source software as part of their
software to publicly disclose all or part of the source code to such software and make available
any derivative works of the open-source code on unfavorable terms or at no cost. Any
requirement to disclose our source code or pay damages for breach of contract could be
harmful to our business, financial condition and results of operations.
Economic sanctions, anti-corruption and anti-money laundering laws may expose us to
potential compliance risks.
We are subject to economic sanctions, anti-corruption, anti-bribery, anti-money
laundering and other relevant laws and regulations in the countries and regions where we have
business operations. We face significant risks if we fail to comply with the applicable laws.
Any violation of applicable economic sanctions, anti-corruption, anti-bribery, anti-money
laundering or other laws or regulations could result in governmental or regulatory
investigations, civil or criminal fines or other sanctions, whistleblower complaints and adverse
publicity, which could have an adverse effect on our reputation, business, operating results and
prospects. In addition, responding to any enforcement action may result in a significant
diversion of management’s attention and significant defense costs and other professional fees.
The United States and other jurisdictions or organizations, including the European Union
and the United Nations, have, through executive orders, passing of legislation or other
governmental means, implemented measures that impose economic sanctions against certain
countries or jurisdictions, or against targeted industry sectors, groups of companies or persons,
and/or organizations within these countries or jurisdictions. There can be no assurance that we
will be able to prevent or detect all inadvertent business dealings with sanctioned parties or the
dispatch of freight to higher-risk or prohibited end-uses. We cannot predict the interpretation
or implementation of government policies in the United States at the federal, state or local
levels or any policy of the European Union, the United Nations and other applicable
jurisdictions with respect to any current or future activities by us or our third-party business
partners in countries subject to international sanctions and with sanctioned persons. As a result,
we cannot assure you that our future business will be free of risk under sanctions implemented
in these jurisdictions or that we will conform our business to the expectations and requirements
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of the authorities of the United States or any other government or organization that, with or
without jurisdiction over our business, assert the right to impose sanctions on an extraterritorial
basis. Our business and reputation could be adversely affected if the authorities of the United
States, the European Union, the United Nations or any other government or organization were
to determine that any of our activities constitutes a violation of the sanctions they impose or
provide a basis for a sanctions designation of us. In addition, as many sanction programs are
constantly evolving, new requirements or restrictions could come into effect, which might
increase scrutiny of our business or result in additional compliance risks.
Any litigation, legal and contractual disputes, claims or administrative proceedings
against us could be costly and time-consuming to defend or settle, and could result in
negative publicity.
Our business is subject to the risk of disputes, claims or legal proceedings brought by
customers, suppliers, employees, government agencies and others in the forms of private
actions, administrative proceedings, regulatory actions or other litigation. The outcome of such
proceedings can be difficult to assess or quantify.
Claimants in such proceedings may seek recovery of large or indeterminate amounts, and
the magnitude of potential losses relating to such disputes may remain unknown for a
substantial period of time. The cost of defending future disputes or proceedings may be
significant and could negatively affect our results of operations if changes to our business
operations are required. There could also be negative publicity associated with such disputes
or proceedings, regardless of whether the allegations are valid or whether we are ultimately
found liable. As a result, any significant dispute or proceeding could adversely affect our
business, results of operations, financial condition or reputation.
Our insurance coverage may not be sufficient to cover all losses associated with our
business operations.
We maintain various insurance policies to safeguard against risks and unexpected events.
We maintain various insurance policies to safeguard against risks and unexpected events in
relation to our business operations, such as motor vehicle and non-motor vehicle liability
insurance, cargo insurance, parcel-related insurance and warehouse insurance. We do not
maintain business interruption insurance, key-man insurance or terrorist attack insurance,
which is generally in line with industry practices. We cannot assure you that our insurance
coverage is sufficient to prevent us from any loss, or that we will be able to successfully claim
our losses under our current insurance policies on a timely basis, or at all. If we incur any loss
that is not covered by our insurance policies, or the compensated amount is significantly less
than our actual loss, our business, financial condition and results of operations could be
materially and adversely affected.
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Our business operations could be interrupted by any failures to renew the current leases
or locate desirable alternatives for our facilities, or challenges to our use of certain leased
properties by governmental authorities or other third parties.
We may not be able to successfully extend or renew such leases upon expiration of the
current term on commercially reasonable terms or at all, and may therefore be forced to
relocate from the affected properties. This could disrupt our operations and result in significant
relocation expenses, which could adversely affect our business, financial condition and results
of operations. We may not be able to locate desirable alternative sites for our facilities as our
business continues to grow, and failure in relocating our operations when required could
adversely affect our business and operations. In addition, we compete with other businesses for
premises at certain locations or of comparable sizes. As a result, even if we could extend or
renew the respective leases, rental payments may significantly increase as a result of the high
demand for the leased properties.
In general, we conduct customary due diligence on relevant real estate properties before
entering into lease agreements in accordance with market practice. Nevertheless, we cannot
assure you that our reviews, surveys or inspections would have revealed all defects or
deficiencies affecting our leased properties, including the titles thereof. The lessors of certain
of our leased properties have not provided us with their property ownership certificates or any
other documentation proving their right to lease those properties to us. If these lessors are not
the owners of the properties and they have not obtained consents, or approval for sub-lease
from the owners or their lessors, or permits from the relevant governmental authorities, our
leases could be invalidated. Neither could we assure you that the lessors have taken all
necessary actions to ensure mandatory fire-control and explosion insurance, file fire-control
registration or satisfy relevant requirements under applicable laws and regulations. Also, in the
event that the actual use of our leased properties is inconsistent with the designated use of
premises as stated in the relevant ownership certificate, the relevant lease agreements may be
deemed to be in breach of the law and therefore void. If any of the foregoing occurs, we may
have to renegotiate the leases with the owners or other parties who have the right to lease the
properties, or to find alternative sites that are as commercially viable, and the terms of the new
leases may be less favorable to us. We provide no assurance that we will be able to find suitable
replacement sites on terms acceptable to us on a timely basis, or at all, or that we will not be
subject to material liability resulting from third parties’ challenges on our use of such
properties. In addition, a portion of our leasehold interests have not been registered with the
relevant PRC governmental authorities as required by relevant PRC laws. The failure to
register leasehold interests may expose us to potential fines.
Title defects with respect to or encumbrances on certain land and buildings may cause
interruptions to our business operations.
As of the Latest Practicable Date, we had entered into contracts for the assignment of two
parcels of state-owned construction land use right and had fully settled the payment for the
grant of the right to these two parcels of land. We were in the process of obtaining land use
right certificates for these two parcels of land, where no construction activities had been
carried out yet on these two parcels of land. However, time required for obtaining these
certificates is subject to uncertainties. In addition, as of the Latest Practicable Date, we had
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seven properties with each having a GFA exceeding 1,000 sq.m. that had not obtained
ownership certificates in the PRC. We have not received any material adverse decisions from
relevant government authorities relating to those defects as of the Latest Practicable Date.
However, until we obtain use or ownership rights to such land and buildings, we could be
compelled to return the land to the relevant government authority while the buildings located
on such land could be confiscated or demolished. Moreover, certain land use rights and the
buildings we own have been mortgaged to banks as collaterals for its outstanding loans. In the
event that the mortgage holder forecloses on the mortgage and transfers the property to a third
party, we may be forced to relocate these facilities. This could disrupt our operations and result
in additional costs, which could adversely affect our business, financial condition and results
of operations.
We have granted, and may continue to grant, share incentives, which may result in
increased share-based payments.
Our Company adopted the 2022 Stock Option Incentive Plan for the purpose of awarding
eligible participants who contribute to our success and provide long-term incentives for
employees to deliver long-term shareholder returns. We recognize share-based payments in
other reserves and our consolidated statements of profit or loss based on awards ultimately
expected to vest, after considering our estimated forfeitures in accordance with IFRS. In
addition, certain of our subsidiaries have also adopted share option incentive plans. For details,
see Note 33 to the Accountant’s Report in Appendix I to this prospectus.
We may incur additional share-based compensation payment expenses if we grant share
incentives in the future. We believe the granting of share-based compensation is of significant
importance to our ability to attract and retain key personnel and employees, and we may
continue to grant share-based compensation to employees in the future. As a result, our
share-based payments may increase, which may have an adverse effect on our results of
operations.
We are exposed to certain uncertainties and risks in relation to the fair value changes of
our financial assets.
Determination of the fair value changes of our financial assets requires the use of
estimates that are based on unobservable inputs and/or other estimates and judgments, and
therefore inherently involves uncertainties. We use unobservable inputs, such as discount for
lack of marketability and expected rate of return, in determining the fair values of our financial
assets, including but not limited to our financial assets at fair value through profit or loss, or
FVPL, and financial assets at fair value through other comprehensive income, or FVOCI. Such
determination requires us to make material estimates, which may be subject to material
changes, and therefore inherently involves uncertainties. We use our judgment to select a
variety of methods and make assumptions that are mainly based on market conditions existing
as of the respective valuation dates. These valuation methodologies that we use involve
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management judgment and are inherently uncertain. Changes in these unobservable inputs and
other estimates and judgments could affect the fair value of certain assets, including our
financial assets at FVPL and financial assets at FVOCI, which in turn may adversely affect our
results of operations.
Further, we are exposed to certain financial risks, including credit risk and price risk, in
relation to the fair value changes of our financial assets. For details, see Note 3.1 to the
Accountant’s Report in Appendix I to this prospectus. In terms of price risks, we are exposed
to equity price risk mainly arising from investments held by us that are classified either as
FVPL or FVOCI that will not be sold within one year.
We may record impairments of non-current assets, such as our intangible assets (other
than goodwill) and goodwill.
We may record impairments of non-current assets, such as our intangible assets (other
than goodwill) and goodwill, adversely affecting our financial condition and results of
operations. We review our non-current assets, including our intangible assets (other than
goodwill), whenever events or changes in circumstances indicate that the carrying amount of
an asset may no longer be recoverable. When these events occur, we measure impairment by
comparing the carrying value of the asset to the recoverable amount of such asset, which is the
greater of the fair value less costs of disposal and the value in use. If the recoverable amount
is less than the carrying amount of such asset, we recognize an impairment loss based on the
recoverable amount of such asset. The application of impairment test to our non-current assets,
including our intangible assets (other than goodwill), requires management judgement.
Furthermore, we determine whether goodwill is impaired at least on an annual basis. This
requires an estimate of the recoverable amount which is the higher of its value in use and its
fair value less costs of disposal. We use the value in use of the cash-generating unit to which
the goodwill is allocated to determine the recoverable amount. The cash flow projections used
to determine the value in use of a cash-generating unit is based on assumptions, such as
revenue growth rates, long term growth rate, gross margin rates, and discount rate applied to
the projected cash flows. These assumptions may be affected by unexpected changes in future
market or economic conditions. If our estimates and judgements are inaccurate, the recoverable
amount determined could be inaccurate and the impairment recognized may not be adequate,
and we may need to record additional impairments in the future.
Divestitures of businesses and assets may have a material and adverse effect on our
business and financial condition.
We disposed of certain subsidiaries during the Track Record Period, and recorded gains
on disposal of investments in subsidiaries of RMB1,808.6 million, RMB32.3 million,
RMB268.2 million, RMB245.0 million and RMB92.0 million, respectively, in 2021, 2022,
2023 and the six months ended June 30, 2023 and 2024. Such gains were non-recurring in
nature. We may undertake partial or complete divestitures or other disposal transactions in the
future in connection with certain of our businesses and assets, particularly the ones that are not
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closely related to our core focus areas or might require excessive resources or financial capital,
in pursuit of our business objectives. These decisions are largely based on our management’s
assessment of the business models and likelihood of success of these businesses. However, our
judgment could be inaccurate, and we may not achieve the desired strategic and financial
benefits from these transactions. Our financial results could be adversely affected by the
impact from the loss of earnings and corporate overhead contribution/allocation associated
with divested businesses.
We have applied for, and the Hong Kong Stock Exchange has granted, a waiver from strict
compliance with the requirements in Paragraph 3(b) of Practice Note 15 to the Hong Kong
Listing Rules such that we achieve a spin-off listing of certain of our infrastructure assets by
way of a real estate investment trusts listing on the SZSE within three years of the Listing. As
of the Latest Practicable Date, the proposed spin-off of such infrastructure assets is still subject
to regulatory approvals, and there is no guarantee as to whether or when the proposed spin-off
will be completed. The waiver granted by the Hong Kong Stock Exchange is conditional upon
(among others) us confirming to the Hong Kong Stock Exchange in advance of any spin-off
that it would not render our Company, excluding the subsidiary to be spun off, incapable of
meeting the eligibility or suitability requirements under Rule 8.05 of the Listing Rules based
on the financial information of the subsidiary to be spun off at the time of the Listing, and
where more than one subsidiary is to be spun off, the assessment will be made on a cumulative
basis. For additional information, see “Waivers and Exemptions — Three-year Restriction on
Spin-offs” in this prospectus.
RISKS RELATING TO DOING BUSINESS IN THE COUNTRIES AND REGIONS
WHERE WE OPERATE
Changes in the economic, political or social conditions or government policies in the
countries and regions where we operate could affect our business, financial condition and
results of operations.
A substantial part of our assets and operations are located in China. In addition, we
operate our business in a number of other geographic markets across Asia and globally.
Accordingly, our business, financial condition and results of operations could also be
influenced by political, economic and social conditions in these markets. Economic growth in
each of our geographic markets has been uneven, both geographically and among various
sectors within any one of the relevant economies. Any economic downturn, whether actual or
perceived, further decrease in economic growth rates or an otherwise uncertain economic
outlook in our geographic markets or any other market in which we may operate could affect
our business, financial condition and results of operations. Changes in the economic or
political environment could increase our costs, increase our exposure to legal and business
risks, disrupt our operations and affect our results of operations.
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Any downturn in regional or global economy, or deterioration of geopolitical environment
could affect our business, financial condition and results of operations.
The growth of the regional and global economy has slowed in recent years. It remains
uncertain whether, and for how long, the regional and global economic downturn will persist.
There are considerable uncertainties over the long-term effects of the monetary and fiscal
policies adopted by the central banks and financial authorities of some of the world’s leading
economies. There have been concerns over the Russia-Ukraine war, as well as unrest and
terrorist threats in certain countries and regions, which have resulted in volatility in oil and
other markets. In addition, the Red Sea crisis, which began on October 19, 2023, disrupted
international maritime trade and the global supply chain. With the Suez Canal of the Red Sea
being a critical conduit for approximately 30% of the world’s container traffic, the crisis has
since been causing surges in shipping costs. The Red Sea crisis persisted as of the Latest
Practicable Date. Regional economic conditions are sensitive to global economic conditions,
changes in domestic economic and political policies as well as the expected overall economic
growth rate.
It is unclear that whether these challenges and uncertainties will be effectively managed
or resolved and what effects they may have on the global political and economic conditions in
the long term. Any economic downturn or slowdown or negative business sentiment could have
an indirect potential impact on our industry. In addition, continued turbulence in the
international markets may adversely affect our ability to access capital markets to meet
liquidity needs. As a result, our business operations and financial performance may be
adversely affected.
Any uncertainties embedded in the legal systems of certain geographic markets where we
operate could affect our business, financial condition and results of operations.
Legal systems of the geographic markets where we operate vary significantly from
jurisdiction to jurisdiction. Some jurisdictions have a civil law system based on written statutes
and others are based on common law. Unlike the common law system, prior court decisions
under the civil law system may be cited for reference but have limited precedential value.
We are subject to certain uncertainties embedded in the legal systems of some geographic
markets where we operate. Laws and regulations that are recently enacted may not sufficiently
cover all aspects of economic activities in such markets. In particular, the interpretation and
enforcement of these laws and regulations are subject to future implementations, and the
application of some of these laws and regulations to our businesses is not settled. Since local
administrative and court authorities are authorized to interpret and implement statutory
provisions and contractual terms, it may be difficult to evaluate the outcome of administrative
and court proceedings and the level of legal protection we have in many of the geographic
markets where we operate. Local courts may have discretion to reject enforcement of foreign
awards or arbitration awards. These uncertainties may affect our judgment on the relevance of
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legal requirements and our ability to enforce our contractual rights or claims. In addition, the
regulatory uncertainties may be exploited through unmerited or frivolous legal actions, claims
concerning the conduct of third parties, or threats in attempt to extract payments or benefits
from us.
Furthermore, many of the legal systems in the geographic markets where we operate are
based in part on their respective government policies and internal rules, some of which are not
published on a timely basis or at all and may have retroactive effects. There are other
circumstances where key regulatory definitions are unclear, imprecise or missing, or where
interpretations that are adopted by regulators are inconsistent with interpretations adopted by
a court in analogous cases. As a result, we may not be aware of our violation of certain policies
or rules until sometime after the violation. In addition, administrative and court proceedings in
certain of our geographic markets may be protracted, resulting in substantial costs and
diversion of resources and management attention.
It is possible that a number of laws and regulations may be adopted or construed to be
applicable to us in our geographic markets and elsewhere that could affect our businesses and
operations. Scrutiny and regulations of the industries in which we operate may further increase,
and we may be required to devote additional legal and other resources to addressing these
regulations. Changes in current laws or regulations or the imposition of new laws and
regulations in our geographic markets may slow the growth of the logistics industry and affect
our business, financial condition and results of operations.
Y ou may have limited recourse in effecting services of legal process or enforcing overseas
judgments against us, our Directors, Supervisors and our senior management.
A substantial part of our assets, and a majority of our Directors, Supervisors and senior
management, are located in China. As a result, it may not be possible for investors to effect
services of process upon us, or our Directors, Supervisors or senior management who reside in
China. China has not entered into treaties or arrangements providing for the recognition and
enforcement of judgments made by courts of most other jurisdictions.
On July 14, 2006, the Supreme People’s Court of the PRC and Hong Kong entered into
the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and
Commercial Matters by the Courts of the Mainland and of the Hong Kong Special
Administrative Region Pursuant to Choice of Court Agreements between Parties Concerned
(τ
ર), or the 2006 Arrangement. Under the 2006 Arrangement, where any designated PRC
court or any designated Hong Kong court has made an enforceable final judgment requiring
payment of money in a civil or commercial case under a choice of court agreement in writing,
any party concerned may apply to the relevant PRC court or Hong Kong court for recognition
and enforcement of the judgment. On January 18, 2019, the Supreme People’s Court of the
PRC and Hong Kong entered into the Arrangement on Reciprocal Recognition and
Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and
of the Hong Kong Special Administrative Region (ʝႩ̙
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τર), or the New Arrangement, which seeks to establish a
mechanism with greater clarity and certainty for recognition and enforcement of judgments in
wider range of civil and commercial matters between the PRC court and Hong Kong court. The
New Arrangement will only take effect after the promulgation of a judicial interpretation by the
Supreme People’s Court of the PRC and the completion of the relevant legislative procedures
in Hong Kong. The New Arrangement will, upon its effectiveness, supersede the 2006
Arrangement.
Certain of our foreign exchange transactions are subject to regulatory requirements over
foreign currency conversion.
Conversion and remittance of foreign currencies are subject to certain foreign exchange
regulations. It cannot be guaranteed that under a certain exchange rate, we would have
sufficient foreign exchange to meet our foreign exchange needs. For example, under the PRC
current foreign exchange regulation system, foreign exchange transactions under the current
account conducted by us, including the payment of dividends, do not require advance approval
from the State Administration of Foreign Exchange (the “ SAFE ”); however, we are required
to present relevant documentary evidence of such transactions and conduct such transactions
at designated foreign exchange banks within the PRC that have the licenses to carry out foreign
exchange business. Foreign exchange transactions under the capital account, however,
normally need to be approved by or registered with the SAFE or their local branch unless
otherwise permitted by law. Any insufficiency of foreign exchange may restrict our ability to
obtain sufficient foreign exchange for dividend payments to Shareholders or satisfy any other
foreign exchange obligation. If we fail to obtain approvals from the SAFE to convert RMB into
any foreign exchange for any of the above purposes, our potential offshore capital expenditure
plans and even our business may be affected. Moreover, non-compliance with any applicable
foreign exchange regulations could subject us to administrative penalties and fines, and could
affect our business and reputation.
We may be subject to additional regulatory requirements relating to new laws and
regulations in connection with overseas securities offering and listing issued by PRC
government authorities.
On February 17, 2023, the CSRC issued the Trial Measures for the Administration on
Overseas Securities Offering and Listing by Domestic Companies (ྤʫΆุྤ̮೯БᗇՎձ
) and five supporting guidelines, which had become effective on March
31, 2023 (the “ Overseas Listing Regulations ”). The Overseas Listing Regulations are
applicable to overseas securities offering and listing conducted by issuers who are (i)
companies incorporated in the PRC (“ PRC domestic companies ”) and (ii) companies
incorporated overseas with substantial operations in the PRC. The Overseas Listing
Regulations lay out the arrangements for regulatory filings for both direct and indirect overseas
offerings, and clarify the determination criteria for indirect overseas offerings in overseas
markets. For details, see “Regulatory Overview — Regulations on Securities and Overseas
Listings” in this prospectus. The Overseas Listing Regulations, or any pertinent rules or
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regulations promulgated in the future, may subject us, or our financing activities, to additional
compliance requirements in the future. Any failure on our part to fully comply with the new
regulatory requirements may significantly limit or completely hinder our future financing
activities.
Our payment of dividends is subject to restrictions under applicable laws and regulations.
As our Company is a holding company, we rely on dividend from our subsidiaries for cash
requirements, including services of any debts our Group may incur. However, our payment of
dividends is subject to restrictions under applicable laws and regulations. For example, under
the current PRC law, dividends may be paid only out of our PRC subsidiaries’ accumulated
after-tax profits, if any, determined in accordance with PRC accounting standards and
regulations. Moreover, each of our PRC subsidiaries is required to set aside at least 10% of its
after-tax profits each year, if any, to fund certain statutory reserves, except where such reserve
has reached 50% of its registered capital. These reserves are not distributable as cash
dividends. In addition, in the future, if any of our subsidiaries incurs debt on its own behalf,
the instruments governing the debt may impose restrictions on its ability to pay dividends or
other payments to our Company. The inability of our subsidiaries to distribute dividends or
other payments to our Company could significantly affect the amount of liquidity available to
supply the development and growth of our business.
Our offshore subsidiaries may be treated as a resident enterprise for PRC tax purposes.
Under EIT Law and the Regulation on the Implementation of the Enterprise Income Tax
Law of China (ૢԷ), enterprises established under the
laws of jurisdictions outside of China with “de facto management bodies” located in China may
be considered PRC tax resident enterprises for tax purposes and may be subject to the PRC
enterprise income tax at the rate of 25% on their global income. In addition, the Notice
Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC
Tax Resident Enterprises on the Basis of De Facto Management Bodies (׵
), or Circular
82, specifies that certain Chinese-controlled offshore incorporated enterprises, defined as
enterprises incorporated under the laws of foreign countries or territories and that have PRC
enterprises or enterprise groups as their primary controlling shareholders, will be classified as
resident enterprises if all of the following conditions are met: (i) senior management personnel
and departments that are responsible for daily production, operation and management are
located mainly within China; (ii) financial and personnel decisions are subject to determination
or approval by bodies or persons in China; (iii) key properties, accounting books, company
seal, and minutes of board meetings and shareholders’ meetings are located or kept within
China; and (iv) at least half of the directors with voting rights or senior management reside
within China. The State Administration of Taxation of the PRC, or SA T, has subsequently
provided further guidance on the implementation of Circular 82.
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Although our offshore subsidiaries have substantive business operations in the countries
or regions where they located, as our Company is a PRC enterprise, our offshore subsidiaries
may be questioned by the competent regulatory authorities, and if our offshore subsidiaries are
deemed PRC resident enterprises, they could be subject to the EIT at 25% on their global
income, except that the dividends they receive from our PRC subsidiaries, if any, may be
exempt from the EIT to the extent such dividend income constitutes “dividends received by a
PRC resident enterprise from its directly invested entity that is also a PRC resident enterprise.”
Nonetheless, it remains subject to future interpretation as to what type of enterprise would be
deemed a “PRC resident enterprise” for such purposes. The EIT on our subsidiaries’ global
income could significantly increase our tax burden and affect our cash flows and profitability.
Our operations are subject to, and may be affected by, changes in tax laws and regulations
in the countries and regions where we operate.
The PRC EIT Law imposes a tax rate of 25% on business enterprises. Some of our
subsidiaries are entitled to preferential tax treatment. See “Financial Information —
Description of Selected Components of Consolidated Statement of Profit or Loss — Income
Tax Expense” in this prospectus. To the extent there are any changes in the laws and regulations
governing preferential tax treatment, or increases in our effective tax rate due to any other
reasons, our tax liability would increase correspondingly. In addition, the PRC government
may amend or restate regulations on income, withholding, value-added, and other taxes.
Non-compliance with the PRC tax laws and regulations may also result in penalties or fines
imposed by relevant tax authorities. Adjustments or changes to PRC tax laws and regulations
and tax penalties or fines could affect our businesses, financial condition and results of
operations.
We also operate in countries and regions overseas and are subject to various taxes. See
“Financial Information — Description of Selected Components of Consolidated Statement of
Profit or Loss — Income Tax Expense” in this prospectus. Due to the fact that the tax
environment can be different in different jurisdictions and that the regulations regarding
various taxes, including but not limited to corporate income tax, are complex, our international
operations may expose us to risks associated with the overseas tax policy changes. Dealing
with such regulatory complexities and changes may require us to divert more managerial and
financial resources, which in turn could affect our results of operations.
Discontinuation of any government grants or preferential tax treatments could affect our
financial condition and results of operations.
In the past, we have received various forms of government financial incentives and
preferential tax treatments in accordance with applicable laws and regulations in China. In
2021, 2022, 2023 and the six months ended June 30, 2023 and 2024, we recorded government
grants of RMB1.8 billion, RMB2.3 billion, RMB2.0 billion, RMB752.2 million and RMB404.9
million, respectively. In addition, several COVID-19 related government policy supports, such
as one-off subsidies for social insurance and tax relief, and waiver of toll charges, have also
contributed to our financial performance during the Track Record Period. However, the timing,
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amount and criteria of government financial incentives are determined within the authorized
discretion of the local governments and cannot be predicted with certainty before we actually
receive any financial incentive. Local governments may decide to reduce or eliminate
incentives at any time. We cannot assure you of the continued availability of the government
incentives we currently enjoy. Any reduction or elimination of such incentives could affect our
results of operations.
Non-PRC Holders of our H Shares may be subject to PRC income tax obligations.
Under the EIT Law and its implementation rules, subject to any applicable tax treaty or
similar arrangement between the PRC and a non-PRC investor’s jurisdiction of residence that
provides for a different income tax arrangement, PRC withholding tax at the rate of 10% is
normally applicable to dividends from PRC sources payable to investors that are non-PRC
resident enterprises, which do not have an establishment or place of business in the PRC, or
which have an establishment or place of business in the PRC if the relevant income is not
effectively connected with such establishment or place of business. Any gains realized on the
transfer of shares by such investors are subject to a 10% PRC income tax rate if such gains are
regarded as income from sources within the PRC unless a treaty or similar arrangement
provides otherwise.
Under the PRC Individual Income Tax Law () and its
implementation rules, dividends from sources within the PRC paid to foreign individual
investors who are not PRC residents are generally subject to a PRC withholding tax at a rate
of 20% and gains from PRC sources realized by such investors on the transfer of shares are
generally subject to a 20% PRC income tax rate, in each case, subject to any reduction or
exemption set forth in applicable tax treaties and PRC laws. Pursuant to the Circular on
Questions Concerning the Collection of Individual Income Tax Following the Repeal of Guo
Shui Fa [1993] No. 045 (਷೼೯[1993]045ஷ
) (Guo Shui Han [2011] No. 348) ( ਷೼Ռ[2011]348 ໮) dated June 28, 2011, issued by the
SA T, dividends paid to non-PRC resident individual holders of H Shares are generally subject
to individual income tax of the PRC at the withholding tax rate of 10%, depending on whether
there is any applicable tax treaty between the PRC and the jurisdiction in which the non-PRC
resident individual holder of H Shares resides as well as the tax arrangement between the PRC
and Hong Kong. Non-PRC resident individual holders who reside in jurisdictions that have not
entered into tax treaties with the PRC are subject to a 20% withholding tax on dividends
received from us. However, pursuant to the Circular Declaring that Individual Income Tax
Continues to be Exempted over Income of Individuals from Transfer of Shares (ɛᔷ
) issued by the MOF of the PRC and the SA T on
March 30, 1998, gains of individuals derived from the transfer of listed shares of enterprises
may be exempt from individual income tax. In addition, on December 31, 2009, the MOF, the
SA T and the CSRC jointly issued the Circular on Relevant Issues Concerning the Collection
of Individual Income Tax over the Income Received by Individuals from Transfer of Listed
Shares Subject to Sales Limitation (੻೼Ϟᗫ
) (Cai Shui [2009] No. 167) which states that individuals’ income from the
transfer of listed shares on certain domestic exchanges shall continue to be exempted from
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individual income tax, except for the relevant shares which are subject to sales restrictions as
defined in the Supplementary Circular on Relevant Issues Concerning the Collection of
Individual Income Tax over the Income Received by Individuals from Transfer of the Listed
Shares Subject to Sales Limitations (੻೼Ϟᗫ
) (Cai Shui [2010] No. 70). As of the Latest Practicable Date, the aforesaid
provision has not expressly provided that individual income tax shall be collected from
non-PRC resident individuals on the sale of shares of PRC resident enterprises listed on
overseas stock exchanges. To our knowledge, in practice, the PRC tax authorities have not
sought to collect individual income tax from non-PRC resident individuals on gains from the
transfer of listed shares of PRC resident enterprises on overseas stock exchanges. However,
there is no assurance as to whether further implemented laws, regulations, or practices in the
future would result in levying income tax on non-PRC resident individuals on gains from the
sale of H shares.
If the PRC income tax is imposed on gains realized from the transfer of our H Shares or
on dividends paid to our non-PRC resident investors, the value of your investment in our H
Shares may be affected. Furthermore, our Shareholders whose jurisdictions of residence have
tax treaties or arrangements with the PRC may not qualify for benefits under such tax treaties
or arrangements.
Several jurisdictions in which we operate impose restrictions on foreign ownership of
businesses. Changes in relevant laws and regulations or policies could affect our business,
financial condition and results of operations.
Foreign investors are subject to restrictions on foreign ownership in certain industries in
several jurisdictions where we operate, such as Malaysia and Indonesia. The governments of
these jurisdictions in which we operate may re-evaluate or amend the relevant laws and
regulations or policies, and changes in the laws and regulations or policies, including their
application or interpretation, could require us to remove or amend our existing arrangements
or reduce our voting or economic interests in any existing or future subsidiaries and associates
in these jurisdictions. Any such removal, amendment or reduction could affect our ability to
successfully implement our business strategies and operate in the relevant jurisdictions.
Furthermore, we cannot assure you that our subsidiaries or associates will be able to comply
with any new restrictions on foreign ownership because compliance may be affected by
whether other shareholders are considered domestic or foreign investors, as determined in
accordance with the applicable laws and regulations. If foreign ownership restrictions are
determined to have been violated, penalties could be imposed and relevant licenses or
agreements could be cancelled or voided. Any of these events could affect our business,
financial condition and results of operations.
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RISKS RELATING TO THE GLOBAL OFFERING
We will be concurrently subject to PRC and Hong Kong listing and regulatory
requirements.
As we are listed on the Shenzhen Stock Exchange and will be listed on the Main Board
of the Stock Exchange, we will be required to comply with the listing rules (where applicable)
and other regulatory regimes of both jurisdictions, unless otherwise agreed by the relevant
regulators. Accordingly, we may incur additional costs and resources in complying with the
requirements of both jurisdictions.
Our A Shares are listed on the Shenzhen Stock Exchange, and the characteristics of the
A Share and H Share markets may differ.
Our A Shares are listed on the Shenzhen Stock Exchange. Following the Global Offering,
our A Shares will continue to be traded on the Shenzhen Stock Exchange and our H Shares will
be traded on the Stock Exchange. Under current PRC laws and regulations, without the
approval from the relevant regulatory authorities, our H Shares and A Shares are neither
interchangeable nor fungible, and there is no trading or settlement between the H Share and A
Share markets. With different trading characteristics, the H Share and A Share markets have
divergent trading volumes, liquidity and investor bases, as well as different levels of retail and
institutional investor participation. As a result, the trading performance of our H Shares and A
Shares may not be comparable. Nonetheless, fluctuations in the price of our A Shares may
adversely affect the price of our H Shares, and vice versa. Furthermore, due to the different
characteristics of the H Share and A Share markets, the historical prices of our A Shares may
not be indicative of the performance of our H Shares. Y ou should therefore not place undue
reliance on the trading history of our A Shares when evaluating the investment decision in our
H Shares.
An active trading market for our H Shares may not develop or be sustained.
Prior to the Global Offering, there was no public market for our H Shares. We cannot
assure you that a public market for our H Shares with adequate liquidity will develop and be
sustained following the completion of Global Offering. The initial Offer Price for our H Shares
to the public will be the result of negotiations, and the Offer Price may differ significantly from
the market price of the H Shares following the Global Offering.
We have applied to the Stock Exchange for the listing of, and permission to deal in, the
H Shares (including any H Shares which may be issued pursuant to the exercise of the
Over-allotment Option). However, the listing on the Stock Exchange does not guarantee that
an active and liquid trading market for the H Shares will develop, or if it does develop, that
it will be sustained following the Global Offering, or that the market price of the H Shares will
not decline following the Global Offering. If an active public market for our H Shares does not
develop following the completion of the Global Offering, the market price and liquidity of our
H Shares could be materially and adversely affected.
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The price and trading volume of our H Shares may be volatile, which could materially and
adversely affect the market price of our H Shares.
The price and trading volume of our H Shares may be subject to significant volatility in
response to various factors beyond our control, including the general market conditions of the
securities in Hong Kong and elsewhere in the world. The Stock Exchange and other securities
markets have, from time to time, experienced significant price and trading volume volatility
that are not related to the operating performance of any particular company. The business and
performance and the market price of the shares of other companies engaging in similar business
may also affect the price and trading volume of our Shares. In addition to market and industry
factors, the price and trading volume of our Shares may be highly volatile for specific business
reasons, such as fluctuations in our revenue, earnings, cash flows, investments, expenditures,
regulatory developments, relationships with our suppliers, movements or activities of key
personnel, or actions taken by competitors. Moreover, shares of other companies listed on the
Stock Exchange with significant operations and assets in the PRC have experienced price
volatility in the past, and it is possible that our H Shares may be subject to changes in price
not directly related to our performance.
Y ou will incur immediate and substantial dilution, and may experience further dilution in
the future.
The Offer Price of the Offer Shares is higher than the net tangible asset value per H Share
immediately prior to the Global Offering. Therefore, purchasers of the Offer Shares in the
Global Offering will experience an immediate dilution in pro forma consolidated net tangible
asset value. In order to expand our business, we may consider offering and issuing additional
Shares in the future. Purchasers of the Offer Shares may experience dilution in the net tangible
asset value per H Share of their H Shares if we issue additional Shares in the future at a price
which is lower than the net tangible asset value per H Share at that time. Furthermore, we may
issue Shares pursuant to any existing or future share option incentive scheme, which would
further dilute our Shareholders’ interests in our Company.
Our Controlling Shareholders have significant influence over us, and their interests may
not be aligned with the interest of our other Shareholders. Changes in our Controlling
Shareholders’ shareholdings in our Company may adversely affect our shareholding
structure and the market price of our Shares.
As of the Latest Practicable Date, the equity interest in our Company was controlled
directly and indirectly (through Shenzhen Weishun) as to approximately 55.27% by Mingde
Holding, and Mr. Wang directly held 99.90% of the equity interest in Mingde Holding.
Immediately following completion of the Global Offering (assuming the Over-allotment
Option is not exercised and no further Shares are issued pursuant to the share options granted
under the 2022 Stock Option Incentive Plan), Mr. Wang and Mingde Holding will, directly and
indirectly (through Shenzhen Weishun), control approximately 53.39% of the voting rights in
our share capital through Mingde Holding. Our Controlling Shareholders have significant
influence over our business and affairs, including decisions in respect of mergers or other
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business combinations, acquisition or disposition of assets, issuance of additional Shares or
other securities, timing and amount of dividend payments, nomination of directors, and other
significant corporate actions. The interests of our Controlling Shareholders may differ from the
interests of our other Shareholders. Subject to the Listing Rules, our Articles of Association
and other applicable laws and regulations, our Controlling Shareholders will continue to have
the ability to exercise their substantial influence over us and to cause us to enter into
transactions or take, or fail to take, actions or make decisions which conflict with the best
interests of our other Shareholders. The concentration of voting power and the substantial
influence of our Controlling Shareholders over our Company may also discourage, delay or
prevent a change in control of our Company, which could deprive our Shareholders of an
opportunity to receive a premium for the Shares as part of a sale of our Company and may
significantly reduce the price of our Shares.
According to the terms of the 2021 Mingde Exchangeable Bonds and the 2024 Mingde
Exchangeable Bonds, Mingde Holding would be required to transfer the beneficial interest of
the relevant number of A Shares to the bondholders upon receipt of the exercise request of any
bondholders during the exercise period. Additional A Shares may be required to be transferred
to the bondholders as a result of automatic and discretionary adjustments to the exchange price
made under the terms of the 2021 Mingde Exchangeable Bonds and the 2024 Mingde
Exchangeable Bonds. Mingde Holding does not intend to exercise discretionary adjustments to
the extent it will cease to be a Controlling Shareholder during the twelve months from the date
of Listing. Mingde Holding does not have absolute control over corporate actions which may
trigger automatic adjustments and neither Mingde Holding nor our Company has control over
when and whether (if not all) the bondholders exercise their exchange rights. In addition, as of
the Latest Practicable Date, Mingde Holding has pledged 42,430,000 and 340,000,000 A Shares
it held to the EB Pledge Agent, being the pledge agent, as security for the obligations of
Mingde Holding under the 2021 Mingde Exchangeable Bonds and 2024 Mingde Exchangeable
Bonds, respectively, representing 0.88% and 7.06%, respectively, of the total issued share
capital of our Company. For details, see “Substantial Shareholders — Exchangeable Bonds
Issued By Mingde Holding” in this prospectus. Furthermore, as of the Latest Practicable Date,
Mingde Holding has pledged 737,400,000 A Shares to certain PRC financial institutions
regulated by NAFR and/or CSRC, representing 15.31% of the total issued share capital of our
Company. Based on the foregoing, as of the Latest Practicable Date, Mingde Holding has
pledged 1,119,830,000 A Shares in aggregate, representing 23.25% of the total issued share
capital of our Company as security for Mingde Holding’s external financing activities. In the
event that the beneficial interest of certain of the A Shares are transferred pursuant to the terms
of the 2021 Mingde Exchangeable Bonds and/or the 2024 Mingde Exchangeable Bonds, or in
the event that any of the aforementioned share pledges entered into by Mingde Holding are
enforced, Mingde Holding may no longer be able to exert the same level of impact over our
Company, which may have a material adverse impact on our shareholding structure.
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Actual or perceived sale or availability for sale of substantial amounts of our Shares could
adversely affect the market price of our Shares.
Future sales of a substantial number of our Shares, especially by our Directors, executive
officers and Controlling Shareholders, or the perception or anticipation that such sales might
occur, could negatively impact the market price of our Shares and our ability to raise equity
capital in the future at a time and price that we deem appropriate. Certain amount of the Shares
controlled by our Controlling Shareholders are subject to certain lock-up periods beginning on
the date on which trading in our Shares commences on the Stock Exchange. While we currently
are not aware of any intention of such persons to dispose of significant amounts of their Shares
after the expiry of the lock-up periods, we cannot assure you that they will not dispose of any
Shares they may own now or in the future. In addition, certain existing Shareholders of our
Shares are not subject to lock-up agreements. Market sale of Shares by such Shareholders and
the availability of these Shares for future sale may have a negative impact on the market price
of our Shares.
Our historical dividends may not be indicative of our future dividend policy, and there
can be no assurance that we will declare and distribute any amount of dividends in the
future.
We have declared dividends in the past. However, there is no assurance that we will
declare dividends in the future. Under the applicable PRC laws, the payment of dividends may
be subject to certain limitations, and the calculation of our profit under applicable accounting
standards differs in certain respects from the calculation under IFRS. The declaration, payment
and amount of our future dividends will depend upon our earnings and financial condition,
operating requirements, capital requirements, applicable laws and regulations and any other
conditions that our Directors may deem relevant and will be subject to the approval of our
Shareholders. Any declaration and payment as well as the amount of dividends will be subject
to our constitutional documents and the applicable PRC laws and regulations, and would
require approval at our shareholders’ meeting. No dividend shall be declared or payable except
out of our profits and reserves lawfully available for distribution. For details, see “Financial
Information — Dividends and Dividend Policy” in this prospectus. There can be no assurance
that dividends of any amount will be declared or distributed in any year in the future. Our
historical dividends should not be taken as indicative of our dividend policy in the future.
Forward-looking statements contained in this prospectus are subject to risks and
uncertainties.
This prospectus contains certain statements and information that are forward-looking and
uses forward-looking terminology such as “anticipate”, “believe”, “could”, “going forward”,
“intend”, “plan”, “project”, “seek”, “expect”, “may”, “ought to”, “should”, “would” or “will”
and similar expressions. Y ou are cautioned that reliance on any forward-looking statement
involves risks and uncertainties and that any or all of those assumptions could prove to be
inaccurate and as a result, the forward-looking statements based on those assumptions could
also be incorrect. In light of these and other risks and uncertainties, the inclusion of
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forward-looking statements in this prospectus should not be regarded as representations or
warranties by us that our plans and objectives will be achieved, and these forward-looking
statements should be considered in light of various important factors, including those set forth
in this section. Subject to the requirements of the Listing Rules, we do not intend to update or
otherwise revise the forward-looking statements in this prospectus to the public, whether as a
result of new information, future events or otherwise. Accordingly, you should not place undue
reliance on any forward-looking information. All forward-looking statements in this prospectus
are qualified by reference to this cautionary statement.
Certain facts, forecasts and other statistics in this prospectus are derived from various
publicly available official sources and independent third-party sources, including the
industry expert reports.
This prospectus, particularly the section headed “Industry Overview,” contains
information and statistics relating to the logistics industry and other economic data. Such
information and statistics have been derived from third-party reports, either commissioned by
us or publicly accessible, and other publicly available sources. We believe that the sources of
the information are appropriate, and we have taken reasonable care in extracting and
reproducing such information. However, the information derived from official government
sources has not been independently verified by us, any of the Joint Sponsors, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, any of their
respective directors and advisers, or any other persons or parties involved in the Global
Offering, and no representation is given as to its accuracy. Collection methods of such
information may be ineffective, or there may be discrepancies between published information
and market practice, which may result in the statistics being inaccurate or not comparable to
statistics produced for other economies. Y ou should therefore not place undue reliance on such
information.
Y ou should not place reliance on any information released by us in connection with the
listing of our A Shares on the Shenzhen Stock Exchange.
As our A Shares are listed on the Shenzhen Stock Exchange, we have been subject to
periodic reporting and other information disclosure requirements in the PRC. As a result, from
time to time we publicly release information relating to ourselves on the Shenzhen Stock
Exchange or other media outlets designated by the CSRC. However, the information announced
by us in connection with our A Shares is based on the regulatory requirements of the securities
authorities and market practices in the PRC which are different from those applicable to our
H Shares. Such information does not and will not form a part of this prospectus. As a result,
prospective investors in our H Shares are reminded that, in making their investment decisions
as to whether to purchase our H Shares, they should rely only on the financial, operating and
other information included in this prospectus. By applying to purchase our H Shares in the
Global Offering, you will be deemed to have agreed that you will not rely on any information
other than that contained in this prospectus and any formal announcements made by us in Hong
Kong with respect to the Global Offering.
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Y ou should read the entire prospectus carefully and only rely on the information included
in this prospectus to make your investment decision, and we strongly caution you not to
rely on any information contained in press articles or other media coverage relating to us,
our Shares or the Global Offering.
There has been, prior to the publication of this prospectus, and there may be, subsequent
to the date of this prospectus but prior to the completion of the Global Offering, press and
media coverage regarding us and the Global Offering. We have not authorized the disclosure
of any information concerning the Global Offering in the press or media. We do not accept any
responsibility for the accuracy or completeness of any information reported by the press or
other media, nor the fairness or appropriateness of any forecasts, views or opinions expressed
by the press or other media regarding our Shares, the Global Offering or us. We make no
representation as to the appropriateness, accuracy, completeness or reliability of any of the
projections, valuations or other forward-looking information about us. To the extent such
statements are inconsistent with, or conflict with, the information contained in this prospectus,
we disclaim responsibility for them. Y ou should rely solely upon the information contained in
this prospectus, the Global Offering and any formal announcements made by us in Hong Kong
in making your investment decision regarding our H Shares. By applying to purchase our H
Shares in the Global Offering, you will be deemed to have agreed that you will not rely on any
information other than that contained in this prospectus and any formal announcements made
by us in Hong Kong with respect to the Global Offering.
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In preparation for the Listing, we have sought the following waivers and exemptions from
strict compliance with the relevant provisions of the Listing Rules, the SFO and the Companies
(Winding Up and Miscellaneous Provisions) Ordinance:
Rules Subject matter
Rule 10.04 and paragraph 5(2) of
Appendix F1 to the Listing Rules
Allocation of H Shares to existing minority
Shareholders and their close associates
Rules 3.28 and 8.17 Appointment of joint company secretaries
Rules 8.12 and 19A.15 Management presence in Hong Kong
Paragraphs 26 of Appendix D1A
to the Listing Rules and paragraphs 11
and 25 of the Third Schedule to the
Companies (Winding Up and
Miscellaneous Provisions) Ordinance
Particulars of any alterations of capital and
authorized debentures
Rule 14A.105 Continuing connected transactions
Rule 17.02(1)(b) of, and paragraph 27
of Appendix D1A to the Listing Rules
Paragraph 10(d) of the Third Schedule
pursuant to section 342A of the
Companies (Winding Up and
Miscellaneous Provisions) Ordinance
Disclosure requirements in respect of
outstanding share options
Paragraph 3(b) of Practice note 15 to
the Listing Rules
Three-year restriction on spin-offs
Paragraph 6 of the Third Schedule to
Companies (Winding Up and
Miscellaneous Provisions) Ordinance
Disclosure of executive Director’s residential
address
Rules 8.08(1)(b) and 19A.13A Public float requirement
Rules 4.04(2) and 4.04(4)(a) Acquisitions after the Track Record Period
Paragraph 4.2 of Practice Note 18 of the
Listing Rules
Clawback mechanism
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ALLOCATION OF H SHARES TO EXISTING MINORITY SHAREHOLDERS AND
THEIR CLOSE ASSOCIATES
Rule 10.04 of the Listing Rules requires that a person who is an existing shareholder of
a listing applicant may only subscribe for or purchase any securities for which listing is sought
that are being marketed by or on behalf of a listing applicant either in his/her/its own name or
through nominees if the conditions in Rule 10.03 of the Listing Rules are fulfilled, namely that
(i) no securities are to be offered to the existing shareholders on a preferential basis and no
preferential treatment is given to them in the allocation of the securities; and (ii) the minimum
prescribed percentage of public shareholders required by Rule 8.08(1) of the Listing Rules is
achieved. Paragraph 5(2) of Appendix F1 to the Listing Rules states that, without the prior
written consent of the Stock Exchange, no allocations will be permitted to be made to directors
or existing shareholders of a listing applicant or their close associates, unless the conditions set
out in Rules 10.03 and 10.04 are fulfilled.
Chapter 4.15 of the Guide provides that the Stock Exchange will consider granting a
waiver from Rule 10.04 of the Listing Rules and a consent, pursuant to paragraph 5(2) of
Appendix F1 to the Listing Rules, to allow a listing applicant’s existing shareholders or their
close associates to participate in its initial public offering if any actual or perceived preferential
treatment arising from their ability to influence the listing applicant during the allocation
process can be addressed.
Prior to the Listing, our share capital comprises entirely A Shares listed on the SZSE. As
a company listed on the SZSE with its A Shares publicly traded thereon and with a large public
A Shares shareholder base, it would be unduly burdensome for us to seek the prior consent of
the Stock Exchange for each of our minority existing Shareholders or their close associates
who subscribe for the H Shares in the Global Offering.
We have applied for, and the Stock Exchange has granted, a waiver from strict compliance
with Rule 10.04 of, and a consent under paragraph 5(2) of Appendix F1 to the Listing Rules
to permit H Shares in the International Offering to be placed to certain existing minority
Shareholders who (i) hold less than 5% of the voting rights in our Company prior to the
completion of the Global Offering and (ii) are not and will not become (upon the completion
of the Global Offering) core connected persons of our Company or the close associates of any
such core connected person (together, the “ Permitted Existing Shareholder ”), on the
following conditions:
(a) each Permitted Existing Shareholder to whom our Company may allocate the
H Shares under the International Offering holds less than 5% of the voting rights in
our Company prior to the completion of the Global Offering;
(b) each Permitted Existing Shareholder is not, and will not be, a core connected person
of our Company or any close associate of any such core connected person
immediately prior to or following the Global Offering;
(c) none of the Permitted Existing Shareholders has the power to appoint any Directors
nor have any other special rights in our Company;
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(d) allocation to the Permitted Existing Shareholders and their close associates will not
affect our Company’s ability to satisfy the public float requirement as prescribed by
the Stock Exchange under the waiver in respect of the strict compliance with the
requirements of Rule 8.08(1)(b) of the Listing Rules;
(e) to the best knowledge and belief of our Company and the Joint Sponsors, and based
on discussions between our Company and the Overall Coordinators and
confirmations required to be submitted to the Stock Exchange by the Joint Sponsors,
we will confirm to the Stock Exchange that:
a. in case of participation as cornerstone investors, no preferential treatment has
been, nor will be, given to the Permitted Existing Shareholders and/or their
close associates by virtue of their relationship with our Company, other than
the preferential treatment of assured entitlement under a cornerstone
investment following the principles set out in Chapter 4.15 of the Guide, and
the Permitted Existing Shareholders’ cornerstone investment agreements do
not contain any material terms which are more favorable to the Permitted
Existing Shareholders than those in other cornerstone investment agreements;
or
b. in case of participation as placees, no preferential treatment will be given to the
Permitted Existing Shareholders and/or their close associates in the allocation
process by virtue of their relationship with our Company;
(f) in the case of participation as placees, the Overall Coordinators will confirm to the
Stock Exchange that, to the best of their knowledge and belief, no preferential
treatment has been, nor will be, given to any of the Permitted Existing Shareholders
or their close associates by virtue of their relationship with our Company in any
allocation in the International Offering; and
(g) the Joint Sponsors will confirm to the Stock Exchange that based on (a) their
discussions with our Company and the Overall Coordinators; and (b) the
confirmations provided to the Stock Exchange by our Company and the Overall
Coordinators, and to the best of their knowledge and belief, they have no reason to
believe that the Permitted Existing Shareholders and/or their close associates
received any preferential treatment in the allocation process either as cornerstone
investors or as placees by virtue of their relationship with our Company, other than,
in the case of participation as cornerstone investors, the preferential treatment of
assured entitlement under a cornerstone investment following the principles set out
in Chapter 4.15 of the Guide, and details of allocation to the Permitted Existing
Shareholders and/or their close associates will be disclosed in this prospectus (for
cornerstone investors) and allotment results announcement (for both cornerstone
investors and placees) of our Company.
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APPOINTMENT OF JOINT COMPANY SECRETARIES
Pursuant to Rule 8.17 of the Listing Rules, we must appoint a company secretary who
satisfies the requirements under Rule 3.28 of the Listing Rules. According to Rule 3.28 of the
Listing Rules, we must appoint as our company secretary an individual, who, by virtue of his
or her academic or professional qualifications or relevant experience, is, in the opinion of the
Stock Exchange, capable of discharging the functions of company secretary.
Pursuant to Note 1 to Rule 3.28 of the Listing Rules, the Stock Exchange considers the
following academic or professional qualifications to be acceptable:
(a) a member of The Hong Kong Chartered Governance Institute;
(b) a solicitor or barrister as defined in the Legal Practitioners Ordinance (Chapter 159
of the Laws of Hong Kong); or
(c) a certified public accountant as defined in the Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong).
In addition, pursuant to Note 2 to Rule 3.28 of the Listing Rules, in assessing “relevant
experience”, the Stock Exchange will consider the individual’s:
(a) length of employment with the issuer and other issuers and the roles he or she
played;
(b) familiarity with the Listing Rules and other relevant law and regulations including
the SFO, the Companies Ordinance, the Companies (Winding Up and Miscellaneous
Provisions) Ordinance and the Takeovers Code;
(c) relevant training taken and/or to be taken in addition to the minimum requirement
under Rule 3.29 of the Listing Rules; and
(d) professional qualifications in other jurisdictions.
We have appointed Ms. Gan Ling (ޛ“() Ms. Gan ”) as our joint company secretary. As
she has extensive experience in investment, corporate finance and corporate governance but
presently does not possess any of the qualification required under Rules 3.28 and 8.17 of the
Listing Rules, we have appointed Ms. So Ka Man ( ᘽྗઽ)( “ Ms. So ”) of Tricor Services
Limited to provide assistance to Ms. Gan. Ms. So is a member of the Hong Kong Chartered
Governance Institute, and therefore meets the qualification requirements under Note 1 to Rule
3.28 of the Listing Rules and is in compliance with Rule 8.17 of the Listing Rules.
Ms. Gan and Ms. So will be jointly discharging the duties and responsibilities of a
company secretary. Ms. So will be assisting Ms. Gan in gaining the relevant experience
required under Rules 3.28 and 8.17 of the Listing Rules. Also, Ms. Gan will be assisted by (1)
the compliance advisor of our Company for the first full financial year starting from the Listing
Date, particularly in relation to Hong Kong corporate governance practice and compliance
matters; and (2) the Hong Kong legal advisor of our Company, on matters regarding our
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Company’s ongoing compliance with the Listing Rules and the applicable Hong Kong laws and
regulations. In addition, Ms. Gan will endeavor to attend relevant trainings and familiarize
herself with the Listing Rules and duties required of a company secretary of an issuer listed on
the Stock Exchange. We have applied to the Stock Exchange for, and the Stock Exchange has
granted, a waiver from strict compliance with the requirements under Rules 3.28 and 8.17 of
the Listing Rules such that Ms. Gan may be appointed as a joint company secretary of our
Company.
Pursuant to Chapter 3.10 of the Guide, the waiver will be for a fixed period of time (the
“Waiver Period ”) and on the following conditions: (1) the proposed company secretary must
be assisted by a person who possesses the qualifications or experience as required under Rule
3.28 and is appointed as a joint company secretary throughout the Waiver Period; and (2) the
waiver can be revoked if there are material breaches of the Listing Rules by the issuer. The
waiver is valid for an initial period of three years on the condition that Ms. So will work closely
with, and provide assistance to, Ms. Gan in the discharge of her duties as a company secretary
and in gaining the relevant experience as required under Rule 3.28 of the Listing Rules and to
become familiar with the requirements of the Listing Rules and other applicable Hong Kong
laws and regulations. The waiver will be revoked immediately if Ms. So ceases to provide
assistance to Ms. Gan during the three-year period after Listing.
Our Company will further ensure that Ms. Gan has access to the relevant training and
support that would enhance her understanding of the Listing Rules and the duties of a company
secretary of an issuer listed on the Stock Exchange, and to receive updates on the latest changes
to the applicable Hong Kong laws and regulations and the Listing Rules. Before the end of the
three-year period, the Company will demonstrate and seek the Stock Exchange’s confirmation
that Ms. Gan, having had the benefits of Ms. So’s assistance during the three-year period, has
attained the relevant experience under Note 2 to Rule 3.28 of the Listing Rules and is capable
of discharging the functions of a company secretary so that a further waiver would not be
necessary.
For further information regarding the qualifications of Ms. Gan and Ms. So, see
“Directors, Supervisors, Senior Management and Employees” in this prospectus.
MANAGEMENT PRESENCE IN HONG KONG
Pursuant to Rule 8.12 of the Listing Rules, we must have sufficient management presence
in Hong Kong. This normally means that at least two of the executive Directors must be
ordinarily resident in Hong Kong. Pursuant to Rule 19A.15 of the Listing Rules, the
requirement in Rule 8.12 may be waived having regard to, among other considerations, the
arrangements for maintaining regular communication with the Stock Exchange.
Since most of the business operations of our Group are managed and conducted outside
of Hong Kong, and most of the executive Directors ordinarily reside outside Hong Kong, our
Company considers that it would be practically difficult and commercially unreasonable and
undesirable for our Company to arrange for two executive Directors to be ordinarily resident
in Hong Kong, either by means of relocation of existing executive Directors or appointment of
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additional executive Directors. Therefore, our Company does not, and does not contemplate in
the foreseeable future that we will, have sufficient management presence in Hong Kong for the
purpose of satisfying the requirements under Rule 8.12 of the Listing Rules.
Accordingly, pursuant to Rule 19A.15 of the Listing Rules, we have applied for, and the
Stock Exchange has granted, a waiver from strict compliance with Rule 8.12 and Rule 19A.15
of the Listing Rules subject to the following conditions. We will ensure that there is an
effective channel of communication between us and the Stock Exchange by way of the
following arrangements:
(a) Authorized representatives : we have appointed Mr. HO Chit ( Оઠ) and Ms. GAN
Ling (ޛas the authorized representatives (the “ Authorized Representatives ”)
for the purpose of Rule 3.05 of the Listing Rules. The Authorized Representatives
will act as our principal channel of communication with the Stock Exchange and
would be readily contactable by phone, facsimile and email to deal promptly with
enquiries from the Stock Exchange. Accordingly, the Authorized Representatives
will be able to meet with the relevant members of the Stock Exchange to discuss any
matters in relation to our Company within a reasonable period of time. We will also
inform the Stock Exchange promptly in respect of any change in the Authorized
Representatives. For more information about our Authorized Representatives, see
“Directors, Supervisors, Senior Management and Employees” in this prospectus;
(b) Directors : each of our Authorized Representatives has means to contact all members
of our Board (including our independent non-executive Directors) promptly at all
times as and when the Stock Exchange wishes to contact the members of our Board
for any matters. In the event that any Director expects to travel or otherwise be out
of office, he/she will provide a contactable phone number of him/her to the
Authorized Representatives. Pursuant to Rule 3.20 of the Listing Rules, each of our
Directors shall provide their telephone number, mobile phone number, facsimile
number (if available), email address (if available), residential address and
correspondence address to the Stock Exchange. To the best of our knowledge and
information, each Director who does not ordinarily reside in Hong Kong possesses
or can apply for valid travel documents to visit Hong Kong and can meet with the
Stock Exchange within a reasonable period upon request of the Stock Exchange;
(c) Compliance advisor : we have appointed Caitong International Capital Co., Limited
(ʮ̡) as our compliance advisor (the “ Compliance Advisor ”)
upon Listing pursuant to Rules 3A.19 and 19A.05 of the Listing Rules for a period
commencing on the Listing Date and ending on the date on which we comply with
Rule 13.46 of the Listing Rules in respect of our financial results for the first full
financial year commencing after the Listing Date. The Compliance Advisor will
have access at all times to our Authorized Representatives, the Directors, the
Supervisors and other senior management and can act as the additional channel of
communication with the Stock Exchange and answer enquiries from the Stock
Exchange. The contact details of the Compliance Advisor have been provided to the
Stock Exchange. We will also inform the Stock Exchange promptly in respect of any
change in the Compliance Advisor; and
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(d) Hong Kong legal advisor : we will retain a Hong Kong legal advisor to advise us
on the on-going compliance requirements, any amendment or supplement to and
other issues arising under the Listing Rules and other applicable laws and
regulations in Hong Kong after the Listing.
PARTICULARS OF ANY ALTERATIONS OF CAPITAL AND AUTHORIZED
DEBENTURES
Paragraph 26 of Appendix D1A to the Listing Rules and paragraph 11 of the Third
Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance require this
prospectus to include the particulars of any alterations of capital within two years immediately
preceding the issue of this prospectus.
Paragraph 25 of the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance requires particulars of the authorized debentures of our Company and
its subsidiaries to be disclosed in this prospectus.
Our Company had more than 1,000 subsidiaries as of the Latest Practicable Date. Our
Company believes that it would be unduly burdensome to disclose the required information in
respect of all of its subsidiaries as our Company would have to incur additional costs and
devote additional resources in compiling and verifying the relevant information for such
disclosure, which would not be material or meaningful to investors save for the major
subsidiaries as referred to below, none of the other subsidiaries of our Company individually
contributed to 5% or more of our revenue or profit before tax during each year in the Track
Record Period, or total assets or net assets as of December 31, 2021, 2022 or 2023, or June 30,
2024, or hold any major licenses and permits for our integrated logistics business operations.
The non-disclosure of the relevant information required under the Listing Rules and the
Companies (Winding Up and Miscellaneous Provisions) Ordinance of subsidiaries that are not
major subsidiaries of the Company will not prejudice the interests of investors.
Our Company has identified 27 entities primarily responsible for the Track Record Period
results of the Group as its major subsidiaries during the Track Record Period. During the Track
Record Period, we disposed of all of our equity interests in Fengwang Express, a major
subsidiary and as of the Latest Practicable Date, we operated our business through 26 major
subsidiaries. For further details, see “History, Development and Corporate Structure — Our
Major Subsidiaries” in this prospectus. These major subsidiaries were identified taking into
account various factors including their significance from business segment, geographical and
financial contribution perspectives. By way of illustration, these major subsidiaries accounted
for (without eliminating intragroup transactions) (i) 48.4%, 41.2%, 46.0% and 40.0% of the
revenue, 82.7%, 56.0%, 131.1% and 30.8% of the profit before tax, and 122.4%, 75.9%,
169.0% and 31.2% of the net profit of our Group for each of the years ended December 31,
2021, 2022 and 2023, and for the six months ended June 30, 2024, respectively; and (ii)
112.3%, 120.6%, 127.1% and 127.0% of the total assets of our Group as at December 31, 2021,
2022 and 2023, and June 30, 2024, respectively. In addition, certain of the major subsidiaries
also hold the assets, intellectual property rights, proprietary technologies or licenses and
permits that are considered by the Directors to be material to the Group and the major
subsidiaries have covered all business segments of the Group. As mentioned above, none of the
other subsidiaries of our Company that are not major subsidiaries individually contributes to
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5% or more of our Group’s revenue or profit before tax during each year or period in the Track
Record Period, or total assets or net assets as of December 31, 2021, 2022 or 2023, or June 30,
2024, nor hold any assets, intellectual property rights, proprietary technologies or licenses and
permits that is considered by the Directors to be material to the Group. Therefore, none of such
other subsidiaries are individually significant to our overall results or operations. On the other
hand, certain of our subsidiaries that were with relatively high loss-making amount (in absolute
figure) on a single-entity basis were selected as major subsidiaries. Despite the selection of
such loss-making subsidiaries would lead to a decrease in the aggregate contribution of the
major subsidiaries to our profit before tax, selection of these subsidiaries helped to achieve a
more balanced outcome and assessment on materiality of our Group on the whole. In addition,
as the mid-year profits of a company do not reflect the dividends such company may receive
from its own various subsidiaries by the end of a financial year, the profits before tax coverage
of the major subsidiaries for the six months ended June 30, 2024 is relatively lower compared
to that of the previous financial years. Moreover, none of the information required under the
relevant paragraphs of Appendix D1A to the Listing Rules and the Third Schedule to the
Companies (Winding Up and Miscellaneous Provisions) Ordinance mentioned above pertain to
the business operations of our Group. Accordingly, the disclosure of such information required
under the requirements in the Listing Rules and the Companies (Winding Up and
Miscellaneous Provisions) Ordinance in respect of our Company and its major subsidiaries
already provide sufficient information that is reasonably necessary to enable potential investors
to make an informed assessment of the activities, assets and liabilities, financial position,
management and prospects of our Company, of its profits and losses and of the rights attaching
to the securities for which listing is sought, as required under Rule 11.07 of the Listing Rules.
On the other hand, our Company believes that it would be unduly burdensome for our Company
to disclose such information in respect of its non-major subsidiaries, as it would have to incur
additional costs and devote additional resources in compiling and verifying the relevant
information of more than 1,000 subsidiaries for such disclosure.
We have disclosed the particulars of the changes in share capital of our Company and the
major subsidiaries in the sections headed “Statutory and General Information — 1. Further
Information about our Company — B. Changes in Share Capital of our Company” and
“Statutory and General Information — 1. Further Information about our Company — C.
Changes in Share Capital of our Major Subsidiaries” in Appendix IV to this prospectus.
Our Company confirms that all information necessary for the public to make an informed
assessment of the business, asset and liability, financial position, trading position, management
and prospect of our Group have been disclosed in this prospectus, and that, as such, the
granting of the waiver and exemption from strict compliance with the relevant content
requirements under the Listing Rules and the Companies (Winding Up and Miscellaneous
Provisions) Ordinance will not prejudice the interest of the investing public.
We have applied for, and the Stock Exchange has granted, a waiver from strict compliance
with the requirements under paragraph 26 of Appendix D1A to the Listing Rules. We have
applied for, and the SFC has granted, a certificate of exemption from strict compliance with the
requirements under paragraphs 11 and 25 of the Third Schedule to the Companies (Winding Up
and Miscellaneous Provisions) Ordinance, to the extent not strictly met by the current
disclosure in this prospectus.
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CONTINUING CONNECTED TRANSACTIONS
We have entered into, and expect to continue, certain transactions that will constitute
partially-exempt continuing connected transactions of our Company under the Listing Rules
upon Listing as described in the section headed “Connected Transactions” in this prospectus.
Our Directors consider that strict compliance with the applicable requirement under the Listing
Rules would be impractical, unduly burdensome and would impose unnecessary administrative
costs on our Company. Accordingly, we have applied for, and the Stock Exchange has granted
to us, a waiver from strict compliance with the applicable requirements under Chapter 14A of
the Listing Rules upon Listing in respect of such partially-exempt continuing connected
transactions. For further details, see “Connected Transactions” in this prospectus.
DISCLOSURE REQUIREMENTS IN RESPECT OF OUTSTANDING SHARE OPTIONS
Paragraph 10(d) of the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance requires our Company to disclose, among other things, details of the
number, description and amount of any Shares in or debentures of our Company which any
person has, or is entitled to be given, an option to subscribe for, together with certain
particulars of each option, namely the period during which it is exercisable, the price to be paid
for shares or debentures subscribed for under it, the consideration (if any) given or to be given
for it or for the right to it, and the names and addresses of the persons to whom it was given.
Rule 17.02(1)(b) of the Listing Rules requires that full details of all outstanding share options
and awards and their potential dilution effect on the shareholdings upon listing as well as the
impact on the earnings per share arising from the issue of shares in respect of such outstanding
options or awards be clearly set out in the listing document. Paragraph 27 of Appendix D1A
to the Listing Rules requires our Company to set out in this prospectus particulars of the capital
of any member of our Group that is under option, or agreed conditionally or unconditionally
to be put under option, including the consideration for which the option was or will be granted
and the price and duration of the option, and the name and address of the grantee (together the
“Share Option Disclosure Requirements ”).
Pursuant to Chapter 3.6 of the Guide, the Stock Exchange would normally grant waivers
from disclosing the names and addresses of certain grantees if the issuer could demonstrate that
such disclosures would be irrelevant and unduly burdensome, subject to certain conditions
specified therein.
Our Company and its subsidiaries may, from time to time, adopt equity incentive plans.
As of the Latest Practicable Date, our Company had adopted the following equity incentive
plan to which the Share Option Disclosure Requirements are applicable:
2022 Stock Option Incentive Plan
In order to establish and improve the incentive mechanism of our Company, to connect
the interests of shareholders and our Company together with the individual interests of the core
talents of our Company and to promote all parties to focus on the long-term development of
our Company, and to attract and retain outstanding core talents, the 2022 Stock Option
Incentive Plan was adopted by our Company. Pursuant to the 2022 Stock Option Incentive
Plan, our Company had in aggregate granted 49,500,100 share options to 1,493 participants in
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two tranches, with the first tranche granted on May 30, 2022 (“ First Tranche ”), and the second
tranche granted on October 28, 2022 (“ Reserved Tranche ”). On August 1, 2023, as (i) 99
grantees under the First Tranche were no longer eligible to hold share options under the 2022
Stock Option Incentive Plan and (ii) 257 grantees under the First Tranche whose share options
reached the first period of exercise were not eligible to exercise their granted options in full
based on their performance appraisal results in 2022, 6,676,212 option granted were therefore
approved by the Board to be canceled. For the options under the First Tranche exercisable
under the first period of exercise, 1,252 grantees have exercised an aggregate of 8,420,193
granted options representing 8,420,193 A Shares. On October 10, 2024, as (i) 116 grantees
under the First Tranche were no longer eligible to hold share options under the 2022 Stock
Option Incentive Plan, (ii) 64 grantees under the First Tranche voluntarily gave up their right
of exercise under the first period of exercise, (iii) 281 grantees under the First Tranche whose
share options reached the second period of exercise were not eligible to exercise their granted
options in full based on their performance appraisal results in 2023, (iv) 12 grantees under the
Reserved Tranche were no longer eligible to hold share options under the 2022 Stock Option
Incentive Plan, and (v) 4 grantees under the Reserved Tranche whose share options reached the
first period of exercise were not eligible to exercise their granted options in full based on their
performance appraisal results in 2022, an aggregate of 6,691,167 options granted were
therefore approved by the Board to be canceled. On October 29, 2024, as 16 grantees under the
Reserved Tranche whose share options reached the first period of exercise did not exercise
their granted options, an aggregate of 115,058 options granted were therefore approved by the
Board to be canceled. On November 14, 2024, as four grantees under the Reserved Tranche
whose share options reached the second period of exercise were not eligible to exercise their
granted options in full based on their performance appraisal results in 2023, an aggregate of
26,312 options granted were approved by the Board to be canceled.
As of November 14, 2024, 57 grantees have exercised an aggregate of 275,763 options
since October 2024, and the number of underlying A Shares pursuant to the outstanding options
granted under the 2022 Stock Option Incentive Plan exercisable by an aggregate of 1,266
grantees amounts to 27,295,395, representing approximately 0.55% of the total issued share
capital of our Company upon completion of the Global Offering (assuming the Over-allotment
Option is not exercised and no further Shares are issued pursuant to the share options granted
under the 2022 Stock Option Incentive Plan), with the number of Shares to be issued upon
exercise of the relevant options ranging from 5,000 A Shares to 366,000 A Shares (assuming
the actual exercisable options of the grantees equals to their respective outstanding options
granted).
As of November 14, 2024, other than three Directors, four senior management members
of our Company (who are not Directors) and seven connected persons of our Company who are
director(s) or supervisor(s) of our subsidiaries, no options were granted to any Directors, senior
management of our Company or connected persons of our Company under the 2022 Stock
Option Incentive Plan.
For details of the 2022 Stock Option Incentive Plan, see “Statutory and General
Information — 4. Our Incentive Schemes and Particulars of our Capital under Option — A.
2022 Stock Option Incentive Plan” in Appendix IV to this prospectus.
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We have applied for: (i) a waiver from the Stock Exchange from strict compliance with
the requirements under Rule 17.02(1)(b) of, and paragraph 27 of Appendix D1A to, the Listing
Rules and the condition to make available a full list of grantees with all the particulars required
under paragraph 10(d) of the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, in relation to the options granted under the 2022 Stock Option Incentive
Plan; and (ii) a certificate of exemption from the SFC under section 342A of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance exempting our Company from strict
compliance with paragraph 10(d) of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance in relation to the options granted under the 2022 Stock
Option Incentive Plan, on the ground that strict compliance with the above requirements would
be unduly burdensome for us on the basis of the following reasons:
(a) given that over 1,000 grantees are involved, strict compliance with the Share Option
Disclosure Requirements in setting out full details of all the grantees who held
options under the 2022 Stock Option Incentive Plan in this prospectus would be
costly and unduly burdensome for our Company in light of a significant increase in
cost and timing for information compilation and prospectus preparation;
(b) the disclosure of the personal details of each grantee, including the number of
options granted and addresses, may require obtaining consent from all the grantees
in order to comply with personal data privacy laws and principles and it would be
unduly burdensome for our Company to obtain such consents given the number of
grantees;
(c) full disclosure on the options granted to each grantee either through disclosure in
this prospectus or through making available a full list of grantees with all the
particulars required would allow the employees of our Group to gain access to their
peers’ or colleagues’ compensation, which could negatively affect employees’
morale, give rise to negative internal competitions, and lead to an increase in the
costs for recruitment and retention. The lack of full disclosure with the above
disclosure requirements will on the contrary give us flexibility in terms of
determining the compensation of our broader group of employees;
(d) full disclosure of the details of the grantees (which include their names and
addresses), as well as the share options granted to each of them, would provide our
competitors with our employees’ compensation details and facilitate their soliciting
activities which could impact our Group’s ability to recruit and retain valuable
personnel;
(e) the grant and exercise in full of the options under the 2022 Stock Option Incentive
Plan will not cause any material adverse impact to the financial position of our
Group;
(f) there will not be any new H Shares issued under the 2022 Stock Option Incentive
Plan, as the option plan was an A Share incentive plan;
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(g) non-compliance with the Share Option Disclosure Requirements would not prevent
our Company from providing its potential investors with an informed assessment of
the activities, assets, liabilities, financial position, management and prospects of our
Company; and
(h) material information relating to the options under the 2022 Stock Option Incentive
Plan will be disclosed in this prospectus, including (i) the total number of share
options granted and outstanding under the 2022 Stock Option Incentive Plan and the
number of underlying Shares, (ii) the exercise price per Share and the exercise
period, and (iii) impact on earnings per Share upon full exercise of the outstanding
options granted under the 2022 Stock Option Incentive Plan (assuming A Shares will
be issued for the exercise of the outstanding options and A Shares in the repurchase
account of the Company will not be utilized). Our Directors consider that the
information that is reasonably necessary for potential investors to make an informed
assessment of our Company in their investment decision making process has been
included in this prospectus.
In light of the above, our Directors are of the view that the grant of the abovementioned
waiver and exemption will not prejudice the interests of the investing public.
We have applied for, and the Stock Exchange has granted, a waiver from strict compliance
with the requirements under Rule 17.02(1)(b) of, and paragraph 27 of Appendix D1A to, the
Listing Rules, and the condition to make available a full list of grantees with all the particulars
required under paragraph 10(d) of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, in relation to the options granted under the 2022 Stock
Option Incentive Plan on the conditions that:
(a) on an individual basis, full details of the options granted under the 2022 Stock
Option Incentive Plan to each of our (i) Directors, (ii) members of senior
management (iii) other connected persons of our Company and (iv) grantees with
200,000 or more outstanding options granted and who are not a Director, member of
senior management team or connected person of the Company, each with options not
expected to be canceled, are disclosed in this prospectus as required under Rule
17.02(1)(b) of, and paragraph 27 of Appendix D1A to, the Listing Rules, and
paragraph 10 of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance;
(b) in respect of the options granted under the 2022 Stock Option Incentive Plan to the
remaining grantees (other than those referred to in paragraph (a) above), disclosure
will be made on an aggregate basis: (i) the aggregate number of grantees and number
of Shares underlying the options granted under the 2022 Stock Option Incentive
Plan; (ii) the dates of grant of the options under the 2022 Stock Option Incentive
Plan; and (iii) the exercise period and exercise price of the options granted under the
2022 Stock Option Incentive Plan;
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(c) the aggregate number of Shares underlying the options granted under the 2022 Stock
Option Incentive Plan and the percentage to our total issued share capital
represented by such number of Shares as of the Latest Practicable Date will be
disclosed in this prospectus;
(d) a summary of the major terms of the 2022 Stock Option Incentive Plan will be
disclosed in “Statutory and General Information — 4. Our Incentive Schemes and
Particulars of our Capital under Option — A. 2022 Stock Option Incentive Plan” in
Appendix IV to this prospectus;
(e) the particulars of the waiver are disclosed in this prospectus; and
(f) the grant of certificate of exemption under the Companies (Winding Up and
Miscellaneous Provisions) Ordinance from the SFC exempting our Company from
the disclosure requirements provided in paragraph 10(d) of the Third Schedule to the
Companies (Winding Up and Miscellaneous Provisions) Ordinance.
We have applied for, and the SFC has granted, a certificate of exemption from the SFC
under section 342A of the Companies (Winding Up and Miscellaneous Provisions) Ordinance
exempting our Company from strict compliance with paragraph 10(d) of the Third Schedule to
the Companies (Winding Up and Miscellaneous Provisions) Ordinance in relation to the
options granted under the 2022 Stock Option Incentive Plan on the conditions that:
(a) on an individual basis, full details of the options granted under the 2022 Stock
Option Incentive Plan granted to each of our (i) Directors, (ii) members of senior
management (iii) other connected persons of our Company and (iv) grantees with
200,000 or more outstanding options granted (but is not expected to be canceled)
and who are not a Director, member of senior management team or connected person
of the Company are disclosed in this prospectus as required by paragraph 10 of the
Third Schedule to the Companies (Winding Up and Miscellaneous Provisions)
Ordinance;
(b) in respect of the options granted under the 2022 Stock Option Incentive Plan to the
remaining grantees (other than those referred to in paragraph (a) above), disclosure
has been made, on an aggregate basis, categorized into lots based on the number of
Shares underlying each individual grantee, being (i) 1 to 25,000, (ii) 25,001 to
75,000 and (iii) 75,001 to 199,999 for each lots of Share, the following details are
disclosed in this prospectus including (i) the aggregate number of grantees and
number of Shares underlying the options granted under the 2022 Stock Option
Incentive Plan; (ii) the consideration paid for and the dates of grant of the options
under the 2022 Stock Option Incentive Plan; and (iii) the exercise period and
exercise price of the options granted under the 2022 Stock Option Incentive Plan;
(c) the particulars of the exemption are disclosed in this prospectus; and
(d) this prospectus is issued on or before November 19, 2024.
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THREE-YEAR RESTRICTION ON SPIN-OFFS
Paragraph 3(b) of Practice Note 15 (“ PN15 ”) to the Listing Rules currently provides that
the Stock Exchange would not normally approve a spin-off within three years of the date of the
listing of the parent because the original listing of the parent will have been approved on the
basis of the parent’s portfolio of businesses at the time of listing, and the expectation of
investors at that time would have been that the parent would continue to develop those
businesses.
Our Company is a leading global integrated logistics service provider offering a complete
portfolio of logistics services, according to Frost & Sullivan, and has business operations in
various logistics and supply chain solutions sub-sectors. Our Group concurrently operates more
than one sizeable business within various logistics and supply chain solutions sub-sectors, and
our Company intends to achieve a spin-off of certain of our infrastructure assets by way of a
real estate investment trusts (“ REITs”) listing on the SZSE.
In this regard, the CSRC and the NDRC jointly published the “Notice of the Work Related
to Promoting the Pilot Program of Real Estate Investment Trusts (REITs) in the infrastructure
Field” (ږREITs))o n
April 24, 2020, and the “Notice by the NDRC and Other Authorities Regarding the
Implementation of Several Recent Measures to Promote the Development of Private Economy”
() published on
July 28, 2023 both mentioned the national policy in the PRC to promote the issuance of
infrastructure REITs by private investment projects.
In light of the aforementioned favorable policies and as a measure to positively respond
to policies encouraged by the PRC government, our Company intends to spin off an
infrastructure REIT named Southern SF Warehouse Logistics Closed-end Infrastructure
Securities Investment Fund* (ږthe “ SF
Infrastructure REIT ”) through listing on the SZSE (the “ Proposed Spin-off ”), which is
expected to be completed within nine months after the proposed Listing. The Proposed Spin-off
has been approved by the Board of Directors on December 28, 2023. Subject to the approval
of the regulatory authorities, the underlying assets of the SF Infrastructure REIT, which mainly
comprise of logistic and industrial properties, shall include the following three projects only:
(i) our SF Huanan Logistics Complex project located near the Shenzhen Bao’an Airport
in Bao’an District, Shenzhen, Guangdong Province, which is owned by a wholly-
owned subsidiary of our Company;
(ii) our SF Fengtai Industrial Park (Wuhan) project located in Dongxihu District,
Wuhan, Hubei Province, which is owned by a wholly-owned subsidiary of our
Company; and
(iii) our SF Fengtai Industrial Park (Hefei) project located in Shushan District, Hefei,
Anhui Province, which is owned by a wholly-owned subsidiary of our Company
(the aforementioned assets, collectively, the “ Projects ”; and the relevant companies holding
such assets, collectively, the “ Project Companies ”).
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The Proposed Spin-off is expected to be effected by way of setting up the SF
Infrastructure REIT as a publicly offered infrastructure securities investment fund by China
Southern Fund Management Co., Ltd.* (ʮ̡) as the public fund
manager. For the purpose of the Proposed Spin-off and as required by the applicable PRC laws
and regulations, an asset-backed special purpose plan (ྌ)( “ ABS”) will be set
up by China Southern Capital Management Co., Ltd.* (ʮ̡)a st h e
ABS manager, which is an independent third party of our Company, to securitize the Project
Companies and the Projects as underlying assets, and the SF Infrastructure REIT will acquire
the entire interests of the ABS by subscribing for the securities to be issued by the ABS. The
ABS will then acquire 100% equity interest of a special purpose vehicle, and the 100% equity
interests of the Project Companies, which hold the Projects, will be transferred to such special
purpose vehicle. The SF Infrastructure REIT will then be listed on the SZSE with its units to
be subscribed by its investors, and our Group is expected to subscribe for at least 20% of the
total issued units of the SF Infrastructure REIT.
Further details of the various projects are set forth below:
Project
Effective
interest held by
our Company
Gross floor
area
Time of
completion Status
Usage of the
underlying
infrastructure
Primary
source of
revenue
(sqm)
Shenzhen
Project ..
100% 74,219.10 July 2015 Completed Transhipment
port near the
Shenzhen
Bao’an Airport
Rent and
management
fees
Wuhan
Project ..
100% 193,237.73 June 2021 Completed Sorting business
and
warehousing
leasing
business
Rent and
management
fees
Hefei
Project ..
100% 218,102.54 Phase One:
January 2019
Phase Two:
June 2022
Completed Sorting business
and industrial
park leasing
business
Rent,
management
fees and
parking fees
Based on the financial information prepared based on PRC GAAP of the Project
Companies, the revenue attributable to the Projects for the three years ended December 31,
2021, 2022 and 2023 were RMB140.42 million, RMB191.51 million and RMB240.25 million,
respectively, and the net (loss)/profit attributable to the Projects for the three years ended
December 31, 2021, 2022 and 2023 were -RMB4.44 million, RMB14.58 million and
RMB71.86 million, respectively.
In connection with the Proposed Spin-off of the SF Infrastructure REITs and listing on the
SZSE, our Group is expected to subscribe for at least 20% of the total issued units of the SF
Infrastructure REITs (the “ Proposed REITs Subscription ”) pursuant to the requirement of the
“Provisional Guidance for the Public Offering of Infrastructure Real Estate Investment Trust”
(ˏ(༊Б)), where the original owner (or its affiliate
under common control) of the asset underlying to the infrastructure REITs to be listed is
required to participate in the strategic placing of such infrastructure REITs and is required to
hold an interest of not less than 20%. The Proposed Spin-off is still subject to (among other
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things) approvals from the relevant regulatory authorities, including without limitation the
CSRC and the SZSE and the entering into of relevant transaction documents with the managers
of the SF Infrastructure REITs and the ABS scheme. As of the Latest Practicable Date, our
Company has not yet entered into any legally binding agreement with respect to the Proposed
REITs Subscription in connection with the Proposed Spin-off, and no agreement has been
reached as to (among other things) the subscription price of the trust units of the SF
Infrastructure REITs. The respective completion of the Proposed Spin-off and the Proposed
REITs Subscription are inter-conditional.
The Proposed Spin-off will be subject to compliance with all applicable requirements
under the Listing Rules, including PN15 (save and except for the three year requirement with
respect to which this waiver application relates), unless otherwise waived by the Stock
Exchange, and will not be dispensed with the requirement to obtain the approval of the Stock
Exchange.
The Proposed Spin-off, together with details of the assets of our Group to be spun off and
the listing plan for the SF Infrastructure REITs, has been approved by the Board and announced
by our Company on December 29, 2023. Certain application materials with respect to the
Proposed Spin-off, including the draft listing document for the SF Infrastructure REIT, has
been submitted to the SZSE on September 24, 2024, and the first batch of comments from
SZSE in relation thereto has been received on October 16, 2024. Under our Company’s
Articles, the SZSE Listing Rules and the relevant applicable PRC laws and regulations, the
Proposed Spin-off is not subject to Shareholders’ approval. Pursuant to paragraph 3(e) of
PN15, shareholder approval will be required where, under Rule 14.07 of the Listing Rules, any
of the percentage ratios of the transaction is 25% or more. On the basis of the total consolidated
assets of our Company as at June 30, 2024 and the total revenue and profit before tax of our
Company for the year ended December 31, 2023, it is currently expected that the Proposed
Spin-off will not constitute a major transaction of our Company as the highest percentage ratios
will not exceed 25% as stipulated under Rule 14.07 of the Listing Rules.
Our Directors believe that the Proposed Spin-off will not materially prejudice the
interests and will be in the best interests of our Company’s shareholders as a whole, given the
Proposed Spin-off can further expand our Company’s financing channels, support the
sustainable and healthy development of its logistics industrial parks, and revitalize its existing
assets. In addition, the raised funds from the Proposed Spin-off can be reinvested in
infrastructure projects which will improve the efficiency of capital circulation, thus enhancing
our Company’s sustainable operating capabilities.
Accordingly, we have applied for, and the Stock Exchange has granted, a waiver from
strict compliance with the requirements of paragraph 3(b) of PN15 with respect to the Proposed
Spin-off on the conditions that:
(a) the book value of the assets of the Group subject to the Proposed Spin-off will not
exceed 1.5% of the Company’s consolidated total assets of RMB219.9 billion as of
June 30, 2024;
(b) our Company will only spin-off the three Projects to the SF Infrastructure REITs;
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(c) our Company will not within three years after the Listing spin off any of its business
subsidiaries on the Stock Exchange until it confirms with the Stock Exchange with
basis that the potential spin-off would not render our Company, excluding the
subsidiary to be spun off, failing to meet the eligibility or suitability requirements
under Rule 8.05 of the Listing Rules based on the financial information of the
subsidiary to be spun off at the time of the Listing, and where more than one
subsidiary is to be spun off, the assessment will be made on a cumulative basis;
(d) our Company will make full disclosures in this prospectus of details of the Proposed
Spin-off, including the location, gross floor area, year of completion and status of
the Projects subject to the Proposed Spin-off and the equity interests held by the
Company in such Projects prior to the Proposed Spin-off, and the risks relating to
the uncertainty and timing of the Proposed Spin-off (see “Risk Factors — Risks
Relating to our Business and Industry — Divestitures of businesses and assets may
have a material and adverse effect on our business and financial condition” in this
prospectus);
(e) the Proposed Spin-off will be subject to the requirements of PN15 (other than
paragraph 3(b) thereof), including that our Company will satisfy the applicable
listing eligibility requirements on a standalone basis;
(f) our Company will comply with the applicable requirements under Chapters 14 and
14A of the Listing Rules with respect to the disposal of assets involved in the
Proposed Spin-off;
(g) our Company will announce in accordance with the Listing Rules more concrete
details of the Proposed Spin-off when it becomes available;
(h) our Company will update the status of the Proposed Spin-off in its annual and
interim reports; and
(i) disclosure of this waiver in this prospectus.
DISCLOSURE OF EXECUTIVE DIRECTOR’S RESIDENTIAL ADDRESS
Paragraph 6 of the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance requires this prospectus to include the address of directors and
paragraph 45 of the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance provides that such address means the place of usual residence of the
directors.
We have applied for, and the SFC has granted, a certificate of exemption under section
342A of the Companies (Winding Up and Miscellaneous Provisions) Ordinance from strict
compliance with paragraph 6 of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance in respect of the disclosure of the residential address of
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Mr. Wang, the founder of the Group and an executive Director and chairman of the Board, on
the ground that such disclosure would be inappropriate having considered the following
factors:
(a) Given the Listing is expected to be a high profile transaction on the basis of the
expected size of the offering and our Company being a well-known logistics services
operator servicing (among others) the general consumer public, and the scale of our
business, Mr. Wang is a high profile public figure who would inevitably attract
media and public attention.
In addition,
(b) Mr. Wang, being our founder, has been the key management figure driving the
business operations and strategy of our Group since its inception. The corporate
decisions and speeches made by him often generate interest in the general public and
the media. Accordingly, the disclosure of Mr. Wang’s residential address may expose
him and his families to unnecessary disturbance and unwanted public attention to his
private life;
(c) Given the scale of the business and “SF” brand name being well-known among the
general public in Hong Kong and Mainland China, our Company, and Mr. Wang may
from time to time be subject to malicious or frivolous complaints or allegations, and
the disclosure of Mr. Wang’s residential address in this prospectus would create a
real risk of exposing him and his family to harassment and endanger his personal
safety.
(d) The disclosure of the business address of Mr. Wang has been made in this
prospectus, such that the intention behind such disclosure of ensuring the
communicability and accountability of Mr. Wang as an executive Director is not
compromised. All other material information in relation to Mr. Wang as an executive
Director as required to be disclosed, including his name, age, and working
experience, under the Listing Rules and the Companies (Winding Up and
Miscellaneous Provisions) Ordinance has been properly disclosed in this prospectus.
(e) We are of the view that the non-disclosure of the residential address of Mr. Wang in
this prospectus will not prejudice the interests of the investing public and would not
affect potential investors’ ability to make an informed investment decision as to the
securities for which listing is sought and the performance and condition of our
Group. In particular, the non-disclosure of the private residential address of Mr.
Wang in this prospectus will not affect the provision of information to potential
investors to make an informed assessment of his character, experience and integrity.
On the contrary, Mr. Wang is a key figure to our business, and any disruption in our
operations, or any reputational damage to our Company, or failure by our Company
to attract or retain a key Director by virtue of an actual or threatened physical
security breach by means of potential coercion or harassment facilitated by the
public disclosure of his personal residential address would materially and adversely
affect our business, financial position, and results of operations, thereby potentially
exposing our Shareholders to a substantial loss of their investment.
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PUBLIC FLOAT REQUIREMENTS
Rule 8.08(1)(a) and (b) of the Listing Rules requires that there shall be an open market
for the securities for which listing is sought, and that a sufficient public float of an issuer’s
listed securities shall be maintained. Generally, at least 25% of the issuer’s total issued share
capital must at all times be held by the public. However, the class of securities for which listing
is sought must not be less than 15% of the issuer’s total issued share capital, having an
expected market capitalization at the time of listing of not less than HK$125 million.
Based on the minimum Offer Price of HK$32.30 and assuming no exercise of the
Over-allotment Option, we expected that the market capitalization of our H Shares will exceed
the minimum expected market capitalization of HK$125 million required by Rules 8.08(1)(b)
and 19A.13A of the Listing Rules. We have applied to the Stock Exchange for, and the Stock
Exchange has granted us, a waiver that the minimum public float requirement under Rules
8.08(1)(b) and 19A.13A be reduced and the minimum percentage of our Company’s H Shares
(being the securities for which listing on the Stock Exchange is sought) upon completion of the
Global Offering held by the public to be the higher of (a) 3.41% (assuming no exercise of the
Over-allotment Option) and (b) such percentage of H Shares to be held by the public
immediately after completion of the Global Offering, as increased by the H Shares to be issued
upon any exercise of the Over-allotment Option, of the total enlarged issued share capital of
the Company.
In order to support the application of this waiver, the Company has confirmed to the Stock
Exchange that the Company will
(a) comply with the public float requirement under Rule 8.08 of the Listing Rules where
at least 25% of the Company’s total number of issued shares (A Shares and H Shares
in aggregate) must be held by the public from time to time;
(b) announce the percentage of H Shares held by the public immediately after the
completion of the Global Offering (before any exercise of the Over-allotment Option
and after any exercise of the Over-allotment Option);
(c) confirm the sufficiency of public float in successive annual reports after its Listing
(with respect to the Rule 8.08(1)(a) only); and
(d) implement appropriate measures and mechanisms to ensure continual maintenance
of the minimum 3.41% public float of H Shares (or such higher percentage upon
completion of any exercise of the Over-allotment Option) upon Listing.
It is expected that after the Listing, our Company may consider the issuance of new H
Shares for the implementation of employee incentive schemes or for other purposes, which may
increase the total number and size of our H Shares and enhance the public float and liquidity
of our H shares.
It is also expected that our H shares will be automatically qualified for trading through
Shenzhen-Hong Kong Stock Connect after the Listing upon announcement by the Shenzhen
Stock Exchange. Upon our H Shares become eligible for trading through Shenzhen-Hong Kong
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Stock Connect, they can also be subscribed for and traded by public investors in the PRC in
accordance with the rules of Shenzhen-Hong Kong Stock Connect, which will further enhance
the liquidity of our H shares upon Listing.
Furthermore, our Company has been from time to time repurchasing our A Shares on the
Shenzhen Stock Exchange which were cancelled by our Company afterwards. Our Company
may further repurchase our A Shares pursuant to relevant mandate granted by the Board and
the general meeting of the Company upon Listing, and such repurchases of A Shares which
were cancelled afterwards will also increase the percentage of our H Shares in the total issued
share capital of our Company and increase the public float percentage of our H Shares.
ACQUISITIONS AFTER THE TRACK RECORD PERIOD
Investments since June 30, 2024
On August 5, 2024, our subsidiary has entered into a capital increase agreement in respect
of our strategic investment into a company primarily engaging in the business of autonomous
driving technologies and products (the “ Investment Target A ”), pursuant to which we shall
subscribe for registered capital of the Investment Target at a consideration of no more than
RMB50 million (the “ Target A Investment ”). Under the Target A Investment, we have also
acquired an option (the “ Option ”) exercisable at our discretion to subscribe in separate
tranches for additional registered capital in the Investment Target A up to a holding of 40%
equity interests (on a fully diluted basis) in the Investment Target A in aggregate. The Target
A Investment has been completed, and as of the Latest Practicable Date, we hold 7.31% equity
interests in the Investment Target A. As of the Latest Practicable Date, we have not exercised
the Option. The consideration for the Target A Investment is the result of commercial arm’s
length negotiations, based on factors including market dynamics, a mutually agreed valuation,
and the target company’s business operations and financial conditions. To the best of the
Directors’ knowledge, information and belief having made all reasonable enquiry, each of the
counterparty and the ultimate beneficial owners of the counterparty in respect of the Target A
Investment is an Independent Third Party.
On September 18, 2024, our subsidiary has entered into a capital increase agreement in
respect of our investment into a company primarily engaging in the business of consultation
and engineering construction in respect of airport digitalization (the “ Investment Target B ”,
together with the Investment Target A, the “ Investment Targets ”), pursuant to which we shall
subscribe for registered capital of the Investment Target B at a consideration of RMB10 million
(the “ Target B Investment ”, together with the Target A Investment, the “ Investments ”). The
Target B Investment has been completed, and upon completion of the Target B Investment, we
are expected to hold 16.67% equity interests in the Investment Target B. The consideration for
the Target B Investment is the result of commercial arm’s length negotiations, based on factors
including market conditions, a mutually agreed valuation, and the target company’s business
operations and financial conditions. To the best of the Directors’ knowledge, information and
belief having made all reasonable enquiry, each of the counterparty and the ultimate beneficial
owners of the counterparty in respect of the Target B Investment is an Independent Third Party.
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The Company has applied to the Stock Exchange for, and the Stock Exchange has granted,
a waiver from strict compliance with Rules 4.04(2) and 4.04(4)(a) of the Listing Rules in
respect of the Investments on the following grounds:
(a) The requested waiver would not prejudice the interests of the investing public.
Upon completion of the Investments, we will only hold a minority equity interests
in each of the Investment Targets, and we are not able to exercise control over the
Investment Targets at board or shareholders’ level. The financials of the Investment
Targets will not be consolidated into the financials of our Company.
The relevant percentage ratios calculated in accordance with Rule 14.07 of the
Listing Rules for each of the Investments are all less than 5% by reference to the most
recent fiscal year of the Track Record Period.
Accordingly, the Company believes that none of the Investments results in any
significant changes to the Company’s financial position since June 30, 2024, and all
information that is reasonably necessary for the potential investors to make an informed
assessment of the Company’s activities or financial position has been included in this
prospectus. As such, the Company considers that a waiver from compliance with Rules
4.04(2) and 4.04(4)(a) of the Listing Rules would not prejudice the interests of the
investors.
(b) The historical financial information of the Investment Targets is not available and
would be unduly burdensome to obtain or prepare.
The Company confirms that the Investment Targets do not have available historical
financial information which is readily available for disclosure in this document in
accordance with the Listing Rules. In addition, it would require considerable time and
resources for our Company and its reporting accountants to fully familiarize themselves
with the management accounting policies of the Investment Targets and compile the
necessary financial information and supporting documents for disclosure in this
prospectus. As such, we believe that it would be impractical and unduly burdensome for
us to disclose the audited financial information of the Investment Targets as required
under Rules 4.04(2) and 4.04(4)(a) of the Listing Rules.
In addition, having considered the Investments to be immaterial and that the
Company does not expect the Investments to have any material effect on its business,
financial condition or operations, our Company believes that it would not be meaningful
and would be unduly burdensome for us to prepare and include the financial information
of the Investment Targets during the Track Record Period in this prospectus. As our
Company does not expect the Investments to result in any material changes to its financial
position after the Track Record Period, we do not believe the non-disclosure of the
required information pursuant to Rules 4.04(2) and 4.04(4)(a) of the Listing Rules would
prejudice the interests of the investors.
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(c) Alternative disclosures of the Investments have been provided in this prospectus.
The Company has provided alternative information about the Investments in this
prospectus. Such information includes that which would be required for a discloseable
transaction under Chapter 14 of the Listing Rules that the Company’s directors consider
to be material, including, for example, descriptions of the Investment Targets’ principal
business activities, the consideration for the Investment, and a statement that whether
each of the counterparty and the ultimate beneficial owners of the counterparty in respect
of the Investments is an Independent Third Party. The Company has however excluded
disclosure on the names of the Investment Targets in connection with the Investments
because the relevant agreements entered into by the Company in respect of each
Investment imposed confidentiality obligations on the Company and the Company does
not have consent from the other parties to either agreement for such disclosure. It is
commercially sensitive to disclose the identities of the companies the Company invested
in as such information may enable its competitors to anticipate the Company’s investment
strategy. Since the relevant percentage ratios of each of the Investments are less than 5%
by reference to the most recent fiscal year of our Track Record Period, the current
disclosure is adequate for potential investors to form an informed assessment of the
Company. The Company will not use any proceeds from the Listing to fund the
Investments.
Acquisition since June 30, 2024
Since June 30, 2024 and up to the Latest Practicable Date, our Group has made the
following acquisition (the “ Acquisition ”), details of which are set out in the below:
Acquisition target Consideration
Percentage of equity
interest acquired Principal business activities
Company C Note ........ RMB120,000 100% Corporate management
consultancy
Note:
* On August 20, 2024, our subsidiary entered into a sale and purchase agreement with respect to the transfer of
100% equity interests in Company C from the sellers. The Acquisition was completed on August 21, 2024. To
the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, each of the
counterparty and the ultimate beneficial owners of the counterparty in respect of the Acquisition is an
Independent Third Party.
The acquisition amount for the Acquisition is the result of commercial arm’s length
negotiations, based on factors including the target company’s business operations and financial
conditions.
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The Company has applied to the Stock Exchange for, and the Stock Exchange has granted,
a waiver from strict compliance with Rules 4.04(2) and 4.04(4)(a) of the Listing Rules in
respect of the Acquisitions on the following grounds:
(a) The percentage ratios of the Acquisition are all less than 5% by reference to the most
recent fiscal year of the Track Record Period.
The relevant percentage ratios calculated in accordance with Rule 14.07 of the
Listing Rules for the Acquisition are all less than 5% by reference to the most recent fiscal
year of the Track Record Period. Accordingly, the Company believes that the Acquisition
has not resulted in any significant changes to the Company’s financial position since June
30, 2024, and all information that is reasonably necessary for the potential investors to
make an informed assessment of the Company’s activities or financial position has been
included in this document. As such, the Company considers that a waiver from
compliance with Rules 4.04(2) and 4.04(4)(a) of the Listing Rules would not prejudice
the interests of the investors.
(b) The historical financial information of the target is not available and would be
unduly burdensome to obtain or prepare.
The Company confirms that the target in respect of the Acquisition does not have
available historical financial information which is readily available for disclosure in this
document in accordance with the Listing Rules. In addition, it would require considerable
time and resources for the Company and its reporting accountants to fully familiarize
themselves with the management accounting policies of the target and compile the
necessary financial information and supporting documents for disclosure in this
document. As such, the Company believes that it would be impractical and unduly
burdensome for the Company to disclose the audited financial information of the targets
as required under Rules 4.04(2) and 4.04(4)(a) of the Listing Rules.
In addition, having considered the Acquisition to be immaterial and that the
Company does not expect the Acquisition to have any material effect on its business,
financial condition or operations, the Company believes that it would not be meaningful
and would be unduly burdensome for it to prepare and include the financial information
of the target during the Track Record Period in this document. As the Company does not
expect the Acquisition to result in any material changes to its financial position after the
Track Record Period, the Company does not believe the non-disclosure of the required
information pursuant to Rules 4.04(2) and 4.04(4)(a) of the Listing Rules would prejudice
the interests of the Investors.
(c) Alternative disclosure of the Acquisition has been provided in this document.
The Company has provided alternative information about the Acquisition in this
document. Such information includes that which would be required for a discloseable
transaction under Chapter 14 of the Listing Rules that the Company’s directors consider
to be material, including, for example, descriptions of the target’s principal business
activities, the consideration for the Acquisition, and a statement that whether each of the
counterparty and the ultimate beneficial owners of the counterparty in respect of the
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Acquisition is an Independent Third Party. The Company has however excluded
disclosure on the names of the target and the sellers in connection with the Acquisition
because the relevant agreement entered into in respect of the Acquisition imposed
confidentiality obligation on our Group and we do not have consent from the other parties
to the agreement for such disclosure. Since the relevant percentage ratios of the
Acquisition are less than 5% by reference to the most recent fiscal year of our Track
Record Period, the current disclosure is adequate for potential investors to form an
informed assessment of the Company. The Company does not expect to use any net
proceeds from the Global Offering to fund the Acquisition.
W AIVER IN RESPECT OF CLA WBACK MECHANISM
Paragraph 4.2 of Practice Note 18 of the Listing Rules requires a clawback mechanism to
be put in place, which would have the effect of increasing the number of Hong Kong Offer
Shares to certain percentages of the total number of Offer Shares offered in the Global Offering
if certain prescribed total demand levels are reached.
Subject to the Stock Exchange granting the waiver described below, the Hong Kong
Public Offering and the International Offering will initially account for 9.5% and 90.5% of the
Global Offering, respectively, subject to the clawback mechanism described below. We have
applied for, and the Stock Exchange has granted to us, a waiver from strict compliance with
the requirements of Paragraph 4.2 of Practice Note 18 to the Listing Rules such that the
allocation of the Offer Shares in the Hong Kong Public Offering will be adjusted as follows:
(a) if the number of the Offer Shares validly applied for under the Hong Kong Public
Offering represents 14 times or more but less than 47 times the number of the Offer
Shares initially available for subscription under the Hong Kong Public Offering,
then the number of Offer Shares will be reallocated to the Hong Kong Public
Offering from the International Offering, so that the total number of Offer Shares
available under the Hong Kong Public Offering will be 23,800,000 Offer Shares,
representing approximately 14.0% of the Offer Shares initially available under the
Global Offering (assuming the Over-allotment Option is not exercised);
(b) if the number of the Offer Shares validly applied for under the Hong Kong Public
Offering represents 47 times or more but less than 95 times the number of the Offer
Shares initially available for subscription under the Hong Kong Public Offering,
then the number of Offer Shares to be reallocated to the Hong Kong Public Offering
from the International Offering will be increased so that the total number of the
Offer Shares available under the Hong Kong Public Offering will be 31,450,000
Offer Shares, representing approximately 18.5% of the Offer Shares initially
available under the Global Offering (assuming the Over-allotment Option is not
exercised); and
(c) if the number of the Offer Shares validly applied for under the Hong Kong Public
Offering represents 95 times or more the number of the Offer Shares initially
available for subscription under the Hong Kong Public Offering, then the number of
Offer Shares to be reallocated to the Hong Kong Public Offering from the
International Offering will be increased, so that the total number of the Offer Shares
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available under the Hong Kong Public Offering will be 62,050,000 Offer Shares,
representing approximately 36.5% of the Offer Shares initially available under the
Global Offering (assuming the Over-allotment Option is not exercised).
In each case, the additional Offer Shares reallocated to the Hong Kong Public Offering
will be allocated between pool A and pool B and the number of Offer Shares allocated to the
International Offering will be correspondingly reduced in such manner as the Overall
Coordinators deem appropriate. In addition, the Overall Coordinators would have discretion to
allocate Offer Shares from the International Offering to the Hong Kong Public Offering to
satisfy valid applications under the Hong Kong Public Offering. On the other hand, if the Hong
Kong Public Offering is not fully subscribed, the unsubscribed Offer Shares under the Hong
Kong Public Offering may be reallocated to the International Offering. See “Structure of the
Global Offering — Pricing and Allocation — Reallocation” for further details.
CONSENT IN RESPECT OF THE PROPOSED SUBSCRIPTION OF H SHARES BY
WISDOMSHIRE AM THROUGH GF SECURITIES AM
Paragraph 5(1) of Appendix F1 to the Listing Rules provides that no allocations will be
permitted to “connected clients” of the overall coordinator(s), any syndicate member(s) (other
than the overall coordinator(s)) or any distributor(s) (other than syndicate member(s))
(collectively, the “ Distributors ”, and each a “ Distributor ”), without the prior written consent
of the Stock Exchange.
Paragraph 13(7) of the Appendix F1 to the Listing Rules states that “connected client” in
relation to an exchange participant means any client which is a member of the same group of
companies as such exchange participant.
As further described in the section headed “Cornerstone Investments” in this prospectus,
Wisdomshire Asset Management Co., Ltd* (ʮ̡)( “ Wisdomshire
AM”) has entered into a cornerstone investment agreement with the Company, the Joint
Sponsors and the Overall Coordinators to subscribe for the Offer Shares. For the purpose of the
cornerstone investment, Wisdomshire AM has engaged GF Securities Asset Management
(Guangdong) Co., Ltd. ( ᄿ೯ᗇՎ༟ପ၍ଣ(؇)ʮ̡)( “ GF Securities AM ”), an asset
manager that is a qualified domestic institutional investor as approved by the relevant PRC
authority, in the name of GFAM RUISHUN NO.1 ASSET MANAGEMENT ACCOUNT(QDII)
(ᄿ೯༟၍ြන1ྌ), to subscribe for and hold such Offer Shares on a
non-discretionary basis on behalf of Wisdomshire AM. GF Securities (Hong Kong) Brokerage
Limited (“ GF Securities (Hong Kong) Brokerage ”) has been appointed as one of the Capital
Market Intermediaries of the Global Offering. GF Securities AM is a direct wholly-owned
subsidiary of GF Securities Co., Ltd. (stock code: 1776.HK) (“ GF Securities ”) and GF
Securities (Hong Kong) Brokerage is an indirect wholly-owned subsidiary of GF Securities.
Each of GF Securities AM and GF Securities (Hong Kong) Brokerage is a member of the same
group of companies. As a result, GF Securities AM is a connected client of GF Securities (Hong
Kong) Brokerage for the purpose of paragraph 13(7) of Appendix F1 to the Listing Rules.
W AIVERS AND EXEMPTIONS
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We have applied for, and the Stock Exchange has granted, a consent under paragraph 5(1)
of Appendix F1 to the Listing Rules to permit Wisdomshire AM (through GF Securities AM as
the asset manager) to participate in the Global Offering as a cornerstone investor on the
following basis and conditions as set out in Paragraph 5 of Chapter 4.15 of the Guide:
(a) any Offer Shares to be allocated to Wisdomshire AM (through GF Securities AM as
the asset manager) will be held on behalf of independent third parties;
(b) the cornerstone investment agreement of Wisdomshire AM (through GF Securities
AM as the asset manager) does not contain any material terms which are more
favourable to Wisdomshire AM (through GF Securities AM as the asset manager)
than those in other cornerstone investment agreements;
(c) no preferential treatment has been, nor will be, given to Wisdomshire AM (through
GF Securities AM as the asset manager) by virtue of their relationship with GF
Securities (Hong Kong) Brokerage in any allocation of Offer Shares in the
International Offering other than the assured entitlement under the relevant
cornerstone investment agreement;
(d) GF Securities AM confirms that to the best of its knowledge and belief,
Wisdomshire AM (through GF Securities AM as the asset manager) has not received
and will not receive preferential treatment in the allocation of Offer Shares in the
Global Offering as a placee by virtue of their relationship with GF Securities (Hong
Kong) Brokerage other than the assured entitlement under the relevant cornerstone
investment agreement;
(e) each of the Company, the Overall Coordinators, GF Securities AM and GF Securities
(Hong Kong) Brokerage has provided the Stock Exchange with written
confirmations in accordance with Chapter 4.15 of the Guide; and
(f) details of the cornerstone investment and details of the allocation will be disclosed
in this prospectus and the allotment results announcement.
W AIVERS AND EXEMPTIONS
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An investment in our H Shares involves significant risks. You should carefully
consider all of the information in this prospectus, including the risks and uncertainties
described below, as well as our financial statements and the related notes, and the
“Financial Information” section, before deciding to invest in our H Shares. The following
is a description of what we consider to be our material risks. Any of the following risks
could have a material adverse effect on our business, financial condition, results of
operations and growth prospects. In any such an event, the market price of our H Shares
could decline, and you may lose all or part of your investment. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial also may
impair our business operations.
These factors are contingencies that may or may not occur , and we are not in a
position to express a view on the likelihood of any such contingency occurring. The
information given is as of the Latest Practicable Date unless otherwise stated, will not
be updated after the date hereof, and is subject to the cautionary statements in “Forward
–Looking Statements” in this prospectus.
DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus, for which our Directors collectively and individually accept full
responsibility, includes particulars given in compliance with the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Securities and Futures (Stock Market Listing) Rules
(Cap 571V of the Laws of Hong Kong) and the Listing Rules for the purpose of giving
information to the public with regard to our Group. Our Directors, having made all reasonable
enquiries, confirm that, to the best of their knowledge and belief, the information contained in
this prospectus is accurate and complete in all material respects and not misleading or
deceptive, and there are no other matters the omission of which would make any statement in
this prospectus misleading.
CSRC FILING
According to the Overseas Listing Trial Measures, we are required to complete the filing
procedures with the CSRC in connection with the proposed Listing. We have submitted a filing
to the CSRC for application for the Listing on August 23, 2023. The CSRC filing was
announced completed on May 31, 2024.
THE HONG KONG PUBLIC OFFERING AND THIS PROSPECTUS
This prospectus is published solely in connection with the Hong Kong Public Offering,
which forms part of the Global Offering. The Global Offering comprises the Hong Kong Public
Offering of initially 16,150,000 Offer Shares and the International Offering of initially
153,850,000 Offer Shares (subject to, in each case, reallocation on the basis referred to in
“Structure of the Global Offering” in this prospectus and, in case of the International Offering,
to any exercise of the Over-allotment Option).
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The listing of our H Shares on the Stock Exchange is sponsored by the Joint Sponsors and
the Global Offering is managed by the Overall Coordinators. The Hong Kong Public Offering
is fully underwritten by the Hong Kong Underwriters pursuant to the Hong Kong Underwriting
Agreement, subject to us and the Overall Coordinators (for themselves and on behalf of the
Hong Kong Underwriters) agreeing on the Offer Price. The International Offering is expected
to be fully underwritten by the International Underwriters pursuant to the terms of the
International Underwriting Agreement which is expected to be entered into on or around
Monday, November 25, 2024. For further information regarding the Underwriters and the
Underwriting Agreements, see “Underwriting” in this prospectus.
The Offer Shares are offered solely on the basis of the information contained and
representations made in this prospectus and on the terms and subject to the conditions set out
herein and therein. No person is authorized to give any information in connection with the
Global Offering or to make any representation not contained in this prospectus, and any
information or representation not contained herein must not be relied upon as having been
authorized by our Company, the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, the Capital
Market Intermediaries, any of their respective directors, officers, employees, advisers, agents
or representatives, or any other persons or parties involved in the Global Offering.
Neither the delivery of this prospectus nor any subscription or acquisition made under it
shall, under any circumstances, create any implication that there has been no change or
development in our affairs since the date of this prospectus or that the information in this
prospectus is correct as of any date subsequent to the date of this prospectus.
STRUCTURE OF THE GLOBAL OFFERING
For details of the structure of the Global Offering (including its conditions) and the
arrangements relating to the Over-allotment Option and stabilization, see “Structure of the
Global Offering” and “Underwriting” in this prospectus.
RESTRICTIONS ON OFFER AND SALE OF THE OFFER SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering
will be required to, or be deemed by his/her acquisition of Hong Kong Offer Shares to, confirm
that he/she is aware of the restrictions on the offer and sale of the Hong Kong Offer Shares
described in this prospectus.
No action has been taken to permit a public offering of the Offer Shares or the distribution
of this prospectus in any jurisdiction other than Hong Kong. Accordingly, without limitation
to the following, this prospectus may not be used for the purpose of, and does not constitute,
an offer or invitation in any jurisdiction or in any circumstances in which such an offer or
invitation is not authorized or to any person to whom it is unlawful to make such an offer or
invitation for subscription. The distribution of this prospectus and the offering and sale of the
Offer Shares in other jurisdictions are subject to restrictions and may not be made except as
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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permitted under the applicable securities laws of such jurisdictions pursuant to registration
with or authorization by the relevant securities regulatory authorities or an exemption
therefrom. In particular, the Offer Shares have not been offered and sold, and will not be
offered and sold, directly or indirectly, in the PRC or the United States.
APPLICATION FOR LISTING OF THE H SHARES ON THE HONG KONG STOCK
EXCHANGE
We have applied to the Hong Kong Stock Exchange for the granting of listing of, and
permission to deal in, our H Shares to be issued pursuant to the Global Offering (including any
H Shares which may be issued pursuant to the exercise of the Over-allotment Option).
Dealings in the H Shares on the Hong Kong Stock Exchange are expected to commence
on Wednesday, November 27, 2024. Save as otherwise disclosed in this prospectus, no part of
our Shares or loan capital is listed on or dealt in on any other stock exchange, and no such
listing or permission to list is being or proposed to be sought as of the Latest Practicable Date.
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, any allotment made in respect of any application will be invalid if the listing of,
and permission to deal in, the H Shares on the Hong Kong Stock Exchange is refused before
the expiration of three weeks from the date of the closing of the application lists, or such longer
period (not exceeding six weeks) as may, within the said three weeks, be notified to our
Company by or on behalf of the Hong Kong Stock Exchange.
H SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the granting of the listing of, and permission to deal in, the H Shares on the
Hong Kong Stock Exchange and compliance with the stock admission requirements of
HKSCC, the H Shares will be accepted as eligible securities by HKSCC for deposit, clearance
and settlement in CCASS with effect from the date of commencement of dealings in the H
Shares on the Hong Kong Stock Exchange or on any other date as determined by HKSCC.
Settlement of transactions between participants of the Hong Kong Stock Exchange is required
to take place in CCASS on the second settlement day after any trading day. All activities under
CCASS are subject to the General Rules of HKSCC and HKSCC Operational Procedures in
effect from time to time.
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS. Investors should seek the advice of their stockbrokers or other professional advisers
for details of the settlement arrangements as such arrangements may affect their rights and
interests.
PROCEDURES FOR APPLICATION FOR HONG KONG OFFER SHARES
The procedures for applying for Hong Kong Offer Shares are set out in “How to Apply
for Hong Kong Offer Shares” in this prospectus.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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H SHARE REGISTER AND STAMP DUTY
All of the Offer Shares will be registered on our H Share register of members to be
maintained by our H Share Registrar, Tricor Investor Services Limited, in Hong Kong. Our
principal register of members will be maintained by us at our headquarters in the PRC.
Dealings in the H Shares registered on the H Share register of members of our Company
in Hong Kong will be subject to Hong Kong stamp duty.
Unless determined otherwise by our Company, dividends payable in respect of our H
Shares will be paid to the Shareholders listed on the H Share register of members of our
Company in Hong Kong, by ordinary post, at the H Shareholders’ risk, to the registered address
of each H Shareholder of our Company.
PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Global Offering are recommended to consult their professional
advisers as to the taxation implications of subscribing for, purchasing, holding or disposal of,
and/or dealing in the H Shares or exercising rights attached to them. None of us, the Joint
Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the
Joint Lead Managers, the Underwriters, the Capital Market Intermediaries, any of their
respective directors, officers, employees, partners, agents, advisers or representatives or any
other person or party involved in the Global Offering accepts responsibility for any tax effects
on, or liabilities of, any person resulting from the subscription, purchasing, holding,
disposition of, or dealing in, the H Shares or exercising any rights attached to them.
EXCHANGE RATE CONVERSION
Solely for your convenience, this prospectus contains translations among certain amounts
denominated in Renminbi, Hong Kong dollars and U.S. dollars.
Unless indicated otherwise, (i) the translations between Renminbi and U.S. dollars were
made at the rate of RMB7.14330 to US$1.00, (ii) the translations between Hong Kong dollars
and Renminbi were made at the rate of RMB0.91906 to HK$1.00, and (iii) the translations
between U.S. dollars and Hong Kong dollars were made at the rate of HK$7.77240 to US$1.00,
being the PBOC rates prevailing on November 8, 2024.
No representation is made that the amounts denominated in one currency could actually
be converted into the amounts denominated in another currency at the rates indicated or at all.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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LANGUAGE
If there is any inconsistency between this prospectus and its Chinese translation, this
prospectus shall prevail. For ease of reference, the names of the Chinese laws and regulations,
government authorities, institutions, natural persons or other entities (including certain of our
subsidiaries) have been included in this prospectus in both the Chinese and English languages.
In the event of any inconsistency, the Chinese name shall prevail.
ROUNDING
Certain amounts and percentage figures included in this prospectus have been subject to
rounding adjustments. Any discrepancies between totals and sums of amounts listed in any
table, chart or elsewhere in this prospectus are due to rounding.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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--- page 130 ---
DIRECTORS
Executive Directors
Name Address Nationality
Mr. W ANG Wei ( ˮ㠛) Block B,
TK Chuangzhi Tiandi Building
Keji South 1st Road
Nanshan District
Shenzhen
Guangdong Province
PRC
1
Chinese
Mr. HO Chit ( Оઠ) Flat G, 20/F, Tower 7
Park Avenue, 18 Hoi Ting Road
Kowloon
Hong Kong
Chinese
(Hong Kong)
Ms. W ANG Xin (ؚFlat 1805, Tower A
Shuangxi Garden Phase II
No. 1099 Wanghai Road
Shekou, Nanshan District
Shenzhen
Guangdong Province
PRC
Chinese
Mr. XU Bensong (ؒFlat 21B, Tower D, Huifangyuan
North Xuefu Road
Nanshan District
Shenzhen
Guangdong Province
PRC
Chinese
1. This is the business address of Mr. W ANG Wei. We have applied for, and the SFC has granted, an exemption
from strict compliance with paragraph 6 of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance such that our Company will only need to disclose the business address
of Mr. W ANG Wei, instead of his residential address. See “Waivers and Exemptions — Disclosure of Executive
Director’s Residential Address” in this prospectus.
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Independent non-executive Directors
Name Address Nationality
Mr. CHAN Charles Sheung
Wai (ਃ)
Flat A, 12/F
Queen Tower 1
St Michel
33 To Shek Street
Sha Tin
New Territories
Hong Kong
Chinese
(Hong Kong)
Mr. LEE Carmelo Ka Sze
(ҽྗɻ)
Flat A, 7/F
Broadview Villa
No. 20 Broadwood Road
Happy V alley
Hong Kong Island
Hong Kong
Chinese
(Hong Kong)
Dr. DING Yi ( ɕू) No. 602, Unit 1, Building 3
No. 2 Taoranting Road
Xicheng District
Beijing
PRC
Chinese
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 132 ---
SUPERVISORS
Name Address Nationality
Ms. W ANG Jia ( ˮԳ) Room 605, Block B, Tower 3
Changcheng Mansion
No. 2 Baihua Fourth Road
Futian District
Shenzhen
Guangdong Province
PRC
Chinese
Mr. LIU Jilu ( ᄎ኏ኁ) No. 404, Building 8, Zone 1
Pearl Garden
Huashan District
Ma’anshan
Anhui Province
PRC
Chinese
Ms. LI Juhua (ڀRoom 302, Tower D
Xiang Ge Li Y uan
No. 2 Qiaoxiang Road
Futian District
Shenzhen
PRC
Chinese
Mr. ZHANG Shun ( ੵන) Unit B, 31/F, Tower 3
Huang Ting Cai Y uan
Fumin Road
Futian District
Shenzhen
Guangdong Province
PRC
Chinese
For further details, see “Directors, Supervisors, Senior Management and Employees” in
this prospectus.
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 133 ---
PARTIES INVOLVED IN THE GLOBAL OFFERING
Joint Sponsors
(in alphabetical order)
Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Huatai Financial Holdings (Hong Kong)
Limited
62/F
The Center
99 Queen’s Road Central
Hong Kong
J.P. Morgan Securities (Far East) Limited
28/F, Chater House
8 Connaught Road Central
Hong Kong
Overall Coordinators Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Huatai Financial Holdings (Hong Kong)
Limited
62/F
The Center
99 Queen’s Road Central
Hong Kong
J.P. Morgan Securities (Asia Pacific)
Limited
28/F, Chater House
8 Connaught Road Central
Hong Kong
(in alphabetical order)
China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 134 ---
UBS AG Hong Kong Branch
52/F, Two International Finance Centre
8 Finance Street
Central
Hong Kong
(in alphabetical order)
Joint Global Coordinators Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Huatai Financial Holdings (Hong Kong)
Limited
62/F
The Center
99 Queen’s Road Central
Hong Kong
J.P. Morgan Securities (Asia Pacific)
Limited
28/F, Chater House
8 Connaught Road Central
Hong Kong
(in alphabetical order)
China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
UBS AG Hong Kong Branch
52/F, Two International Finance Centre
8 Finance Street
Central
Hong Kong
(in alphabetical order)
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 135 ---
Joint Bookrunners Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Huatai Financial Holdings (Hong Kong)
Limited
62/F
The Center
99 Queen’s Road Central
Hong Kong
J.P. Morgan Securities (Asia Pacific)
Limited
28/F, Chater House
8 Connaught Road Central
Hong Kong
(in alphabetical order)
China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
UBS AG Hong Kong Branch
52/F, Two International Finance Centre
8 Finance Street
Central
Hong Kong
(in alphabetical order)
ABCI Capital Limited
11/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
BOCI Asia Limited
26/F, Bank of China Tower,
1 Garden Road, Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 136 ---
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road, Central
Hong Kong
DBS Asia Capital Limited
73rd Floor, The Center
99 Queen’s Road Central
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
27/F, GF Tower
81 Lockhart Road, Wan Chai
Hong Kong
ICBC International Securities Limited
37/F, ICBC Tower
3 Garden Road
Hong Kong
(in alphabetical order)
Joint Lead Managers Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Huatai Financial Holdings (Hong Kong)
Limited
62/F
The Center
99 Queen’s Road Central
Hong Kong
J.P. Morgan Securities (Asia Pacific)
Limited
28/F, Chater House
8 Connaught Road Central
Hong Kong
(in alphabetical order)
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 137 ---
China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
UBS AG Hong Kong Branch
52/F, Two International Finance Centre
8 Finance Street Central
Hong Kong
(in alphabetical order)
ABCI Securities Company Limited
10/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
BOCI Asia Limited
26/F, Bank of China Tower,
1 Garden Road, Central
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road, Central
Hong Kong
DBS Asia Capital Limited
73rd Floor, The Center
99 Queen’s Road Central
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
27/F, GF Tower
81 Lockhart Road, Wan Chai
Hong Kong
ICBC International Securities Limited
37/F, ICBC Tower
3 Garden Road
Hong Kong
(in alphabetical order)
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 138 ---
Capital Market Intermediaries Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Huatai Financial Holdings (Hong Kong)
Limited
62/F
The Center
99 Queen’s Road Central
Hong Kong
J.P. Morgan Securities (Asia Pacific)
Limited
28/F, Chater House
8 Connaught Road Central
Hong Kong
(in alphabetical order)
China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
UBS AG Hong Kong Branch
52/F, Two International Finance Centre
8 Finance Street
Central
Hong Kong
(in alphabetical order)
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 139 ---
ABCI Capital Limited
11/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
ABCI Securities Company Limited
10/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
BOCI Asia Limited
26/F, Bank of China Tower,
1 Garden Road, Central
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road, Central
Hong Kong
DBS Asia Capital Limited
73rd Floor, The Center
99 Queen’s Road Central
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
27/F, GF Tower
81 Lockhart Road, Wan Chai
Hong Kong
ICBC International Securities Limited
37/F, ICBC Tower
3 Garden Road
Hong Kong
(in alphabetical order)
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 140 ---
Legal Advisers to our Company As to Hong Kong and U.S. laws:
Herbert Smith Freehills
23rd Floor, Gloucester Tower
15 Queen’s Road Central
Hong Kong
As to PRC laws:
CM Law Firm
Room 2805, Plaza 66 Tower 2
1366 West Nanjing Rd
Shanghai
PRC
As to PRC data compliance laws:
Grandall Law Firm (Beijing)
9/F, Taikang Financial Tower
No. 38 North Dongsanhuan Road
Beijing, China
Legal Adviser to the Controlling
Shareholders
As to Hong Kong laws:
Bird & Bird
6/F, The Annex, Central Plaza
18 Harbour Road
Wanchai
Hong Kong
Legal Advisers to the Joint Sponsors and
the Underwriters
As to Hong Kong and U.S. laws:
Clifford Chance
27th Floor, Jardine House
One Connaught Place
Hong Kong
As to PRC laws:
King & Wood Mallesons
18/F, East Tower
World Financial Center
1 Dongsanhuan Zhonglu
Chaoyang District
Beijing 100020
PRC
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 141 ---
Auditor and Reporting Accountant PricewaterhouseCoopers
Certified Public Accountants and
Registered Public Interest Entity Auditor
22/F, Prince’s Building
Central, Hong Kong
Industry Consultant Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co.
Room 2504-2505
Wheelock Square
1717 Nanjing West Road
Shanghai, PRC
Compliance Adviser Caitong International Capital
Co., Limited
Unit 2401-05, 24th Floor
Grand Millennium Plaza
181 Queen’s Road Central
Hong Kong
Receiving Banks Bank of China (Hong Kong) Limited
1 Garden Road
Hong Kong
Standard Chartered Bank (Hong Kong)
Limited
18/F Standard Chartered Tower
388 Kwun Tong Road
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 142 ---
Registered Office and Headquarters in
the PRC
3/F, Complex Building
SF South China Transit Center
No. 1111, Hangzhan 4th Road
Shenzhen Airport, Caowei Community
Hangcheng Sub-district, Bao’an District
Shenzhen
PRC
Principal Place of Business in Hong Kong 9/F, Asia Logistics Hub - SF Centre
36 Hong Wan Road
Tsing Yi
New Territories
Hong Kong
Company’s Website www.sf-express.com
(The information contained in this website
does not form part of this prospectus)
Joint Company Secretaries Ms. GAN Ling
Block B, TK Chuangzhi Tiandi Building
Keji South 1st Road, Nanshan District
Shenzhen, Guangdong
PRC
Ms. SO Ka Man (FCG, HKFCG (PE))
5/F, Manulife Place
348 Kwun Tong Road
Kowloon
Hong Kong
Authorized Representatives Mr. HO Chit
Block B, TK Chuangzhi Tiandi Building
Keji South 1st Road, Nanshan District
Shenzhen, Guangdong
PRC
Ms. GAN Ling
Block B, TK Chuangzhi Tiandi Building
Keji South 1st Road, Nanshan District
Shenzhen, Guangdong
PRC
CORPORATE INFORMATION
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--- page 143 ---
Audit Committee Mr. CHAN Charles Sheung Wai (Chairman)
Mr. LEE Carmelo Ka Sze
Dr. DING Yi
Nomination Committee Mr. W ANG Wei
Mr. LEE Carmelo Ka Sze (Chairman)
Dr. DING Yi
Remuneration and Appraisal Committee Dr. DING Yi (Chairlady)
Mr. CHAN Charles Sheung Wai
Mr. LEE Carmelo Ka Sze
Strategy Committee Mr. CHAN Charles Sheung Wai (Chairman)
Dr. DING Yi
Mr. W ANG Wei
Risk Management Committee Mr. HO Chit (Chairman)
Mr. CHAN Charles Sheung Wai
Mr. LEE Carmelo Ka Sze
H Share Registrar Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
Principal Banks
(in alphabetical order)
Bank of China
Shenzhen Branch
International Financial Building
No. 2022, Jianshe Road
Luohu District,
Shenzhen, China
China Development Bank
Shenzhen Branch
CDB Financial Center,
No. 2003, Fuzhong Third Road
Futian District
Shenzhen, China
CORPORATE INFORMATION
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China Merchants Bank
Shenzhen Branch
China Merchants Bank Shenzhen Branch
Building,
No. 2016, Shennan Boulevard
Futian District
Shenzhen, China
HSBC Bank (China) Company Limited
Shenzhen Branch
8th Floor, China Resources Building
No. 5001, Shennan East Road
Luohu District
Shenzhen, China
Industrial and Commercial Bank of China
Shenzhen Branch
North Block, Financial Centre,
No. 5055, Shennan East Road,
Shenzhen, China
Standard Chartered Bank (China)
Limited
Shenzhen Branch
11/F Tower A, Kingkey 100 Building
No. 5016, Shennan East Road
Luohu District,
Shenzhen, China
CORPORATE INFORMATION
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The information and statistics set out in this section and other sections of this
prospectus were extracted from the F&S Report, which was commissioned by the
Company, and from various official government publications and available resources
from public market research. The Company engaged Frost & Sullivan to prepare the F&S
Report in connection with the Global Offering. The information from official government
sources has not been independently verified by any of the Joint Global Coordinators, the
Joint Bookrunners, the Joint Lead Managers, the Underwriters, any of their respective
directors and advisers, or any other persons or parties involved in the Global Offering
(other than Frost & Sullivan), and no representation is given as to its accuracy. For
discussion of risks related to the Group’ s industry, see “Risk Factors — Risks Relating
to Our Business and Industry” in this prospectus.
Global logistics represents an enormous market opportunity, with an estimated US$11.1
trillion spent on logistics in 2023. Specifically, outsourcing logistics requirements to
third-party providers has become a secular trend across the world, resulting in sustainable
growth in global logistics spending and the emergence of leading third-party logistics service
providers. The overall logistics market remains highly fragmented, with a majority of
third-party logistics service providers remaining small in scale and either focused on a
particular sub-sector or a particular region or country. Globally, there are only around ten
integrated logistics service providers that can provide a full spectrum of logistics services
including express, freight, cold chain logistics, supply chain solutions, and international freight
forwarding services, among others. Among the global leading integrated logistics service
providers, a vast majority have adopted a directly operated model, directly operating all aspects
of the delivery process. The directly operated model allows integrated logistics service
providers to achieve superior service quality, provide customized and integrated solutions as
customers’ needs evolve, and maximize cost efficiencies through integrating multiple
networks.
The global integrated logistics players have been consistently gaining market share in
recent years. The top four integrated logistics service providers generated combined revenue
of US$303.2 billion in 2023, representing an expanding market share of global third-party
logistics spending from 4.3% in 2014 to 5.8% in 2023. During this ten-year period, the
combined revenue of the top four integrated logistics service providers increased at a CAGR
of 6.1%, compared with 2.7% for the overall global third-party logistics spending. This can be
attributed to a number of factors, including (i) scale, (ii) global networks, (iii) scarce
infrastructure, (iv) the ability to provide integrated and customized solutions, (v) superior
service levels, (vi) deep customer relationships, (vii) leading technology and data insights, and
(viii) financial strength.
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GLOBAL LOGISTICS MARKET OVERVIEW
Enormous Market Opportunity, with Asia as a Key Driver of Growth
The global logistics sector presents a multi-trillion dollar market opportunity, enabling
flow of goods and services across the world, as the backbone of the global economy. Total
global logistics spending was US$11.1 trillion in 2023, and is expected to reach US$13.8
trillion in 2028 at a CAGR of 4.4%.
Among all the regions, Asia is the largest, fastest growing, and one of the most
fragmented regions in the global logistics market, presenting the most attractive growth
prospects. In 2023, Asia’s logistics spending reached US$5.1 trillion, accounting for 45.5% of
the global market, and is expected to grow at a CAGR of 5.5% between 2023 and 2028.
In particular, China represented the largest share of Asia at 53.4% in 2023, and is
expected to grow at a CAGR of 4.2% from 2023 to 2028, supported by continued economic
growth, upgrades in manufacturing and consumption. Outside of China, the remaining Asian
market is expected to grow at a CAGR of 6.9% during the same period, driven by strong
economic growth, ongoing urbanization, increasing demand for consumption and booming
intra-Asia trade propelled by Southeast Asia’s expanding role in global supply chain,
cross-border e-commerce, favorable government policies and regional trade initiatives.
Global Logistics Spending, 2018-2028E
CAGR 2018-2023 2023-2028E
Total 4.0% 4.4%
2.9% 6.9%Asia (Ex. China)
2.6% 3.3%Europe
2.9% 3.2%South America
1.8% 4.2%Rest of the World
5.6% 3.5%North America
6.0% 4.2%China
950.7 950.7 891.3 1,054.7 1,099.2 1,039.8 1,069.5 1,114.1 1,173.5 1,232.9 1,277.5
1,752.8 1,767.7 1,634.0 2,005.4 2,213.3 2,302.5 2,376.7 2,451.0 2,555.0 2,659.0 2,733.21,708.3 1,708.3 1,619.2
1,871.7 1,856.8 1,946.0 2,020.2 2,109.4 2,168.8 2,243.0 2,287.62,020.2 2,168.8 2,213.3
2,480.7 2,644.1 2,703.5 2,807.5 2,911.5 3,045.2 3,164.0 3,327.4
2,049.9 2,020.2 1,901.4
2,257.9 2,243.0 2,361.9 2,510.4 2,703.5 2,896.7
3,119.5 3,297.7
20202019 2024E 20222018 2023 2025E 2026E 2027E 2028E2021
9,254.4 8,779.1
10,294.3
11,126.1 11,571.6
12,121.4
12,700.8
13,309.7
13,829.5
9,150.4
10,754.6
US$ in billions
519.9 698.2 772.4 787.3 831.9 861.6 891.3 906.1668.5 638.7 623.9
Sources: National Bureau of Statistics of China (“ NBS”), International Monetary Fund (“ IMF”), World Bank, and Frost & Sullivan
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Outsourcing logistics’ needs to third-party service providers is an increasing global trend.
Global third-party logistics spending is expected to grow at a CAGR of 5.2% from 2023 to
2028, as compared to the CAGR of 4.4% for global logistics spending in the same period,
reflecting an increasing penetration of global third-party logistics from 47.1% in 2023 to 48.8%
in 2028. The transition from first-party to third-party logistics is mainly driven by proven
benefits including superior service quality, operational efficiency, timeliness and cost savings.
In-house, first-party logistics units often struggle to match dedicated third-party service
providers in terms of service capabilities, quality and reliability, among other criteria. By
outsourcing logistics to dedicated third-party service providers, companies can allocate more
time and resources to focus on their core competencies and optimize logistics costs and
end-customer experience.
Asia represents the largest and fastest growing region for third-party logistics spending.
This is primarily driven by strong underlying growth in overall logistics spending and
increasing penetration of third-party logistics.
Global Third-party Logistics Market Size, 2018-2028E
CAGR (%) Penetration rate (1) (%)
2018-2023 2023-2028E 2023 2028E
Total 4.9% 5.2% 47.1% 48.8%
3.7% 3.5% 43.2% 43.7%South America
2.6% 4.9% 41.7% 43.2%Rest of the World
3.4% 7.3% 44.3% 45.1%Asia (Ex. China)
6.1% 4.1% 51.0% 52.5%North America
7.9% 6.0% 46.9% 50.9%China
3.2% 3.7% 50.8% 51.9%Europe
382.2 385.0 362.7 432.4 454.0 433.6 449.2 471.3 499.9 528.9 551.9278.1 268.3 219.4 340.9 361.0 374.8 388.6 396.0
872.9 883.8 818.6 1,008.7 1,119.9 1,174.3 1,219.3 1,264.7 1,326.0 1,388.0 1,435.0
845.6 849.0 806.3
937.7 935.8 988.5 1,032.3 1,082.1 1,116.9 1,159.7 1,187.3866.7 945.6 973.9
1,103.9 1,218.9 1,268.0 1,336.4 1,406.3 1,495.2 1,582.0 1,693.7
885.6 881.7 835.1
991.9 986.4 1,045.5 1,114.5 1,205.0 1,296.3
1,401.5
1,486.7
4,131.1
6,109.1
4,213.4
5,243.6
5,492.6
4,016.0
5,790.4
6,448.7 6,750.6
4,739.8 5,013.8US$ in billions
333.7298.8265.2
20212020 2025E 20232018 2019 2024E 2026E 2027E 2028E 2022
Sources: NBS, NDRC, IMF , World Bank, and Frost & Sullivan
Note:
(1) Calculated by third-party logistics spending as a percentage of total logistics spending.
Directly Operated vs Franchising Model
Logistics service providers generally utilize a directly operated model or a franchising
model. Under the directly operated model, logistics service providers directly operate all
aspects of the delivery process. This typically requires more upfront investment and operating
know-how. In contrast, under the franchising model, logistics service providers will only
directly control and operate parts of the logistics value chain and outsource other operations
to third-party franchisees. This is typically more asset light and requires less operating
expertise but in return leads to less control over service consistency and quality.
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The global top four integrated logistics service providers all utilize the directly operated
model, which has several critical advantages:
 Superior timeliness and service quality: Directly operated model offers superior
control over the entire value chain to better manage timeliness, reliability and
service quality. In particular, the directly operated model is in general regarded as
a necessity to provide time-definite express services.
 Greater ability to expand into adjacent logistics segments: With direct control
over operations, more owned infrastructure, and direct relationships with end-
customers, directly operated logistics players can more easily enter into adjacent
logistics segments and expand their service portfolio.
 Customization capabilities: Directly operated logistics service providers have a
superior ability to offer customized solutions as they have greater control over the
value chain and can therefore more flexibly tailor their solutions to meet specific
needs and capture new demand from emerging industries and business scenarios. On
the contrary, franchising model players provide their services through third-party
franchisees, which given organization separation, typically provide services based
on standardized operating procedures.
Integrated Logistics vs Single-Product Logistics Service Providers
Integrated logistics service providers typically offer a full spectrum of domestic and
international logistics services and are able to provide one-stop solutions to multinationals,
large corporations, small and medium enterprises and retail customers. Globally, there are only
around ten integrated logistics service providers that are able to provide a full spectrum of
logistics services. Their service offerings typically include but are not limited to express
(including time-definite express), freight (through FTL and/or LTL modes), cold chain
logistics, international freight forwarding services (by air, sea, rail or ground) and supply chain
solutions. With such service capabilities, integrated logistics service providers are able to
address diverse requirements from within (i) procurement and production logistics, from raw
material suppliers to manufacturers to warehouses; (ii) distribution logistics, from warehouses
to distribution channels either domestically or cross-border; and (iii) consumption and
after-sales logistics, including but not limited to last-mile deliveries to or from end customers,
and reverse logistics scenarios. Leveraging their extensive global logistics networks,
comprehensive logistics infrastructure, deep operational expertise and technology, integrated
logistics service providers are best positioned to capture the opportunities across the entire
logistics value chain globally.
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The following diagram illustrates the full-service spectrum of integrated logistics service
providers:
Typical Service Offerings of Global Integrated Logistics Service Providers
Express Freight Cold chain logistics Supply chain solutions
Express/
LTL/FTL
Raw material
suppliers Manufacturers
Hubs &
Sorting
centers
Bonded
warehouse
Custom
clearance
Custom
clearance
Express/
Intra-city on-
demand delivery
Domestic
Cross-border Overseas
warehouse
Cross-border
transportation through
Air/Sea/ Rail/Ground
Corporate &
Individual
Consignee
Express/
Intra-city on-
demand delivery
Procurement and production logistics Distribution logistics Consumption and after-
sales logistics
Shopping malls & retail
stores & distribution
centers
Omni-channel
Distribution centers for
e-commerce parcels
Individual shippers
Non-manufacturing business shippers
Express/
LTL/FTL
Express/
LTL/FTL
Reverse logisticsExpress/
LTL/FTL
Offline
Online
Illustrative Full-Spectrum, End-to-end Logistics Services
B2B/B2C
C2C
International
freight forwarding
Source: Frost & Sullivan
Over the past ten years, integrated logistics has proven to be a winning business model
in the global logistics industry, and its leading proponents have been gaining market share. The
market share of the global top four integrated logistics service providers increased from 4.3%
in 2014 to 5.8% in 2023 in terms of global third-party logistics spending. During this ten-year
period, the global top four integrated logistics service providers have grown at a CAGR of
6.1% by revenue, in comparison to that of 2.7% for the overall global third-party logistics
industry.
The success and market leadership of the integrated logistics service providers are driven
by the following factors:
 Scale: Substantial scale advantage, enabling lower unit costs and better service
quality that cannot be achieved by smaller logistics players.
 Global network: Capability to fulfill comprehensive and end-to-end logistics
demands of business and retail customers across many countries and regions.
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 Well-established infrastructure: Ability to build infrastructure from resources that
are scarce in nature or difficult to acquire, such as cargo-focused logistics hubs,
large air cargo fleets, air traffic rights and airport take-off and landing slots. For
example, in Asia, there was only one dedicated air cargo hub as of the Latest
Practicable Date. Obtaining a cargo airline license and air cargo fleet is difficult and
costly. The prime routes and slots have already been assigned to existing cargo
airlines, making it difficult for new entrants to obtain such valuable resources.
Beyond aviation infrastructure, integrated logistics service providers operate
extensive global networks, including warehouses and sorting centers in prime
locations. Even with years or decades of investments, potential new entrants may
still not be able to match the same quality and depth of the networks among the
global leading integrated logistics players.
 Ability to provide integrated and customized solutions, addressing complex
requirements and capturing greater customer wallet share: The logistics
demands of large corporates and small and medium enterprises are becoming
increasingly sophisticated and complex. They increasingly seek logistics service
providers that can (i) fulfill all their logistics needs, (ii) minimize the time and
complexity of dealing with multiple logistics service providers, (iii) reduce overall
logistics costs and improve operational efficiency, (iv) seamlessly integrate with
their internal systems, and (v) add value with industry know-how and data insights.
Integrated logistics service providers are best equipped to address these needs and
cross-sell additional logistics services and solutions, enabling them to capture
greater customer wallet share in a cost-efficient manner and improve customer
stickiness.
 Synergies across networks and operations: Ability to optimize operational
efficiency across multiple networks by consolidating shipments, sharing line haul
transportation, sorting center and warehousing capacity, and developing multi-
service outlets. This enables higher capacity utilization and lower unit costs.
 Technology leadership and data insights: With larger scale, global integrated
logistics service providers can afford larger investments in research and
development of technology to empower operations and in turn they possess larger
volumes of data. This results in more accurate proprietary models for demand
forecasting and resource allocation, generating higher operating efficiency.
 Financial strength and ability to consolidate: With greater financial strength,
global integrated logistics service providers have greater ability to operate through
different macroeconomic environments, and capacity to drive industry consolidation
through mergers and acquisitions. More than 70 mergers and acquisitions have been
completed or announced by the global top ten integrated logistics service providers
over the past ten years.
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Independent Third-Party Logistics vs Platform-Affiliated Logistics
Most of the global integrated logistics service providers are independent third-parties,
without affiliation to or heavy reliance on a particular e-commerce platform. Out of the global
top ten integrated logistics service providers in 2023, eight were independent players that are
not affiliated with any particular e-commerce platform or retailer. Independence from any
particular platform is becoming increasingly important in Asia for e-commerce logistics,
especially in China and Southeast Asia, as new forms of e-commerce such as social
e-commerce, livestreaming e-commerce, and cross-border e-commerce are taking market share
from the traditional e-commerce platforms, and these companies have a strong preference for
logistics service providers that are independent from their competitors.
Competitive Landscape
The Group was Asia’s largest and the world’s fourth largest integrated logistics service
provider in terms of revenue in 2023. The Group was also the fastest growing integrated
logistics service provider among the global top four integrated logistics service providers in
terms of revenue CAGR from 2021 to 2023. In addition, among the global top ten integrated
logistics service providers, the Group ranked third in terms of revenue CAGR from 2021 to
2023.
Global ranking and market share of integrated logistics service providers,
by revenue in 2023
Ranking Company 1 Headquarter Revenue 2
(US$ in Billions)
Market
Share3
(%)
Business model Independence
Global top 4 integrated logistics service providers
1 Company A United States 91.0 1.7% Directly-operated Independent
2 Company B United States 87.8 1.7% Directly-operated Independent
3 Company C Germany 86.0 1.6% Directly-operated Independent
4 The Group China 38.4 0.7% Directly-operated Independent
Other integrated logistics service providers
5 Company D China 24.7 0.5% Directly-operated Affiliated to
E-Commerce platform
6 Company E Japan 17.0 0.3% Directly-operated Independent
7 Company F France 16.5 0.3% Directly-operated Independent
8 Company G Japan 13.5 0.3% Directly-operated Independent
9 Company H China 13.1 0.2% Partially directly-
operated
Independent10 Company I Japan 10.0 0.2% Directly-operated
Affiliated to
E-Commerce platform
Others 4,845.6 92.4%
Total 5,243.6 100.0%
Source: Frost & Sullivan
Notes:
1 Company A: a global package delivery and supply chain management company established in the 1900s. It mainly offers
small parcel delivery, freight brokerage, freight forwarding, and supply chain solutions. It is a publicly listed company;
Company B: a global logistics services company, established in the 1970s. Specializes in international express delivery,
international freight, and supply chain solutions. It operates worldwide and is a publicly listed company;
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Company C: a global logistics and postal services company, founded in the 1960s. It offers express delivery, freight delivery,
international freight forwarding and supply chain solutions. It operates globally and is a publicly listed company;
Company D: a logistics and supply chain management company founded in China in the 2000s. It is currently a subsidiary
of an e-commerce platform and is a publicly listed company;
Company E: a global logistics company established in the 1930s. It offers a wide range of transportation, freight forwarding,
supply chain management, and other logistics services domestically and internationally. It is a publicly listed company;
Company F: an international parcel delivery and logistics company established in the 1970s. It provides express delivery
services, freight delivery services, and supply chain management solutions to both customers and businesses across Europe
and beyond. It is not a publicly listed company;
Company G: a logistics and transportation company established in the 1910s. It offers parcel delivery, freight delivery, supply
chain management and logistics services to individuals and businesses. It is a publicly listed company;
Company H: a logistics company established in the 2010s. It specializes in providing supply chain and logistics solutions.
It is not a publicly listed company;
Company I: a logistics company established in the 1950s. It provides parcel delivery, freight delivery, and supply chain
management services with operations in both domestic and international markets. It is a publicly listed company.
The abovementioned listed companies include Deutsche Post DHL Group, FedEx Corporation, JD Logistics, Inc., Nippon
Express Co., Ltd., SG Holdings Co., Ltd., United Parcel Service, Inc. and Yamato Holdings.
2 Financial year of Company B ends on May 31 and financial year of Company G and Company I ends on March 31.
Calendarized to financial year ended December 31 for like-for-like comparison.
3 Market share calculated by revenue as a percentage of global third-party logistics spending.
The following table summarizes how the Group compares with the leading global and
Chinese integrated logistics players across a number of criteria:
Home market
Home market1 Asia North America China
Market size in 2023 (US$ trillion)2 5.1 2.3 2.7
Market growth (2023-2028 CAGR) 5.5% 3.5% 3.6%
Scale No. of parcels in 2023 (bn) 12.0 5.7 N/A
11.7%Growth Revenue growth (2023-2028 CAGR) -3.3% 26.2%
Global coverage No. of countries operated in 202 220+
Europe
1.9
3.3%
1.83
0.01%
220+
North America
2.3
3.5%
5.84
-1.4%5
220+ Mainly China
Company A Company B Company C Company D
Source: Frost & Sullivan
Notes:
1 Home market: market where the majority of a company’ s revenue is generated from.
2 Market size: total logistics spending in respective home market.
3 Including domestic express logistics parcel volume and international shipment volume.
4 Including package volume of airborne and ground package businesses.
5 Financial year of Company B ends on May 31. Calendarized to financial year ended December 31 for like-for-like
comparisons with peers.
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Across various services and geographies, the Group primarily competes with three major
types of logistics service providers. The key success factors in competing with each type of
logistics service providers are summarized as follows.
 vs. Other Leading Global Integrated Logistics Service Providers:
(i) Superior growth with multiple growth drivers: The Group has been growing
rapidly, powered by growth across multiple business segments;
(ii) Larger, faster growing and more attractive home market: The Group is based
in Asia, the world’s largest and fastest-growing region for logistics. The
landscape in Asia is notably more fragmented, offering a significant growth
opportunity through consolidation, especially when compared to the United
States and Europe. In 2023, the top three integrated logistics service providers
in Asia collectively accounted for only 3.5% of the Asia market in terms of
revenue, as compared with 12.0% and 7.8% taken up collectively by the top
three integrated logistics service providers in the United States and Europe
markets, respectively. In addition, there is no other integrated logistics player
in Asia with comparable scale, infrastructure, independence, and integrated
services capabilities;
(iii) More comprehensive services and leadership across sub-sectors: The Group
is engaged in time-definite express delivery services, economy express
services, freight, cold-chain logistics, intra-city on-demand services, supply
chain solutions, international delivery services, and international freight
forwarding services, the broadest spectrum of services among other leading
global integrated logistics service providers. Furthermore, the Group is ranked
first in nearly every logistics sub-sector in which the Group operated in Asia
or China in terms of revenue in 2023, including express, freight, cold chain and
intra-city on-demand delivery supply chain and international services;
(iv) Strong positioning in Asia domestic and international express: With well-
established last-mile networks in China and Southeast Asia, the largest air
cargo fleet in Asia and a dedicated logistics complex in Asia’s first and only
dedicated air cargo hub, as well as the Group’s premium brand name, strong
talent pool, and cost leadership, the Group is strongly positioned to capture
domestic and Asia-outbound express demand;
(v) Competitive cost structure and superior operating efficiency: The Group is
equipped with the ability to offer comparably high service levels with a more
competitive cost structure. For example, on certain routes from China to
Southeast Asia, the Group is able to provide international express services at
30-60% lower pricing with comparable service level compared to other global
integrated logistics service providers. The Group’s competitive cost structure
and operating efficiency enabled the Group to achieve the highest average
daily parcel pick-up and delivery frequency of seven to eight times in the
world.
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 vs. Other China-Based Integrated Logistics Service Providers:
(i) Greater scale and established leadership positions across various sub-
segments;
(ii) The Group has the broadest spectrum of logistics services, including time-
definite express delivery services, economy express services, freight, cold-
chain logistics, intra-city on-demand services, supply chain solutions, and
international logistics services;
(iii) Unparallel aviation infrastructure – As of June 30, 2024, the Group operated
Asia’s largest air cargo fleet with 99 aircraft, which exceeded the second-
largest fleet over two times as of the same date. In addition, the Group
accounted for 32.0% of the air cargo volume in China in the first half of 2024.
The Group was also the only logistics company that owned a logistics complex
at the Ezhou cargo hub as of June 30, 2024;
(iv) Extensive directly operated networks, with minimum reliance on franchisees,
enabling superior timeliness, reliability and high-quality services;
(v) Independence from e-commerce platform, enabling the Group to fully benefit
from the ongoing increase of volumes from new emerging e-commerce
platforms;
(vi) Larger international operations, broader global network coverage, local
services capabilities in Southeast Asia and mission-critical air cargo fleet and
infrastructure.
 vs. Other Single-Product Logistics Service Providers:
For detailed comparisons, see “— Integrated Logistics vs Single-Product Logistics
Service Providers.”
Single-Product logistics service providers face numerous challenges to (i) transform
into an integrated model, (ii) command mid to high-end pricing, and (iii) build
presence in international logistics markets, for the following reasons:
(i) An extensive global network and infrastructure requires heavy capital
investments and many years to build;
(ii) Scarce resources such as cargo hubs, air cargo fleet and airport take-off and
landing slots are difficult to acquire, and require substantial scale to be
cost-efficient;
(iii) Requirement for deep operational know-how, strong control and advanced
technology infrastructure to operate and integrate multiple networks;
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(iv) The leading players have already established a premium brand and reputation
for high quality services; and
(v) Franchising model players have limited access to customers, making it harder
to provide a holistic solution and to cross-sell other services.
ASIA PRESENTS THE MOST ATTRACTIVE GROWTH OPPORTUNITIES
As the largest and fastest growing logistics market, Asia continues to present the most
attractive growth prospects for the global logistics industry. There continues to be significant
growth opportunities coming from (i) China, (ii) Asia (excluding China), including Intra-Asia
and domestic Southeast Asia logistics, and (iii) Asia intercontinental logistics, especially
between Asia to the US and Asia to Europe.
China Logistics Market Overview
China’s GDP is expected to increase from US$19.6 trillion in 2024 to US$23.8 trillion in
2028. This sustained growth underscores China’s continued economic expansion, fueled by
technological innovation, infrastructure development, and a strategic shift towards a
consumption-driven economy. China is the largest logistics market in the world in terms of
logistics spending and one of the fastest growing. Along with the increase in its nominal GDP ,
China’s total logistics spending increased from US$2.0 trillion in 2018 to US$2.7 trillion in
2023, representing a CAGR of 6.0%, and is expected to further increase to US$3.3 trillion in
2028, representing a CAGR of 4.2% from 2023 to 2028.
China Logistics Spending, 2018-2028E
3,045.2 3,164.0
2,020.2
US$ in billions
2,168.8 2,213.3
2,480.7
2,644.1 2,703.5 2,807.5 2,911.5
3,327.4
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
CAGR 2018-2023 2023-2028E
6.0% 4.2%Logistics Spending
Sources: NBS, NDRC, IMF , and Frost & Sullivan
The growth in the China logistics market from 2023 to 2028 is expected to be driven by
the following factors: (i) growth in GDP; (ii) continued growth in manufacturing activity and
consumption; (iii) continued urbanization, which creates a demand for efficient logistics
services to support the flow of goods and services within and between urban areas; (iv) rapid
advancement of new logistics technologies, further enhancing logistics efficiency and capacity;
and (v) favorable governmental policies that promote sustainable growth and upgrades to the
logistics services industry in China.
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Key Trends in the China Logistics Market
China’s logistics market is still at its early stage of development as compared to markets
in other developed countries, and presents an enormous growth opportunity for integrated
logistics service providers:
 Shift in customer focus from price to service quality, and integrated logistics
capabilities : Fierce price competition is normally seen in lower-end logistics
market, where competitive landscape is more scattered and customers are more price
sensitive. Whereas in mid to high-end logistics market, the market share is more
concentrated and the price is relatively stable. As more business and retail customers
place greater emphasis on timeliness, reliability and service quality, the focus of
competition is shifting away from offering the lowest price to providing higher
service quality. In addition, in recent years, as supply chains become more complex,
enterprises increasingly demand one-stop logistics services from third-party service
providers. Integrated logistics service providers are best-positioned to capture such
demand.
 Independent third-party logistics service providers benefiting from diversifying
e-commerce traffic : Traditional e-commerce platforms used to command a
dominant market share in China, until recent years when new forms of e-commerce
such as social e-commerce and live streaming e-commerce emerged and have been
rapidly gaining market share. These independent platforms are growing rapidly, and
require more increasingly complex logistics solutions. These platforms also prefer
logistics companies independent of traditional e-commerce platforms with no
conflicts of interest.
 Increasing demand for both tailored and standardized industry-specific
packaged solutions across various emerging, high-growth verticals : The fast-
growing new economy industry verticals, such as electric vehicle, new energy,
live-streaming e-commerce and new retail, have witnessed more complex logistics
needs and increasing demand for industry-specific logistics solutions. For example,
the global new energy vehicle industry, particularly that in China, has experienced
rapid growth over the past few years. The new energy vehicle supply chain,
including the power battery supply chain, is significantly more complex than
traditional automotive powertrains. The production of power batteries relies heavily
on rare materials like lithium, cobalt, and nickel. The agility of the supply chain is
paramount in ensuring a stable supply of rare materials and maintaining the
efficiency and quality of battery production. Therefore, tailored, integrated and
industry-specific logistics solutions from licensed logistics service providers are
increasingly in high demand. As another example, fresh retail and other consumer
goods retail are growing rapidly, mainly catalyzed by the continued penetration of
e-commerce and innovative formats like live-streaming. This growth has led to a
pronounced demand for integrated express logistics services including cold-chain,
time-definite express delivery, intra-city on-demand delivery and warehousing to
meet the ever-growing expectations in terms of delivery speed, quality and seamless
operations across distribution channels. To address this demand, logistics service
providers must be equipped with the capabilities to offer integrated, timely, tailored
and smart solutions.
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Leveraging the experience serving sector leaders in various emerging industries,
leading integrated logistics service providers are well-equipped to roll out
standardized industry-specific packaged solutions in a cost-efficient way to capture
the broader group of small and medium enterprises in the respective sectors, and
effectively expand their market share in the target industry verticals and wallet share
in target customers.
 Highly fragmented market with enormous potential for further consolidation :
In terms of revenue in 2023, the Group, the largest integrated logistics service
provider in Asia and China, accounted for approximately 2.6% of China’s total
third-party logistics spending in 2023. In contrast, the largest integrated logistics
service provider in the US accounted for 6.2% of total third-party logistics spending
in the country in 2023. This suggests substantial room for further consolidation in
China’s logistics market. Moreover, various logistics sub-segments, such as freight,
cold chain, and supply chain solutions, are also characterized by a high degree of
fragmentation, indicating significant room for further consolidation by industry
leading players.
 Technology and innovation : Technology and innovation not only transformed the
way logistics service providers operate but also created new business opportunities
and enhanced customer experience. For instance, automation, IoT, and data analytics
enabled cost reduction, efficiency improvement and service quality enhancement.
Additionally, the application of technology has enabled the development of
value-added services, such as inventory optimization, logistics and supply chain
analytics, allowing logistics service providers to offer comprehensive solutions that
go beyond traditional transportation and warehousing services.
 Favorable government policies and regulations : The PRC government has
implemented a series of policies and initiatives to enhance logistics infrastructure
and support the development and international expansion of logistics service
providers. For example, in 2022, the State Council released the “14th Five-Y ear Plan
for the Development of Modern Logistics”, the first five-year plan for logistics in
China. The plan aims to (i) accelerate the digital and intelligent transformation and
service innovation in logistics industry; (ii) enhance services capabilities in certain
specialized verticals, such as cold chain logistics and aviation logistics; (iii)
encourage modern logistics to support the entire supply chain; (iv) enhance the
connectivity between international and domestic logistics and expand international
logistics coverage; and (v) develop high-quality and efficient international air cargo
logistics and expand the coverage of the international air cargo logistics network.
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Key Sub-Segments in the China Logistics Market
In China’s logistics market, the Group operates in a number of sub-sectors, including
express (time-definite and economy express), LTL freight, cold chain logistics, intra-city
on-demand, and end-to-end supply chain solutions. The Group is the leaders across all of these
sub-segments. The following tables set out the market size, market growth, and the Group’s
market position and market share in each of these sub-segments in China.
No.1
Express LTL Cold Chain
Logistics
Intra-city
On-demand
No.1
End-to-end Supply
Chain Solutions
179 282 70 30 91
2023
market size
(US$ in billions)
11.9% 5.6% 8.1% 15.7% 9.1%2023-2028E
CAGR
The Group’s
market position1
11.7% (express)
63.9% (time-
definite express)
1.7% 2.2% 13.8% 3.2%The Group’s
market share1
Express and time-
definite delivery
service provider
Non-state-owned
independent third-
party supply chain
solutions provider
No.1
LTL freight
service
provider
No.1
Cold chain logistics
service provider
No.1
Third-party
on-demand
delivery
service provider3
Industry
concentration2
CR5=29%
(express)
CR2=85%
(time-definite
express)
CR3=4% CR3=5% CR3=33% CR3=9%
Source: Frost & Sullivan
Notes:
1 In terms of revenue in 2023.
2 CR# stands for concentration rate of top # players in the industry measured by combined market shares in 2023.
3 In terms of market share in the third-party on-demand delivery service in 2023.
Express
China is the largest express delivery market in Asia and globally in terms of both revenue
and parcel volume in 2023. China commanded a market share of 62.5% in Asia’s express
market in 2023 in terms of revenue, with a market size of US$179.3 billion. China’s express
market is expected to maintain rapid growth from 2023 to 2028 with a CAGR of 11.9%, driven
by growth in e-commerce, further penetration into consumption and manufacturing scenarios,
favorable policies such as promoting express services in manufacturing industries, and
technological advancements such as automation. In particular, China’s e-commerce transaction
scale is expected to increase from US$7,597.0 billion in 2024 to US$9,499.3 billion in 2028.
This growth highlights the robust expansion of China’s digital economy, driven by increasing
consumer demand for online shopping, advancements in digital payment systems, and the rapid
development of logistics and infrastructure supporting e-commerce.
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Asia Express Market Size, by Revenue, 2018-2028E
0
100
200
300
400
500
CAGR 2018-2023 2023-2028E
14.9% 11.9%
18.8% 10.5%
Total 16.2% 11.4%
45.5
60.1
72.5
86.0 92.2
107.6
124.1
140.0
153.2
166.3
177.6
89.7 111.4 130.6 153.5 156.9
206.1 233.0 260.3 287.2 315.4
2024E
287.0
453.5
203.1
2027E
413.5
2028E2026E2022
179.4
2025E20202019 20232018 2021
249.1
135.2
171.5
239.5
330.2
373.0
493.0
China
Asia (Ex.China)
US$ in billions
Sources: the State Post Bureau, NBS, NDRC, and Frost & Sullivan
The express market consists of time-definite and economy express services.
China Express Market Size, by Revenue, 2018-2028E
15.0% 8.1%Time-definite express market size
14.9% 12.6%Economy express market size
13.4
15.3
CAGR 2018-2023 2023-2028E
Total 14.9% 11.9%
76.3 96.1 112.0 130.1 132.2 152.5 176.9 201.4 226.1 250.0
275.7
18.6
23.4 24.7
26.9
29.2
31.6
34.2
37.2
39.7
48.0
260.3
287.2
89.7
US$ in billions
111.4
130.6
153.5 156.9
179.4
206.1
233.0
315.4
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
Sources: the State Post Bureau, NBS, NDRC, and Frost & Sullivan
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Time-definite express in general refers to a type of express delivery services that
guarantee the delivery of shipments within a specific, pre-determined timeframe. It offers
precise and fixed delivery windows, typically ranging from a few hours to a maximum of two
business days for domestic shipment, depending on the service level chosen. Over time, items
eligible for time-definite express delivery have expanded to include a wider range of
categories, size, and weight. The typical price for time-definite express is around RMB15 per
shipment.
Economy express, also known as non-time-definite express, refers to a type of express
delivery services that prioritize cost-effectiveness over strict time commitments. Unlike
time-definite express services that guarantee specific delivery windows, economy express
services do not include fixed or guaranteed delivery timelines. Economy express can be further
divided into mid to high-end and low-end services with price range of RMB6-8 and RMB2-3
per shipment respectively.
Time-definite express is the fastest growing and most profitable segment within express
delivery services, primarily attributable to: (i) the increasing trend of online consumption of
mid to high-end products, which requires fast and reliable delivery; (ii) accelerating
forward/reverse logistics demand fueled by the rise of emerging e-commerce platforms, which
benefits independent third-party logistics platforms; (iii) growing time-definite express
demand among industrial sectors characterized by supply chain disruptions, customer-to-
manufacturer (“ C2M”) transitions and just-in-time practices; (iv) increasing industrial B2B
online penetration that requires swift and dependable delivery of goods between businesses;
and (v) customers’ increased willingness to pay a premium for high-quality services.
Mid to high-end economy express is a fast growing segment within express delivery
services, primarily attributable to (i) increasing demand for quality express services at
reasonable price, due to increased e-commerce penetration, and tiered consumption and (ii)
logistics demand from emerging e-commerce platforms.
The barriers to entry for time-definite express delivery are exceptionally high. Service
providers in China need to be equipped with the following features to succeed in the market:
(i) extensive and dense nationwide network; (ii) strong control over their network, services and
capacity; (iii) mission-critical and scarce resources such as air cargo fleets, air cargo hubs,
airport slots and ground networks; (iv) brand recognition, as customers tend to trust established
brands and are more likely to use their services; (v) operational know-how accumulated over
decades; and (vi) strong technological capabilities. This is typically only possible when a
service provider utilizes the directly operated model.
As a result, only very few logistics service providers can provide time-definite express
services and the market remains highly concentrated. The top two time-definite express service
providers, namely, the Group and a leading state-owned enterprise in China, affiliated with a
large state-owned enterprise primarily engaged in postal delivery and postal savings services
in the PRC, specializing in providing express mail and logistics services, accounted for 85.1%
of the market share in China in terms of revenue in 2023, and the Group was the clear leader
in China with a market share of 63.9% in 2023.
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For economy express, the Group strategically focuses on the mid to high-end sub-segment
and was the largest player within this sub-segment with a market share of 49.9% in terms of
revenue in 2023, while the Tongda Operators adopt the franchising models and mainly compete
in the lower-end sub-segment.
The revised “Express Delivery Market Management Measures” by the Ministry of
Transport of the PRC came into effect on March 1, 2024. It clarified that without recipients’
consent, express delivery companies cannot confirm receipt of parcels on behalf of the
recipient, nor arbitrarily deliver parcels to smart parcel lockers, service outlets, or other
terminal delivery outlets. The impact of the new measures on the Group is anticipated to be
limited as compared to other franchising players, mainly because: i) the Group has always been
primarily focused on doorstep deliveries; ii) the Group’s marginal cost for doorstep deliveries
is lower than industry peers given the Group’s higher density of service outlets and couriers,
and the economies of scale from higher volume of time-definite parcels; iii) the Group’s
industry-leading data and technological capabilities continue to deepen its understanding and
smart prediction of customer behaviors, leading to higher operational efficiency in delivery; iv)
more and more e-commerce platforms offer customers with the option of doorstep delivery,
which will ultimately benefit premium logistics brands with strong last-mile capabilities who
are best equipped to provide high-quality and reliable doorstep delivery services.
Leveraging the Group’s directly operated network and high-quality service capabilities,
the Group is able to maintain price premium in both time-definite express and economy
express. The Group also has the best service quality among all express players in China, and
was ranked by the State Post Bureau as (i) 1st for 15 consecutive years (2009 to 2023) in
overall customer satisfaction, (ii) 1st for nine consecutive years (2013 to 2021) in delivery
timeliness (within 48 hours), and (iii) 1st for nine consecutive years (2013 to 2021) in delivery
punctuality (within 72 hours). The State Post Bureau has not published new rankings for
delivery timeliness and delivery punctuality since 2021.
The Group was the largest express service provider in China in terms of revenue in 2023,
with a market share of 11.7%. The Group was also the largest express and time-definite express
delivery service provider in Asia, in terms of revenue in 2023.
LTL Freight
Ground freight delivery is carried out mainly through FTL and LTL modes, with LTL
mode being the fastest growing sub-segment in freight delivery services. The market size of
LTL freight in China in terms of revenue increased from US$224.8 billion in 2018 to US$282.3
billion in 2023, representing a CAGR of 4.7%, and is expected to increase to US$371.1 billion
in 2028, representing a CAGR of 5.6% from 2023. In addition, China represents the largest
LTL freight market in Asia. In 2023, China’s LTL freight market accounted for 83.4% of the
market share in LTL freight market in Asia in terms of revenue. This dominance of China’s LTL
freight market significantly mirrors the overall landscape of LTL freight market in Asia.
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Asia LTL Freight Market Size, by Revenue, 2018-2028E
0
100
200
300
400
500
CAGR 2018-2023 2023-2028E
4.7% 5.6%
2.2% 4.0%
Total 4.2% 5.4%
50.2 47.8 46.4
52.0 52.7
56.0
59.3 61.0 63.7
65.6 68.0
224.8 213.9 214.7 249.5 252.9
300.2 317.4 333.8 354.5 371.1
2024E
338.3
420.1
261.1
2027E
397.5
2028E2026E2022
282.3
2025E20202019 20232018 2021
305.6
275.0 261.7
301.5
359.5 378.4
439.1
China
Asia (Ex.China)
US$ in billions
Sources: China Federation of Logistics and Purchasing, NBS, NDRC, and Frost & Sullivan
The following factors are expected to drive the development of the LTL freight market in
China: (i) increasing penetration of business-to-business, or B2B, industrial and business-to-
consumer, or B2C, heavy freight online platforms, which are reshaping the way businesses and
consumers transport goods; (ii) C2M transitions and the adoption of just-in-time manufacturing
practices, creating a demand for efficient and timely freight delivery services to support
production; (iii) more deliveries directly from product origin to end market propelled by
e-commerce; (iv) the multi-layered distribution channels in many industries are becoming
flatter, generating increased demand for nationwide and timely LTL freight services; and (v)
omni-channel distribution, where goods are distributed through multiple channels, requiring a
flexible and reliable freight delivery network.
The LTL freight market is highly fragmented with substantial opportunities for
consolidation. The LTL freight landscape in China is made up of a small number of nationwide
network players and more than 200,000 small and medium regional and direct-line operators.
The aggregate market share of nationwide network players in China’s LTL freight market was
6.2% in 2023, and is expected to increase to 10.9% in 2028. The Group was the largest LTL
freight service provider in China in terms of both revenue and volume in 2023, with a market
share of 1.7% in terms of revenue and 0.4% in terms of volume, respectively. The Group was
also the largest LTL freight service provider in Asia, in terms of revenue and volume in 2023.
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LTL freight service providers in China need to obtain the following capabilities in order
to succeed: (i) nationwide network coverage, with the ability to deliver across the country; (ii)
streamlined and efficient operational process, maximizing operational and cost-efficiency; (iii)
commitment to superior service quality and stringent network control; and (iv) advanced
technological capabilities.
Integrated logistics players with strong network and capabilities from express delivery
services enjoy strong advantages against traditional LTL freight service providers, including:
(i) established nationwide full-capability network with unparalleled density; (ii) superior
last-mile delivery capabilities that offer to-door services; (iii) a trusted brand that results in
increased customer willingness to accommodate installation services at home, creating
additional value-added services opportunities; (iv) revenue synergies from cross-selling; and
(v) cost synergies from sharing infrastructure and resources with express networks, which
allows providers to offer high-quality services with competitive pricing. As a result, the Group
managed to overtake the former largest LTL freight player
* in only six years since the Group
launched the business.
Cold Chain Logistics
Cold chain logistics refers to specialized handling, storage, and transportation of
temperature-controlled products or goods that require specific temperature conditions to
maintain their quality, integrity, and safety throughout the logistics process. The Chinese cold
chain logistics market has emerged as a crucial component of the Asian cold chain logistics
landscape, representing more than 50% of Asian market in 2023. The market size of cold chain
logistics in China in terms of revenue increased from US$45.0 billion in 2018 to US$69.8
billion in 2023, representing a CAGR of 9.2%, and is expected to further increase to US$102.8
billion in 2028, representing a CAGR of 8.1% from 2023.
Pharmaceutical logistics services account for a significant portion of the cold chain
logistics market in China. The market size of pharmaceutical logistics services in China in
terms of revenue increased from US$2.1 billion in 2018 to US$4.6 billion in 2023, representing
a CAGR of 17.0%, and is expected to further increase to US$8.1 billion in 2028, representing
a CAGR of 12.0% from 2023.
* A Chinese logistics company established in the 1990s. It provides express delivery services, freight delivery
and warehouse management. It is currently a subsidiary of Company D and is a publicly listed company.
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Asia Cold-chain Logistics Market Size, by Revenue, 2018-2028E
0
50
100
150
200
CAGR 2018-2023 2023-2028E
9.2% 8.1%
4.6% 5.6%
Total 6.8% 6.9%
50.2
55.8
58.2 59.7 61.7 65.2 68.3
71.5
75.0
80.2
85.5
45.0 54.7 61.4 62.5 65.3 75.7 82.0 88.5 95.4 102.8
2024E
135.0
175.6
119.6
2027E
163.5
2028E2026E2022
69.8
2025E20202019 20232018 2021
127.0
97.0
110.5
122.2
144.0
153.5
188.3
China
Asia (Ex.China)
US$ in billions
Sources: China Federation of Logistics and Purchasing, NBS, NDRC, and Frost & Sullivan
The following factors are expected to drive the development of cold chain logistics
services market in China: (i) favorable policy support from the PRC government to promote the
development of cold chain logistics infrastructure; (ii) increasing popularity of livestreaming
e-commerce, driving the need for cold chain logistics for pre-made and fresh food delivery;
(iii) rise of omni-channel retail and the demand for frequent and low-volume deliveries for
fresh food in communities; and (iv) fast-growing pharmaceutical industry in China, driving the
demand for dedicated and high-quality logistics services to transport temperature-sensitive
products.
The cold chain logistics services market is also highly fragmented with substantial room
for consolidation. In China, there are over 2,000 small and medium-sized cold chain logistics
service providers. However, very few leading players have the capability to provide end-to-end
cold chain logistics services that cover the entire process from production, storage,
transportation and distribution to the end-consumer, while ensuring constant temperature
control and stable services quality. The Group was the largest cold chain logistics service
provider in China in terms of revenue in 2023, with a market share of 2.2%.
Cold chain logistics service providers in China need to obtain the following capabilities
in order to succeed in the market: (i) high-quality services to meet the stringent requirements
of handling temperature-sensitive products, including maintaining precise temperature control,
implementing strict quality control measures, and ensuring timely deliveries; (ii) control over
directly operated network; (iii) end-to-end multi-temperature solutions to address customers’
wide-ranging temperature requirements for products such as frozen and chilled food products;
and (iv) well-established and specialized cold chain infrastructure, which requires access to
scarce resources and ability to make capital investments.
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Intra-City On-Demand
Intra-city on-demand delivery refers to the provision of delivery services upon demand
within a specific city or urban area, and typically involves delivery of cooked meals, groceries
and consumer goods. Intra-city on-demand delivery services are most commonly provided by
riders using two-wheel vehicles. The market size of intra-city on-demand delivery in China in
terms of revenue increased from US$12.6 billion in 2018 to US$30.2 billion in 2023,
representing a CAGR of 19.1%, and is expected to further increase to US$62.6 billion in 2028,
representing a CAGR of 15.7% from 2023 to 2028. The third-party on-demand delivery
services market is a key component in the intra-city on-demand delivery market in China. The
market size of third-party intra-city on-demand delivery in China in terms of revenue increased
from US$3.0 billion in 2018 to US$7.8 billion in 2023, representing a CAGR of 21.1%, and
is expected to further increase to US$21.0 billion in 2028, representing a CAGR of 21.9% from
2023. Built upon China’s vast food delivery and urban retail markets, the intra-city on-demand
delivery market in China commanded a dominant market share in Asian market of 79.7% in
2023 in terms of revenue.
Asia Intra-city On-demand Delivery Market Size, by Revenue, 2018-2028E
0
10
20
30
40
50
60
70
80
1.6
CAGR 2018-2023 2023-2028E
19.1% 15.7%
36.9% 13.3%
Total 21.7% 15.2%
4.7
6.1
6.6
7.7
8.8
10.5
12.2
14.0
14.4
12.6 17.3 18.7 23.1 27.5
36.1 41.9
48.5
55.2
62.6
2024E
37.9
69.2
23.4
2027E
60.7
2028E2026E2022
30.2
2025E20202019 20232018 2021
34.1
14.2
19.6
29.2
44.9
52.4
77.0
China
Asia (Ex.China)
US$ in billions
2.3
Sources: NBS, NDRC, and Frost & Sullivan
The following factors are expected to drive the development of the third-party intra-city
on-demand delivery market in China: (i) continued urbanization and increases in consumer
purchasing drive greater demand for convenient and efficient intra-city on-demand delivery
services; (ii) growing demand for food and beverage delivery driven by increased online
penetration in local services; (iii) emerging new service scenarios driven by local e-commerce,
including, but not limited to, various goods such as groceries, electronics, apparel, cosmetics,
and pharmaceuticals; and (iv) increased demand from merchants to build direct internet traffic
and reduce reliance on internet platforms. The transformation has led to growing demand for
sophisticated third-party delivery services.
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The third-party intra-city on-demand delivery services market is relatively fragmented.
Currently, many merchants’ orders are fulfilled by less organized local delivery teams. The
aggregate market share of China’s top three third-party intra-city on-demand delivery service
providers in terms of revenue was 32.6% in 2023. The Group was the largest third-party
intra-city on-demand delivery service provider in China in terms of revenue in 2023, with a
market share of 13.8%. The Group was also the largest third-party intra-city on-demand
delivery service provider in Asia, in terms of revenue in 2023.
Intra-city on-demand delivery service providers in China will need to obtain the following
capabilities in order to succeed in the market: (i) well-established customization capabilities to
cater to various customer needs, including different types of goods, delivery timeframes, and
special requirements; (ii) flexibility in catering to diverse scenarios; (iii) a high-quality and
diverse pool of riders, who play a vital role in customer satisfaction through their reliable,
professional and capable services, requiring service providers’ investment in compensation and
trainings; advanced technological capabilities, which help enhance operational efficiency,
improve delivery accuracy, and provide a seamless user experience; and (iv) high-level
independency and reliability.
End-to-end Supply Chain Solutions
End-to-end supply chain solutions comprehensively optimize the entire flow of goods,
information, and services from initial procurement to the final delivery of products to end
users. This demands an intricate understanding of procurement, production, inventory
management, transportation, warehousing, and distribution, alongside advanced technologies
for real-time tracking and data analysis, helping customers to tackle the complexities of
managing the entire supply chain. Unlike companies that only provide partial supply chain
solutions such as warehousing distribution, the core competency of end-to-end supply chain
solutions providers lies in orchestrating the seamless coordination and integration of diverse
functions, partners, and processes across the entire supply chain life cycle. As a result,
end-to-end solution providers are able to serve a wider group of customers from various
industry verticals, who demand for integrated solutions with higher value-added in a
comprehensive range of logistics scenarios. On the other hand, building end-to-end capabilities
requires established domestic and international network and infrastructure, technologies, and
cross-functional expertise, which set a high entry barrier for potential competitors. The market
size of end-to-end supply chain solutions in Asia increased from US$154.7 billion in 2018 to
US$238.1 billion in 2023, representing a CAGR of 9.0%. This market is expected to further
increase to US$345.6 billion in 2028, representing a CAGR of 7.7% from 2023. End-to-end
supply chain solutions continue to experience significant demand in China, outgrowing the
overall logistics market in China. The market size of end-to-end supply chain solutions in
China increased from US$54.6 billion in 2018 to US$91.3 billion in 2023, representing a
CAGR of 10.8%, and is expected to further increase to US$140.8 billion in 2028, representing
a CAGR of 9.1% from 2023 to 2028. As a result, supply chain solutions as percentage of total
third-party logistics spending is also expected to grow from 7.2% in 2023 to 8.3% in 2028.
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Asia End-to-end Supply Chain Solutions Market Size, by Revenue, 2018-2028E
0
50
100
150
200
250
300
350
CAGR 2018-2023 2023-2028E
10.8% 9.1%
8.0% 6.9%
Total 9.0% 7.7%
100.1 102.9 98.2
121.4 127.2
146.8
165.5 165.1
181.0
199.2
204.8
54.6 60.5 62.3 72.9 82.9 99.7 108.6 118.2 129.1 140.8
2024E
238.1
328.3
160.5
2027E
299.2
2028E2026E2022
91.3
2025E20202019 20232018 2021
210.1
154.7 163.4
194.3
265.2 273.7
345.6
China
Asia (Ex.China)
US$ in billions
Sources: China Federation of Logistics and Purchasing, NBS, NDRC, and Frost & Sullivan
The following factors are expected to drive the development of end-to-end supply chain
solutions market in China: (i) increasingly complex and sophisticated customer needs across
industry verticals, requiring customized supply chain solutions tailor-made for specific
industry requirements; (ii) vast efficiency improvement potential at the manufacturing end of
the supply chain, driven by customer demand for manufacturing process optimization and cost
savings; (iii) demand for data insights and other value-added services, which support an
enhanced decision-making process, improved forecasting accuracy, and disruption avoidance;
and (iv) favorable governmental policies that encourage the development of integrated supply
chain solutions.
The Group was the largest non-state-owned third-party end-to-end supply chain solutions
provider in China in terms of revenue in 2023, with a market share of 3.2%. The top ten supply
chain solution providers in China collectively accounted for 38.0% of the market share in
China in terms of revenue in 2023, reflecting a relatively more concentrated landscape as
compared to the broader logistics market. Historically, many leading supply chain solutions
providers in China were associated with either traditional e-commerce platforms or large-scale
manufacturing corporates. There are few independent third-party providers who are capable of
providing sophisticated supply chain solutions at scale, given high entry barriers such as
industry knowhow, advanced technology requirement, extensive infrastructure and established
customer relationships. Independent, sizable third-party supply chain solutions providers like
the Group are well positioned to gain market share, given (i) outsourcing demand driven by
medium-to-large corporates’ increasingly complex supply chain, and (ii) e-commerce traffic
diversification driven by new emerging platforms.
INDUSTRY OVERVIEW
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Supply chain solutions providers in China will need to obtain the following capabilities
in order to succeed in the market: (i) integrated and end-to-end services capabilities along the
entire supply chain; (ii) third party independence that enables supply chain solutions providers
to fully collaborate with various stakeholders along the industry value chain, not having to rely
on a specific number of customers and industries; (iii) direct control over supply chain
infrastructure and service processes to ensure service reliability, efficiency and quality; (iv)
application of advanced technologies and data to optimize operations, enhance visibility, and
enable data-driven decision-making; (v) deep understanding of specific industries and their
supply chain dynamics, which enables tailored solutions to address industry-specific
challenges; and (vi) well-established brand image and premium services.
Asia (Excluding China) and Asia Intercontinental Logistics Market Overview
Over the past decades, globalization presented significant growth opportunities for U.S.
and European companies outside of their home markets, leading to emergence of a number of
multi-national corporations. During that period, the global top three integrated logistics service
providers played a critical role in enabling their customers’ expansion into overseas markets,
and as a result, benefited by capturing those growth opportunities in parallel. Today, a similar
set of structural growth opportunities are presented to leading, Asia-based integrated logistics
players, given (i) Asian companies are increasingly expanding their traditional cross-border
trade, enhancing international brand recognition, and extending their production capacities
overseas, (ii) global multinational corporations expanding and diversifying their supply chain
across emerging Asian countries, and (iii) continued penetration of cross-border e-commerce
between Asia and other global markets.
Outside of China, total logistics spending in Asia reached US$2,361.9 billion in 2023,
accounting for 21.2% of the global market. Asia (excluding China) is also expected to be one
of the fastest growing markets globally, with total logistics spending expected to reach
US$3,297.7 billion in 2028, growing at a CAGR of 6.9% from 2023. The penetration rate for
outsourced logistics for Asia (excluding China) was 44.3% in 2023, below the global average
of 47.1% and 50% or above in developed markets such as North America and Europe,
indicating further growth potential for third party logistics service providers. Within this
market, (i) Intra-Asia logistics and (ii) Southeast Asia domestic logistics represent two highly
attractive growth opportunities.
Beyond Asia, intercontinental logistics represents a significant opportunity, with total
logistics spending increasing from US$1,089.1 billion in 2018 to US$1,182.7 billion in 2023,
representing a CAGR of 1.7%, and is expected to further increase to US$1,431.4 billion in
2028, representing a CAGR of 3.9% from 2023. The Group had the largest international
operations among Asia-based integrated logistics service providers in terms of international
revenue in 2023.
INDUSTRY OVERVIEW
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Intra-Asia Logistics SEA Domestic Logistics Asia-Intercontinental Logistics
2023
market size
(US$ in billions)
254 475 1,183
23-28
CAGR 6.9% 5.9% 3.9%
Source: Frost & Sullivan
Intra-Asia Logistics Markets
Intra-Asia trade comprised of 36.5% of the world’s total trade flow in 2023, generating
significant demand for cross-border logistics services. Intra-Asia logistics spending increased
from US$150.1 billion in 2018 to US$253.5 billion in 2023 at a CAGR of 11.1%, and is
expected to further increase to US$353.9 billion in 2028, representing a CAGR of 6.9% from
2023. China and Southeast Asia both have dominant representation in Intra-Asia logistics, each
associated with three of the top five trade lanes by logistics spending. In particular,
China-Southeast Asia represents the largest share of 26.6% in intra-Asia logistics spending in
2023 and is expected to grow the fastest in the region, with a CAGR of 8.8% from 2023 to
2028.
The strong growth prospects for Intra-Asia and in particular, the China-Southeast
logistics markets, are mainly driven by (i) growth in cross-regional trade flow propelled by the
expanding role of Southeast Asia in the global supply chain; (ii) accelerating regional
integration underpinned by initiatives such as China-ASEAN Free Trade Agreement and the
Regional Comprehensive Economic Partnership, which promotes regional trade and reduces
barriers among SEA countries and their trading partners; (iii) boom in cross-border
e-commerce across the region; and (iv) Belt and Road Initiative, which aims to enhance
economic connectivity between China and countries in Southeast Asia, among other regions.
Logistics spending of major intra-Asia trade lanes, 2018-2028E
CAGR 2018-2023 2023-2028E
Total 11.1% 6.9%
17.8% 8.8%China-SEA
8.1% 5.3%Others
12.4% 8.6%Intra-SEA
20212020 2025E 20232018 2019 2024E 2026E 2027E 2028E 2022
229.9
155.9
295.9
253.5
150.1 149.5
274.8
317.9
334.9
353.9
234.1
US$ in billions
29.8
26.8
31.2
26.9
34.3
26.1
51.2
39.5
102.7
72.6
96.0
67.8
90.2
64.6
82.0
59.6
76.9
54.1
67.5
48.1
56.3
43.0
93.5 91.4 95.5
139.2 134.8 137.9 143.8 154.3 163.1 171.1 178.6
Sources: United Nations Conference on Trade and Development, World Bank, and Frost & Sullivan
INDUSTRY OVERVIEW
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In order to succeed in the China-Southeast Asia logistics market, logistics service
providers will need to acquire the following capabilities: (i) integrated cross-border
capabilities, such as time-definite express, freight forwarding and supply chain solutions to
fulfill the evolving demand of customers; (ii) ownership and/or access to infrastructure, such
as aviation, cargo fleet and warehouses; (iii) strong foothold and extensive last-mile
capabilities in both China and Southeast Asia; (iv) timeliness, service quality and diverse
product offerings at competitive pricing; and (v) self-operation across key logistics capabilities
including express, freight forwarding and warehousing, allowing for seamless coordination,
control and hence service quality across the end-to-end supply chain.
Integrated logistics service providers, with directly operated cross-border express,
domestic last-mile capabilities in both China and Southeast Asia, freight forwarding and supply
chain capabilities are well-positioned to capture the significant growth opportunities in the
Intra-Asia logistics markets.
Within the China-Southeast Asia cross-border logistics market, the freight forwarding
market is highly fragmented with hundreds of global and regional market participants. The
aggregate market share of top ten players in this market was less than 20% in 2023. In contrast,
the international express market is highly concentrated with global and China-based integrated
logistics players dominating 73% of the total market share by revenue in 2023. Integrated
logistics service providers are the only players that can offer a combination of high-quality
international express and freight forwarding logistics services. These companies have
established themselves as leaders with extensive networks and superior aviation and cross-
border capabilities.
Southeast Asia Domestic Logistics Markets
Outside of China, Southeast Asia represents a major and one of the fastest growing
logistics markets in Asia (excluding China) based on logistics spending in 2023. Southeast Asia
accounted for 9.4% and 20.1% of overall Asia and Asia (excluding China) market, respectively.
Logistics spending in Southeast Asia increased from US$385.6 billion in 2018 to US$475.3
billion in 2023 at a CAGR of 4.3%, and is expected to further increase to US$633.2 billion in
2028, representing a CAGR of 5.9% from 2023, which is higher than in China, Japan and South
Korea.
Southeast Asia Logistics Spending, 2018-2028E
385.6
US$ in billions
408.7 387.0
426.0
453.9 475.3 503.2
532.9
564.5
597.9
633.2
2028E2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E
CAGR 2018-2023 2023-2028E
4.3% 5.9%Logistics spending
Sources: IMF , World Bank, and Frost & Sullivan
INDUSTRY OVERVIEW
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The strong growth prospects of the Southeast Asia logistics market is mainly driven by
the following factors: (i) strong economic growth across Southeast Asian economies, resulting
in growing GDP per capita and consumer purchasing power; (ii) continued proliferation of
Southeast Asia e-commerce; (iii) continued improvements in logistics infrastructure; (iv)
Southeast Asia’s growing importance in the global supply chain, which attracts more
multi-national enterprises to build manufacturing and distribution centers in the region, driving
logistics demand, and (v) favorable government policies promoting e-commerce and the
development of and logistics infrastructures.
In order to succeed in Southeast Asia, logistics service providers will need to acquire the
following capabilities: (i) the ability to customize services and operations in accordance with
the local competitive landscape, regulatory requirements, and cultural nuances across different
Southeast Asian countries; (ii) extensive domestic coverage, last-mile, line-haul and warehouse
network in Southeast Asia which all requires significant of time and capital to establish; and
(iii) timeliness, service quality and diverse product offerings at competitive pricing.
Integrated logistics service providers, with their directly operated last-mile network and
extensive experience in local markets, expertise across the full-spectrum of logistics services,
use of proprietary technologies and leading operational efficiency are well-positioned to
capture the significant growth opportunities in Southeast Asia.
The domestic logistics markets across Southeast Asian countries are characterized by high
competition and fragmentation, including logistics companies operating in one single market
or in multiple markets. E-commerce penetration has significantly increased in Southeast Asia
from 4.6% in 2018 to 18.2% in 2023, and is expected to further reach 33.1% in 2028. As a
result, e-commerce express has become a primary growth driver for logistics spending in
Southeast, benefiting leading express companies across the region.
Asia Intercontinental Logistics Markets
Intercontinental logistics services mainly refer to express delivery services and freight
forwarding services carried out on intercontinental trade routes. Asia intercontinental logistics
spending increased from US$1,089.1 billion in 2018 to US$1,182.7 billion in 2023,
representing a CAGR of 1.7%, and is expected to further increase to US$1,431.4 billion in
2028, representing a CAGR of 3.9% from 2023. Among all Asia intercontinental trade routes,
China-US and China-EU continued to be the two largest routes in terms of revenue in 2023.
The fastest growing trade routes are represented by Southeast Asia to US and Southeast Asia
to EU, and are expected to grow by a CAGR of 5.8% and 5.6% from 2023 to 2028, respectively.
INDUSTRY OVERVIEW
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Logistics Spending of Major Asia Intercontinental Trade Lanes, 2018-2028E
CAGR 2018-2023 2023-2028E
Total 8.3% 4.5%
5.3% 2.9%China-US
13.9% 5.8%SEA-US
9.4% 4.5%China-Europe
5.9% 5.6%SEA-Europe
20212020 2025E 20232018 2019 2024E 2026E 2027E 2028E 2022
US$ in billions
24.6 23.8 23.2 30.5 33.0 32.8 34.5 36.0 38.3 40.5 43.0
19.5 21.4 24.2
34.0 38.3 37.3 39.3 41.2 43.8 46.5 49.457.6 60.5 67.1
99.7 94.9 90.4 94.8 99.1 104.9 109.4
112.7
45.5 39.6
45.8
66.7 65.9
59.0 57.6 59.4
61.9
65.1
68.1
273.2
248.9
145.3
226.2
160.3
235.7
147.2
230.9
219.5
232.1
261.5
Sources: United Nations Conference on Trade and Development, World Bank, Expert Interview and Frost & Sullivan
The superior growth in the Asia intercontinental logistics markets is underpinned by the
following factors: (i) China-US and China-EU trade volume, which is expected to continue to
contribute the largest share in Asia intercontinental trade from 2023 to 2028, generating
significant demand for cross-continental logistics services; (ii) Southeast Asia-US and
Southeast Asia-Europe trade volume, which is expected to grow from US$834.2 billion in 2023
to US$1,049.9 billion in 2028, representing a CAGR of 4.7% from 2023. Southeast Asia’s
fast-growing economies, ever-growing economic linkage with the rest of the world, and its
rising role in the global supply chain are expected to be key growth catalysts for cross
continental logistics traffic between Asia and the rest of world; and (iii) structured
development opportunities of Chinese and global enterprises’ global expansions.
The Asia intercontinental express market is relatively concentrated and dominated by
global and leading Asia-based integrated logistics companies. In particular, the market for
time-definite intercontinental express services, which requires advanced and comprehensive
capabilities, is dominated by only a very few global leading integrated logistics service
providers who have established high barriers to entry such as decades of capital investments,
extensive network, aviation capabilities, operational know-how and technological expertise.
The Asia intercontinental freight forwarding market, is also primarily dominated by global
leading freight forwarders who can utilize their extensive global networks and resources to
provide a wide range of intercontinental end-to-end integrated freight solutions.
Intercontinental integrated logistics service providers need to obtain the following
capabilities in order to succeed in Asia intercontinental market: (i) extensive global network
and infrastructure coverage in Asia and across the globe, to enable efficient connections and
faster fulfillment; (ii) established brand and long-standing relationships with a diverse
customer base; (iii) strong control in air cargo and shipping capacity; (iv) deep industry
knowledge and insights to address complex and customized logistics needs; and (v) advanced
technological capabilities to enhance efficiency, visibility, and customer experiences.
INDUSTRY OVERVIEW
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Cross-border E-commerce Logistics Market
Cross-border e-commerce is emerging as a new growth engine for intra-Asia and Asia
intercontinental logistics. In particular, China cross-border e-commerce logistics is expected to
grow at a CAGR of 17.3% from 2023 to 2028.
China cross-border logistics market witnessed multiple underlying secular trends,
including:
(1) the demand from cross-border e-commerce platforms is becoming more and more
diverse. For instance, many platforms are now demanding for both air and ocean
freight services, as well as capabilities to handle shipments at customized volume
and weight. Such demand is likely to favor logistics vendors equipped with
integrated logistics capabilities.
(2) geographically, e-commerce platforms are also expanding their operations to cover
more regions across countries and continents. As a result, logistics vendors with
global footprints and service capabilities are better positioned to serve those
platforms.
(3) cross-border e-commerce platforms are turning to segmented tendering, which refers
to the process of dividing the procurement of cross-border e-commerce logistics
services into different segments or stages and conducting separate tenders for each
segment, when selecting logistics service providers. Consequently, logistics players
owning or self-operating mission-critical assets across logistics processes (such as
pickup, line-haul, customs clearance, warehousing and delivery) are better
positioned to acquire larger customer wallet share across the logistics value chain,
due to better service quality, broader product capabilities and higher cost efficiency.
As a result, China-based integrated logistics players with i) direct operations, ii)
integrated capabilities and iii) third-party independence are strategically positioned to
capitalize on the continued high growth of China’s cross-border e-commerce logistics sector.
COST ANALYSIS
Transportation costs are primarily driven by the prices of petroleum products. Since 2017,
the prices of petroleum products, including diesel and jet fuel, have shown a volatile trend. Key
factors included a significant drop in global petroleum product prices in 2020 due to the impact
of the pandemic. In 2022, crude oil prices continued to rise. However, since mid-2022, several
countries have released substantial strategic crude oil reserves to alleviate supply pressures.
Additionally, with demand expectations weakening against a backdrop of global interest rate
hikes, petroleum product prices gradually retreated from their highs. Looking ahead,
international oil price trends will depend more on global economic developments, Organization
of the Petroleum Exporting Countries production policies, increased focus on energy security
by various countries, and energy transition.
INDUSTRY OVERVIEW
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Against the backdrop of continuous economic growth in China since 2017, the average
wage of urban employees has shown a steady upward trend. Looking ahead, this growth trend
is expected to continue.
Average Annual Wage of Urban Employees in China, 2017 to 2023
0
2017 2018 2019 2020 2021 2023 2022
Average Annual Wage
RMB in Thousand
0
1
2
3
4
5
6
7
8
9
10
07/17 07/2101/18 01/2207/18 07/2201/19 01/2307/19 07/2301/20 01/2407/20 07/2401/17 01/21
Jet Fuel
Diesel (0#, China VI)
RMB Thousand/Ton
Monthly Price of Diesel and Jet Fuel in China, January 2017 to March 2024
20
40
60
80
100
120
140
74.3
82.4
90.5
97.4
106.8
114.0
120.7
Sources: NBS, Frost & Sullivan
SOURCE OF INFORMATION
This section contains information extracted from the F&S Report prepared by Frost &
Sullivan independently, which is commissioned by us in connection with the Global Offering.
We expect to pay Frost & Sullivan a total of RMB1,208,400 for the F&S Report and our use
of the report. Frost & Sullivan is a consulting company which provides industry consulting
services, commercial due diligence and strategic consulting services for a variety of industries.
We are of the view that the payment of such fee does not impair the fairness of the conclusions
drawn in the F&S Report. We have extracted certain information from the F&S Report in this
section, as well as in the sections headed “Summary,” “Risk Factors,” “Business,” “Financial
Information” and elsewhere in this prospectus to provide our potential investors with a more
comprehensive presentation of the industry in which we operate.
During the preparation of the F&S Report, Frost & Sullivan performed both primary and
secondary research, and obtained knowledge, statistics, information on and industry insights
into the logistics markets in China and globally. Primary research involved interviewing key
industry experts and leading industry participants. Secondary research involved analyzing data
from various publicly available data sources. Exchange rate used in the F&S Report are set out
as following: (i) the translations between Renminbi and U.S. dollar are made at the rate of
RMB6.7319 to US$1.00, (ii) the translations between Euro and U.S. dollar are made at the rate
of Euro 0.9511 to US$1.00, and (iii) the translations between Japanese yen and U.S. dollar are
made at the rate of Japanese yen 131.448 to US$1.00. The F&S Report was compiled based on
the following assumptions: (1) the overall social, economic, and political environment in China
and globally is expected to remain stable during the forecast period; (2) relevant key drivers
are likely to drive the continued growth of the logistics markets in China and globally
throughout the forecast period; and (3) there is no extreme force majeure or unforeseen
industry regulations in which the industry may be affected in either a dramatic or fundamental
way. Our Directors have confirmed, after making reasonable inquiries and exercising
reasonable care, that there is no adverse change in the market information since the date of the
F&S Report which may qualify, contradict or impact the information disclosed in this section.
INDUSTRY OVERVIEW
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--- page 175 ---
We are subject to a variety of PRC laws, rules and regulations across a number of aspects
of our business. This section sets forth a summary of the most significant laws and regulations
that are applicable to our current business activities within the territory of the PRC.
REGULATIONS ON CORPORATION
On December 29, 1993, the Standing Committee of the National People’s Congress (the
“SCNPC”) issued the PRC Company Law () (the “Company Law”),
which was recently amended by the SCNPC on December 29, 2023 and will come into force
on July 1, 2024. All companies established in the PRC are subject to the Company Law. The
Company Law regulates the establishment, operation, corporate structure, and management of
corporate entities in China and classifies companies into limited liability companies and
limited companies by shares.
General Meeting
According to the Company Law, a shareholders’ general meeting of a company limited by
shares shall be constituted by all the shareholders; the shareholders’ general meeting shall be
the authority of the company and shall exercise duties and powers in accordance with the
provisions the Company Law.
A shareholders’ general meeting shall be convened once every year. An extraordinary
shareholders’ general meeting shall be convened within two months in case of the certain
events specified in the Company Law.
The Company Law has no specific provisions on the quorum of shareholders to attend the
general meeting of shareholders.
Under the Company Law, shareholders present at a shareholders’ general meeting have
one vote for each share they hold, save that the company’s shares held by the company are not
entitled to any voting rights or the classified shares held by the shareholders.
Under the Company Law, resolutions of the general meeting shall be passed by more than
half of the voting rights held by shareholders (including those represented by the appointed
representative), with the exception of matters relating to merger, division or dissolution of the
company, increase or reduction of registered share capital, change of corporate form or
amendments to the Articles of Association, which in each case shall be passed by at least
two-thirds of the voting rights held by the shareholders (including those represented by the
appointed representative).
REGULATORY OVERVIEW
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--- page 176 ---
The shareholders may entrust the entrusted representative to attend the general meeting
of shareholders, and the power of attorney shall specify the scope of exercising the voting
right.
The Company Law has no specific provisions on the quorum of shareholders.
Transfer of Shares
Shares may be transferred in accordance with relevant laws and regulations. Registered
shares shall be transferred by means of endorsement or other means prescribed by laws or
administrative regulations; after the transfer, the company shall record the name and domicile
of the transferee in the register of shareholders of the company. Within 20 days before the
general meeting of shareholders or within 5 days before the record date of dividend distribution
determined by the company, the above-mentioned register of shareholders shall not be
changed. The transfer of bearer shares shall take effect when the shareholder delivers the shares
to the transferee.
Restrictions on Shareholding and Transfer of Shares
Generally, the target investors of H shares offering by domestic companies shall be
overseas investors. Where domestic investors subscribe H shares issued by domestic
companies, domestic investors shall be compliant with relevant provisions of the cross-border
investment, such as qualified domestic institutional investors (QDII), or overseas investment
filing (ODI), etc.
Under the Company Law, the shares issued before the public offering shall not be
transferred within one year from the date of the stocks of the company are listed and traded on
the stock exchange. The directors, supervisors and senior management personnel of the
company shall report to the company the shares held by them and their changes, and the shares
transferred each year during their term of office shall not exceed 25% of the total shares of the
company held by them during their tenure. The above-mentioned personnel shall not transfer
their shares of the company within half a year after their resignation. The Articles of
Association may make other restrictive provisions on the transfer of shares held by the
directors, supervisors, and management personnel of the company.
Variation of Class Rights
The Company Law has no special provision relating to variation of class rights. However,
the Company Law states that The State Council may formulate separate regulations on
companies issuing other types of shares which are not provided in the Company Law.
REGULATORY OVERVIEW
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--- page 177 ---
REGULATIONS ON EXPRESS DELIVERY SERVICES
The PRC Postal Law (), which was promulgated on
December 2, 1986 and latest amended in 2015, sets out the fundamental rules on the
establishment and operation of an express delivery company. Pursuant to the PRC Postal Law ,
an enterprise that operates and provides express delivery services must run its express delivery
business by obtaining a Courier Service Operation Permit. The PRC Postal Law also states
that, a company must meet all the requirements as a corporate legal person and satisfy certain
prerequisites with respect to its service capacity and management system before obtain a
business permit for express delivery services, and its registered capital must be no less than
RMB500,000 to operate within a province, autonomous region, or municipality directly under
the central government, no less than RMB1,000,000 in the case of cross-provincial operation,
and no less than RMB2,000,000 to operate international express delivery services.
In addition, after the effectiveness of the PRC Postal Law, (i) the Administrative Measures
for Express Delivery Market , (ii) the Express Delivery Market Measures and the Administrative
Measures on Courier Service Operation Permits (), which was
first promulgated on September 1, 2009 and latest amended on November 28, 2019, and (iii)
the Provisional Regulations on Express Delivery Business (Ҟ჈ᅲБૢԷ), which was
mostly recently amended on March 2, 2019, further state that, any entity engaging in express
delivery services must obtain a Courier Service Operation Permit from the State Post Bureau
or its local counterpart and is subject to their supervision and regulation. Entities applying for
a permit to operate express delivery services in a certain province should apply to the
provincial-level post bureau, while entities applying for a permit to operate express delivery
services across multiple provinces should apply to the State Post Bureau. If an entity operates
express delivery services without obtaining a Courier Service Operation Permit in accordance
with the above measures, it may be compelled to make corrections, subject to the confiscation
of its earnings generated from its unlicensed operating express delivery services, imposed a
fine ranging from RMB50,000 to RMB200,000, and/or ordered to suspend its business
operation for rectification. If a permit-holder does not operate any express delivery services for
over six months without due grounds after obtaining the Courier Service Operation Permit, or
suspends its business for more than six months without authorization, the postal administrative
departments have the authority to cancel the Courier Service Operation Permit of such holder.
Moreover, an express delivery company is required to file with the postal administrative
department while setting up branches. The requirements for the establishment of a branch of
express delivery company are specified in the Administrative Measures for Express Delivery
Market () (the “ Express Delivery Market Measures ”), which was
promulgated by the Ministry of Transportation on January 11, 2013, recently amended on
December 17, 2023 and became effective on March 1, 2024. Pursuant to the Express Delivery
Market Measures, express delivery companies shall make public announcements and/or publish
service areas or service time limit as required and make an announcement to the public in
advance for the change of service areas or service time limit. Express delivery operators shall
limit the access to the personal information of users to what is necessary for the performance
of express delivery service contracts, and shall not excessively collect the personal
REGULATORY OVERVIEW
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--- page 178 ---
information. In addition, express delivery operators shall establish the management systems
and operating procedures for the production, use, custody and destruction of express waybills,
and take the encryption, de-identification and other security technical measures to protect the
information security of express waybills. Where an express delivery company entrusts its
express delivery service to another enterprise without Courier Service Operation Permit, it may
be imposed a fine ranging from RMB5,000 to RMB30,000. With regard to any express delivery
company committing any of the following acts, competent postal administration authority shall
order it to make rectifications, issue a warning or circulate a notice of criticism against it, and
it may imposed a fine of not more than RMB30,000: (i) acknowledge receipt of courier items
on behalf of a user without the consent of the user; (ii) using smart courier boxes, courier
service stations etc. to deliver courier items without consent of a user; or (iii) throwing or
treading on courier items. During the Track Record Period and up to the Latest Practicable
Date, as advised by our PRC Legal Adviser, neither our Company nor our relevant domestic
major subsidiaries have been subject to any administrative penalty due to violation of Express
Delivery Market Measures, that could, individually or in the aggregate, have a material adverse
effect on our business, financial condition and results of operations.
The express delivery business must be operated within the permitted scope and valid term
of the Courier Service Operation Permit, and enterprises engaged in express delivery services
other than postal enterprises may not engage in posting and mail delivery business exclusively
operated by postal enterprises, and may not deliver any official documents of state organs. The
Courier Service Operation Permit is valid for 5 years upon its issuance and comes with an
annual reporting obligation. According to the Express Delivery Market Measures and the
Administrative Measures on Courier Service Operation Permits , an enterprise engaged in
express delivery services must complete annual reporting on its operation status for the
previous year with the postal administrative authority which issued its Courier Service
Operation Permit. Where an express delivery service company fails to submit its annual report
to the relevant postal administrative authority in a timely manner or conceals any facts or
commits fraud in its annual report, such express delivery service company may be imposed a
fine below RMB10,000. Moreover, in February 2013, the State Post Bureau issued the Circular
on Implementing the Administrative Measures for the Express Delivery Market and
Strengthening the Administration of Express Delivery Service Operations (݄<Ҟ
ج>), which further clarifies that the postal
administrative department must examine whether an entity operates express delivery service
within the permitted business scope and geographic scope of its Courier Service Operation
Permit, and the geographic examination must be carried out down to the district-level within
cities. Failure to conduct express delivery services within the permitted operation scopes would
subject the express delivery company to a correction order by the postal administrative
department and a fine from RMB5,000 to RMB30,000.
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In accordance with the Decision of the State Council on Issues concerning Cancelling and
Adjusting a Batch of Administrative Examination and Approval Items (՟ऊձሜ
) in February 2015, a company operating express delivery
services must apply for and obtain the Courier Service Operation Permit prior to the
application of its business license, and the obtaining of Courier Service Operation Permit is
subject to industrial and commercial registration with prior examination.
Pursuant to the Risk Assessment and Reporting for Major Operation and Management
Issues of Express Delivery Companies Headquarters (Trial) (ɽ຾ᐄ၍ଣԫ
ܓ(༊Б)), which was issued by the State Post Bureau on October 20,
2020, the headquarters of an express delivery company must submit a report to the State Post
Bureau within 3 days after making a major decision on business that may cause an impact on
the nationwide postal industry, including but not limited to nationwide price adjustment,
capital reduction, dissolution and bankruptcy, and any failure to submit such report in a timely
manner may cause such express delivery company to make correction, subject to a fine ranging
from RMB50,000 to RMB100,000 and ordered to suspend business operation until cancelation
of its Courier Service Operation Permit.
Companies engaging in express delivery service must establish and implement a system
for the examination of parcels or articles received for delivery. Pursuant to the PRC Postal Law
and Measures for the Supervision and Administration of Postal Security in the Postal Industry
() which became effective on February 15, 2020 and
amended on December 20, 2023, express delivery companies must examine the postal articles
so as to inspect whether the postal articles are prohibited or restricted from express delivery.
Express delivery companies must also examine whether the names, nature and quantity of the
postal articles have been properly disclosed on delivery form. According to the PRC Postal
Law, any failure to establish or implement such inspection system, or any unlawful acceptance
or delivery of prohibited or restricted parcels/articles may result in the sanctions to the
in-charge persons bearing direct responsibility and other persons subject to direct liability of
the express delivery companies and the suspension of the company’s business operation for
rectification or even cancelation of its Courier Service Operation Permit, being compelled to
make corrections and being imposed a fine up to RMB5,000.
According to the Provisional Regulations on Express Delivery Business , express delivery
operators and their branches may open express delivery terminal outlets which are required to
file with the local post administrations in the places where they are located for record within
20 days from the date of opening their express delivery terminal outlets. The delivery terminal
outlets are not required to obtain a business license. Where an express delivery service operator
fails to file with the local post administrations for opening their express delivery terminal
outlets, such express delivery service company may be compelled to make corrections,
imposed a fine ranging up to RMB50,000 and/or ordered to suspend business for rectification.
In case an express delivery service company intends to suspend operating express delivery
services, it shall (i) make public announcement ten days in advance, (ii) submit a written notice
to the postal administrative departments, (iii) return the Courier Service Operation Permit and
(iv) make proper arrangement on undelivered express parcels. Failure to comply with such
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requirement may be compelled to make corrections, imposed a fine ranging up to RMB50,000
and/or ordered to suspend business for rectification. According to the Provisional Regulations
on Express Delivery Business , express delivery operators shall also verify the identity of
senders and register their identity information when receiving express parcels. Where senders
refuse to furnish their identity information or furnish false identity information, express
delivery operators shall not receive their express parcels. Moreover, if any express delivery
operator fails to verify the identity of senders and registers their identity information, or
identifies that the senders provide false identity information, but still receives the express
parcels, such express delivery operator may be subject to a fine ranging from RMB100,000 to
RMB500,000 or ordered to suspend business operation until cancelation of its Courier Service
Operation Permit, and the personnel directly in charge and other persons directly liable may be
subject to a fine ranging up to RMB100,000, according to the Provisional Regulations on
Express Delivery Business , the PRC Postal Law and the Anti-Terrorism Law (˴່
). The Provisional Regulations on Express Delivery Business also indicates that two or
more express delivery operator may use a unified trademark, corporate name or express waybill
to conduct the express delivery business.
Pursuant to the E-commerce Law of the People’ s Republic of China (ʕശɛ͏΍ձ਷
) (the “ E-commerce Law ”) promulgated by Standing Committee of the National
People’s Congress, which took effect on January 1, 2019, express delivery service providers
shall remind consignees to examine the commodities immediately on the spot; where the
commodities are received by others for consignees, such providers shall obtain the consent of
consignees. In addition, the E-commerce Law also stipulates that express delivery service
providers shall use environmental-friendly packaging materials in accordance with the relevant
provisions in an effort to reduce the consumption of and recycle packaging materials, which is
further mentioned in the Measures for Administration of Packaging of Mails and Express Mails
() promulgated by the Ministry of Transport on February 8, 2021
and has come into effect on March 12, 2021. Pursuant to the Measures for Administration of
Packaging of Mails and Express Mails , where an express delivery company uses packaging that
is not in compliance with the law, or uses a toxic substance as filling material, it would be
subject to a correction order by the postal administration authority; if the express delivery
company fails to make corrections within a time limit, it would be fined from RMB5,000 to
RMB10,000.
REGULATIONS ON TRANSPORTATION
Regulations relating to Road Transportation Permit
Pursuant to the Regulations on Road Transportation of PRC (ʕശɛ͏΍ձ਷༸༩༶፩
ૢԷ), promulgated by the State Council on April 30, 2004 and most recently amended on
July 20, 2023, and the Provisions on Administration of Road Freight Transportation and
Stations (Sites) () issued by the Ministry of Transport in
June 2005 and most recently amended in November 10, 2023 (the “ Road Freight Provisions ”),
the business operations of road freight transportation refer to commercial road freight
transportation activities that provide public services. The road freight transportation includes
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general road freight transportation, special road freight transportation, road transportation of
large articles, and road transportation of hazardous cargos. Special road freight transportation
refers to freight transportation using special vehicles with containers, refrigeration equipment,
or tank containers, etc.
The Road Freight Provisions set forth detailed requirements with respect to vehicles and
drivers, pursuant to which, anyone engaging in the business of operating road freight
transportation must obtain a Road Transportation Operation Permit from the local county-level
road transportation administrative bureau, and each vehicle used for road freight transportation
must have a Road Transportation Certificate ( ༸༩༶፩ᗇ) from the same authority. Except
international freight transportation and transportation of dangerous goods, such individual or
institution applying for the operation of freight transportation shall have: (i) qualified vehicles
for operations; (ii) competent drivers under 60 with relevant driving licenses who (except for
drivers who use general freight vehicles with a total mass of 4.5 metric tons or less) have
passed requisite knowledge tests and obtained qualification certificates, and (iii) sound and
proper administrative systems for safe operation. The transportation administrations at the
county level (districted city level for transportation of dangerous goods) are responsible for the
issuance of the operating permits for the freight transport operating enterprises and the
operating licenses for the freight transport operating vehicles. An enterprise shall conduct
freight transportation operation in accordance with the scope specified under its road
transportation operation permit and shall not transfer or rent such permit to others. Pursuant to
the Notice on the Cancelation of the Road Transportation Certificate and the Driver
Qualification Certificate for Ordinary Freight V ehicles with a Total Mass of 4.5 Tons or Less
(՟ऊᐼሯඎ 4.5੽ุ༟
) promulgated by the PRC Ministry of Transport, which took effect on January
1, 2019, local transportation management departments will no longer issue road transportation
certificate for ordinary freight vehicles with a total mass of 4.5 tons or less.
Although the Road Transportation Operation Permits have no limitation with respect to
geographical scope, several provincial governments in China, including Shanghai and Beijing,
promulgated local rules on administration of road transportation, stipulating that permitted
operators of road freight transportation registered in other provinces should also make
record-filing with the local road transportation administrative bureau where it carries out its
business.
Regulations relating to Cargo Vehicles
On August 19, 2016, the PRC Ministry of Transport promulgated the Administrative
Provisions concerning the Running of Cargo V ehicles with Out-of-Gage Goods (༶፩ԓ
), and latest amended on August 11, 2021, which stipulates that cargo
vehicles running on public roads shall not carry cargo weighing more than the limits prescribed
by this regulation and their dimensions shall not exceed those as set forth by the same
regulation. V ehicle operators who violate this regulation may be subject to a fine of up to
RMB30,000 for each violation. In the event of repeated violations, the regulatory authority
may suspend the operating license of the vehicle operator and/or revoke the business operation
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registration of the relevant vehicle. In the event more than 10% of the total vehicles of any road
transportation enterprise are not in compliance with this regulation in any year, such road
transportation enterprise shall suspend its business for rectification and its road transportation
license may be revoked.
Regulations relating to Public Air Transport Enterprise
Pursuant to the Regulation on Business Permits for Public Air Transport Enterprises ( ʮ
) promulgated by the Ministry of Transport in 2004 and
recently amended in 2018, business entities that uses civil aircraft to engage in the transport
of passengers, luggage, goods and parcels for the purpose of making profits, referred to as
“public air transport enterprise”, shall obtain a Business Permit for Public Air Transport
Enterprises and abide by state laws, administrative regulations and rules related to civil
aviation management. Public air transport enterprises shall carry out business activities within
the business scope as stated in their permit, and may not exceed the approved business scope
without permission, and no air transport business activities shall be conducted without a
Business Permit for Public Air Transport Enterprises.
Regulations Relating to International Freight Forwarding Business
The Administrative Provisions on International Freight Forwarders of the PRC (ʕശ
) promulgated in 1995 and its detailed rules issued
in 2004 regulate the business of international freight forwarding. According to the provisions
and its detailed rules, the minimum amount of registered capital must be RMB5 million for an
international freight forwarder by sea, RMB3 million for an international freight forwarder by
air and RMB2 million for an international freight forwarder by land or for an entity operating
international express delivery services. An international freight forwarder must, when each
time applying for setting up a branch, increase its registered capital (or the excess amount over
its minimum registered capital) by RMB500,000. Under the Measures on Filing of
International Freight Forwarders (Interim) (ࣩ(ᅲБ))
announced in March 2005 and amended in August 2016, all international freight forwarders and
their branches registered with the SAMR must be filed with the MOFCOM or its authorized
organs.
Regulations Relating to Tariff and Export Control
Pursuant to the Regulations on Import and Export Duties of the PRC (ʕശɛ͏΍ձ਷
ආ̈ɹᗫ೼ૢԷ) promulgated by State Council on March 7, 1985 and latest amended on
March 1, 2017, where an enterprise making customs declaration is engaged by a taxpayer to
complete customs declaration and make payment of customs duties for and on behalf of the
taxpayer violates the provisions and thus causes a shortfall or omission in the collection of
customs duties, such enterprise shall assume joint liability together with the taxpayer for
payment of the shortfall amount or amount payable and any overdue fine. Where an enterprise
making customs declaration is engaged by a taxpayer to complete customs declaration and
make payment of customs duties for and on behalf of the taxpayer, the enterprise and the
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taxpayer shall assume joint liability for payment of customs duties. The Customs Duties Law
of the PRC (), issued by SCNPC on April 26, 2024 and effective as
of December 1, 2024, will replace Regulations on Import and Export Duties of the PRC .
Pursuant to the Customs Duties Law of the PRC , logistics enterprises are withholding obligors
for customs duties.
Pursuant to the Export Control Law of the PRC () issued
by SCNPC on October 17, 2020, no organization or individual may provide exporters with
services such as agency, freight, delivery, customs declaration, third-party e-commerce
transaction platforms and finance services, etc., that are engaged in illegal acts related to export
control. Where any party is aware that an exporter engages in illegal acts concerning export
control but still provides it with aforementioned services, it shall be given a warning, ordered
to stop the illegal acts, its illegal gains shall be confiscated, and a fine of not less than three
times but not more than five times the illegal turnover shall be imposed on it concurrently if
its illegal turnover is more than RMB100,000, or a fine of not less than RMB100,000 but not
more than RMB500,000 shall be imposed on it concurrently if there is no illegal turnover or
the illegal turnover is less than RMB100,000. Pursuant to the Measures of the Customs of the
PRC for the Supervision and Administration of Inward and Outward Express Consignments
(), which promulgated by General
Administration of Customs of the PRC in 1993 and latest amended on March 9, 2023, any
operator may not undertake or carry any of the articles listed in the List of Articles Prohibited
from Entry into or Exit from the PRC (), nor shall it
discretionally dispose of any of such articles it has found but shall forthwith notify the customs
and assist the customs in the disposal instead. The Measures of the Customs of the PRC on
Regulation of Inbound and Outbound Transportation V ehicles (ʕശɛ͏΍ձ਷ऎᗫආ̈ྤ
) promulgated in 2018 specifies the supervision on the inbound and
outbound transportation vehicles and protection of legitimate rights and interests of persons-
in-charge and service providers of such vehicles. The logistics service provided by the
Company does not belong to the controlled items as defined in the Export Control Law of the
PRC, and the logistics company itself is not responsible for the customs duties of the goods it
carries, whereas the logistics carriers still be subject to the supervision of relevant export
control and customs laws and regulations. Based on the foregoing, during the Track Record
Period and up to the Latest Practicable Date, there wasn’t any material trade restrictions or
tariffs that was applicable to us.
REGULATIONS ON FOREIGN INVESTMENT
Investment activities in the PRC by overseas investors are principally governed by the
Catalog of Encouraged Industries for Foreign Investment (ོᎸ̮ਠҳ༟ପุͦ፽) (the
“Encouraged Catalog ”), and the Special Administrative Measures (Negative List) for Foreign
Investment Access (݄(૶ఊ)) (the “ Negative List ”), which
are promulgated and amended from time to time by the Ministry of Commerce (the
“MOFCOM ”) and the National Development and Reform Commission (the “ NDRC ”), and
together with the Foreign Investment Law of PRC () (the
“Foreign Investment Law ”) and its respective implementation rules and ancillary regulations.
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In March 2019, the Foreign Investment Law was promulgated by National People’s
Congress and came into effect on January 1, 2020, which replaced three then existing laws on
foreign investments in China, namely, the Sino-Foreign Equity Joint V enture Enterprise Law
of PRC (), the Sino-Foreign Cooperative Joint
V enture Enterprise Law of PRC () and the Wholly
Foreign-owned Enterprise Law of PRC. The Foreign
Investment Law, by means of legislation, establishes the basic framework for the access,
promotion, protection and administration of foreign investment in view of investment
protection and fair competition. According to the Foreign Investment Law, foreign investment
shall enjoy pre-entry national treatment, except for those foreign invested entities that operate
in industries deemed to be either “restricted” or “prohibited” in the “negative list”, and the
State Council shall promulgate or approve a list of special administrative measures for access
of foreign investments. To ensure the effective implementation of the Foreign Investment Law,
the Regulations on Implementing the Foreign Investment Law of PRC (ʕശɛ͏΍ձ਷̮ਠ
ૢԷ) (the “ Implementation Regulations ”), was promulgated by State Council
in December 2019 and came into effect on January 1, 2020, which further clarified that the
state encourages and promotes foreign investment, protects the lawful rights and interests of
overseas investors, regulates foreign investment administration, continues to optimize foreign
investment environment, and advances a higher-level opening.
The NDRC and the MOFCOM jointly revised and issued the Special Administrative
Measures (Negative List) for Foreign Investment Access (2024 version) (ɝतй
݄(૶ఊ)(2024و)) (the “ Negative List ”) on September 6, 2024, which came
into effect on November 1, 2024, to replace the previous negative list thereunder (the NDRC
and MOFCOM commonly revise the list every 1-3 years), and the latest update of the Negative
List has decreased the total number of foreign investment access-restricted industries from 31
to 29, removing two sectors compared to the previous version. Pursuant to the Foreign
Investment Law, the Implementation Regulations and the Negative List, overseas investors
shall not make investments in prohibited industries as specified in the Negative List unless
certain conditions and contexts are met, while foreign investments must satisfy certain
conditions stipulated in the Negative List for investment in restricted industries. Industries not
listed in the Negative List are generally deemed “permitted” for foreign investments.
According to the Negative List, the domestic express delivery services for letters, which form
a very small part of our business, remain among those prohibited industries, and any domestic
enterprise engaging in the fields prohibited by the Negative List may issue shares abroad and
list and trade such shares overseas, if they have obtained the consent from the relevant
competent authorities of the PRC, the overseas investors shall not participate in the operation
and management of the enterprise, and overseas investors’ shareholding percentage shall be
subject to the relevant provisions on administration of domestic securities investment by
overseas investors. According to the NDRC’s further clarification through the Answers to
Reporters’ Questions on the Negative List (2021 version) by relevant officials of the NDRC
disclosed on its official website, the current regulations require that the shareholding
percentage of a single overseas investor and its affiliates shall not exceed 10% of the total
number of shares of the company, and the shareholding percentage of all overseas investors and
their affiliates in aggregate shall not exceed 30% of the total number of shares of the company.
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For companies engaged in industries prohibited by the Negative List for foreign investment and
listed both domestically and overseas, the holdings of overseas investors in both domestic and
overseas listed shares of the same company are combined for calculation.
Pursuant to the Implementing Rules of SZSE on Securities Trading by Qualified Foreign
Institutional Investors and Renminbi Qualified Foreign Institutional Investors (Revised in
2020) (the “ Implementing Rules ”) (ྤ
ۆ2020ࠈࡌ)) and the Rules of the Exchange (஝
), when the sum of A-shares of a single listed company held by all Qualified Foreign
Investors and other overseas investors reaches or exceeds 24% of the total shares of the
company, the SZSE shall, prior to the opening of the next trading day, announce the total
number of A-shares of the company held by them and the proportion thereof to the total shares
of the company through the website of the SZSE. Where overseas investors (including
investors holding China Connect Securities through CCASS) hold 28% or more of the issued
shares of a relevant issuer in aggregate, SZSE will notify the The Stock Exchange of Hong
Kong Ltd. (the “ SEHK ”) Subsidiary, and the SEHK and SEHK Subsidiary will as soon as
practicable thereafter suspend accepting China Connect buy orders (for A-shares) in respect of
the relevant China Connect Securities until the aggregate shareholding of overseas investors is
reduced to below 26%, as advised by SZSE.
According to the Securities Law of the PRC (2019 Revision) (ج
2019ࠈࡌ)) and the Administrative Measures on Acquisition of Listed Companies (ɪ̹
), where the shares held by an investor (including an overseas investor)
through securities transactions on a stock exchange or jointly with others through an agreement
or other arrangements attain 5% of the issued voting rights shares (including A-shares and
H-shares) of a listed company, the investor shall submit a written report to the CSRC and SZSE
within three days, notify the listed company and make an announcement. Whenever the
investor’s shares with voting rights in the said listed company are increased or reduced by 1%,
the investor shall notify the listed company on the day following such occurrence, and make
an announcement.
The Company will closely monitor overseas shareholder holdings through the monthly
register of A-shareholders provided by CSDC, maintain effective communication with overseas
investors and cooperate with domestic securities regulatory agencies (including the SEHK, in
the case of A-shares held by Hong Kong investors through Shenzhen-Hong Kong Stock
Connect), CSDC, and comply with applicable laws and regulations.
According to the Measures for the Security Review of Foreign Investment (̮ਠҳ༟τ
) promulgated by the NDRC and the MOFCOM on December 19, 2020 and
became effective on January 18, 2021, any foreign investment that has or possibly has an
impact on state security shall be subject to security review in accordance with the provisions
hereof. A overseas investor or a party concerned in China shall take the initiative to make a
declaration to the working mechanism office prior to making the investment in any important
infrastructure, important transportation services and other important fields that concern state
security while obtaining the actual control over the enterprises invested in.
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REGULATIONS ON COMMERCIAL FRANCHISING
Pursuant to the Administrative Regulations on Commercial Franchising Operations (ਠ
ุत஢຾ᐄ၍ଣૢԷ) promulgated by the State Council on February 6, 2007, which became
effective on May 1, 2007, and Administrative Measures on the Record Filing of Commercial
Franchises () issued by MOFCOM on December 12, 2011,
and amended on December 29, 2023, collectively the Regulations and Provisions on
Commercial Franchising, commercial franchising refers to the business activities where a
franchisor, being an enterprise possessing registered trademarks, corporate logos, patents,
proprietary technology, or other business resources, licences through contracts its business
resources to the franchisees, being other business operators, and the franchisees carry out
business operation under a uniform business model and pay franchising fees to the franchisor
pursuant to the contracts. Under the Regulations and Provisions on Commercial Franchising,
within 15 days of the first conclusion of franchising contract, the franchisor must carry out
record-filing with MOFCOM or its local counterparts and must report the status of its
franchising contracts in the previous year in the first quarter of each year after record-filing.
If the franchisor fails to comply with these Regulations and Provisions on Commercial
Franchising, the MOFCOM or its local counterparts have the discretion to take administrative
measures against the franchisor, including fines and public announcements.
REGULATIONS ON V ALUE-ADDED TELECOMMUNICATIONS SERVICES
The Telecommunications Regulations of the PRC (ૢԷ) (the
“Telecommunications Regulations ”), promulgated on September 25, 2000 by the State
Council and most recently amended on February 6, 2016, are the primary regulations governing
telecommunications services. Under the Telecommunications Regulations, a
telecommunications service provider is required to procure operating licences prior to the
commencement of its operation. The Telecommunications Regulations categorize all
telecommunication services in China as either basic telecommunications services or value-
added telecommunications services and operators of value-added telecommunications services
shall obtain value-added telecommunications business operation licenses from the Ministry of
Industry and Information Technology (the “ MIIT ”) or its provincial branches prior to the
commencement of such services.
Moreover, according to the Classification Catalogue of Telecommunications Services
(2015 version) (ุਕʱᗳͦ፽(2015و)) (the “ Classification Catalogue ”), which
was promulgated by the MIIT, in 2015, and latest amended in 2019, information services
provided for users through the public communication network or the Internet by relying on the
information collection, development, processing and information platform construction are
value-added telecommunications services.
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As a subcategory of the value-added telecommunications services, internet information
services are regulated by the Administrative Measures on Internet Information Service (ʝ
), which was promulgated by the State Council in 2000 and was last
amended in 2011. Internet information services are divided into services of commercial nature
and non-commercial nature. Commercial internet information services refer to for-profit
services which provide information to or create web pages for online users through the Internet,
and a commercial internet information service provider shall obtain a license to operate
value-added telecommunications business in internet-based information services from
appropriate telecommunications authorities.
Furthermore, the MIIT Circular on Regulating the Use of Domain Names in Internet
Information Services (), issued
on November 27, 2017 and came into effect on January 1, 2018, requires internet information
service providers to register and own the domain names they use in providing internet
information services.
REGULATIONS ON INTERNET INFORMATION SECURITY AND PRIV ACY
PROTECTION
Regulations relating to Privacy Protection
Pursuant to the PRC Civil Code (Պ), personal information of a
natural person shall be protected by the law. Any organization or individual that needs to obtain
personal information of others shall obtain such information legally and ensure the safety of
such information, and shall not illegally collect, use, process or transmit personal information
of others, or illegally purchase or sell, provide, or make public personal information of others.
Further, the Ninth Amendment to the Criminal Law of the PRC (ج
ࣩ(ɘ)), which issued by the SCNPC on August 29, 2015, and became effective on
November 1, 2015, stipulates that any network service provider that fails to fulfill the
obligations related to information network security management as required by applicable laws
and administrative regulations and refuses to take corrective measures, will be subject to
criminal liability for causing (i) any large-scale dissemination of illegal information; (ii) any
severe effect due to the leakage of users’ information; (iii) any serious loss of evidence of
criminal activities; or (iv) other severe situations, and any individual or entity that (a) sells or
provides personal information to others unlawfully or (b) steals or illegally obtains any
personal information will be subject to criminal liability in severe situations.
On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law
of PRC () (the “ Personal Information Protection Law ”)
and became effective on November 1, 2021. Pursuant to the Personal Information Protection
Law, the processing of personal information includes the collection, storage, use, processing,
transmission, provision, disclosure, deletion, etc. of personal information, and before
processing personal information, personal information processors should truthfully, accurately
and completely inform individuals of the following matters in a conspicuous manner and in
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clear and easy-to-understand language: (i) the name and contact information of the personal
information processor; (ii) purpose of processing personal information, processing method,
type of personal information processed, and retention period; (iii) methods and procedures for
individuals to exercise their rights under the Personal Information Protection Law; and (iv)
other matters that should be notified as required by laws and administrative regulations.
Personal information processors should also take the following measures to ensure that
personal information processing activities comply with laws and administrative regulations
based on the processing purpose, processing methods, types of personal information, impact on
personal rights and interests, and possible security risks, etc., and to prevent unauthorized
access and personal information leakage, tampering, and loss: (i) formulating internal
management systems and operating procedures; (ii) implementing classified management of
personal information; (iii) adopting corresponding security technical measures such as
encryption and de-identification; (iv) reasonably determining the operating authority for
personal information processing, and regularly conduct safety education and training for
practitioners; (v) formulating and organizing the implementation of emergency plans for
personal information security incidents; and (vi) other measures stipulated by laws and
administrative regulations.
Where personal information is processed in violation of the provisions of the Personal
Information Protection Law, or the processing of personal information fails to fulfill the
personal information protection obligations hereunder, the department performing personal
information protection duties shall order corrections, give warnings, confiscate illegal gains,
and order to suspend or terminate the provision of services by the applications that illegally
process personal information; if the personal information processor refuses to make
corrections, a fine of not more than RMB1 million shall be imposed; the directly responsible
person in charge and other directly responsible personnel shall be fined not less than
RMB10,000 but not more than RMB100,000. For any aforesaid illegal act with serious
circumstances, the department performing personal information protection duties at or above
the provincial level shall order the personal information processor to make corrections,
confiscate the illegal gains, and impose a fine of less than RMB50 million or less than 5% of
the previous year’s turnover. It can also order the suspension of relevant business or suspend
business for rectification, notify the relevant competent authority to revoke the relevant
permits or the business license; impose a fine of RMB100,000 up to RMB1 million on the
directly responsible person in charge and other directly responsible personnel, and may decide
to prohibit them from serving as a director, supervisor, senior manager and person in charge
of personal information protection of related companies within a certain period of time.
The Administrative Provisions on the Security of Personal Information of Express Service
Users (), promulgated by State Post Bureau on
March 26, 2014, recently amended on February 13, 2023, provides for the protection of the
personal information of users of express delivery services, and the supervision on the express
operations of postal enterprises and express delivery companies. In accordance with these
provisions, the state postal administrative department and its local counterparts are the
supervising and administering authority responsible for the security of the personal
information of users of express or express delivery services, and postal enterprises and express
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delivery companies must establish and refine systems and measures for the security of such
personal information. Specifically, express delivery companies must enter into confidentiality
agreements with its employees regarding the personal information of its clients or users to
specify confidentiality obligations and liabilities for violation thereof. Express delivery
companies shall establish and complete systems and measures for safeguarding the personal
information of express delivery service users, clarify the responsibility for security protection
of enterprise departments and positions, reasonably determine the operational authority for the
handling of personal information of express delivery service users, and periodically conduct
security education and training for employees. When an express delivery company entrusts a
third party to carry out services to complete the entire process of operation of the delivery
service, it shall conduct an impact assessment of the personal information protection of the
trustee in advance and supervise the personal information processing activities thereof. Where
trustees causing damages to the users of express delivery services, the entrusting express
delivery company shall bear corresponding liabilities.
Regulations relating to Internet Information Security
In recent years, PRC government authorities have enacted laws and regulations on
internet use to protect personal information from any unauthorized disclosure. The Decisions
on Protection of Internet Security enacted by the SCNPC (ึᗫ
) in 2000, as amended on August 27, 2009, provides that, among
other things, the following activities conducted through the internet, if constituted a crime
according to PRC laws, are subject to criminal punishment: (i) intrusion into a strategically
significant computer or system; (ii) intentionally inventing and disseminating destructive
programs, such as computer viruses, to attack the computer system and the communications
network, thereby damaging the computer system and the communications networks; (iii)
violating national regulations, suspending the computer networks or the communication
services without authorization, causing the computer network or communication system to fail
to operate normally; (iv) leaking state secrets; (v) spreading false commercial information; or
(vi) infringing intellectual property rights through internet.
On July 1, 2015, the SCNPC issued the National Security Law of the PRC (ʕശɛ͏
), which came into effect on the same day, pursuant to which the state
shall safeguard the sovereignty, security and cybersecurity development interests of the state,
and that the state shall establish a national security review and supervision system to review,
among other things, foreign investment, key technologies, internet and information technology
products and services, and other important activities that are likely to impact the national
security of the PRC.
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On November 7, 2016, the SCNPC promulgated the Cybersecurity Law of the PRC (ʕ
) (the “ Cybersecurity Law ”) and become effective as of June 1,
2017, which applies to the construction, operation, maintenance and use of networks as well
as the supervision and administration of cybersecurity in the PRC. According to the
Cybersecurity Law, network operators shall comply with laws and regulations and fulfill their
obligations to safeguard security of the network when conducting business and providing
services. Those who provide services through networks shall take technical measures and other
necessary measures pursuant to the mandatory requirements of laws, regulations and national
standards to safeguard the safe and stable operation of the networks, respond to network
security incidents effectively, prevent illegal and criminal activities, and maintain the integrity,
confidentiality and usability of network data, and the network operator shall not collect the
personal information irrelevant to the services it provides or collect or use the personal
information in violation of the provisions of laws or agreements between both parties.
On June 10, 2021, the SCNPC promulgated the Data Security Law of PRC (ʕശɛ͏
) (the “ Data Security Law ”) which became effective on September 1,
2021. The Data Security Law mainly sets forth specific provisions regarding establishing basic
systems for data security management, including hierarchical data classification management
system, risk assessment system, monitoring and early warning system, and emergency disposal
system. In addition, it clarifies the data security protection obligations of organizations and
individuals carrying out data activities and implementing data security protection
responsibility.
On July 6, 2021, the General Office of the CPC Central Committee, and the General
Office of the State Council jointly promulgated the Opinions on Strictly Combatting Illegal
Securities Activities in Accordance with the Law (จ
Ԉ). The opinions emphasized the need to strengthen the administration over illegal
securities activities and the supervision on overseas listings by China-based companies and
improve the legislation on data security, cross-border data transmission, and confidential
information management.
On September 24, 2024, the CAC announced the Regulations on the Administration of
Cyber Data Security ( ၣഖᅰኽτΌ၍ଣૢԷ) (the Cyber Data Security Regulations),
which will be effective on January 1, 2025. It regulates that Cyber data processors who carry
out Cyber data processing activities that affect or may affect national security shall undergo
national security review in accordance with relevant state regulations.
In addition, the Cyber Data Security Regulations also regulate other specific requirements
in respect of the data processing activities conducted by Cyber data processors in the view of
personal data protection, important data safety, data cross-broader safety management and
obligations of network platform service providers.
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On December 28, 2021, the CAC and other twelve PRC regulatory authorities jointly
revised and promulgated the Measures for Cybersecurity Review () (the
“Cybersecurity Review Measures ”) which became effective on February 15, 2022. The
Cybersecurity Review Measures provides that, among others, (i) critical information
infrastructure operators that the purchase of cyber products and services or network platform
operators that engage in data processing activities that affects or may affect national security
shall be subject to the cybersecurity review by the Cybersecurity Review Office, the
department which is responsible for the implementation of cybersecurity review under the
CAC; (ii) network platform operators with personal information data of more than one million
users that seek for listing in a foreign country are obliged to apply for a cybersecurity review
by the Cybersecurity Review Office; and (iii) the relevant regulatory authorities may initiate
cybersecurity review if such regulatory authorities determine that the issuer’s network products
or services, or data processing activities affect or may affect national security.
On July 7, 2022, the CAC has promulgated the Measures for the Security Assessment of
Cross-border Data Transfer (), which takes effect on September 1,
2022, and requires that any data processor providing important data collected and generated
during operations within the territory of the PRC or providing personal information that should
be subject to security assessment according to the relevant law to an overseas recipient shall
apply for cross-border data transfer security assessment.
Regulations relating to Consumer Protection
A user of express delivery services may seek remedies by following the Measures on
Settling the Complaints of the Postal Users () issued by State
Post Bureau, which took effect on September 8, 2020. The Postal Users Complaints Settling
Center implements the regime of mediation to handle the complaints from users on the quality
of the express delivery services. According to the Interim Regulations on Express Delivery
(Ҟ჈ᅲБૢԷ), an express delivery service company shall not sell, reveal or illegally
provide any information of client that has been exposed during the provision of express
services. In case the information of client is revealed or may be revealed, the express delivery
service company shall take remedial measures immediately and report to the local post
administrations. Failure to comply with such requirement may be subject to penalties including
a fine ranging from RMB10,000 to RMB100,000, suspension of business for rectification or
revoke of its Courier Service Operation Permit.
REGULATIONS ON LEASING
According to the PRC Civil Code , an owner of immovable or movable property is entitled
to possession, use, earnings, and disposal of such property in accordance with the law. Subject
to the consent of the lessor, the lessee may sublease the leased premises to a third party. Where
a lessee subleases the premises, the lease contract between the lessee and the lessor remains
valid. The lessor is entitled to terminate the lease if the lessee subleases the premises without
the consent of the lessor. In addition, if the ownership of the leased premises changes during
the lessee’s possession in accordance with the terms of the lease contract, the validity of the
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lease contract shall not be affected. Moreover, pursuant to the PRC Civil Code ,i ft h e
mortgaged property has been leased and transferred for occupation prior to the establishment
of the mortgage right, the original tenancy shall not be affected by such mortgage right.
On December 1, 2010, the Ministry of Housing and Urban-Rural Development
promulgated the Administrative Measures on Leasing of Commodity Housing (ॡ༣
), which became effective on February 1, 2011. According to such measures, the
lessor and the lessee are required to complete property leasing registration and filing
formalities within 30 days from execution of the property lease contract with the development
authorities or real estate authorities of the municipality or county where the leased property is
located. If a company fails to do as aforesaid, it may be ordered to rectify within a stipulated
period, and if such company fails to rectify, a fine ranging from RMB1,000 to RMB10,000 may
be imposed on each lease agreement.
According to the Interpretation of the Supreme People’ s Court on Several Issues
concerning the Application of Law in the Trial of Cases about Disputes Over Lease Contracts
on Urban Buildings (2020 version) (΁Ո᜗
༆ᙑ(2020͍)), which took effect on January 1, 2021, if the
ownership of the leased premises changes during lessee’s possession in accordance with the
terms of the lease contract, and the leasee requests the assignee to continue to perform the
original lease contract, the PRC court shall support it, except that the mortgage right has been
established before the lease of the leased premises and the ownership changes due to the
mortgagee’s realization of the mortgage right.
On July 14, 2023, the National Fire and Rescue Administration promulgated
Administrative Measures for the Administration of Fire Safety in Leased Factory Buildings and
Warehouses (for Trial Implementation) (ج(༊Б)), which
clarifies the respective fire safety management responsibilities of the lessor and lessee of the
leased plant warehouse, and allows the lessor and lessee to stipulate their respective fire safety
management responsibilities through the contract. According to the Administrative Measures
for the Administration of Fire Safety in Leased Factory Buildings and Warehouses (for Trial
Implementation) , the lessor and lessee of a leased factory building or warehouse shall clarify
the fire safety responsibilities of all parties concerned in writing, and if they fail to clarify such
responsibilities in writing, the lessor shall be responsible for unified management of the
common evacuation passages, safety exits, building fire control facilities and fire control
engine passages, and the lessee shall be responsible for fire safety of the leased factory
building or warehouse.
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REGULATIONS ON ANTI-MONOPOLY
The currently effective Anti-Monopoly Law of PRC () (the
“Anti-Monopoly Law”) was promulgated by SCNPC in 2007 and latest amended in 2022. The
Anti-Monopoly Law elaborates several circumstances that undertakings might be prohibited
from monopolistic conducts, including:
Entering into monopolistic agreements. The “monopolistic agreements” refer to
agreements, decisions or other concerted actions that eliminate or restrict competition, such as
fixing or changing the price of a commodity, limiting the production or sales amount of a
commodity, segmenting the sales market or the raw material procurement market, restricting
the purchase of new technology or new equipment or the development of new technology or
new product, boycotting transactions and other monopolistic agreements as determined by the
Anti-monopoly Law Enforcement Agency of the State Council.
Abuse of dominant market position. The “abuse of dominant market position” refers to
that an undertaking with a dominant market position engages in the following practices of
abuse of such position: (i) selling commodities at an unfairly high price or buying commodities
at an unfairly low price; (ii) selling commodities at a price lower than cost without justifiable
reasons; (iii) refusing to trade with its trading counterparties without justifiable reasons; (iv)
restricting its trading counterparties to trade exclusively with the said undertaking or trade
exclusively with the designated undertakings without justifiable reasons; (v) conducting tie-in
sales or add other unreasonable trading conditions to the trading without justifiable reasons;
(vi) giving discriminatory treatments to trading counterparties with the same conditions with
respect to trading price and other trading conditions without justifiable reasons; and (vii) other
practices determined as abuse of dominant market position by the Anti-monopoly Law
Enforcement Agency of the State Council.
Concentration of undertakings which has or may have an effect of eliminating or
restricting competition. The “concentration of undertakings” refers to any of the following
circumstances: (i) the merger of undertakings; (ii) acquiring control over other undertakings by
virtue of acquiring their equities or assets; and (iii) acquiring control over other undertakings
or ability of exercising decisive influence on other undertakings by virtue of contract or any
other means. Pursuant to the Anti-Monopoly Law, where a concentration of undertakings
concludes the threshold of declaration prescribed by the State Council, it shall be declared to
the Anti-monopoly Law Enforcement Agency of the State Council in advance and shall not be
implemented without such declaration. Specifically, as clarified by the Provisions of the State
Council on the Threshold of Filings for Undertaking Concentrations (ණ
) issued by the State Council in 2008 and latest amended in January 22,
2024, the anti-monopoly agency (i.e., the State Administration for Market Regulation) shall be
notified in advance of any concentration of undertaking if either of the following filing
thresholds was met: (i) the total global turnover of all operators participating in the transaction
exceeds RMB12 billion in the preceding fiscal year and at least two of these operators each had
a turnover of more than RMB800 million within China in the preceding fiscal year, or (ii) the
total turnover within China of all the operators participating in the transaction exceeded
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RMB4 billion in the preceding fiscal year, and at least two of these operators each had a
turnover of more than RMB800 million within China in the preceding fiscal year. No
concentration shall be implemented until the anti-monopoly enforcement agency clears the
applicable anti-monopoly filing.
On March 10, 2023, the SAMR promulgated the Provisions on Prohibition of Monopoly
Agreements (), the Provisions on Prohibiting Abuse of Dominant
Market Positions (), and the Provisions on the
Examination of Concentrations of Undertakings (). These provisions
further elaborate on some more detailed factors which shall be considered in assessing
monopoly agreements, abusive practices of dominant market positions and concentrations of
undertakings, based on the principles established by the Anti-monopoly Law.
REGULATIONS ON INTELLECTUAL PROPERTY
Trademark
According to the Trademark Law of the PRC () promulgated
by SCNPC on August 23, 1982, most recently amended on April 23, 2019 and effective from
November 1, 2019, and the Implementation Regulation of the Trademark Law of the PRC (ʕ
ૢԷ) promulgated by the State Council on August 3, 2002, later
amended on April 29, 2014 and effective from May 1, 2014, registered trademarks are granted
a term of ten years which may be renewed for consecutive ten-year periods upon request by the
trademark owner. Trademark license agreements must be filed with the Trademark Office for
record, and the Trademark Law of the PRC has adopted a “first-to-file” principle with respect
to trademark registration. Conducts that shall constitute an infringement of the exclusive right
to use a registered trademark include but not limited to using a trademark that is identical with
or similar to a registered trademark on the same or similar goods without the permission of the
trademark registrant, and the infringing party will be ordered to stop the infringement act
immediately and may be imposed a fine. The infringing party may also be held liable for the
right holder’s damages, which will be equal to gains obtained by the infringing party or the
losses suffered by the right holder as a result of the infringement, including reasonable
expenses incurred by the right holder for stopping the infringement.
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Copyright
According to the Copyright Law of the PRC () promulgated
by the SCNPC, which was latest amended in November 2020, and its related Implementing
Regulations, Chinese citizens, legal persons, or other organizations shall, whether published or
not, own copyright in their works, which include, among others, works of literature, art, natural
science, social science, engineering technology and computer software. Copyright owners of
protected works enjoy personal rights and property rights with respect to publication,
authorship, alteration, integrity, reproduction, distribution, lease, exhibition, performance,
projection, broadcasting, dissemination via information network, production, adaptation,
translation, compilation, and other rights shall be enjoyed by the copyright owners.
Pursuant to the Regulation on Computers Software Protection (ᚐૢԷ)
promulgated by the State Council on June 4, 1991 and latest amended on January 30, 2013, and
the Measures for the Registration of Computer Software Copyright (ၑዚழ΁ഹЪᛆ೮া
) promulgated on February 20, 2002, the National Copyright Administration is mainly
responsible for the registration and management of software copyright in China and recognizes
the China Copyright Protection Center as the software registration organization. The China
Copyright Protection Center shall grant certificates of registration to computer software
copyright applicants in compliance with the regulations.
Patent
In accordance with the Patent Law of the PRC (),
promulgated by the SCNPC, which was latest amended in October 2020 and became effective
on June 1, 2021, and its Implementation Rule, patent is divided in to 3 categories, i.e.,
invention patent, design patent and utility model patent. The duration of invention patent right,
design patent right and utility model patent right shall be 20 years, 15 years and 10 years,
respectively, which all calculated from the date of application. Implementation of a patent
without the authorization of the patent holder shall constitute an infringement of patent rights,
and shall be held liable for compensation to the patent holder and may be imposed a fine, or
even subject to criminal liabilities.
Domain Names
The Measures on Administration of Internet Domain Names ()
was promulgated by the MIIT in 2017, which adopts “first to file” rule to allocate domain
names to applicants, and provide that the MIIT shall supervise the domain names services
nationwide and publicize the PRC domain name system. After completion of the registration
procedures, the applicant will become the holder of the relevant domain name.
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REGULATIONS ON EMPLOYMENT AND SOCIAL WELFARE
Employment
The major PRC laws and regulations that govern employment relationship are the PRC
Labor Law (), the PRC Labor Contract Law (ʕശɛ͏΍ձ਷௶
) (the “ Labor Contract Law ”) and its implementation, which impose stringent
requirements on the employers in relation to entering into fixed-term employment contracts,
hiring of temporary employees and dismissal of employees.
The Labor Contract Law, which became effective on January 1, 2008, primarily aims at
regulating rights and obligations of employment relationships, including the establishment,
performance, and termination of labor contracts. Pursuant to the Labor Contract Law, labor
contracts must be executed in writing if labor relationships are to be or have been established
between employers and employees. Employers are prohibited from forcing employees to work
above certain time limits and employers must pay employees for overtime work in accordance
with national regulations. In addition, employee wages must not be lower than local standards
on minimum wages and must be paid to employees in a timely manner.
In December 2012, the Labor Contract Law was amended to impose more stringent
requirements on the use of employees of temp agencies, who are known in China as
“dispatched workers”. Dispatched workers are entitled to equal pay with full-time employees
for equal work. Employers are only allowed to use dispatched workers for temporary, auxiliary
or substitutive positions. According to the Interim Provisions on Labor Dispatch (჆
) promulgated by the Ministry of Human Resources and Social Security and came
into effect on March 1, 2014, the number of dispatched workers hired by an employer may not
exceed 10% of the total number of its employees. Where rectification is not made within the
stipulated period, the employers may be subject to a penalty ranging from RMB5,000 to
RMB10,000 per dispatched worker exceeding the 10% threshold.
Social Insurance
The PRC Social Insurance Law () (the “ Social
Insurance Law ”) issued by the SCNPC in 2010 and latest amended on December 29, 2018, has
established social insurance systems of basic pension insurance, basic medical insurance,
work-related injury insurance, unemployment insurance and maternity insurance and has
elaborated in detail the legal obligations and liabilities of employers who fail to comply with
relevant laws and regulations on social insurance. According to the Social Insurance Law and
the Provisional Regulations on Collection and Payment of Social Insurance Premiums (ٟ
ᎈ൬ᅄᖮᅲБૢԷ) promulgated by the State Council on January 22, 1999 and most
recently amended on March 24, 2019 and effective from the same date, enterprises shall
register social insurance with local social insurance and pay or withhold relevant social
insurance for or on behalf of its employees. Any employer that fails to make social insurance
contributions may be ordered to rectify the non-compliance and pay the required contributions
within a prescribed time limit and be subject to a late fee. If the employer still fails to rectify
the failure to make the relevant contributions within the prescribed time, it may be subject to
a fine ranging from one to three times the amount overdue.
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Housing Provident Fund
In accordance with the Regulations on the Administration of Housing Provident Funds
(၍ଣૢԷ) promulgated by the State Council on April 3, 1999, and amended
on March 24, 2002, and March 24, 2019, enterprises must register at the designated
administrative centers and open bank accounts for depositing employees’ housing provident
funds. Employers and employees are also required to pay and deposit housing provident funds,
with an amount no less than 5% of the monthly average salary of the employee in the preceding
year in full and on time. In case of overdue payment or underpayment by employers, orders for
payment within a specified period will be made by the housing fund management center. Where
employers fail to make payment within such period, enforcement by the people’s court will be
applied.
In case of failure to register and open accounts for depositing employees’ housing
provident funds, the housing fund management center shall order employers to go through the
formalities within a specified period, where employers fail to do such formalities within the
prescribed time, a fine of not less than RMB10,000 nor more than RMB50,000 shall be
imposed.
REGULATIONS ON FOREIGN EXCHANGE
Regulations relating to Foreign Currency Exchange
The principal regulations governing foreign currency exchange in China are the Foreign
Exchange Administration Regulations of the PRC (ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ), most
recently amended in August 2008. Under the PRC foreign exchange regulations, payments of
current account items, such as profit distributions, interest payments and trade and service-
related foreign exchange transactions, can be made in foreign currencies without prior approval
from the State Administration of Foreign Exchange, or SAFE, by complying with certain
procedural requirements. By contrast, approval from or registration with appropriate
government authorities is required where Renminbi is to be converted into foreign currency
and remitted out of China to pay capital account items, such as direct investments, repayment
of foreign currency-denominated loans, repatriation of investments and investments in
securities outside of China.
The SAFE issued the Circular on Reforming of the Management Method of the Settlement
of Foreign Currency Capital of Foreign-Invested Enterprises (̮ਠ
) (the “ SAFE Circular 19 ”) on March 30, 2015,
and it became effective on June 1, 2015, which was partially repealed on December 30, 2019,
and latest amended on March 23, 2023. The SAFE Circular 19 expands a pilot reform of the
administration of the settlement of the foreign exchange capitals of foreign-invested
enterprises nationwide. In June 2016, SAFE further promulgated the Notice of the State
Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange
Settlement Management Policy of Capital Account (ձ஝ᇍ༟͉ධ
) (the “ SAFE Circular 16 ”), which was amended on December 4,
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2023, among other things, amends certain provisions of SAFE Circular 19. Pursuant to SAFE
Circular 19 and SAFE Circular 16, the flow and use of the Renminbi capital converted from
foreign currency denominated registered capital of a foreign-invested company is regulated
such that Renminbi capital may not be used for business beyond its business scope or to
provide loans to persons other than affiliates unless otherwise permitted under its business
scope.
In October 2019, SAFE issued the Circular of Further Facilitating Cross-border Trade
and Investment (), which was
amended on December 4, 2023, or SAFE Circular 28, which cancels the restrictions on
domestic equity investments by capital fund of non-investment foreign invested enterprises and
allows non-investment foreign invested enterprises to use their capital funds to lawfully make
equity investments in China, provided that such investments do not violate the Negative List
and the target investment projects are genuine and in compliance with laws. According to the
Circular on Optimizing Administration of Foreign Exchange to Support the Development of
Foreign-related Business (),
or SAFE Circular 8, issued by SAFE in April 2020, under the prerequisite of ensuring true and
compliant use of funds and compliance with the prevailing administrative provisions on use of
income under the capital account, eligible enterprises are allowed to make domestic payments
by using their capital funds, foreign credits and the income under capital accounts of overseas
listing, without prior provision of the evidentiary materials concerning authenticity to the bank
for each transaction. The handling banks shall conduct spot checks afterwards in accordance
with the relevant requirements. The interpretation and implementation in practice of SAFE
Circular 28 and SAFE Circular 8 are still subject to substantial uncertainties given they are
newly issued regulations.
Regulations relating to Stock Incentive Plans
Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration for
Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed
Company (ྌ̮ි၍ଣϞᗫਪᕚ
) (the “ SAFE Circular 7 ”), promulgated by SAFE in February 2012, employees,
directors, supervisors, and other senior management participating in any share incentive plan
of an overseas publicly-listed company who are PRC citizens or who are non-PRC citizens
residing in China for a continuous period of not less than one year, subject to a few exceptions,
are required to register with SAFE through a domestic agency. Moreover, an overseas-entrusted
institution must be retained to handle matters in connection with the exercise or sale of stock
options and the purchase or sale of shares and interests.
The income of foreign exchange PRC residents by selling out the shares according to the
equity incentive plan and the dividend distributed by the overseas-listed company shall be
distributed to the PRC residents after being remitted to the bank account in China opened by
the domestic institutions.
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REGULATIONS ON TAXATION
Enterprise Income Tax
According to the Enterprise Income Tax Law of the PRC (੻೼
), which was promulgated by the SCNPC and was latest amended on December 29, 2018,
and the Regulation on the Implementation of the Enterprise Income Tax Law of the PRC (ʕ
ૢԷ), which was promulgated by the State Council and was
latest amended in April 2019, collectively referred to as the Enterprise Income Tax Law, a
uniform 25% enterprise income tax rate is imposed to both foreign invested enterprises and
domestic enterprises, except where tax incentives are granted to special industries and projects.
The enterprise income tax rate is reduced to 20% for qualifying small low-profit enterprises.
The high-tech enterprises that need full support from the PRC’s government will enjoy a
reduced tax rate of 15% for Enterprise Income Tax.
Value-added Tax
Pursuant to the Provisional Regulations of the PRC on V alue-added Tax (ʕശɛ͏΍
೼ᅲБૢԷ), which was promulgated by the State Council and was latest amended
on November 19, 2017, and the Implementation Rules for the Provisional Regulations the PRC
on V alue-added Tax (), which was promulgated
by the Ministry of Finance and was latest amended on October 28, 2011 and effective from
November 1, 2011, entities and individuals engaging in selling goods, providing processing,
repairing or replacement services or importing goods within the territory of the PRC are
taxpayers of the value-added tax.
According to the Notice of the Ministry of Finance and the State Taxation Administration
on the Adjusting V alue-added Tax Rates ()
effective in May 2018, the value-added tax rates of 17% and 11% on sales, imported goods
shall be adjusted to 16% and 10%, respectively.
According to the Announcement of the Ministry of Finance, the State Taxation
Administration and the General Administration of Customs on Relevant Policies for Deepening
the V alue-Added Tax Reform (ഄ
ʮѓ) promulgated on March 20, 2019 and effective from April 1, 2019, the value-added
tax rates of 16% and 10% on sales, imported goods shall be adjusted to 13% and 9%,
respectively.
Dividends Distribution
The principal laws, rules and regulations governing dividend distributions by foreign-
invested enterprises in the PRC are the Company Law, promulgated in 1993 and amended in
2018 and 2023, and the Foreign Investment Law and its Implementing Regulations. Under
these requirements, foreign-invested enterprises may pay dividends only out of their
accumulated profit, if any, as determined in accordance with PRC accounting standards and
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regulations. A PRC company is required to allocate at least 10% of their respective
accumulated after-tax profits each year, if any, to fund certain capital reserve funds until the
aggregate amount of these reserve funds have reached 50% of the registered capital of the
enterprises. A PRC company is not permitted to distribute any profits until any losses from
prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed
together with distributable profits from the current fiscal year.
According to the Civil Procedure Law of the People’ s Republic of China (ʕശɛ͏΍
) which was promulgated by the National People’s Congress on April 9,
1991 and most recently amended and became effective on January 1, 2024, the limitation
period for an action to recover a debt (including the recovery of declared dividends) is three
years. The company must not exercise its powers to forfeit any unclaimed dividend in respect
of shares until after the expiry of the applicable limitation period.
Pursuant to the Individual Income Tax Law of the PRC (੻೼
), which was most recently amended on August 31, 2018, and the Implementation
Provisions of the Individual Income Tax Law of the PRC (ྼ
ૢԷ), which was most recently amended on December 18, 2018, dividends distributed by
PRC enterprises are subject to individual income tax levied at a flat rate of 20%. For a foreign
individual who is not a resident of the PRC, the receipt of dividends from an enterprise in the
PRC is normally subject to individual income tax of 20% unless specifically exempted by the
tax authority of the State Council or reduced by relevant tax treaty.
Pursuant to the EIT Law and the Regulation on the Implementation of the Enterprise
Income Tax Law of China provides that since January 1, 2008, an enterprise income tax rate
of 10% will normally be applicable to dividends declared to non-PRC resident investors which
do not have an establishment or place of business in the PRC, or which have such establishment
or place of business but the relevant income is not effectively connected with the establishment
or place of business, to the extent such dividends are derived from sources within the PRC,
unless any such non-PRC resident investors’ jurisdiction of incorporation has a tax treaty with
China that provides for a preferential withholding arrangement.
Non-resident investors residing in jurisdictions which have entered into treaties or
adjustments for the avoidance of double taxation with the PRC might be entitled to a reduction
of the Chinese EIT imposed on the dividends received from PRC companies. The PRC
currently has entered into avoidance of double taxation treaties or arrangements with Hong
Kong, Macau, and a number of countries and regions including Australia, Canada, France,
Germany, Japan, Malaysia, the Netherlands, Singapore, the United Kingdom, the United States
and etc. Non-PRC resident enterprises entitled to preferential tax rates in accordance with the
relevant taxation treaties or arrangements are required to apply to the Chinese tax authorities
for a refund of the EIT in excess of the agreed tax rate, and the refund application is subject
to approval by the Chinese tax authorities.
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REGULATIONS ON SECURITIES AND OVERSEAS LISTINGS
Securities Laws and Regulations
The Securities Law of the People’ s Republic of China , which was promulgated by the
SCNPC on December 29, 1998, and was latest amended on December 28, 2019 and took effect
on March 1, 2020, comprehensively regulating activities in the PRC securities market
including issuance and trading of securities, takeovers by listed companies, securities
exchanges, securities companies and the duties and responsibilities of securities regulatory
authorities, etc. The Securities Law further regulates that a domestic enterprise issuing
securities overseas directly or indirectly or listing their securities overseas shall comply with
the relevant provisions of the State Council and for subscription and trading of shares of
domestic companies using foreign currencies, detailed measures shall be stipulated by the State
Council separately. The CSRC is the securities regulatory body set up by the State Council to
supervise and administer the securities market according to law, maintain order in the market,
and ensure the market operates in a lawful manner. Currently, the issue and trading of H shares
are principally governed by the regulations and rules promulgated by the State Council and the
CSRC.
Overseas Listings
On February 17, 2023, the CSRC released several regulations regarding the management
of filings for overseas offerings and listings by domestic companies, including the Trial
Measures for the Administration on Overseas Securities Offering and Listing by Domestic
Companies () (the “ Overseas Listing Trial
Measures ”) together with 5 supporting guidelines (together with the Overseas Listing Trial
Measures, collectively referred to as the “ Overseas Listing Regulations ”). Under Overseas
Listing Regulations, PRC domestic companies that seek to offer and list securities in overseas
markets, either in direct or indirect means, are required to file the required documents with the
CSRC within three working days after its application for overseas listing is submitted.
The Overseas Listing Regulations provides that no overseas offering and listing shall be
made under any of the following circumstances: (i) such securities offering and listing is
explicitly prohibited by provisions in laws, administrative regulations and relevant state rules;
(ii) the intended securities offering and listing may endanger national security as reviewed and
determined by competent authorities under the State Council in accordance with law; (iii) the
domestic company intending to make the securities offering and listing, or its controlling
shareholders and the actual controller, have committed crimes such as corruption, bribery,
embezzlement, misappropriation of property or undermining the order of the socialist market
economy during the latest three years; (iv) the domestic company intending to make the
securities offering and listing is suspected of committing crimes or major violations of laws
and regulations, and is under investigation according to law and no conclusion has yet been
made thereof; or (v) there are material ownership disputes over equity held by the domestic
company’s controlling shareholder or by other shareholders that are controlled by the
controlling shareholder and/or actual controller. Additionally, the Overseas Listing Regulations
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stipulates that after an issuer has offering and listing securities in an overseas market, the issuer
shall submit a report to the CSRC within three working days after the occurrence and public
disclosure of (i) a change of control thereof, (ii) investigations of or sanctions imposed on the
issuer by overseas securities regulators or relevant competent authorities, (iii) changes of
listing status or transfers of listing segment, and (iv) a voluntary or mandatory delisting.
Overseas offering and listing by domestic companies shall be made in strict compliance with
relevant laws, administrative regulations and rules concerning national security in spheres of
foreign investment, cybersecurity, data security and etc., and duly fulfill their obligations to
protect national security.
On February 24, 2023, the CSRC and three other relevant government authorities jointly
promulgated the Provisions on Strengthening the Confidentiality and Archives Administration
Related to the Overseas Securities Offering and Listing by Domestic Enterprises (̋੶
), or the Provision on
Confidentiality. Pursuant to the Provision on Confidentiality, where a domestic enterprise
provides or publicly discloses any document or material that involving state secrets and
working secrets of state agencies to the relevant securities companies, securities service
institutions, overseas regulatory authorities and other entities and individuals, it shall report to
the competent department with the examination and approval authority for approval in
accordance with the law, and submit to the secrecy administration department of the same level
for filing. The working papers formed within the territory of the PRC by the securities
companies and securities service agencies that provide corresponding services for the overseas
issuance and listing of domestic enterprises shall be kept within the territory of the PRC, and
cross-border transfer shall go through the examination and approval formalities in accordance
with the relevant provisions of the State.
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OVERVIEW
Founded in 1993 by Mr. Wang, our business originated in Guangdong Province providing
express delivery services in the Pearl River Delta, and our services network has further
expanded to cover other parts of China since 1996 and overseas markets since 2010.
Throughout our three decades in operation, we have, through expansion into new business
segments and collaborations with reputable international logistics service providers such as
UPS, DHL and HA VI Group, expanded into various links within the logistics services value
chain. We have also expanded our geographical footprint to cover not only the rest of China,
but also the global market. We have become a leading global integrated logistics company, the
largest player in China and Asia, and the fourth largest player globally, in terms of revenue in
2023, with clear market leadership in five segments in China and four segments in Asia,
offering a complete portfolio of logistics services.
Since January 23, 2017, our business has been listed on the SZSE (stock code:
002352.SZ) through the Material Asset Restructuring of Dingtai New Materials. As of the
Latest Practicable Date, our total issued share capital was RMB4,816,186,983, comprising
4,816,186,983 A Shares, of which approximately 55.27% was controlled by Mr. Wang, Mingde
Holding and Shenzhen Weishun, our Controlling Shareholders.
KEY DEVELOPMENT MILESTONES
The following table sets out a summary of our Group’s key development milestones:
Y ear Development Milestones
1993 ......... W e were founded by Mr. Wang in Shunde, Guangdong Province.
Late 1990s . . . We launched the courier incentive model, which tied courier compensation to
the number of parcels delivered and delivery fees.
2004 ......... M r . W a n g through his controlled entity acquired the entire share capital in
Chengxingye International Delivery, which became our operating entity. The
company name of Chengxingye International Delivery was changed to S.F.
Express Limited* (ʮ̡).
2009 ......... S . F . Airlines Co., Ltd* (ʮ̡) was established in March.
2010 ......... W e expanded into the international market through the launch of our
Singapore business.
2013 ......... W e became an integrated logistics service provider by expanding into new
business segments of cold chain and pharmaceutical logistics and the LTL
freight.
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Y ear Development Milestones
2016 ......... T h e Material Asset Swap and Share Subscription Agreement was entered into
in respect of the Material Asset Restructuring, which was subsequently
approved by the CSRC.
2017 ......... O u r business listed on the SZSE (stock code: 002352.SZ) in January, and the
name of the Company was changed to S.F. Holding Co., Ltd. in February.
2018 ......... W e completed the acquisition of 75% shareholding interest in SXH China
Logistics (formerly named as SF\HA VI China Logistics), a company
engaging in cold chain business in mainland China, Hong Kong and Macau
from HA VI China Holding LLC in July to further expand our business in cold
chain logistics.
We completed the acquisition of relevant express business assets of
Guangdong Xinbang Logistics Co., Ltd. to establish “SX Freight” as our
independent LTL freight brand using the franchising model.
2019 ......... W e completed the acquisition of the supply chain business of Deutsche Post
DHL Group in mainland China, Hong Kong and Macau in February.
2021 ......... S F REIT was listed on the Main Board of the Stock Exchange in May (stock
code: 2191.HK). Upon the listing of SF REIT, we indirectly hold 35% of the
total real estate investment trust units in issue of SF REIT.
We completed the acquisition of a 51.5% stake in Kerry Logistics, a company
listed on the Main Board of the Stock Exchange (stock code: 0636.HK), and
Kerry Logistics became a member of the Group in September.
The Company completed a private A Shares placement in November, raising
gross proceeds of approximately RMB20.0 billion.
SF Intra-city, a subsidiary of the Company that operates our intra-city
on-demand delivery services, was spun off and listed on the Main Board of
the Stock Exchange in December (stock code: 9699.HK).
2022 ......... W e became a Fortune Global 500 Company and were ranked first out of
Chinese Top 50 Private Logistics Enterprises by the China Federation of
Logistics and Purchasing.
2023 ......... T h e Ezhou cargo hub, the first dedicated air cargo hub in Asia, and we
officially commenced operation of the logistics complex therein in September
2023.
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OUR MAJOR SUBSIDIARIES
As of the Latest Practicable Date, we conducted our business operations through more
than 1,000 subsidiaries. The following table sets forth the principal activities, the date and
place of incorporation/establishment, and the equity interest attributable to our Group in
respect of each of our major subsidiaries as of the Latest Practicable Date:
Name of major subsidiary
Date of
incorporation/
establishment
Place of
incorporation/
establishment
Equity interest
attributable to
the Group Principal activities
SF Taisen August 15, 2008 PRC 100% Investment holding
company
S.F. Express Co., Ltd.* ( නᔮ஺
ʮ̡)
July 25, 2013 PRC 100% Provision of
international
freight
forwarding,
domestic and
international
express services
SF Holding (HK) October 24, 2006 Hong Kong 100% Investment holding
company
Shenzhen Fengtai E-commerce
Industrial Park Asset
Management Co., Ltd.* ( ଉ
έ̹ᔮइཥਠପุ෤༟ପ၍ଣ
ʮ̡)
April 16, 2013 PRC 100% Operation and
management of
our logistics
industrial parks
SF Airlines Company Ltd.* ( න
ʮ̡)
March 30, 2009 PRC 100% Operation of our
cargo airline, SF
Airlines
SF Intra-city June 21, 2019 PRC 58.48% Investment holding
company and
provision of third-
party on-demand
delivery services
SF Technology April 7, 2009 PRC 100% Investment holding
company and
provision of
technical
maintenance and
development
services
S.F. Holding Group Finance
Co., Limited* (ණྠ
ʮ̡)
September 18,
2016
PRC 100% Provision of cash
management
services internally
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Name of major subsidiary
Date of
incorporation/
establishment
Place of
incorporation/
establishment
Equity interest
attributable to
the Group Principal activities
Shenzhen S.F. Freight
Corporation* ( ଉέනᔮҞ༶
ʮ̡)
October 9, 2019 PRC 100% Provision of express
delivery and
supply chain
services
Anhui S.F. Telecommunication
Services Co., Ltd.*
(ʮ̡)
February 5, 2013 PRC 100% Provision of value-
added
telecommunication
services
Shenzhen Shunlu Logistics Co.,
Ltd.* (ʮ
̡)
December 23,
2004
PRC 100% Investment holding
company and
provision of cargo
transportation and
freight forwarding
services
Shenzhen SF Intra-city
Logistics Co., Ltd*
(ʮ
̡)
October 26, 2018 PRC A wholly-
owned
subsidiary
of SF
Intra-city
Provision of third-
party on-demand
delivery services
Guangzhou S.F. Express Co.,
Ltd.* (ʮ
̡)
November 7,
2000
PRC 100% Provision of
international
freight
forwarding,
domestic and
international
express services
Beijing S.F. Express
Co., Ltd.* ( ̏ԯනᔮ஺༶Ϟ
ʮ̡)
May 20, 2004 PRC 100% Provision of
international
freight
forwarding,
domestic and
international
express services
Guangdong SF E-commerce
Co., Limited* (නᔮཥɿ
ʮ̡)
June 5, 2014 PRC 100% Provision of logistics
services
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Name of major subsidiary
Date of
incorporation/
establishment
Place of
incorporation/
establishment
Equity interest
attributable to
the Group Principal activities
Zhejiang S.F. Express Co.,
Ltd.* (ʮ
̡)
July 7, 1999 PRC 100% Provision of
international
freight
forwarding,
domestic and
international
express services
Shanghai Shunheng Logistics
Co., Ltd.* (Ϟ
ʮ̡)
May 24, 2010 PRC 100% Provision of
international
freight
forwarding,
domestic and
international
express services
Jiangsu S.F. Express
Co., Ltd.* ( Ϫᘽනᔮ஺༶Ϟ
ʮ̡)
July 4, 2001 PRC 100% Provision of
international
freight
forwarding,
domestic and
international
express services
Shenzhen S.F. Shuntai
Logistics Co., Ltd.* ( ଉέන
ʮ̡)
October 13, 2020 PRC 100% Provision of cargo
transportation and
freight forwarding
services
Suzhou S.F. Express
Co., Ltd.* ( ᘽψනᔮ஺༶Ϟ
ʮ̡)
May 25, 2001 PRC 100% Provision of express
delivery services
Zhejiang Fengchi Network
Technology Co., Ltd.* ( एϪ
ʮ̡)
January 16, 2018 PRC 100% Provision of cargo
transportation and
freight forwarding
services
TREND POWER
INVESTMENTS LIMITED
(ʮ̡)
January 2, 2019 Cayman
Islands
91.77% Investment holding
company
SF Holding Investment 2021
Limited
January 5, 2021 BVI 100% Investment holding
company
Flourish Harmony December 21,
2020
Cayman
Islands
100% Investment holding
company
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Name of major subsidiary
Date of
incorporation/
establishment
Place of
incorporation/
establishment
Equity interest
attributable to
the Group Principal activities
KEX Thailand January 17, 2014 Thailand 81.43% Provision of express
parcel delivery
services and
payment solutions
in Thailand
K-APEX LOGISTICS (HK)
CO., LIMITED
December 6, 2016 Hong Kong A wholly-
owned
subsidiary
of Kerry
Logistics
Operation of freight
forwarding
business
Note:
 During the Track Record Period, we also conducted our business operation through Shenzhen Fengwang
Express Co., Ltd* (ʮ̡)( “Fengwang Express ”), a major subsidiary established in the PRC
on April 7, 2020, in which our Group indirectly held 63.75% equity interests and the principal activities of
which were the operation of our franchise model economy express services. We subsequently disposed of all
of our equity interests in Fengwang Express on June 27, 2023 through our disposal of Shenzhen Fengwang
Information Technology Co., Ltd.* (ʮ̡)( “ Fengwang Information Technology ”),
and therefore, Fengwang Express was not a subsidiary of our Company as of the Latest Practicable Date. For
details, see “— Major Acquisitions and Disposals — Disposal of Fengwang Information Technology in June
2023.”
OUR EARLY HISTORY
Our Group was founded in 1993 by Mr. Wang in Shunde, Guangdong Province, China as
a parcel express delivery service provider serving customers within the Pearl River Delta
region.
On August 3, 2004, Mr. Wang, through his controlled entity, acquired 90% and 10% of
the equity interests in Chengxingye International Delivery from Shenzhen Chengxingye
Investment Development Co., Ltd.* (ʮ̡) and LIU Jingqiu,
respectively, being Chengxingye International Delivery’s original shareholders and
Independent Third Parties. On the same day, the company name of Chengxingye International
Delivery was changed to S.F. Express Limited* (ʮ̡) and it became the
operating entity of our business.
On September 1, 2010, the then-shareholder of SF Express (Group), transferred 99% of
the equity interest it held in SF Express (Group) to Mr. Wang and the remaining 1% of the
equity interest it held in SF Express (Group) to Taihai Investment, the predecessor of SF
Holding (Group) and SF Taisen and a company controlled by Mr. Wang.
On August 5, 2013, CITIC Capital (Tianjin) Investment Management Partnership
(Limited Partnership)* (༟͉(ݵ)ҳ༟၍ଣΥྫΆุ(Υྫ)) (“ CITIC Capital ”),
China Merchants Group Limited (“ China Merchants ”), Suzhou Oriza Holdings Co., Ltd. ( ᘽ
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ʮ̡)( “ Suzhou Oriza ”) and Jade Capital Management Co., Ltd. ( ͗̚༟͉၍
ʮ̡)( “ Jade Capital ”) agreed to make investments in SF Holding (Group) (the
predecessor of SF Taisen). Each of Jiaqiang Shunfeng (Shenzhen) Equity Investment
Partnership (Limited Partnership)* (ࠬ(ଉέ)ᛆҳ༟ΥྫΆุ(Υྫ)) (“ Jiaqiang
Shunfeng ”), Shenzhen Zhaoguang Investment Co., Ltd.* (ʮ̡)
(“Zhaoguang Investment ”) and Suzhou Industrial Park Oriza Shunfeng Equity Investment
Enterprise (Limited Partnership)* (ᛆҳ༟Άุ(Υྫ)) (“ Oriza
Shunfeng ”), being the investment entities of CITIC Capital, China Merchants and Suzhou
Oriza, respectively, subscribed for RMB5,071,875 in the registered capital of SF Holding
(Group) at a consideration of RMB2,437,500,000 and Suzhou Jade Capital Qiuchuang Equity
Investment Partnership (Limited Partnership)* (ᛆҳ༟ΥྫΆุ(Υྫ))
(“Jade Capital Qiuchuang ”), being the investment entity of Jade Capital, subscribed for
RMB1,014,375 in the registered capital of SF Holding (Group) at a consideration of
RMB487,500,000. Each of CITIC Capital, China Merchants, Suzhou Oriza, Jade Capital and
their respective investment entities were Independent Third Parties.
Along with the above strategic investment, various restructuring steps were adopted to
transfer all assets of our business to SF Holding (Group) and its subsidiaries, upon the
completion of which SF Holding (Group) became the holding and operating entity controlling
our PRC and overseas businesses commencing from May 2014.
Subsequently, SF Holding (Group) was converted into a joint stock limited company in
November 2015 and its registered capital was converted into RMB1,800,000,000. On
December 25, 2015, Ningbo Shunda Fengrun Investment Management Partnership (Limited
Partnership)* (න༺ᔮᆗҳ༟၍ଣΥྫΆุ(Υྫ)) (“ Shunda Fengrun ”) and Ningbo
Shunxin Fenghe Investment Management Partnership (Limited Partnership)* (ᔮΥҳ
༟၍ଣΥྫΆุ(Υྫ)) (“ Shunxin Fenghe ”), our employee shareholding platforms at the
time, agreed to subscribe for 198,600,000 shares and 1,400,000 shares, respectively, of SF
Holding (Group) at a consideration of RMB3,894,546,000 and RMB27,454,000, respectively.
Immediately prior to the Material Asset Restructuring, the shareholding structure of SF
Holding (Group), the holding entity of our business at the time, was as follows:
Name of Shareholder Number of Shares
Approximate
percentage of
shareholding
(%)
Mingde Holding ..................................... 1,368,000,000 68.40
Shunda Fengrun ..................................... 198,600,000 9.93
Jiaqiang Shunfeng ................................... 135,000,000 6.75
Zhaoguang Investment ............................... 135,000,000 6.75
Oriza Shunfeng ..................................... 135,000,000 6.75
Jade Capital Qiuchuang .............................. 27,000,000 1.35
Shunxin Fenghe ..................................... 1,400,000 0.07
Total ............................................... 2,000,000,000 100.00
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MAJOR SHARE CAPITAL CHANGES OF OUR COMPANY
Material Asset Restructuring in 2016 and our A Share Listing on the SZSE in 2017
On June 14, 2016, the then-shareholders (the “ SFHG Shareholders ”) of SF Holding
(Group) (including Mingde Holding, Shunda Fengrun, Jiaqiang Shunfeng, Zhaoguang
Investment, Oriza Shunfeng, Jade Capital Qiuchuang and Shunxin Fenghe) entered into the
Material Asset Swap and Share Subscription Agreement with Dingtai New Materials, LIU Jilu,
the actual controller of Dingtai New Materials at the time, and his person acting-in-concert,
LIU Lingyun to implement the Material Asset Restructuring. The Material Asset Restructuring
was implemented by way of an asset swap between all assets and liabilities of Dingtai New
Materials and 100% of the equity interests of SF Holding (Group), which was the holding
entity of our business at the time, such that upon completion of the Material Asset
Restructuring, Dingtai New Materials shall hold the entire equity interest in SF Holding
(Group), and we shall achieve a listing on the SZSE using Dingtai New Materials as the listing
entity. The Material Asset Restructuring involved the following three transactions:
(1) Asset swap between Dingtai New Materials and equity interests in SF Holding (Group)
Pursuant to the Material Asset Swap and Share Subscription Agreement, the parties to
such agreement shall conduct an asset swap, which involved (i) the sale by Dingtai New
Materials of all its assets and liabilities of Dingtai New Materials prior to the Material Asset
Restructuring to Ma’anshan Shuntai Rare Earth New Materials Co., Ltd.* ( ৵ቧʆ̹නइ೽ɺ
ʮ̡)( “ Shuntai New Materials ”), a company established in the PRC on August
25, 2016 for the purpose of acquiring such assets and liabilities of Dingtai New Materials sold
as part of the Material Asset Restructuring and whose shareholders were the SFHG
Shareholders, and (ii) the acquisition by Dingtai New Materials from the SFHG Shareholders
of such portion of the equity interests in SF Holding (Group) held by the SFHG Shareholders
with a value that was equivalent to the consideration for the sale of all assets and liabilities of
Dingtai New Materials subject to the asset swap.
The consideration for the sale of all assets and liabilities of Dingtai New Materials was
RMB796,000,000, determined with reference to the valuation of the assets and liabilities of
Dingtai New Materials at RMB811,530,000 as of December 31, 2015 (the valuation base date
for the Material Asset Restructuring) based on an asset valuation report issued by an
independent professional valuer and as adjusted by the amount of cash dividends paid by
Dingtai New Materials for 2015. The consideration for the acquisition of the entire equity
interests in SF Holding (Group) was RMB43,300,000,000, determined with reference to the
valuation of SF Holding (Group)’s entire equity interest at RMB44,830,000,000 as of
December 31, 2015 based on a valuation report issued by an independent professional valuer
and as adjusted by the amount of cash dividends declared by SF Holding (Group) on May 3,
2016. As a result of the foregoing, Dingtai New Materials exchanged all its assets and
liabilities for approximately 1.84% of the equity interests in SF Holding (Group).
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(2) Issuance of A Shares to the SFHG Shareholders
In order to further acquire the remaining 98.16% of the equity interests in SF Holding
(Group) that was not subject to the above asset swap, Dingtai New Materials shall issue certain
number of A Shares to the SFHG Shareholders to make up for the shortfall in the consideration
for the sale of all assets and liabilities of Dingtai New Materials, as compared with the
consideration for the acquisition of the entire equity interests in SF Holding (Group), being
RMB42,504,000,000 (the “ Consideration Shortfall ”). The A Share issuance was priced at
RMB10.76 per A Share, which was determined with reference to the monetary volume and
number of the A Shares traded in the secondary market for the 60 trading days preceding the
date of pricing and as adjusted for the cash dividend declared and the capitalization issue of
A Shares to all shareholders of Dingtai New Materials in its 2015 annual general meeting. As
a result, Dingtai New Materials shall issue a total of 3,950,185,873 A Shares to the SFHG
Shareholders in respect of the Consideration Shortfall and on a pro-rated basis to each such
shareholder’s respective shareholding interest in SF Holding (Group).
On December 12, 2016, the administrative approval was granted under the CSRC
Approval (2016) No. 3016 (ᗇ္஢̙<2016 >3016 ໮) in respect of the Material Asset
Restructuring. On December 23, 2016, the acquisition by Dingtai New Materials of the entire
equity interests in SF Holding (Group) (then under the company name of SF Taisen) was
completed, and SF Taisen became a wholly-owned subsidiary of Dingtai New Materials, and
subsequently on December 26, 2016, the sale of all assets and liabilities of Dingtai New
Materials was completed. In addition, 3,950,185,873 A Shares was issued to the SFHG
Shareholders in respect of the Consideration Shortfall on January 18, 2017 and such A Shares
were listed on the SZSE on January 23, 2017.
Upon completion of steps (1) and (2) of the Material Asset Restructuring, our business
was injected into the Company and became listed on the SZSE. The shareholding structure of
our Company was as follows:
Name of Shareholder
Number of
A Shares held
Approximate
percentage of
shareholding
(%)
LIU Jilu (1) .......................................... 100,164,338 2.39
LIU Lingyun (1) ...................................... 14,394,704 0.34
Other shareholders of Dingtai New Materials prior to
the Material Asset Restructuring (2) .................. 1 18,933,298 2.84
Mingde Holding ..................................... 2,701,927,139 64.58
Shunda Fengrun ..................................... 392,253,457 9.38
Jiaqiang Shunfeng ................................... 266,637,546 6.37
Zhaoguang Investment ............................... 266,637,546 6.37
Oriza Shunfeng ..................................... 266,637,546 6.37
Jade Capital Qiuchuang .............................. 53,327,509 1.27
Shunxin Fenghe ..................................... 2,765,130 0.07
Total ............................................... 4,183,678,213 100.00
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Notes:
(1) Mr. LIU Jilu was the chairman of Dingtai New Materials prior to the Material Asset Restructuring and has been
our Supervisor since December 28, 2016. Ms. LIU Lingyun was a person acting-in-concert with Mr. LIU Jilu.
(2) To the best knowledge of the Directors having made all reasonable enquiries, such other shareholders of
Dingtai New Materials prior to the Material Asset Restructuring were Independent Third Parties.
(3) Private placement of A Shares to strategic investors
In order to enhance our business performance and sustainability of our development upon
completion of the Material Asset Restructuring, on August 23, 2017, our Company completed
the private placement of 227,337,311 A Shares to eight investors, which were all Independent
Third Parties, at a price of RMB35.19 per A Share, which was determined with reference to
various factors (including the average share price for the 20 trading days prior to the date of
pricing and the subscription price quotes made by potential investors), raising net proceeds of
approximately RMB7,822.18 million. The net proceeds raised from the private placement were
used for our procurement of aviation equipment and aviation project development, our
procurement of cold chain vehicles and temperature control equipment, the development of
information services platform and next-generation logistics information technology
advancement projects, and the construction of sorting centers.
Following completion of the aforementioned A Shares placement in August 2017, the
shareholding structure of our Company was as follows:
Name of Shareholder
Number of
A Shares held
Approximate
percentage of
shareholding
(%)
Mingde Holding ..................................... 2,701,927,139 61.25
Other Shareholders .................................. 1,709,088,385 38.75
Total ............................................... 4,411,015,524 100.00
Issuance of the SF Convertible Bonds in November 2019
Since our A Share listing in 2016, there have been several instances of share capital
changes of our Company as a result of the repurchase and/or issuance of A Shares and
cancellation of restricted A Shares by our Company for employee incentive purpose. On
November 18, 2019, the Company conducted a public issuance of convertible bonds (the “ SF
Convertible Bonds ”) in the principal amount of RMB5.8 billion with a maturity period of 6
years, which was listed on the SZSE. Pursuant to the offering circular of the SF Convertible
Bonds, the convertible bonds shall be convertible into A Shares at a specified conversion price
as stipulated in the offering circular during the period from May 22, 2020 to November 18,
2025. On July 7, 2020, the Company resolved to exercise its conditional redemption rights
under the SF Convertible Bonds to redeem all outstanding SF Convertible Bonds at the time
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at face value plus accrued interests. Up to the date of completion of the redemption on August
3, 2020, the Company’s share capital increased by 144,311,758 A Shares to 4,556,440,455 A
Shares as a result of the exercise of conversion right under the SF Convertible Bonds.
Private Placement of A Shares in November 2021
After the issuance and redemption of the SF Convertible Bonds as aforementioned, there
have been several instances of share capital changes of our Company as a result of the
repurchase and/or issuance of A Shares and cancellation of restricted A Shares by our Company
for employee incentive purpose. For details of the repurchase of A Shares and cancellation of
restricted A Shares by our Company within the two years immediately preceding the date of
this prospectus, see “Statutory and General Information — 1. Further Information about our
Company — B. Changes in Share Capital of our Company” in Appendix IV to this prospectus.
Upon the approval from our Shareholders in March 2021 and from the CSRC in August
2021, our Company conducted a private placement of its A Shares to raise funds for our various
development initiatives, including the upgrade of our express delivery equipment automation,
construction of the Ezhou cargo hub, development of our supply chain digitalization system
solutions, upgrade of our land transport capacity and procurement and maintenance of our
aviation materials, and for our working capital needs. 349,772,647 A Shares were eventually
placed in the private placement to 22 investors, which were all Independent Third Parties, at
a price of RMB57.18 per A Share, which was determined with reference to various factors
(including the average share price for the 20 trading days prior to the date of pricing and the
subscription price quotes made by potential investors), raising net proceeds of approximately
RMB19,907 million.
Following completion of the aforementioned A Shares placement in November 2021, the
shareholding structure of our Company was as follows:
Name of Shareholder
Number of
A Shares held
Approximate
percentage of
shareholding
(%)
Mingde Holding ..................................... 2,701,927,139 55.07
Other Shareholders .................................. 2,204,285,963 44.93
Total ............................................... 4,906,213,102 100.00
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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MAJOR ACQUISITIONS AND DISPOSALS
Acquisition of SXH China Logistics
On February 12, 2018, SF Holding (HK) (our wholly-owned subsidiary) entered into a
sale and purchase agreement with HA VI China Holding LLC (“ HA VI China ”) and HA VI
Group, pursuant to which we agreed to purchase 75% of the issued share capital of SXH China
Logistics (formerly named as SF\HA VI China Logistics) at a consideration of approximately
US$140 million. The consideration for the acquisition was determined on the basis of arm’s
length negotiation, taking into account the business operations and industry conditions of the
businesses and assets being acquired. The acquisition of the 75% issued share capital of SXH
China Logistics was completed on July 31, 2018. Along with the 75% acquisition, Jolly Union
Limited (our wholly-owned subsidiary and a 75% shareholder of SXH China Logistics at the
relevant time) was granted a call option to request HA VI China to sell all or part of the 25%
issued share capital of SXH China Logistics it held upon the occurrence of specified events
(the “ HA VI Call Option ”). Pursuant to the HA VI Call Option exercised by Jolly Union
Limited, on April 12, 2022, HA VI China transferred the remaining 25% of the issued shares of
SXH China Logistics to Jolly Union Limited at a consideration of approximately US$96
million, and SXH China Logistics became a wholly-owned subsidiary of our Company. The
acquisitions have been properly and legally completed and settled, and all relevant approvals
required from the relevant authorities have been obtained.
Acquisition of DHL Supply Chain HK and DHL Logistics Beijing
On October 26, 2018, our Company reached a strategic cooperation with Deutsche Post
DHL Group (“ DHL Group ”) to acquire DHL Group’s supply chain business in mainland
China, Hong Kong and Macau. On the same date, SF Holding (HK), a subsidiary of our
Company, entered into a sale and purchase agreement (the “ DHL Sale and Purchase
Agreement ”) with several subsidiaries of DHL Group, including Deutsche Post Beteiligungen
Holding GmBH (“ Deutsche Post Holding ”), Ocean Overseas Holdings Limited (“ Ocean
Holding ”) and DHL Global Forwarding (Hong Kong) Limited (ݴي(ಥ)ࠢ
ʮ̡)( “ DHL Forwarding ”). Pursuant to the DHL Sale and Purchase Agreement, SF Holding
(HK) shall acquire the entire share capital in DHL Supply Chain (Hong Kong) Limited ( ౱Ⴔ
ԶᏐᗡ(ಥ)ʮ̡)( “ DHL Supply Chain HK ”) from Deutsche Post Holding and Ocean
Holding and the entire equity interest in DHL Logistics (Beijing) Co., Ltd.* (ݴي(̏ԯ)
ʮ̡)( “ DHL Logistics Beijing ”) from DHL Forwarding at a total cash consideration of
RMB5,500,000,000. The consideration was determined on the basis of arm’s length
negotiation, the target companies’ financial forecast based on discounted cash flow at the time
and financial figures as at June 30, 2018, and took into account the business operations and
industry conditions of the target companies. Each of DHL Group, Deutsche Post Holding,
Ocean Holding and DHL Forwarding is an Independent Third Party.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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DHL Supply Chain HK and DHL Logistics Beijing were the operating entities of the
supply chain business of DHL Group in mainland China, Hong Kong and Macau. Upon
completion of the above acquisition, we became the sole shareholder of DHL Supply Chain HK
and DHL Logistics Beijing. According to the relevant provisions of the Rules Governing the
Listing of Securities on the Shenzhen Stock Exchange and our Articles of Association,
shareholders’ approval was not required for the aforementioned acquisitions. The acquisitions
were completed in February 2019 and have been properly and legally completed and settled,
and all relevant approvals required from the relevant authorities have been obtained.
Acquisition of 51.5% Stake in Kerry Logistics in September 2021
To further enhance our business capability as an international integrated logistics
solutions provider and the strategic layout of our freight forwarding and international business,
our Group, through our wholly-owned indirect subsidiary, Flourish Harmony, acquired
approximately 51.5% of the shareholding of Kerry Logistics through a voluntary partial cash
offer to the then shareholders of Kerry Logistics at a price of HK$18.80 per share. The offer
price per share of HK$18.80 was determined based on arm’s length negotiation considering,
among others, the value of Kerry Logistics taking into account the sale of certain warehouses
in Hong Kong and the sale of its Taiwan business concurrently with the acquisition, the
payment of special dividend from the Hong Kong warehouses sale proceeds, and the historical
share price of Kerry Logistics on the Stock Exchange.
Our Shareholders’ approval for the acquisition was obtained on June 15, 2021. The
voluntary partial cash offer was closed on September 16, 2021 and was settled on September
28, 2021. Upon completion of the acquisition, Kerry Logistics continues to be listed on the
Main Board of the Stock Exchange and Kerry Logistics’ results of operations have been
consolidated into our Company’s financial information since September 28, 2021. This
acquisition has been properly and legally completed and settled, and all relevant approvals
required from the relevant authorities have been obtained. After completion of the acquisition,
Kerry Logistics contributed to (i) RMB20.3 billion, RMB74.3 billion, RMB45.9 billion and
RMB24.0 billion, representing 9.8%, 27.8%, 17.8% and 17.8%, of the revenue of our Group,
and was reflected in our supply chain and international segment; and (ii) RMB371.0 million,
RMB1.4 billion, RMB209.8 million and RMB25.5 million, representing 7.8%, 21.9%, 2.6%
and 0.5%, of the profit attributable to owners of our Company, for each of the years ended
December 31, 2021, 2022 and 2023, and the six months ended June 30, 2024, respectively. The
decrease in net profit contribution of Kerry Logistics for the year ended December 31, 2023
was primarily attributable to the slowdown experienced by the international sea and air freight
market, mainly due to the softening demand, and the de-stocking in certain countries, as the
global supply chain continued to normalize gradually post-pandemic. For details, see
“Financial Information — Period-to-Period Comparison of Results of Operations — Y ear
Ended December 31, 2023 Compared with the Y ear Ended December 31, 2022 — Revenue —
By Segment” in this prospectus.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Shareholders’ agreement with respect to Kerry Logistics
In connection with the acquisition of Kerry Logistics, in February 2021, Flourish
Harmony and our Company entered into a shareholders’ agreement with Kerry Holdings and
Kerry Properties, the controlling shareholders of Kerry Logistics prior to the completion of the
acquisition, in respect of certain corporate governance matters of Kerry Logistics. The
shareholders’ agreement became effective on September 16, 2021. Principal terms of the
shareholders’ agreement are set out below:
Board composition For so long as Kerry Holdings and its associated
companies in aggregate hold 10% or more of the total
issued share capital of Kerry Logistics, the board of
directors of Kerry Logistics shall comprise 11 directors,
including (i) seven directors (excluding independent
non-executive directors), of whom four shall be
nominated by Flourish Harmony, two shall be nominated
by Kerry Holdings and one shall be nominated by Kerry
Properties, and (ii) four independent non-executive
directors, of whom three shall be nominated by Flourish
Harmony and one shall be nominated by Kerry Holdings.
For so long as Kerry Holdings and its associated
companies in aggregate hold 5% or more but less than
10% of the total issued share capital of Kerry Logistics,
one director shall be nominated by Kerry Holdings.
Reserved matters Certain matters to be undertaken by Kerry Logistics and
its subsidiaries, including any change to the issued share
capital or the creation or issue of any shares of Kerry
Logistics or any other security convertible into shares of
Kerry Logistics or the grant of any option or rights to
subscribe for or to convert any instrument into such
shares of Kerry Logistics, and any acquisition (or a series
of related acquisitions) by Kerry Logistics or any of its
subsidiaries with a value of HK$3 billion or more, shall
be subject to the approval by two-thirds or more of the
directors of Kerry Logistics.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Business arrangements Subject to our Company obtaining the requisite corporate
approvals (or shareholders’ approvals and/or regulatory
approvals, where applicable) and (1) our Group and (2)
Kerry Holdings and Kerry Properties (and their
respective associated companies) legally and beneficially
holding not less than 50% and 30%, respectively, of the
shares of Kerry Logistics, Flourish Harmony and our
Company agree to procure that our Group carries out its
logistics businesses outside of mainland China, Hong
Kong, Macau and Taiwan through Kerry Logistics and its
subsidiaries, subject to: (i) the exclusion of any
international freighter operations; (ii) consent having
been obtained from relevant partners of certain joint
venture businesses; and (iii) no existing contracts (as at
the date of the shareholders’ agreement) of our Group
having been breached as a result. Our Group would
otherwise be free to pursue any new logistics business
opportunities which Kerry Logistics and its subsidiaries
elect not to pursue.
Public float In the event the public float of Kerry Logistics falls
below 15% of the total number of issued shares of Kerry
Logistics immediately following completion of the
acquisition on September 28, 2021, Kerry Holdings and
Kerry Properties agree to restore the public float to 15%
by placing down up to 6.9% of the total number of issued
shares of Kerry Logistics as at February 10, 2021, and
Flourish Harmony agrees to take action to restore the
public float to 15% to the extent in excess of 6.9% of the
total number of issued shares of Kerry Logistics as at
February 10, 2021.
Mandatory takeover offer waiver and non-compete undertaking in respect of KEX Thailand
Given Flourish Harmony would be deemed to have acquired indirect control of KLN
Logistics (Thailand) Limited, an indirect subsidiary of Kerry Logistics that is interested in
approximately 52.06% of the issued ordinary share capital of KEX Thailand, a company listed
on the Stock Exchange of Thailand, a waiver was obtained from the relevant regulatory
authorities in respect of the requirement applicable to Flourish Harmony, Kerry Logistics or
any other entity through which Kerry Logistics holds its interest in KEX Thailand to make a
chain principle mandatory takeover offer for the shares of KEX Thailand.
As a condition to the aforementioned waiver, each of Flourish Harmony and our Company
has undertaken to the relevant Thai regulatory authority that Flourish Harmony, our Company
and S.F. Express Co., Ltd. (a company incorporated in Thailand which operates our business
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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--- page 218 ---
in Thailand) will not operate any businesses similar to KEX Thailand’s core business in
Thailand, including small package delivery services, from the date when the acquisition of
shares in Kerry Logistics was completed. This non-compete undertaking (the “ Thai SEC
Undertaking ”) shall be valid so long as Flourish Harmony and our Company and/or
subsidiaries of Flourish Harmony and our Company hold directly or indirectly more than 10%
of shares in Kerry Logistics and Kerry Logistics holds directly or indirectly more than 10% of
the total voting rights in KEX Thailand.
From the date when the acquisition of shares in Kerry Logistics was completed up till the
Latest Practicable Date, each of Flourish Harmony, our Company and S.F. Express Co., Ltd.
has operated their respective business in a manner that is compliant with the Thai SEC
Undertaking.
Subscription of perpetual convertible securities
On May 18, 2023, SF Holding (HK) (our wholly-owned subsidiary) subscribed for
perpetual convertible securities in the principal amount of HK$780,000,000 issued by Kerry
Logistics (the “ Kerry Logistics Perpetual Convertible Securities ”). Subject to compliance
with relevant Listing Rules requirements applicable to Kerry Logistics, the Kerry Logistics
Perpetual Convertible Securities are convertible at the option of SF Holding (HK) into new
shares to be allotted and issued by Kerry Logistics at any time on or after June 5, 2023 (i.e.
14 days after the closing date, which was May 18, 2023) to the close of business on the date
falling seven days prior to the date fixed for redemption of the relevant convertible securities.
The initial conversion price is at HK$18.80 per share of Kerry Logistics, which is subject to
adjustment upon occurrence of specified events. On the basis of the initial conversion price of
HK$18.80, the number of new shares of Kerry Logistics subject to such conversion right would
be 41,489,361 shares. If and upon full exercise of the conversion rights pursuant to the Kerry
Logistics Perpetual Convertible Securities and taking into account the shareholding we held in
Kerry Logistics through Flourish Harmony, our aggregate shareholding interests in Kerry
Logistics would increase to 53.82%, assuming that there is no other change to the total number
of shares of Kerry Logistics.
For further details of the Kerry Logistics Perpetual Convertible Securities, see “Statutory
and General Information — 4. Our Incentive Schemes and Particulars of our Capital under
Option — B. Kerry Logistics Perpetual Convertible Securities” in Appendix IV to this
prospectus.
Transfer of ten subsidiaries of Kerry Logistics to SF Holding (HK)
In continuation of the objectives of our integration of Kerry Logistics’ international
freight forwarding services and international delivery services in order to bring efficiencies of
scale to our operations, on July 25, 2023, SF Holding (HK) (our wholly-owned subsidiary)
entered into an agreement with Kerry Logistics, pursuant to which SF Holding (HK) (or its
nominee(s) or subsidiary(ies)) has conditionally agreed to buy the interests held by Kerry
Logistics in ten companies that were originally Kerry Logistics’ subsidiaries engaging in
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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--- page 219 ---
express delivery services in Asia Pacific and Europe (the “ Target Companies ”), and Kerry
Logistics has conditionally agreed to sell and to procure the relevant shareholders of the Target
Companies to sell their respective interests in the Target Companies. Upon completion of the
aforementioned transfer of the Target Companies, the Target Companies will cease to be
subsidiaries of Kerry Logistics and all the interests in the Target Companies previously held
by Kerry Logistics would be held by SF Holding (HK) (by itself or through its nominee(s) or
subsidiary(ies)). Kerry Holdings, Kerry Properties, our Company and Flourish Harmony have
executed a letter agreeing that the aforementioned transfers and the carrying on by our Group
of express business pursuant to the terms of the transfers in the relevant jurisdictions would not
constitute a breach of the business arrangements provisions in the shareholders’ agreement of
Kerry Logistics. As of the Latest Practicable Date, the transfers for eight of the Target
Companies have been completed.
Acquisition of shares in and mandatory tender offer in relation to KEX Thailand
On December 29, 2023, the board of directors of Kerry Logistics has resolved to
conditionally declare a special interim dividend (the “ KLN Distribution ”), which was effected
by way of a distribution in specie of the 907,200,000 shares in KEX Thailand indirectly held
by Kerry Logistics to such qualifying shareholders of Kerry Logistics, in proportion to such
shareholders’ then respective shareholdings in Kerry Logistics.
Given our Company is the controlling shareholder of Kerry Logistics, which indirectly
held approximately 51.5% of the issued shares in Kerry Logistics through Flourish Harmony,
Flourish Harmony will be entitled to receive 467,373,833 shares in KEX Thailand (the “ KEX
DIS Shares ”) under the KLN Distribution, representing 26.8% of all issued shares in KEX
Thailand. Given Flourish Harmony transferred all of the KEX DIS Shares it received under the
KLN Distribution to SF International Holding (Thailand) Co., Ltd. (“ SF Thailand ”, an indirect
subsidiary of our Company), SF Thailand was required to make a mandatory tender offer (the
“KEX Offer ”) to acquire all shares in KEX Thailand (other than such shares in KEX Thailand
held by SF Thailand) in accordance with the requirements of the relevant regulatory rules and
codes of Thailand. On February 13, 2024, SF Thailand launched the KEX Offer, the offer
period of which ended on March 22, 2024. As a result of the KEX Offer, SF Thailand has
further acquired 624,443,472 shares in KEX Thailand, representing 35.8% of all issued shares
in KEX Thailand.
The KLN Distribution and the KEX Offer were completed in March 2024. Prior to the
KLN Distribution and the KEX Offer, KEX Thailand is a subsidiary of Kerry Logistics, which
was indirectly controlled as to 52.1% by our Company through Kerry Logistics, and upon
completion of the KLN Distribution and the KEX Offer, KEX Thailand ceased to be a
subsidiary of Kerry Logistics, and become a 62.66%-held indirect subsidiary of our Company
through SF Thailand.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Disposal of Fengwang Information Technology in June 2023
On May 12, 2023, Shenzhen Fengwang Holding Co., Ltd.* (ʮ̡)
entered into an agreement with Shenzhen J&T Supply Chain Co., Ltd.* (ࠢ
ʮ̡)( “ Shenzhen J&T ”), an Independent Third Party, to dispose of 100% equity interest we
held in Fengwang Information Technology, which represents the 63.75% equity interests we
held in Fengwang Express, to Shenzhen J&T at a consideration of RMB1,183,000,000 (subject
to adjustment for the profit and losses of Fengwang Information Technology and its
subsidiaries during the transitional period). As the principal activities of Fengwang
Information Technology and its subsidiaries were the operation of the franchising model
economy express services, such disposal of Fengwang Information Technology allowed us to
redirect our resources to advance our strategic focus on the development of our principal
businesses of mid to high-end express services, through a directly operated model.
Furthermore, as Fengwang Express was still in its initial stage of development prior to the
disposal and due to changes in the franchising model economy express services market
environment including its competitive dynamics, Fengwang Express had been operating at a
loss since its establishment and prior to its disposal. The disposal of Fengwang Information
Technology and its subsidiaries was beneficial to the Company’s financial performance and
aligned with the Company’s commitment to sustainable operation and steady growth. The
consideration was determined by the parties upon arm’s length negotiation and taking into
account the operational performance and market conditions with respect to Fengwang
Information Technology. Shareholders’ approval was not required for this disposal. The
disposal was completed on June 27, 2023. Upon completion of the disposal, we no longer hold
any equity interest in Fengwang Information Technology. As advised by our PRC Legal
Adviser, the aforementioned transaction has been properly and legally completed, all relevant
approvals required from the relevant PRC authorities have been obtained, and Fengwang
Express was not involved in any material non-compliance issues during the Track Record
Period and up to the date of completion of the disposal on June 27, 2023.
The applicable percentage ratios under Chapter 14 of the Listing Rules for each of the
acquisitions that took place during the Track Record Period were all below 25%, and save as
those acquisitions or proposed acquisitions conducted after the Track Record Period for which
a waiver from strict compliance with Rules 4.04(2) and (4) has been granted, our Company has
complied with the applicable requirements under Chapter 4 of the Listing Rules with respect
to the acquisitions it conducted. See “Waivers and Exemptions — Acquisitions after the Track
Record Period” of this prospectus. Save as disclosed in the above, no other major acquisition
or disposal took place during the Track Record Period and up to the Latest Practicable Date.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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OUR LISTING ON THE SZSE AND REASONS FOR THE LISTING ON THE STOCK
EXCHANGE
As of the Latest Practicable Date, our Company was listed on the SZSE, and our Directors
confirmed that we had no instances of non-compliance with the rules of the SZSE and other
applicable PRC securities laws and regulations in any material respects since the completion
of the Material Asset Restructuring and our listing on the SZSE and, to the best knowledge of
our Directors having made all reasonable enquiries, there was no material matter that should
be brought to the investor’s attention in relation to our compliance record on the SZSE, and
nothing has come to the Joint Sponsors’ attention that would reasonably cause them to disagree
the Directors’ view. Our PRC Legal Adviser is of the view that the confirmation of our
Directors above with regard to our compliance record is accurate and reasonable.
To further advance our internationalization strategy, establish an overseas equity
financing platform, optimize our international brand image and enhance our integrated
competitive strengths, we plan to be listed on the Stock Exchange. We endeavor to further
strengthen and optimise our network and service offerings, continue to enhance our efficiency
and productivity across our operations, continue to invest in technology to build a smart
logistics network and offer pioneering solutions, and expand our international and cross-border
capabilities. We currently intend to use the net proceeds from the Global Offering to strengthen
our international and cross-border logistics capabilities, strengthen and optimize our logistics
network and service offerings in China, and conduct research and development of advanced
technologies and digital solutions to upgrade our supply chain and logistics services and
implement ESG-related initiatives. For more details, see “Business — Strategies” and “Future
Plans and Use of Proceeds — Use of Proceeds” in this prospectus.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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--- page 222 ---
OUR SHAREHOLDING AND CORPORATE STRUCTURE
Shareholding and Corporate Structure Immediately Before the Global Offering
The following chart illustrates our simplified shareholding and corporate structure immediately prior to the Global Offering:
Mr. WANG Wei
Mingde Holding(1)
(PRC)
Shenzhen Weishun
(PRC)
99.90%
Our Company
(PRC)
100%
2.08% 53.19%
Ms. WANG Xin(3)
0.004%
Mr. HO Chit(2)
0.003%
Mr. XU Bensong(4)
0.001%
Mr. LIU Jilu(6)
0.74%
SF Taisen
(PRC)
Other subsidiaries(7)
S.F. Express Co., Ltd.*
ʮ̡
(PRC)
SF Airlines Company Ltd.*
ʮ̡
(PRC)
Shenzhen Fengtai E-commerce Industrial
Park Asset Management Ltd.*
ଉέ̹ᔮइཥਠପุ෤
ʮ̡
(PRC)
Shenzhen S.F. Freight
Corporation*
ʮ̡
(PRC)
Anhui S.F. Telecommunication
Service Co., Ltd.*
ʮ̡
(PRC)
SF Technology Co., Ltd.*
ʮ̡
(PRC)
SF Holding (HK)
(Hong Kong)
100%
100% 100%
100%
100% 100%
100%
Other subsidiaries(7)
100%76.51%
23.49%
Beijing SF Intra-city
Technology Co., Ltd.*
ʮ̡(8)
(PRC)
80.95%
8.18% 37.45% 12.76% 0.10%
Advance Harmony
Holdings Company
Limited
(Cayman Islands)
Celestial Ocean
Investment Limited
(British Virgin Islands)
Flourish Harmony
(Cayman Islands)
Kerry Logistics(10)
(Stock Code: 0636.HK)
(Bermuda)
Other subsidiaries(7)
100%100%
100%
51.52%
S.F. Holding Group Finance
Company Limited*
ʮ̡
(PRC)
100%
Other A Shareholders
43.97%
SF Intra-city(9)
(Stock Code: 9699.HK)
(PRC)
Shenzhen Shunlu
(PRC)
Mr. LEE Carmelo
Ka Sze(5)
0.001%
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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--- page 223 ---
Notes:
(1) As of the Latest Practicable Date, Mr. Wang held 99.90% of the equity interest in Mingde Holding, with the remaining 0.10% held by Mr. Lin Zheying, th e former deputy
chairman and a former director of the Company, whose term of office expired on December 20, 2022, and certain of the A Shares controlled by Mr. Wang were p ledged in favour
of certain financial institutions or placed in a security and trust account. For more details, see “Substantial Shareholders” in this prospectus.
(2) Mr. HO Chit is an executive Director, deputy general manager and head of finance of the Company, and held 122,000 A Shares as of the Latest Practicabl e Date.
(3) Ms. W ANG Xin is an executive Director, and held 172,000 A Shares as of the Latest Practicable Date.
(4) Mr. XU Bensong is an executive Director, and held 54,200 A Shares as of the Latest Practicable Date.
(5) Mr. LEE Carmelo Ka Sze is an independent non-executive Director and held 38,000 A Shares as of the Latest Practicable Date.
(6) Mr. LIU Jilu is a Supervisor and held 35,793,780 A Shares as of the Latest Practicable Date.
(7) As of the Latest Practicable Date, our other subsidiaries include more than 1,000 subsidiaries established in various jurisdictions.
(8) As of the Latest Practicable Date, the remaining 19.05% equity interest in Beijing SF Intra-city Technology Co., Ltd.* (ʮ̡) was held by Ningbo Meishan
Free Trade Port Zone Danwu Investment Management Partnership (Limited Partnership)* (ҳ༟၍ଣΥྫΆุ(Υྫ)), which is ultimately controlled
by Mr. GENG Y ankun, our deputy general manager.
(9) SF Intra-city is a company listed on the Main Board of the Stock Exchange (stock code: 9699.HK). As of the Latest Practicable Date, (i) 7.54% of the eq uity interest in SF
Intra-city was held by Ningbo Shunxiang Tongcheng V enture Capital Investment Partnership (Limited Partnership)* (නԮΝϓ௴ุҳ༟ΥྫΆุ(Υྫ)) (“ Ningbo
Shunxiang ”), a domestic employees shareholding platform controlled by Mr. Sun Haijin, an executive director of SF Intra-city; (ii) 1.82% and 3.83% of the equit y interest in
SF Intra-city was held by Duckling Fund, L.P . and Shining Star Fund, L.P ., respectively, both being entities controlled by Boundless Plain Holdings L imited and Mr. Eric LI;
and (iii) 5.55% of the equity interest in SF Intra-city was held by Taobao China Holding Limited, a company controlled by Alibaba Group Holding Limited (a company listed
on the Stock Exchange, stock code: 9988.HK, and on the New Y ork Stock Exchange, stock ticker: BABA.NY). All of the aforementioned shareholders of SF In tra-city are
Independent Third Parties, and to the best knowledge of our Directors having made all reasonable enquiries, all of the remaining shareholders of SF In tra-city are Independent
Third Parties.
(10) Kerry Logistics is a company listed on the Main Board of the Stock Exchange (stock code: 0636.HK). As of the Latest Practicable Date, (i) Kerry Grou p Limited held indirectly
through its subsidiaries 32.97% shareholding in Kerry Logistics, including direct shareholding of 20.84% by Kerry Properties; (ii) KUOK Khoon Hua, a non-executive director
of Kerry Logistics, was interested as to 0.10% shareholding in Kerry Logistics as beneficial owner and as a discretionary beneficiary to a discretion ary trust; (iii) CHENG Chi
Wai, an executive director of Kerry Logistics, held 0.06% shareholding in Kerry Logistics; (iv) CHEUNG Ping Chuen, an executive director of Kerry Log istics, was interested
as to 0.22% shareholding in Kerry Logistics; and (v) WONG Y u Pok Marina, an independent non-executive director of Kerry Logistics, held 0.001% shareh olding in Kerry
Logistics. To the best knowledge of our Directors having made all reasonable enquiries, the remaining shareholders of Kerry Logistics are Independe nt Third Parties.
(11) Similar to many large-scale, multinational conglomerates, our multi-layered and complicated corporate structure commensurate the fact that our business network spanning
across a large number of cities in the PRC and a large number of cities in overseas countries, and our services offering comprising different types of lo gistics services across
the various segments of our Group. We conduct our business through a large number of operating entities in the PRC and overseas, as we continue to expand through organic
growth and acquisitions and consolidations of other businesses.
As of the Latest Practicable Date, all of our A Shares were traded on the SZSE, and our Controlling Shareholders controlled directly and
indirectly 55.27% of our total issued Shares. To the best knowledge of our Directors having made all reasonable enquiries, as of the Latest Practicabl e
Date, no other Shareholders of our A Shares were close associates of any of our Controlling Shareholders.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Shareholding and Corporate Structure upon Completion of the Global Offering
The following chart illustrates our simplified shareholding and corporate structure immediately following the completion of the Global
Offering, assuming the Over-allotment Option is not exercised and no further Shares are issued pursuant to the share options granted under the 2022
Stock Option Incentive Plan:
Mr. WANG Wei
Mingde Holding(1)
(PRC)
Shenzhen Weishun
(PRC)
99.90%
Our Company
(PRC)
100%
2.01% 51.38%
SF Taisen
(PRC)
Other subsidiaries(7)
S.F. Express Co., Ltd.*
ʮ̡
(PRC)
SF Airlines Company Ltd.*
ʮ̡
(PRC)
Shenzhen Fengtai E-commerce Industrial
Park Asset Management Ltd.*
ଉέ̹ᔮइཥਠପุ෤
ʮ̡
(PRC)
Shenzhen S.F. Freight
Corporation*
ʮ̡
(PRC)
Anhui S.F. Telecommunication
Service Co., Ltd.*
ʮ̡
(PRC)
SF Technology Co., Ltd.*
ʮ̡
(PRC)
SF Holding (HK)
(Hong Kong)
100%
100% 100%
100%
100% 100%
100%
Other subsidiaries(7)
100%76.51%
23.49%
Beijing SF Intra-city
Technology Co., Ltd.*
ʮ̡(8)
(PRC)
80.95%
8.18% 37.45% 12.76%
Advance Harmony
Holdings Company
Limited
(Cayman Islands)
Flourish Harmony
(Cayman Islands)
Kerry Logistics(10)
(Stock Code: 0636.HK)
(Bermuda)
Other subsidiaries(7)
100%100%
100%
S.F. Holding Group Finance
Company Limited*
ʮ̡
(PRC)
100%
SF Intra-city(9)
(Stock Code: 9699.HK)
(PRC)
Shenzhen Shunlu
(PRC)
Ms. WANG Xin(3)
0.003%
Mr. HO Chit(2)
0.002%
Mr. LIU Jilu(6)
0.72%
Mr. XU Bensong(4)
0.001%
Other A Shareholders
42.48%
H Shareholders
3.41%
51.52%
Mr. LEE Carmelo
Ka Sze(5)
0.001%
0.10%
Celestial Ocean
Investment Limited
(British Virgin Islands)
Notes (1) to (10): See “— Shareholding and Corporate Structure Immediately Before the Global Offering.”
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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OVERVIEW
Growth
Largest in Asia
Scale
4th Largest Globally
Integrated logistics service provider1
Leadership1
No. 1 in Asia
Express, LTL Freight, Intra-city On-demand2,
International3
No. 1 in China
Express, LTL Freight, Cold Chain,
Intra-city On-demand
2,S u p p l yC h a i n4
Global Coverage
Brand
No. 1
Customer satisfaction for express services in
China as published by the State Post Bureau
15 years
in a row
Profitability
RMB8.2bn
RMB29.4bn
EBITDA5 in 2023
202
Countries and regions covered
99 aircraft
Largest air cargo fleet in Asia
186k vehicles
Largest ground delivery fleet in the world
11.7%
Revenue CAGR, 2021-2023
31.9%
Net Profit Attributable to Owners of
Our Company CAGR, 2021-2023
16.3%
EBITDA5 CAGR, 2021-2023
Net Profit Attributable to Owners of
Our Company in 2023
Notes:
1 According to Frost & Sullivan, in terms of revenue in 2023
2 Among third-party intra-city on-demand delivery service providers
3 Among Asia integrated logistics players
4 Among non-state-owned independent third-party supply chain solutions providers
5 For details, see “Financial Information — Non-IFRS Measures” in this document
We are a leading global integrated logistics service provider (i.e. logistics service
provider that offers a full spectrum of domestic and international logistics services, including
but not limited to, express delivery services, freight delivery services, cold chain logistics
services, intra-city on-demand delivery services, supply chain services and international
logistics services, and provide one-stop solutions to multinationals, large corporations, small
and medium enterprises and retail customers), the largest player in China and Asia, and the
fourth largest player globally, in terms of revenue in 2023, according to Frost & Sullivan. We
are a Fortune Global 500 company with market leadership in five logistics sub-segments in
China and four in Asia, offering a complete range of logistics services including express,
freight, cold chain, intra-city on-demand, supply chain solutions and international logistics
services.
We have a premium brand that is widely recognized for top-notch services and is a
commonly used verb in Chinese, with “Let me SF this to you” having become synonymous
with “Let me express mail this to you.” We were the only logistics company recognized as one
of the Top Five Most Admired Chinese Companies by Fortune Magazine in 2024. As of June
30, 2024, we had an extensive global delivery network covering 202 countries and regions,
supported by 99 aircraft and over 186,000 vehicles, the largest air and ground delivery fleet in
Asia, according to Frost & Sullivan. We are also a technology-driven company with 4,199
patents and patent applications as of June 30, 2024, and we continuously leverage proprietary
technologies to deliver innovative solutions and execution excellence. We had approximately
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2.2 million customers with active credit accounts and approximately 699 million retail
customers as of June 30, 2024, both of which were the highest among all logistics service
providers in Asia, according to Frost & Sullivan.
Our business model has three key attributes: direct operations, integrated capabilities, and
third-party independence. First, we directly operate the entire end-to-end delivery process from
first-mile pickup to last-mile delivery. This enables strong operational control, high network
visibility and agile resource allocation to support industry-leading speed, cost and reliability.
Second, our integrated capabilities enable us to offer a full-spectrum of services, standardized
or customized, to address a full range of customers’ logistics needs, capture greater wallet
share, and achieve above-industry growth. Third, we are the only integrated logistics service
provider of scale in China that is independent of major e-commerce platforms
*, allowing us to
serve our customer base impartially, capture new opportunities, and build long-term
sustainable relationships.
Time Period
Geography
Strategic
Focus
1993 - 2012
Build a strong foundation
Establish market leadership
Build our brand
Country
Leadership
Incubate new products
Invest in infrastructure
Gain market share
Building
Capabilities
China Express Logistics Invest in the Future Global Integrated Logistics
erutuF-32023202-2102
China and AsiaChina China, Asia and Global
Global
Expansion
Harvest prior investment
Enhance profitability
Strengthen cost disciplineWe have dedicated over three decades to building our logistics network and investing in
logistics infrastructure, which has given us a unique position today in Asia as an industry-
defining player. Our flagship product is time-definite express, in which we commanded a
market share of 63.9% in China in 2023, according to Frost & Sullivan. Leveraging our
time-definite capabilities, we employed an “1-to-n” growth strategy to enter into adjacent
products and geographies in a strategic and cost-effective manner. Following this strategy, our
capabilities and product offerings are becoming increasingly comprehensive and sophisticated
each day, expanding from time-definite to economy express, from small light-weight items to
large heavy parcels, from standard delivery to specialized services with temperature or
humidity precision, from China to Asia and then to the world. Today, most of our service
offerings have reached scale and market leadership, achieved profitability, and are poised for
growth.
Note:
* According to Frost & Sullivan, in 2023, we were the only integrated logistics service provider in China that
is independent of major e-commerce platform, which recorded revenue exceeding RMB200 billion.
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As a leading global integrated logistics service provider, we have always had a vision to
become the leader in global logistics. Global logistics represents an enormous market
opportunity, with an estimated US$11.1 trillion spent on logistics in 2023, of which Asia is the
largest regional market accounting for US$5.1 trillion in logistics spend in 2023, according to
Frost & Sullivan. The logistics industry is going through several paradigm shifts which
presents us with multiple opportunities. As the logistics needs of businesses become
increasingly complex and diverse, customer demand is shifting towards logistics players that
provide a full spectrum of products, high quality services, and global reach. In our home
market of Asia, the logistics industry as a whole and most of its sub-sectors remains highly
fragmented. As single-market single-product players become increasingly disadvantaged due to
lack of capabilities, strategic consolidation opportunities continue to emerge for leading
integrated players. We started our international business in 2010, primarily serving Chinese
customers’ outbound logistics needs. Today, as Chinese enterprises expand globally, the
international supply chain has significant opportunities for transformation. In 2021, our
acquisition of Kerry Logistics further strengthened our domestic and cross-border express
operations in Southeast Asia, international supply chain and freight forwarding capabilities.
Successful integration of Kerry Logistics into our existing international operations further
solidified our global integrated logistics capabilities and customer base, empowering our
global expansion strategy and vision. In 2023, we had the largest international operations
among all Asia-based integrated logistics service providers in terms of international revenue,
according to Frost & Sullivan. Together with the commencement of operations of the logistics
complex in the Ezhou cargo hub, we believe we are best-positioned among all local and global
players to consolidate the market and to capture opportunities both domestically and
internationally, with our extensive product portfolio, integrated global capabilities, experience
in merger and acquisitions, operational excellence and strong cost discipline. We are well
positioned to capture a greater proportion of future logistics demand due to our years of prior
investment and the capabilities we have built, which cannot be easily replicated.
Looking ahead, we aim to become the leader in global logistics and connect Asia with the
world. We will reinforce our market leadership in China, expand our reach in Asia, and broaden
our presence globally. In Asia, we will replicate our success in China and expand in selected
high-growth markets. In markets outside of Asia, we aim to achieve high-quality growth by
leveraging our highly recognized brand, leadership in cost efficiency and integrated
capabilities to provide one-stop services. We strive to become the go-to-logistics partner of
businesses and individuals worldwide, offering market-leading logistics services that empower
their success.
Our Journey
In our 31 years of development, we always strive to make our service offerings
increasingly more sophisticated, accommodating customers’ diverse requirements in time,
weight, frequency, distance, condition, and geography. As we develop new features for existing
service offerings, we are also constantly accumulating capabilities to enter adjacent segments
and establish market leadership quickly.
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Business Lines
1993
Express
2013
LTL Freight
2010
International
Number of Years to
Asia #1
24 years
12 years3
6 years
5 years2
5 years1
TimeFrequency WeightDistanceConditionGeography
/g131 Temperature precision
/g131 Specialized solutions
/g131 Network synergies
/g131Door-to-door services
/g131Customized solutions
/g131Around-the-clock services
/g131Global vision and network
/g131Local expertise and talents
/g131Industry pacesetter
/g131Go-to brand
/g131Extensive and dense network
2016
Intra-city
On-demand
2013
Cold-chain
Notes:
1 Among third-party intra-city on-demand delivery service providers
2 Asia excluding Japan
3 Largest international revenue among Asia integrated logistics players
We were founded in Shunde, Guangdong Province in 1993. Three decades later, we have
become a global integrated logistics player with market leadership across multiple logistics
segments in China and Asia.
We have achieved strong growth over the past decade through both organic development
and strategic initiatives. Today, a majority of our business customers use more than one of our
services.
 In 2013, we began providing freight delivery services for consignments heavier than
parcels, which is typically called LTL freight.
 In 2013, we began providing cold chain logistics services, for goods requiring
temperature-controlled delivery and storage. In 2018, we acquired a controlling
interest in Havi’s business in mainland China, Hong Kong and Macau to further
strengthen our cold chain capabilities.
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 In 2016, we began providing intra-city on-demand delivery services, delivering
food, groceries and other products on behalf of business and consumers.
 In 2017, we listed on the Shenzhen Stock Exchange.
 In 2018, we began providing supply chain services for enterprises. These capabilities
were strengthened by the acquisition of DHL’s supply chain business in mainland
China, Hong Kong and Macau in 2019.
 In 2021, we began providing international freight forwarding services.
 In 2021, we acquired a controlling interest in Kerry Logistics, to strengthen our
capabilities in freight forwarding and supply chain management and equip us with
integrated capabilities in Southeast Asia.
Our management team has pioneered many innovations that have transformed China’s
logistics industry and have become the industry standard:
 In late 1990s, according to Frost & Sullivan, we pioneered the courier incentive
model that tied courier compensation to parcel volume, aligning the interest of
couriers with company performance. This incentive model was later adopted across
the entire logistics industry in China.
 In 2003, according to Frost & Sullivan, we revolutionized the logistics industry in
China by adopting handheld terminals, which boosted our operational efficiency and
facilitated the collection and tracking of express delivery routing information for the
first time in China.
 In 2009, we became the first private logistics service provider in China to establish
our own cargo airline, SF Airlines.
 In 2012, according to Frost & Sullivan, we were the first to use e-waybills in China,
which enhanced automation and real-time tracking of parcels.
Our Global Network
Our logistics network is vast and comprehensive. As of June 30, 2024, we covered all
cities and 98.1% counties in China, and 202 countries and regions across the globe. As of June
30, 2024, we were the largest shipper of air cargo in China, with a fleet of 99 all-cargo aircraft,
and accounted for 32.0% of the air cargo volume in China in the first half of 2024, according
to Frost & Sullivan. As of the same date, our ground network was enabled by the largest ground
fleet in Asia, according to Frost & Sullivan, consisting of over 86,000 line-haul and short-haul
trucks and over 100,000 first and last-mile delivery vehicles globally. The Ezhou cargo hub is
expected to enable us to further increase the differentiation versus our competitors in terms of
delivery speed and global network coverage.
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Our Proprietary Technology
Technology lies at the core of everything we do. Our proprietary “SF Smart Brain”, a
data-driven middle platform system, has enabled effective management of our highly complex
operations across a vast network, leading to operational efficiencies and optimized costs. Our
couriers are equipped with a set of proprietary and comprehensive technology tools to optimize
delivery efficiency and ensure exceptional services. We also harness technology to push the
boundaries of our service capabilities and incubate new offerings. Our technology capabilities
and our continuing research and development efforts ensure we remain at the forefront of smart
logistics.
Our Value Proposition
We pride ourselves on providing top-notch services to our customers. We believe the
following distinctive value proposition set us apart from competitors and enable us to uphold
premium pricing:
 Fast. We provide fast and time-definite delivery for our customers. Our time-
definite express product is what we are best known for and the foundation of our
integrated logistics services.
 Reliable . Our services are consistently reliable. Our directly operated business
model ensures full control over our operations and resource allocation.
 Customer-centric. We put our customers’ interests first and believe in shared
growth. We can only succeed if our customers succeed. Our couriers promote a
customer-centric culture and strive to build close relationship with our customers,
providing warm services.
Our Scale, Growth, and Profitability
We have achieved significant scale, growth and profitability. Our revenue increased from
RMB207.2 billion in 2021 to RMB258.4 billion in 2023, representing a CAGR of 11.7%; our
revenue also increased by 8.1% from RMB124.4 billion for the six months ended June 30, 2023
to RMB134.4 billion for the same period in 2024. Our profit for the year attributable to owners
of our Company was RMB4.7 billion, RMB6.2 billion and RMB8.2 billion in 2021, 2022 and
2023, respectively, representing a CAGR of 31.9% from 2021; our profit for the year
attributable to owners of our Company also increased by 15.1% from RMB4.2 billion for the
six months ended June 30, 2023 to RMB4.8 billion for the same period in 2024. Our EBITDA
(non-IFRS measure) increased from RMB21.8 billion in 2021 to RMB29.4 billion in 2023,
representing a CAGR of 16.3%; our EBITDA (non-IFRS measure) also increased by 8.2% from
RMB14.7 billion for the six months ended June 30, 2023 to RMB15.9 billion for the same
period in 2024.
We also have a strong emphasis on shareholder return, having declared annual dividends
every year since we became a public company. Our dividend payout ratio increased from 20%
(from 2017 to 2022) to 35% in 2023, and we aim to steadily increase this over the next five
years.
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We believe we are at an inflection point today for high-quality and sustainable growth.
The period of heavy capital expenditure has now passed and we have implemented many
operational efficiency initiatives that are bearing fruit. We have also achieved a number of
breakthroughs in our businesses, including the following:
 Market share gains as our broader portfolio of logistics services and industry-
specific packaged solutions enable us to serve a more diverse customer base across
different industries and capture greater customer wallet share;
 Enhanced profitability as our newer logistics services have grown in scale and
achieved breakeven, any further growth will be accretive to our bottom line;
 Improved cost efficiency as integration of our aviation, ground and information
networks and resource sharing lead to increased cost synergies; and
 Accelerated global expansion as we ramp up the operations of the Ezhou cargo hub
to improve connectivity between China and Asia, within Asia, and Asia with the
world.
Our Commitment to ESG
We are deeply committed to building a green and sustainable world as well as bringing
positive impact to our people, community and stakeholders. Our ESG efforts cover a broad
spectrum of initiatives, from promoting green transportation, utilizing clean energy in logistics
industrial parks, advancing green packaging to empowering our employees, advocating for
diversity and inclusion, and promoting rural revitalization. Our longstanding ESG commitment
is widely accredited. We have been named on Fortune Magazine’s China ESG Influential List
for three consecutive years since 2022, and are the only express logistics company on the list.
We were also named among the World’s Best Employers by Forbes in 2022.
Our Culture and Social Responsibility
The logistics industry plays a vital role in the overall economy and serves various
industrial and consumer sectors, facilitating manufacturing upgrade and improving everyone’s
day-to-day life.
As the leading player in the logistics industry, our development has been closely linked
to our commitment to social responsibility. Our couriers, who are fondly referred as “Yige ( ɓ
ࡩYijie ( ɓ֎)”, not only fulfill their daily duties, but also always extend help to communities
in times of need. They foster a genuine sense of warmth and care, and are returned with deep
trust. During major emergencies such as earthquakes or floods, we are always at the forefront
to shoulder social responsibilities, saving lives and facilitating rapid resumption of normal
production. In addition, through our various logistics services, we empower rural revitalization
and agricultural digitalization to help farmers diversify sales channels and generate additional
income, fostering shared growth.
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Our strong corporate culture sets us apart from our peers and serves as the backbone of
our success. We value and are genuinely thankful to our people’s contributions and dedications.
Our culture embodies the principles and fundamental beliefs that we uphold. It serves as our
compass, guiding our efforts towards realizing our vision. Our cultural values are:
 Integrity and responsibility (ዄ຅)
 Empower employees’ success (ʈ)
 Enable customers’ success (˒)
 Innovation and inclusiveness (࢙)
 Commitment to excellence ( ৛Ӌՙ൳)
STRENGTHS
Asia’s Largest Integrated Logistics Service Provider
We are Asia’s largest integrated logistics service provider offering a comprehensive range
of end-to-end logistics solutions. According to Frost and Sullivan:
 Largest . We were Asia’s largest and globally the fourth largest integrated logistics
service provider, in terms of revenue in 2023.
 Fastest growing . We were the fastest growing among the global top four integrated
logistics service providers, in terms of revenue growth from 2021 to 2023, and the
only one based in Asia, which is the largest and fastest growing logistics market.
With our market leadership, we are able to capture the region’s most attractive
growth opportunities, thereby outpacing the overall growth of the Asia logistics
market, during the Track Record Period.
 Increasing profitability . We achieved the highest growth in profitability among the
global top four integrated logistics service providers, in terms of profit and EBITDA
(non-IFRS measure), during the Track Record Period.
 Leading provider of time-definite express. We are the clear frontrunner in time-
definite express, with a market share of 63.9% in China in terms of revenue in 2023.
The time-definite express, our flagship product, captures the strong momentum from
emerging e-commerce and parcel return services, as well as the increasing
consumption of mid to high-end goods and fresh foods.
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 Market leader across multiple logistics segments . We were the market leader in
China across the vast majority of logistics sub-segments including express, LTL
freight delivery, cold-chain logistics, third-party intra-city on-demand delivery and
non-state owned independent third-party supply chain solutions, in terms of revenue
in 2023. We were also Asia’s largest provider of overall express delivery, LTL
freight delivery, intra-city on-demand in terms of revenue in 2023. In addition, we
had the largest international operation among Asia-based integrated logistics service
providers in terms of revenue in 2023.
According to Frost & Sullivan, we have the most extensive global network among
Asia-based logistics service providers;
 Air cargo fleet. As of June 30, 2024, according to Frost & Sullivan we were the
largest shipper of air cargo in China, accounting for 32.0% of the air cargo volume
in China in the first half of 2024. As of the same date, we operated the largest cargo
aircraft fleet in Asia of 99 all-cargo aircraft and the largest number of domestic and
international routes among Asia-based logistics service providers.
 Cargo hub. The Ezhou cargo hub is the first dedicated air cargo hub in Asia, and
fourth in the world, which is of strategic value and scarce position. It is expected to
become an international hub that connects the world, especially as a bridge to
connect Southeast Asia and Europe. The Ezhou cargo hub adopts the hub-and-spoke
mode, which will enable us to further expand our network coverage, bring even
higher time-definiteness, achieve higher operational efficiency, and lower our costs.
 Ground. As of June 30, 2024, we operated over 86,000 line-haul and short-haul
trucks and over 100,000 first and last-mile delivery vehicles globally, the largest
fleet in Asia, supporting the broadest road coverage in the region. We also have the
most extensive network of service outlets and largest couriers team in Asia,
extending our fast, reliable, and customer-centric services into businesses and
communities throughout the region.
 Rail. We operated on the largest number of high-speed rail lines and international
routes among Asian logistics service providers as of December 31, 2023, enabling
the most extensive railroad coverage in Asia.
 Sea. We were the third largest Asia-based ocean freight forwarder in terms of TEU
in 2023.
 Logistics parks and warehouses. We operate various logistics parks strategically
located across Asia, as well as more than 700 warehouses in the PRC with an
aggregate area exceeding 7.4 million sq.m. and more than 1,100 warehouses
overseas with an aggregate area exceeding 2.5 million sq.m. as of June 30, 2024.
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Winning Business Model – Directly Operated, Integrated and Independent
We are the only sizable integrated logistics service provider in Asia that maintains direct
control and independence of our operations, and without any affiliation with e-commerce
platforms. We believe our business model creates sustainable competitive advantages.
 End-to-end direct operations enabling strong network control and premium
services. We directly control and operate the entire delivery process, from first-mile
pickup to last-mile delivery. Our full integration of air, ground and information
networks ( ɧၣፄஷ), coupled with end-to-end process management, provides us
with enhanced operational control to unify strategy and execution across our
networks and optimize resource allocation. We are able to enhance efficiency of our
network through multi-network synergies ( εၣፄஷ), where we integrate pertinent
resources across multiple networks to create one cohesive logistics network. We
provide both standardized and bespoke products with consistent high quality and
minimal incremental costs. For example, our time-definite express offers up to eight
daily parcel pick-ups and drop-offs, compared with between one to three pick-ups
for other players.
 Integrated capabilities addressing a larger market opportunity, achieving greater
customer wallet share, and stronger product synergies
o Larger market opportunity . With our integrated capabilities, we provide a full
spectrum of logistics services, and therefore address a larger market
opportunity. With established capabilities across product segments and
industry verticals, we strategically select areas of focus which we believe will
outpace broader industry growth.
o Greater customer wallet share . We have a symbiotic relationship with our
customers. As they scale, we provide incrementally more solutions that
seamlessly integrate with their operations to address their evolving needs. In
this process, we grow with them, capturing greater wallet share while also
helping them grow their businesses. In 2023, approximately 64% of our
business customers used more than one of our services.
o Modular bespoke products . As the breadth and depth of our logistics services
grow, we are able to consolidate multiple standardized modules to create
bespoke solutions and serve diverse logistics needs, empowering the entire
supply chain of our customers.
o Service synergies . Leveraging our information network to share resources and
infrastructure across our aviation network and ground network, we enjoy
greater economies of scale and synergies across our service offerings.
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 Third-party independence fostering deeper relationships with a diverse customer
base. We are the only player among the leading integrated logistics service providers
in China to maintain independence from e-commerce platforms and merchants. As
the e-commerce landscape evolves rapidly in Asia, our platform-neutral position
ensures that we can serve a broad customer base impartially, and enables deeper
relationships over time. Compared with our global and domestic peers, we generally
have lower customer and industry concentration. For each year/period during the
Track Record Period, no single customer contributed more than 3% of our revenue.
 Business expansion enabling continued industry leadership. The attractive
economics of our flagship time-definite express product and directly operated model
have enabled us to employ a highly adaptable and flexible “1-to-n” expansion
strategy to cost-efficiently incubate new products and successfully disrupt adjacent
logistics segments.
o LTL Freight. Based on our time-definite express practices, we introduced
widespread adoption of door-to-door deliveries, achieving the highest door-
to-door delivery rate, far exceeding the industry average in China, according to
Frost & Sullivan. This provided our customers with significant additional value
and allowed us to become Asia’s LTL freight market leader in terms of revenue
in only six years.
o Cold-chain. With similar service precision requirements to time-definite
express, our existing logistics network excelled at handling the exacting
delivery requirements of perishable goods. We became Asia (excluding
Japan)’s cold-chain market leader in terms of revenue in just five years.
o Intra-city on-demand. As our existing express network was designed to
specifically meet stringent time-specific demands, we were able to build an
intra-city on-demand business quickly and with ease. The intra-city on-demand
business also provided cost-efficiencies to our overall business, through
resource sharing to improve utilization. We became Asia’s leader among
third-party intra-city on-demand delivery service providers in terms of revenue
in five years.
o International logistics. With ownership and control over critical cross-border
logistics resources such as first-mile and last-mile networks, customs clearance
capabilities, air fleet and overseas warehousing, we integrate this with our
domestic logistics know-hows to offer cross-border solutions. We were Asia’s
leader in the international logistics market in terms of revenue in 2023.
Our winning business model enables us to command above-the-industry pricing for our
time-definite and bespoke products among the leading Asian players. At the same time,
leveraging the synergies across our network and resource allocation advantages, we are able to
offer standard products, such as economy express, with highly competitive pricing.
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Global Gateway Connecting Asia and the World
We act as a global gateway connecting China and Asia, integrating Asian local markets,
and bridging Asia with the rest of the world. As the only Asia-based player among the global
top four integrated logistics service providers, we benefit from the tailwinds in Asia, the largest
and fastest growing logistics market, which had total third-party logistics spending of US$2.3
trillion in 2023 and is expected to grow at a CAGR of 6.6% from 2023 to 2028, according to
Frost & Sullivan. In this region, we have accumulated extensive resources, including extensive
local networks, broad connectivity, strong brand recognition, and talented teams. With these
unique assets, we are well positioned to replicate our success from China across Asia and
globally. Our acquisition and integration of Kerry Logistics in 2021 has successfully elevated
our global strategy and operations to a new level.
 Strong local expertise and network across Asia.
o First and last-mile network in China and Southeast Asia . We are the only
logistics service provider among the global top four integrated logistics service
providers to have a directly controlled and operated network across both China
and Asia, supported by our capability to connect these regions by air. We also
have broad first and last-mile capabilities in China and Southeast Asia to
capture cross-border express demand. Southeast Asia represents a major and
one of the fastest growing logistics markets in Asia, attributable to its strong
economic growth, continued improvements in logistics infrastructure and
growing importance in the global supply chain.
o Deep penetration into Southeast Asian markets. We have a strong presence in
Southeast Asian markets supported by our well-established local networks,
local connectivity and operational know-how. We have established a leadership
position in Southeast Asia among integrated players in terms of revenue in
2023. Moreover, with a leading network in Southeast Asia and global service
capabilities, we are poised to seize growth opportunities in the Asia-Pacific
region by leveraging our deep integration of supply chains and the rapid
expansion of local and cross-border trade to enhance our international service
capabilities. This strategic positioning enables us to progressively expand our
network and achieve global reach.
o Unique vantage point in global supply chains . We have a unique vantage point
in global supply chains as the only Asia-based company in the global top four
integrated logistics service providers. As over 90% of Fortune 500 companies
have significant portion of their supply chains based in Asia, we are uniquely
positioned to deliver competitive solutions and capture their logistics demand.
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 Cost leadership driving price-competitive, one-stop solutions. International
logistics is highly complex, requiring an expansive global network and multi-model
transportation across borders. With our integrated capabilities, we offer comparable
delivery times at more competitive pricing than our global peers. Our competitive
pricing is enabled by our cost leadership among global players. This efficient cost
structure is supported by our Asian nexus, highly integrated network and large
demand volume, which enables us to support numerous regional routes with greater
scale. Moreover, with few players possessing comparable scale and capabilities in
Asia, we are further distinguished by our ability to deliver one-stop solutions
covering international express, cross-border e-commerce parcel delivery to
international freight forwarding.
 Asset-appropriate approach to deploy resources. With the infrastructure in place,
we adopt an asset-appropriate approach to deploy our resources for international
expansion. To expand into countries and regions outside of China, we employ
organic growth, acquisitions and partnerships. Our approach provides flexibility to
adapt to changing market conditions and allocate resources more efficiently across
our network.
We have achieved rapid expansion in our international business through a combination of
organic growth and acquisitions, as demonstrated by a 38.6% CAGR in our revenue generated
outside of mainland China from 2021 to 2023.
Go-to Brand for Differentiated and Premium Services
“Let me SF this to you ” has become synonymous with “ Let me express mail this to you .”
In China, our household brand name has become a commonly used verb for time-definite
express. Our name has also become associated with premium services. Many retailers actively
advertise their exclusive use of SF delivery to convey service quality.
Our fast, reliable and customer-centric services are made possible by our directly
operated team of couriers, who are our brand ambassadors and high-frequency touch points for
customers. As of June 30, 2024, our services were supported by the largest courier team among
all logistics players in Asia, according to Frost & Sullivan. As a testament to our leadership in
time-definite express and exceptional services, we have been ranked first in overall customer
satisfaction for 15 consecutive years (2009 to 2023), first in delivery timeliness (within 48
hours) for nine consecutive years (2013 to 2021), and first in delivery punctuality (within 72
hours) for nine consecutive years (2013 to 2021) by the State Post Bureau. The State Post
Bureau has not published new rankings for delivery timeliness and delivery punctuality since
2021.
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Due to our successful track record in providing premium services, we have built a
reputation for exceeding customer expectations. As a result, we have accumulated the most
extensive customer base across major industry verticals in Asia, with high customer loyalty and
stickiness. We have expanded our offerings to grow with our customers and meet their evolving
demands. We are a highly dependable logistics partner, supporting our customers through the
ups and downs of their business cycles. For details, see “— Our Customers and Customer
Services — Our Customers.” We also provide specialized services that cater to diverse
scenarios. Leveraging our integrated capabilities, these solutions are bespoke to our customers
but standardized to our operations, with minimal or low customization cost. Examples include:
 Fresh and seasonal food. We are the first and only designated logistics service
provider to deliver live Y angcheng Lake hairy crabs through express delivery,
according to Frost & Sullivan. This is enabled by our sophisticated capability to
maintain highly precise temperature and humidity during the delivery process. In
addition, we introduced the first-ever automated binding machine for hairy crabs, an
innovation that has improved timeliness and reduced costs. We are the undisputed
leader in this market, with a 94% market share in terms of shipping volume of
Y angcheng Lake hairy crabs in China in 2023, according to Frost & Sullivan.
 Pharmaceuticals. We strive to be the pacesetter in pharmaceutical logistics services,
which often require strict standards of safety, condition monitoring, delivery time,
and full process coordination. We are among the very few logistics players globally
to offer one-stop and highly reliable vaccine transportation solutions, featuring
designated transportation vehicles, enhanced vaccine safety protection, and
temperature control.
 Luxury. We were the first to provide luxury time-definite express “SF Shangpai” ( න
ݼ֠a delivery service with couriers dressed in tailored suits and trained in
brand storytelling.
Technology and Innovation Driven Operations
We are a technology-driven logistics service provider and leverage proprietary
technologies and innovations to digitalize internal management, enhance operational
efficiencies, and expand our business.
Data-driven management and digitalized operations. We harness advanced technologies
and digital solutions to manage the full cycle of our end-to-end logistics operations, covering
pre-planning, monitoring, and post-review. During pre-planning, we utilize intelligent systems
to accurately forecast package volumes and scientifically allocate resources; during
monitoring, we track business performance in real-time and make necessary adjustments
swiftly; during post-review, we conduct meticulous analysis to distill data insights and
continuously iterate and refine our operations.
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Today, we have embedded technologies in every aspect of our operations to drive
operational excellence:
 First-mile pickup and last-mile delivery. We employ a data-driven approach to
empower our first-mile pickup and last-mile delivery services. To maximize
efficiency of our courier team, our management system dispatches tasks to our
couriers dynamically based on data insights, including their skills, anticipated
volume, total working hours and potential delivery challenges, among other factors.
 Transportation. We have adopted a digitalized dispatch scheduling and management
system that optimizes efficiency for our land, air, and multimodal transportation. For
example, our intelligent scheduling system takes into account every factor, including
network capacity, route planning, service requirements, and weather conditions, and
then adjusts resources dynamically and accordingly.
 Sorting centers. We have deployed a site management system for intelligent
planning, decision making, and dynamic allocation of on-site resources during the
transit process. With this technology setup, we are able to perform numerous
simulations to refine our operational strategies before strategy implementation, and
hence substantially lower costs and enhance efficiency at our sorting centers.
In addition, we have adopted a smart finance management system, which employs
advanced data modelling and analytics to help business teams identify potential cost-reduction
areas, enable effective operational management, and assist in operational decision making.
Address complex logistics scenarios and empower customers’ supply chains . Our
proprietary technologies enable us to provide innovative solutions to address diverse and
complex logistics scenarios. We also provide our technology to our customers as a service,
making their supply chains more efficient.
 Address complex scenarios. Our high level of digitalization enables us to address
new and complex logistics needs across a wide range of industry verticals and
provide practical solutions. We are able to address a wide range of logistics
scenarios across online and offline channels for B2B, B2C, C2C and B2B2C modes.
 Empower customers’ supply chains. We offer our proprietary technologies as a
service to our customers to empower their supply chains. For example, we have
deployed our proprietary Fengzhi Cloud Chain (ᔮ౽ථᗡ), a cloud-based system for
intelligent demand forecasting and resource optimization, with our customers to
great success, resulting in faster and more efficient fulfillment. For further details,
see “— Technology and Research and Development.”
We have been widely recognized for our achievements in technological innovations. We
were on Fortune Magazine’s Most Influential IoT Innovation List in 2022 and 2023. We had
the highest number of patents and patent applications among the global top four integrated
logistics service providers as of June 30, 2024, according to Frost & Sullivan. As of June 30,
2024, we had 4,199 patents and patent applications, and 2,535 software copyrights in the fields
of automation, big data and smart hardware, among others.
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Visionary Management Promoting a People-centric Culture
Our management team exhibits extraordinary vision. They have guided us through
changes that may not yield immediate outcomes but have substantial long-term benefits, for
instance, being the industry-first transform the business into a directly operated model within
the China express sector. Under their leadership, we have become Asia’s largest integrated
logistics service provider, an achievement through strong execution of organic growth
initiatives as well as strategic acquisitions and partnerships, both domestically and
internationally. With diverse local and international experience, our management team also
brings multifaceted perspectives to the organization. Their diverse backgrounds also create an
inclusive culture of learning and collaboration that attracts top talents.
Our founder, chairman of the Board, and chief executive officer, Mr. Wang, is a highly
respected veteran of the logistics industry. Guided by his vision, we have anticipated and
embraced emerging trends to shape the future of the logistics industry. Mr. Wang is grounded
by the belief that the fulfilment of our employees drives the satisfaction of our customers,
which creates a virtuous cycle that empowers both our employees and customers.
Our people-centric culture promotes sustainable growth internally and closer
relationships with our customers externally. We invest in our couriers and take special care to
ensure their well-being through market-leading compensation, continuous training, and
employee benefits. By nurturing our couriers with the support and care they deserve, they have
passed on that same passion and warmth to our customers. Our couriers play a pivotal role in
advancing our culture. Their willingness to go the extra mile through extending a helping hand
to local communities cultivates a deep sense of trust among our customers.
We are recognized by Fortune Magazine as one of the Most Admired Chinese Companies
for eight consecutive years (2017 to 2024), making us the only logistics service provider with
such international recognition.
STRATEGIES
Our growth journey passed through distinct phases. We first established market leadership
in time-definite delivery services, and then strategically expanded our service offerings and
geographic coverage. Each step was meticulous and focused on our long-term vision. With our
competitive offerings and executional excellence, we are well positioned to identify and
capture emerging opportunities. We are focusing on executing our core strategies and have
clear business priorities to continuously reinforce our competitive moats and achieve
long-term, sustainable and profitable growth.
Further Strengthen and Optimize Our Network and Service Offerings
Our service quality and integrated capabilities are key to our continued success. We
endeavor to further enhance our network coverage and improve our network infrastructure.
Based on business needs, we will continuously optimize and selectively expand our logistics
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infrastructure, including service outlets, sorting centers, warehouses and fleets. We will
continue to develop the Ezhou cargo hub into a global logistics hub, which will enhance the
competitiveness of our time-definite express and cross-border service offerings.
We aim to continue to expand our service offerings to fulfill new customer demand and
offer bespoke solutions to address customized scenarios. We plan to deepen our penetration
into emerging and fast-growing sectors across technology, healthcare and financial services. As
more industry verticals require more speedy delivery of their products, we aim to capture
greater demand for time-definite equivalent services within these segments. Meanwhile, we
perform constant performance review of our business segments and customer cohorts to
optimize resource allocation for core segments and customers.
Continue to Enhance Efficiency and Productivity
We are committed to enhancing operational efficiencies and reducing costs throughout
our operations. We have multiple clear levers to improve our productivity and focus on
multi-network coordination and operational efficiency enhancement. As our capabilities and
services evolve, we are able to constantly identify synergistic areas to streamline operations,
which will lead to sustainable and profitable growth.
To improve our multi-network integration, we plan to continue to implement unified
network planning and integrate pertinent resources across multiple networks to create one
cohesive logistics network, which would increase utilization, avoid repeated investment, and
enhance economies of scale. In particular, we will focus on improving our capabilities and
productivity in distribution, transportation, and last-mile delivery, by further optimizing the
utilization of our physical facilities and adopting innovative operational models, such as
increasing direct dispatch from sorting centers and setting up more multi-purpose service
outlets.
To enhance our operational efficiency, we will continue to deploy automation equipment
in our facilities to increase handling capacity while reducing manpower. In addition, we intend
to further optimize personnel management through increasing digitalization and finetuning
incentive programs.
Continue to Invest in Technology to Build a Smart Logistics Network and Offer
Pioneering Solutions
We will continue to promote the end-to-end digitalization of our logistics network to drive
greater automation and efficiencies. Through our “SF Smart Brain”, we plan to continually
upgrade our smart systems from demand planning, collection, transportation, distribution to
delivery. We will continue to promote the digitalization of the entire industry supply chain
system through more seamless integration of our supply chain with our customers’ operations.
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We endeavor to continuously push the limits of conventional logistics to offer pioneering
solutions through technology innovation. Through strengthening our capabilities in
technologies including automation, blockchain and cloud computing, we expect to address
more complex scenarios and provide more customized solutions, reinforcing our
competitiveness. In line with our goal to become a leader in green logistics, we will continue
to develop innovative technologies to improve energy efficiency and promote wider adoption
of green packaging.
Expand Our International and Cross-Border Capabilities
We aim to become the global leader in logistics. Today, with Chinese enterprises expand
globally, as well as global multinational corporations expand and diversify their supply chain
across emerging Asian countries, the international logistics has significant opportunities for
structural transformation, especially to leading and Asia-based integrated logistics service
providers. To that end, we will further enhance our global and cross-border capabilities through
expanding network coverage in Asia and the rest of the world while maintaining a flexible
approach in deploying resources. We will deepen our footprint in existing international markets
such as Southeast Asia and increase our presence in new markets with high growth. We will
also enhance network connectivity and density within our Asia network and between our Asia
and global logistics network.
Our aim is to become the go-to logistics partner globally, driving our customers’ success
on a global scale. We intend to further enhance the breadth and depth of our international
offerings, specifically by enhancing cross-border capabilities and providing integrated
overseas warehousing and distribution services. We target to offer more premier logistics
solutions overseas as we view our quality of services as a key differentiator. Further, we aim
to stay agile to adapt to the change in demand of our customers’ supply chains. We will also
selectively pursue acquisitions, investments and partnerships that are accretive to our strategy
to become the global logistics leader.
Grow Business and Consumer Mindshare as “ the One in Asia ”
We strive to grow our business and consumer mindshare by establishing our brand image
as “ the One in Asia ”, meaning that whenever businesses and consumers have a need for an
end-to-end integrated logistics solution in Asia, SF is the first name they think of.
We believe that we are well equipped to accomplish this relative to our peers, and aim to
leverage our existing business positioning to achieve this. We will actively promote our
strengths in:
 Full coverage. We have broad geographic, service and industry coverage. We
covered 202 countries and regions globally as of June 30, 2024, have integrated
logistics capabilities and serve a client base spread across all industry verticals.
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 Strong network. We directly control and operate our network across China and Asia,
with broad first and last-mile capabilities in China and Southeast Asia, and utilize
our logistics complex in the Ezhou cargo hub, the only dedicated air cargo hub in
Asia, to enhance our global connectivity capabilities. This is evidenced by over 45%
of 2023 Fortune China 500 companies being customers of our international logistics
services in 2023.
 Deep relationships. We served 476 of the Top 500 Enterprises in China in 2023 and
have the highest coverage of blue-chip customers among integrated logistics service
providers in Asia. We form deep relationships with our customers by growing
together with them, expanding our service offerings to meet their evolving demands,
and becoming a one-stop logistics solutions provider to serve businesses and
consumers.
 Seamless integration. Our business model is fully integrated across geography,
service and customers to realize synergies and efficiently utilize resources.
Based on the above, we believe we have clear and distinctive advantages to deliver an
ever-improving customer experience, and subsequently capitalize on the opportunity to expand
mindshare and grow our business.
OUR BUSINESS MODEL
Our business model combines direct operations, integrated capabilities, and third-party
independence, enabling us to maintain control and autonomy over our operations, offer a wide
portfolio of service offerings, and serve customers impartially.
Directly Operated Model
Our operations pivot around a directly operated model, integrating aviation, ground, and
information networks under one unified command. We directly operate the entire delivery
process from first-mile pickup to last-mile delivery with minimum reliance on franchisees.
This model ensures strong operational control and high visibility over our entire logistics
network and infrastructure, including service outlets, sorting centers, warehouses, and
line-haul transport, empowering us to effectively allocate resources and deliver speedy and
reliable services. For example, we fully integrate resources across our aviation and ground
network with our data network to efficiently serve our entire portfolio of services. In addition,
with direct operations, we are able to ensure business resilience and sustain service quality
throughout changing business environments and market conditions.
Integrated Capabilities
Anchored by our directly operated model, we deliver a comprehensive portfolio of
logistics and supply chain solutions to a diverse customer base globally. Leveraging our
time-definite capabilities as a foundation, we have expanded strategically into economy
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express, freight delivery, cold chain logistics, intra-city on-demand delivery, and supply chain
and international services, catering to the evolving and diverse logistics needs of our customers
across industry verticals. We have been building our capabilities in a strategic, meticulous, and
cost-effective way, leveraging our established competitive strengths and networks to enter
adjacent products. This approach unlocks network synergies and optimizes resource allocation,
simultaneously reinforcing the foundation of our time-definite delivery and fostering the
growth of our other businesses. The following diagram illustrates the full cycle of our
integrated service offerings:
Supply chain
service
Distribution solutions Consumption and after-sales solutionsProcurement and manufacturing solutions
Express,
freight and
cold chain
Intra-city
on-demand
Pick-up Sorting & transportation Delivery
Hubs and
sorting centers
RecipientsBusiness customers/
Retail customers
Service outletsHubs and
sorting centers
Service outlets
First-mile Short-haul Line -haul Short-haul Last-mile
Domestic
suppliers
Overseas
suppliers
Factories
OEM
manufacturers
Domestic
distribution hubs
Overseas
distribution hubs
Enterprise
recipients
Individual
recipients
Warehouse
Bonded
warehouse
Stores
E-commerce
distribution centers
Regional
distribution centers
International
delivery
service
International
freight
forwarding
service1
Domestic
Overseas
Enterprise/Retail
customers Domestic hubs and
sorting centers
Line-haul
shipping
Overseas hubs and
sorting centers
Consignee
Custom
clearance
Custom
clearance
Pick-up
Delivery
Business
customers
Trucking
company
Terminal
operator
Customs
broker
Carriers/
Shipping lines
Customs
broker
Trucking
company
Consignee
Transportation
arrangement
Warehousing &
ground handling
Documentation
preparation and
customs clearance
Air/Ocean Warehousing &
ground handling
Transportation
arrangement
Terminal
operator
12 3
Documentation
preparation and
customs clearance
32 1
Cross-border Overseas
Cross-borderDomestic
Cross-border
E-commerce platform
Offline
Online
Pick-up
Place order
Merchants Rider Recipients
SF Intra-city
Place shopping
or food orders
DeliveryCollection
Place delivery order/tailored solutions1 Order dispatch2
34
Individual
Customers Place delivery order/individual services1
Consumers
Note:
Our international services in general adopt an asset-appropriate approach. In particular , our international freight
forwarding service is asset-light, whereby majority of transportation needs are provided by external carriers, and
customs clearance is partly outsourced to external customs brokers.
With a comprehensive portfolio of logistics and supply chain solutions, we can select and
combine our capabilities, which are operationally standardized to us, to provide differentiated
and tailored solutions to address the specific logistics needs of our customers across various
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industries. As a result, the number of our customers with active credit accounts amounted to
approximately 2.2 million as of June 30, 2024, the highest among all logistics service providers
in Asia, according to Frost & Sullivan.
Leveraging our integrated capabilities, on top of our existing standardized products and
tailored solutions, we are able to further provide our customers with versatile industry-specific
packaged solutions designed specifically for various industries with wide applicability and
replicability. With our industry experience and in-depth engagement with large-scale
enterprises spanning across various industries, we are able to spot logistics challenges
confronted by small and medium enterprises that are common among the industry and their
unmet logistics needs. Therefore, we have distilled our existing standardized products and
tailored solutions into industry-specific packaged solutions that can be widely applied.
Simplified industry-specific packaged solutions offer standardized logistics services to a vast
number of small and medium enterprises, making it easier to scale and mass roll out. This
strategic approach will further enhance customer satisfaction and loyalty, expand our customer
base, and deepen our wallet share and market share across various industry verticals. We
believe the implementation of versatile industry-specific packaged solutions will not only meet
broad customer needs but also fortify our competitive edge in the logistics industry, driving
sustainable growth.
Independent Third-party Logistics Service Provider
The express delivery industry in China has grown rapidly due to the rise of e-commerce
platforms. As new e-commerce platforms and merchants continue to emerge, they generally
prefer logistics partners that are not affiliated with incumbent e-commerce players to form
long-term trusted relationships free of potential conflicts of interest, perceived or otherwise.
Unlike the majority of our domestic Chinese peers, we are positioned in the industry as an
independent third-party logistics service provider neutral to platforms and merchants. We are
not affiliated with any e-commerce platform, which enables us to provide impartial services to
all our customers. We aim to provide unbiased, inclusive, high-quality services to all our
partners and empower their success.
Our unique business model, combining direct operations, integrated services capabilities,
and third-party independence, has enabled us to achieve today’s success as an industry
frontrunner and will further empower us to capture evolving customer needs and continue our
expansion.
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OUR V ALUE PROPOSITION
We deliver differentiated and exceptional value to our customers and our operations.
Value Proposition to Our Customers
 Superior timeliness and service quality with execution excellence : Our
dedication to ensuring superior timeliness and providing top-notch services has
positioned us as a logistics industry leader. Even in challenging conditions like bad
weather or peak hours, we strive to use every means to ensure service quality and
deliver a satisfactory customer experience. Additionally, our dedicated account
managers serve as the main coordinators to integrate various logistics teams for
seamless execution and direct customer services. This collaborative effort enhances
communication, resolves inefficiencies, and guarantees a uniform customer
experience. Our relentless commitment to service quality does not only meet
customers’ logistics requirements, but also contributes significantly to their own
operational success, and therefore deepens relationship with our customers.
 One-stop solution to address diverse needs : Our customers operate in multiple
regions and span across a vast number of industries, requiring diverse logistics
services of all kinds. Our integrated services offer a one-stop solution and freeing
our customers from liaising with multiple logistics providers. This efficient
approach effectively caters to our customers’ increasingly diverse and sophisticated
demands.
 Tailored solutions to unlock value : By providing comprehensive and integrated
service offerings, we are able to gain better insights on our customers’ specific
logistics needs and pain points. This approach allows us to offer customized,
optimized solutions to enhance supply chain efficiency and unlock value for our
customers.
 Technological empowerment : We empower our customers with technological
capabilities, digital solutions, and data insights to drive their strategic decision-
making and optimize operational efficiency. We are committed to continually
advancing our technology capabilities and investing in research and development to
provide digitalized and intelligent logistics services.
Value Proposition to Our Operations
 Strong operational control : We directly operate the entire end-to-end delivery
process from first-mile pickup to last-mile delivery with minimum reliance on
franchisees. This enables strong operational control, high network visibility and
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agile resource allocation to support our industry-leading speed, cost and reliability.
Empowered by the centralized control over our networks and resources, we are able
to address customers’ demands promptly and effectively, ensuring a seamless
experience.
 Integrated capabilities to address complex requirements and capture new
market opportunities : Our integrated capabilities have allowed us to continuously
tap into new logistics segments and geographies to capture new growth
opportunities and extend market leadership. Moreover, our comprehensive service
offerings have opened up cross-selling opportunities, enabling us to offer
complementary services and deepen wallet share with our existing customers. As a
testament to the success of our strategy, we have transformed from China’s premier
time-definite express service provider to a global integrated logistics leader in less
than ten years.
 Network synergies and economies of scale : Our integrated service offerings allow
us to unify our networks, resulting in increasing economies of scale and network
synergies. The integration of our networks enables us to streamline line-haul routes,
boost loading capacity, and enhance time efficiency, leading to improvement of
overall operational efficiency. We also adopt a unique “large and small parcel
integration” strategy to optimize distribution efficiency. By merging networks for
different parcel sizes, we achieve greater synergies and foster a flexible, seamless
logistics process that caters to our customers’ diverse needs.
 Early-mover advantage in securing infrastructure : As the early mover in
integrated logistics, we have secured scarce or difficult-to-acquire resources to build
our robust infrastructure, including cargo-focused logistics hub, large air cargo
fleets, air traffic rights, and exclusive airport slots. For instance, in China, where
licenses for operating a cargo airline are stringently regulated, and prime take-off
and landing slots are limited, we have secured an advantageous position that is
challenging for new entrants to replicate, even with substantial financial resources.
This early-mover advantage, amplified by our extensive global networks and prime
warehouse and sorting center locations, underpins the unique strength of our
business operations.
 Data-driven and digitalized operations : We are deeply committed to leveraging
advanced technologies to digitalize our operations and enhance our capabilities.
Empowered by our proprietary technologies, we are able to forecast demand
accurately, allocate resources optimally, make decisions intelligently, and
continuously drive operational efficiency.
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OUR SERVICE OFFERINGS
Over the past decade, with our “1-to-n” expansion strategy, we have quickly transformed
from China’s leading time-definite express delivery service provider into a leading global
integrated logistics service provider. We offer a diverse spectrum of service offerings that cover
various manufacturing and consumption scenarios. The diagram below summarizes major
categories of our service offerings:
Express and freight delivery Intra-city
Time-definite express Economy
express Freight delivery Cold chain and
pharmaceuticals
Intra-city
on-demand
Business
description
• Door-to-door delivery
services through air and
ground transportation,
delivering everything
from consumer goods
to manufacturing
components
• Cost-effective and
quality guaranteed
door-to-door
delivery services
• Door-to-door
delivery of bulky
and heavy items
• Customized cold
chain logistics
services
• On-demand
city-wide delivery
services
Service radius • Nationwide • Nationwide • Nationwide • Nationwide • Intra-city
Timeliness •T y p i c a l l y s a m e d a y ,
next morning and next
day deliveries
• Swift response time:
Couriers guaranteed to
arrive at the sender's
location within one hour
of order placement
• Industry-leading
collection and dispatch
frequency: up to eight
collections and seven
dispatches each day,
irrespective of holidays
•W i t h o u t s t r i c t t i m e
sensitivity
• Depends on
customers'
requirements.
Provides more
time-definite
delivery services
compared to other
freight delivery
service providers,
with a guaranteed
delivery time for
freight delivery
• Depends on
customers'
requirements
• Average delivery
time of
approximately
30 minutes
Business
models
• B2B, B2C, C2C • B2C • B2B, B2C • B2B, B2C • B2B, B2C, C2C
Market focus • High-end • Mid to high-end • Mid to high-end • Mid to high-end • Mid to high-end
Major customers
served
• Retail customers
• Business customers in
consumer, business
and industrial sectors
• E-commerce
platforms and
merchants
• Business customers
across wide range
of industries for
manufacturing and
commercial
distribution, such as
home appliance,
furniture, and B2B
and  B2C heavy
goods e-commerce
• Business customers
in food, agricultural
products and
pharmaceuticals
sectors
• Retail customers
• Business
customers in food
and beverage,
groceries, 3C
electronics, and
apparel sectorsSupply chain and international
Supply chain International deliver y International freight forwarding
Business
description
• High-quality integrated and tailored
supply chain solutions that cover
the full spectrum of the supply chain
of our customers
• International express delivery
services: time-definite international
express services to serve urgent
delivery needs across borders
• Cross-border e-commerce delivery
services: cost-effective delivery
services, catering to logistics needs
of cross-border e-commerce
platforms
• Overseas local express delivery
services: local express delivery
services mainly in Southeast Asia
countries
• Freight forwarding services, offering
comprehensive freight
transportation
Service radius • Global • Global • Global
Business models • B2B, B2C • B2B, B2C, C2C • B2B
Market focus • Mid to high-end • Mid to high-end • Mid to high-end
Major customers
served
• Business customers primarily in
electric vehicle, new energy,
live-streaming e-commerce and
new retail industries
• Business customers primarily in
manufacturing, import and export and
cross-border e-commerce sectors, and
retail customers
• Cross-border business customers
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The following table sets forth our revenue breakdown by business segment for the
years/periods indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Express and freight delivery
segment (1) ............... 160,675,510 77.6 169,764,860 63.5 186,890,137 72.4 90,058,986 72.5 96,820,175 72.1
Time-definite express services .... 98,961,735 47.8 105,696,512 39.5 115,456,067 44.7 56,069,720 45.1 59,185,770 44.0
Economy express services ....... 25,428,003 12.3 25,551,306 9.6 25,051,548 9.7 12,129,430 9.8 13,254,012 9.9
Freight delivery services ....... 27,290,961 13.2 27,917,012 10.4 33,078,821 12.8 15,120,722 12.2 17,554,101 13.1
Cold chain and pharmaceutical
logistics services .......... 7,802,610 3.8 8,612,665 3.2 10,312,988 4.0 5,338,545 4.3 5,062,524 3.8
Others (2) ............... 1,192,201 0.5 1,987,365 0.8 2,990,713 1.2 1,400,569 1.1 1,763,768 1.3
Intra-city on-demand delivery
segment ................ 5,117,905 2.5 6,567,057 2.4 7,371,250 2.8 3,406,837 2.8 4,022,952 2.9
Intra-city on-demand delivery
services ............... 5,003,156 2.4 6,436,102 2.4 7,249,500 2.8 3,339,291 2.7 3,956,020 2.9
Others (2) ............... 1 14,749 0.1 130,955 0.0 121,750 0.0 67,546 0.1 66,932 0.0
Supply chain and international
segment ................ 39,979,632 19.3 89,916,599 33.6 62,859,302 24.3 30,283,063 24.3 32,914,104 24.5
Supply chain and international
services ............... 39,203,772 18.9 87,866,143 32.8 59,978,741 23.2 28,857,391 23.2 31,195,538 23.2
Others (2) ............... 775,860 0.4 2,050,456 0.8 2,880,561 1.1 1,425,672 1.1 1,718,566 1.3
Undistributed units (3) ......... 1,413,600 0.6 1,241,898 0.5 1,288,714 0.5 616,712 0.4 652,489 0.5
Total ................... 207,186,647 100.0 267,490,414 100.0 258,409,403 100.0 124,365,598 100.0 134,409,720 100.0
Notes:
(1) We adjusted our reportable segments in 2023 by merging two segments, previously named as “express delivery
segment” and “freight delivery segment,” into “express and freight delivery segment.” As a result, our segment
information for the years ended December 31, 2021 and 2022 has been restated, see Note 5 to the Accountant’s
Report in Appendix I to this prospectus.
(2) Others primarily represents our ancillary non-logistics services, such as sales of goods, provided under the
banner of the relevant segment. Primarily incidental to our comprehensive supply chain solutions, we at times
provided, as per our key accounts’ requests, certain raw materials and machineries.
(3) Undistributed units primarily include our non-principal businesses, such as leasing and provision of
technology services.
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Express and Freight Delivery Services
Our express and freight delivery services primarily include time-definite express services,
economy express services, freight delivery services, and cold chain and pharmaceuticals
logistics services in mainland China, Hong Kong and Macau.
Time-definite Express Services
Our time-definite express services, launched when the concept was relatively unknown to
Chinese customers, offers efficient door-to-door delivery for retail and business customers,
including mid to high-end brands with a precise delivery time commitment. According to Frost
& Sullivan, the top two time-definite express service providers accounted for 85.1% of the
market share in China in terms of revenue in 2023, and we were the clear leader in China with
a market share of 63.9% in 2023. By delivering everything from consumer goods to
manufacturing components, we serve a broad spectrum of industry verticals and operate under
diverse scenarios. Our time-definite express services maintain a focus on consumer goods
while simultaneously support business parcel and industrial delivery.
Our time-definite express services mainly comprise SF speedy express and SF standard
express. SF speedy express provides guaranteed next-day delivery between most urban areas
in the PRC. In addition, it offers same-day option for deliveries to certain destinations. Our
inter-city SF speedy express is delivered through air and high-speed railway transportation to
meet the time-definite delivery guarantee. We also introduced a cross-provincial door-to-door
delivery services for bulk cargo through air transportation. SF standard express provides
customers with a delivery services characterized by “better price, guaranteed on-time,
dependable delivery, and broad coverage (ਕᇍఖᄿ).” As
of June 30, 2024, our time-definite express services were offered in more than 320 cities in
mainland China, Hong Kong and Macau.
We have redefined the standard for time-definite express in China, pioneering the highest
standard for time-definiteness express through our clear and precise arrival time commitments.
As part of our operations, we offer high-frequency parcel pick-up, with couriers guaranteed to
arrive at the sender’s location within one hour of order placement. We have been continuously
seeking excellence and improvement. According to the State Post Bureau, our time-definite
express services recorded the shortest delivery time among all time-definite express services
in the PRC since 2013.
We believe that our exceptional timeliness can be primarily attributed to our ability to
offer the highest collection and dispatch frequency in the express services industry globally,
according to Frost & Sullivan. We set the industry benchmark with our collection and dispatch
frequency, conducting up to eight collections and seven dispatches daily and year-round,
irrespective of holidays. In addition, our extensive transportation resources contribute to our
exceptional timeliness. As of June 30, 2024, we were the largest shipper of air cargo in China
with a fleet of 99 all-cargo aircraft, accounting for 32.0% of the air cargo volume in China in
the first half of 2024, according to Frost & Sullivan. Our air fleet, paired with our access to
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commercial flight cargo space, bolsters our aviation resources. Furthermore, our ground
transportation resources, cultivated through a high-frequency operational model for line-haul
and short-haul transportation, enable us to achieve incremental growth and heightened hourly
efficiency, while maintaining lower costs compared to our competitors who are starting their
operations from scratch. In addition to our transportation resources, our exceptional time-
definiteness owes much to our advanced technological capabilities, providing critical visibility
and precision to our operations. Complementing this is the trusted team of highly trained
couriers who ensure each parcel is meticulously handled from pick-up to delivery and is always
in capable hands. Our time-definite express is the bedrock of our integrated logistics services.
As a testament to our differentiated and high quality services, we have won numerous
market recognitions, including from official sources. As published by the State Post Bureau, we
ranked:
– 1st for 15 consecutive years (2009 to 2023) for overall customer satisfaction;
– 1st for nine consecutive years (2013 to 2021
*) in delivery timeliness (within 48
hours); and
– 1st for nine consecutive years (2013 to 2021 *) in delivery punctuality (within 72
hours).
With our established logistics infrastructure, nationwide coverage, and reliable end-point
delivery capabilities, we offer tailored solutions to meet customers’ time-specific needs. We
have consistently been broadening our time-definite express services scenarios, including the
introduction of parcel return services for e-commerce platforms in 2021, which enhanced the
brand image for our e-commerce platform customers. For emerging e-commerce platforms, our
efficient parcel return services, which leverage our time-definite network and quick pick-up
capabilities, are crucial to improving their customer stickiness and repurchase rates by ensuring
a smooth parcel return experience.
For our time-definite express services, we generally charge our customers with a delivery
fee for each parcel delivered, of which pricing is determined with reference to various factors,
including, among others, time sensitivity, distance, weight and volume of the delivery, and
transportation method.
Economy Express Services
Our economy express services provide cost-effective, quality-assured door-to-door
delivery, primarily to e-commerce platforms and merchants focused on both cost and
timeliness. Although the delivery time is not as fast as our time-definite express services as
economy express relies mainly on ground transportation, our economy express services still
outperforms comparably priced services offered by our competitors in terms of delivery speed
and service quality. Our economy express services utilize the marginal capacity of our
Note:
* The State Post Bureau has not published new rankings for delivery timeliness and delivery punctuality since
2021.
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time-definite express services to ensure optimal resource utilization. This is enabled by our
directly operated model and integrated services capabilities. Our economy express services
primarily target mid to high-end e-commerce customers.
Our flagship service offering under the economy express services is e-commerce standard
express, which provides domestic delivery for e-commerce parcels. Our service offering
provides unique advantages over competitors and directly addresses e-commerce logistics pain
points. For example, our door-to-door e-commerce delivery feature is uncommon among
logistics providers and is a key differentiating factor. We have served many leading
e-commerce channels to offer large-scale, door-to-door services in China. Moreover, as an
independent third-party logistics service provider, we are not affiliated with e-commerce
platforms and merchants. This ensures that we have no conflicting interests and can offer
unbiased services to all our e-commerce partners. Therefore, we are the partner of choice for
emerging e-commerce platforms and merchants as we can help them reduce the pressures of
bundling with traditional e-commerce platforms and avoid close ties with logistics providers
linked to incumbent e-commerce platforms.
During the Track Record Period, except for economy express services offered through
Fengwang express, an independent brand of express services operated under a franchising
model in the PRC, we operated our economy express services under a directly operated model.
To advance our strategic focus on the development of our principal businesses of mid to
high-end logistics services, we disposed of Fengwang Express in June 2023. For details of our
disposal of Fengwang Express, see “History, Development and Corporate Structure — Major
Acquisitions and Disposals — Disposal of Fengwang Information Technology in June 2023”
in this prospectus.
For our economy express services, we generally charge our customers with a delivery fee
for each parcel delivered, of which pricing is determined with reference to distance, weight and
volume of the delivery.
Freight Delivery Services
Since inception in 2013, our freight delivery services have captured increasing market
demand from business customers across wide range of industries for manufacturing and
commercial distribution, such as home appliance, furniture, and B2B and B2C heavy goods
e-commerce, for the delivery of bulky and heavy items. We have continuously expanded our
customer base and services scenarios for both to-B and to-C scenarios. According to Frost &
Sullivan, we were the largest LTL freight delivery service provider in Asia in terms of both
revenue and delivery volume in 2023.
Our freight delivery services cater to a broad spectrum of customer needs and market
segments. Service offerings under our freight delivery services primarily include bulky and
heavy parcel delivery services, bulky cargo specialized delivery services, standard LTL
services, and standard FTL services. We primarily offer our freight delivery services through
SF Freight ( නᔮҞ༶) under a directly operated model. SF Freight emphasizes the delivery of
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medium-to high-end products and differentiated value-added services, such as in-home
furniture installation service. We are committed to delivering a trusted brand experience with
standardized operating procedures, including safety and privacy measures implemented during
the course of our operations. This ensures a secure and comfortable service experience. We also
offer freight delivery services through a franchising model, SX Freight ( නːઠ༺). SX Freight
focuses on cost-sensitive segments, offering timely and cost effective services to serve a
broad-based economy market.
Our freight delivery services distinguish itself through a set of competitive advantages.
First and foremost, we prioritize our customers’ convenience, offering door-to-door services as
opposed to the more common store-to-store model, thereby demonstrating a heightened
understanding of customer needs and operational capabilities. Second, regardless of the tiered
approach based on time-definiteness and costs for our freight delivery services, we are
committed to providing more time-definite delivery services than our competitors. We
understand the importance of meeting strict timelines and ensuring the timely delivery of
goods, including bulky and heavy items. With the assistance of our technological capabilities,
we managed to achieve optimized logistics processes, efficient route planning and fleet
dispatching. According to Frost & Sullivan, as of June 30, 2024, we were one of the very few
logistics service providers that provided a guaranteed delivery time for freight delivery
services in the PRC. Additionally, we offer reliability through consistently punctual deliveries,
establishing a resilient network for our customers to rely on. Lastly, our trusted brand name
permits us to offer unique value-added services, such as in-home installations, which sets us
apart and cements our status as a premium brand in the market.
Our freight delivery services stand out due to its versatility and applicability in various
scenarios as well as its capabilities to serve to-C scenarios, which is rarely seen among freight
delivery service providers. While the majority of freight delivery service providers in the PRC
focus primarily on serving the manufacturing industry, we have extended our reach to
encompass a wide range of consumer scenarios. For the to-B scenario, we quickly respond to
demands from manufacturers and merchants for cost-effective and efficient logistics services
by creating flexible industry solutions. For example, we provide night collection and delivery
services for deliveries in industrial areas. Furthermore, we have enhanced our valued-added
services capabilities under the to-B scenario, and have also assisted in the relocation of
facilities such as schools and hospitals. For the to-C scenario, we continue to solidify our
end-to-end services capabilities.
For our freight delivery services, we generally charge our customers with a delivery fee
for each parcel delivered, of which pricing is determined with reference to weight, volume and
distance of the delivery, and transportation method.
We recognize revenue from time-definite express services, economy express services and
freight delivery services based on the progress of the service performed within period, which
is determined based on proportion of costs incurred to date to the estimated total costs or days
spent to the estimated total days. As of the date of the end of the reporting period, we
re-estimate the progress of the service performed to reflect the actual status of contract
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performance. Costs incurred for provision of the aforesaid services are recognized as costs of
revenue when revenue recognized based on the progress of the service performed within
period. For each parcel delivered under our express services, economy express services and
freight delivery services, relevant fund flows directly from our customers to us.
Cold Chain and Pharmaceuticals Logistics Services
Our cold chain and pharmaceuticals logistics services address the significant demand for
cold chain logistics in the PRC from customers mainly from the food, agricultural products and
pharmaceuticals sectors. Our cold chain and pharmaceuticals logistics services primarily
include fresh and seasonal food logistics services, food cold chain logistics services and
pharmaceuticals logistics services. According to Frost & Sullivan, we were the largest cold
chain logistics service provider in the PRC in terms of revenue in 2023. Moreover, we ranked
first for five consecutive years (2019 to 2023) in the “China Top 100 Cold Chain Logistics
List” issued by the cold chain logistics professional committee of China Federation of
Logistics and Purchasing. As a testament to our high-quality services, industry expertise and
leadership in cold chain and pharmaceuticals logistics in the PRC, we have been invited by
national authorities in the PRC, including the State Post Bureau and the Ministry of Transport
of China, to actively participate in setting national and industry standards for cold chain and
pharmaceuticals logistics.
Our cold chain and pharmaceutical logistics services possess unique competitive
strengths due to our nationwide network, high-quality standards, and pioneering industry
practices. We boast the most comprehensive coverage in China across diverse sectors,
including supermarkets, agriculture, and catering. Our technology-driven approach enables
real-time remote temperature and humidity control from warehouse intake to delivery. We pride
ourselves as an industry pacesetter and pioneer for innovative solutions. For example, we are
the first logistics provider to deliver live Y angcheng Lake hairy crabs, introduce an automated
crab binding machine for efficiency, and operate a dedicated 48-hour cargo flight route for
matsutake mushrooms.
For our cold chain and pharmaceuticals logistics services, we generally charge our
customers with a delivery fee for each delivery, of which pricing is determined with reference
to volume and distance of the delivery, transportation method, and customers’ specific request
on temperature.
Fresh and Seasonal Food Logistics Services
Through our fresh and seasonal food logistics services, we primarily serve agricultural
merchants and farmers in delivering fresh and seasonal food nationwide in the PRC. As of June
30, 2024, our fresh and seasonal food logistics services network covered more than 2,700
counties across the PRC. We have been actively contributing to the PRC government’s national
rural revitalization strategy through our efforts in the fresh and seasonal food logistics services.
In 2023, we helped farmers generate revenue exceeding RMB100 billion. In addition, to
enhance brand awareness for our fresh and seasonal food logistics services, as well as to
streamline the upward channels of agricultural products, we cooperate with local government
agencies and leading agricultural product brands to build regional brands of agricultural
products, such as Y antai cherry, Lingnan lychee, Y unnan flowers and Ganzi matsutake.
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Food Cold Chain Logistics Services
Through our food cold chain logistics services, we primarily serve businesses such as
ice-cream vendors, yogurt suppliers, poultry dealers, and frozen pastry merchants, which
deliveries require the maintenance of strict and precise temperature control. Our infrastructure
allows us to deliver dairy products, meats, ice cream, and fish under strict temperature control
requirements, typically frozen at -18°C. We are committed to ensuring the utmost quality and
freshness of products during transport to meet and exceed our customers’ expectations.
Pharmaceuticals Logistics Services
We provide tailored logistics services for pharmaceutical companies, laboratories, and
hospitals, and oversee the entire process from warehouse intake to delivery. Our state-of-the-
art system offers real-time visibility, detailed tracking, and temperature monitoring, all of
which set a new industry standard. We utilize an integrated IoT platform to maintain precise
control over diverse temperature zones from -80°C to 25°C, meeting the evolving needs of our
pharmaceutical customers and medical institutions. Notable achievements include our
designated vaccine transportation solution that adheres to national standards. Additionally, we
have launched door-to-door temperature-controlled services, a multi-temperature zone and
life-cycle supervision platform. Customers can track their orders through our Yilushunxin ( ᔼ
༩නː) platform for an enhanced experience.
Intra-city On-demand Delivery Services
Our intra-city on-demand delivery services address customers’ needs across various
industries and product categories. We provide intra-city delivery for merchants and consumers
with needs for point-to-point intra-city delivery. Intra-city on-demand delivery services differ
from intra-city express services in many aspects. The average delivery time for intra-city
on-demand delivery services is generally within 30 minutes delivered by one rider. The average
delivery time for intra-city express delivery service generally ranges from half day to one day.
In addition, express delivery involves multiple intermediate steps such as first-mile pick-up,
short-haul transport, sorting, and last-mile delivery. Multiple personnel are involved in the
delivery process of intra-city express services, including couriers, drivers and sorting
personnel as applicable, and the parcel is generally picked up and delivered by different
couriers. In terms of goods delivered, intra-city on-demand delivery services mainly focus on
point-to-point deliveries of items such as food, beverages and 3C electronics, while intra-city
express services mainly focus on parcel deliveries within the same city.
According to Frost & Sullivan, we were the largest third-party intra-city on-demand
delivery service provider in the PRC in terms of revenue in 2023. Our intra-city on-demand
delivery services are highly responsive to evolving customer needs and our great growth
potential is based on our coverage in both growth and mature scenarios. Main scenarios
covered by our intra-city on-demand delivery services include food and beverage, groceries,
3C electronics, and apparel.
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Intra-City Delivery Services for Merchants
As the go-to third-party on-demand delivery service provider, our intra-city on-demand
delivery services empower merchants with our open and inclusive on-demand delivery
network, as well as our professional and comprehensive solution offerings.
We provide a customer-centric comprehensive services matrix for merchants, including
local life services merchants. For key customers of our intra-city on-demand delivery services,
we offer one-on-one professional consultations and customized solutions. We enable merchants
to define, and we tailor, solutions for each of their stores, considering product categories, peak
hours, timing sensitivities and packaging needs. For small- to medium-sized merchants who are
typically more price sensitive, we primarily offer standardized value-for-money options. In
addition to delivery services, we share our technology capabilities and data insights with
merchants to improve their operational efficiency. As a result of our customer-centric
comprehensive services matrix and technology-empowered operational enhancement solutions,
the number of registered merchants for our intra-city on-demand delivery services continued
to increase, amounting to approximately 258,000, 330,000, 470,000 and 550,000 as of
December 31, 2021, 2022 and 2023 and June 30, 2024, respectively.
Intra-City Delivery Services to Consumers
We offer around-the-clock local on-demand fulfillment solutions to consumers including
“Deliver for Me, Fetch for Me, Purchase for Me and Solve for Me ” services. Riders collect
items, run errands and offer other lifestyle services, such as picking up and delivering laundry
and picking up clothes from local retail stores for consumers to try-on. Consumers can monitor
order fulfillment progress online in real time and contact us through multiple channels for
inquiries and complaints. By providing professional, reliable and around-the-clock on-demand
services covering varied everyday scenarios, we acquire substantial consumer mindshare and
enhance consumer loyalty, further boosting our brand recognition and leading to greater growth
potential. As a result, the number of active consumers for our intra-city on-demand delivery
services continued to increase, amounting to approximately 10.6 million, 15.6 million, 20.5
million and 21.9 million as of December 31, 2021, 2022 and 2023 and June 30, 2024,
respectively.
Supply Chain and International Services
Supply Chain Services
We provide high-quality integrated supply chain solutions to customers in various
industries covering the full spectrum of the supply chain, including procurement, production,
delivery, sales and after sales. We have developed tailored supply chain solutions for industries
including, but not limited to, B2B and B2C e-commerce, electric vehicle, new energy,
live-streaming e-commerce and new retail industries. Moreover, through technological
capabilities such as automation, IoT, and logistics mapping, we empower customers’
digitalization and intelligent transformation, automation, and technological upgrade of supply
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chains. Our supply chain solutions assist our customers in accurately predicting their demand
to guide their upfront procurement, production, storage and sales, thereby establishing a
comprehensive supply chain system with timely response, efficiency and flexibility.
Our supply chain services also present a series of significant advantages. Firstly, we cover
both B2B and B2C models. Our full-spectrum approach allows us to penetrate into all parts of
the supply chain, and extend our supply chain services from Asia to the world. Secondly, as
many Chinese manufacturing enterprises are expanding their global presence, they are more
willing to collaborate with supply chain service providers with a trusted brand and
international capabilities. We facilitate the relocation of global supply chain layouts for our
business customers, with a particular emphasis on Southeast Asia. Finally, our positioning as
an independent third-party logistics service provider enables us to serve all platforms,
underpinning our commitment to providing comprehensive, flexible, and efficient solutions.
We actively work with our customers to develop efficient and accurate smart supply chain
solutions which span the full spectrum of the industry value chain. For example, for our
e-commerce platform customers, our supply chain solutions assist them in forming an
omni-channel inventory system, enabling them to optimize their business strategies. Our smart
supply chain solutions cover the full cycle of their business needs, spanning across marketing
and selling, commodity management, order and delivery forecasting and replenishment, and
the establishment of smart stores.
Our supply chain services cater to customers’ diverse needs arising from different
scenarios mainly through:
– SF DSC ( නᔮᔮႴ), which focuses on customers in the automobile, consumer retail,
technology, industrial manufacturing, pharmaceutical and health, fashion boutiques,
and energy sectors. SF DSC aims to assist our domestic customers in expanding
their operations overseas and help global enterprises establish a local presence in
Asia.
– New Havi ( නอฯ), which focuses on customers in the catering and food industries.
– Kerry Logistics, which focuses on customers in overseas countries and regions. Our
acquisition of Kerry Logistics in September 2021 further enhanced our international
supply chain services capabilities.
We have established a comprehensive overseas warehouse and distribution network
globally, including in Asia, Europe and America, to enhance our localized services capabilities
for supply chain services. For more details of our overseas warehouse and distribution
networks globally, see “— Our Network and Infrastructure — Ground Network.”
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Service fee for our supply chain services is mainly determined based on a cost-plus
pricing basis, of which pricing also takes into account complexity of supply chain solutions
provided and specific requests of customers, as well as applicable costs such as warehousing
costs and transportation costs.
Case Study: Comprehensive Supply Chain Services for a Multinational Corporation in the
Food Industry
In 2022, we embarked on an ambitious project to revamp the supply chain infrastructure
for a multinational food-product corporation as part of its plan to establish its online flagship
store for infant formula products. We helped this customer implement a direct shipping model
in which its key customers in various regions receive orders directly from our sorting centers.
This facilitated a streamlined supply chain network for this customer, ensuring efficient
inventory sharing and reducing the need for inter-warehouse transportation.
To ensure efficient distribution, we comprehensively analyzed the distribution of infant
formula sales terminals for this multinational food-product corporation customer. We assisted
this customer in the implementation of its nationwide network of 14 warehouses, each
strategically located, taking into account various factors including this customer’s factory and
warehouse locations and cost optimization. This meticulously planned network enabled us to
fulfill 96% of deliveries for this customer within 48 hours in 2022, manifesting our
commitment to timely delivery.
With our focus on technology empowerment aiming to enhance this customer’s
operational efficiency, we developed a full-process digital visualization solution for this
customer’s entire supply chain, allowing for rapid iterations and adjustments to meet dynamic
project demands. This drastically improved operational efficiency and enhanced service
quality. Moreover, we offered a novel technological solution providing delivery check-in,
location tracking, and in-store photo uploading for record-keeping purposes.
Our comprehensive supply chain solutions coupled with technological empowerment
have significantly improved this customer’s operational efficiency, customer satisfaction, and
cost-effectiveness. Our commitment to comprehensive supply chain solutions and technology-
infused innovation continue to set us apart as a valued partner in the evolving supply chain
services market.
International Delivery Services
We are proud to offer comprehensive international delivery services with global reach,
meeting the needs of business customers primarily in manufacturing, import and export and
cross-border e-commerce sectors, and retail customers. Our international delivery services
primarily include international express delivery services, cross-border e-commerce delivery
services, and overseas local express delivery services. In addition, our international delivery
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services work hand-in-hand with our international freight forwarding services, creating a
synergistic operational model. We strategically sell unused cargo space to customers, ensuring
optimal utilization of our outbound and inbound aircraft.
Our international express delivery services specialize in time-definite international
express delivery, catering to urgent cross-border delivery needs. The network for our
international express delivery services is supported by our sophisticated smart technologies,
which allow us to plan and manage end-to-end delivery routes and optimize various delivery
processes. Consequently, we have significantly reduced delivery time for international express
delivery services, exemplifying our commitment to efficiency and customer satisfaction.
Understanding the unique logistics needs of cross-border e-commerce platforms, we have
tailored our cross-border e-commerce delivery services to provide a comprehensive, efficient
solution. Our international delivery services present a robust infrastructure capable of
supporting both door-to-door and port-to-port service models, thereby ensuring flexibility and
convenience for our e-commerce platform customers. Our cross-border e-commerce delivery
services hold several competitive advantages, which enable us to offer superior services. We
leverage our broad network, technologies, and deep understanding of global logistics to
navigate complexities and meet the time-sensitive demands associated with cross-border
transactions. This customer-centric approach allows us to streamline the entire delivery
process, making our services the indispensable asset for e-commerce businesses aiming for
global reach.
We have a robust presence in Southeast Asia, where we provide local express delivery
services in many countries therein. Our cross-border e-commerce delivery services operate a
door-to-door model, facilitated by frequent air flights and an extensive local delivery network.
Our air connections ensure swift transportation of goods to Southeast Asia, while our local
delivery capabilities enable reliable last-mile delivery.
As we continue to grow and innovate, we are constantly looking to expand the coverage
of our services. During the Track Record Period, we opened many new flight paths for our
international express services, covering new countries and regions including New Zealand,
Thailand, Vietnam, South Korea and Malaysia.
International Freight Forwarding Services
Our international freight forwarding services cover all major aspects of the cross-border
logistics process. Our international freight forwarding services adopt an asset-light approach,
whereby a majority of transportation needs are provided by external carriers, and customs
clearance is partly outsourced to external customs brokers. We integrate industry resources to
provide integrated cross-border logistics solutions, such as intermodal solutions, primarily to
cross-border business customers through a combination of air transportation, ground
transportation and sea freight to meet customers’ specific needs in terms of cost, transit time
and routing. By using a mix of transportation modes, we provide customers with more flexible
options that can result in lower costs for transporting cargo while meeting our customers’
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specific cost, transit time and routing requirements. We also utilize freight forwarding services
when we do not possess all logistics network and infrastructure to complete the delivery
ourselves. For instance, we opt for freight forwarding services in sea freight where we do not
own the means of transportation and act solely as a non-vessel operating common carrier.
As an important part of our international freight forwarding services, we provide customs
clearance services to facilitate the transportation process across borders. We have significant
expertise in handling customs and quarantine procedures and have been continuously
improving our customs clearance capabilities. We engage customs brokers based in various
locations to conduct customs brokerage and dedicate professionals in various locations who are
knowledgeable in trade regulation. This allows us to provide guidance and expert advice on
matters relating to customs. We maintain a list of approved customs brokers for numerous
locations worldwide. In addition, the Authorized Economic Operator certifications we have
obtained in the PRC help us streamline the customs clearance process and improve our
end-to-end services capabilities.
Our Targeted Industry Verticals
Building on our strong logistics services capabilities, we have developed industry-
tailored logistics services that integrate our service offerings to address the specific needs of
industry verticals. We strategically focus on industry verticals that demonstrate high growth
potential. These particular industry verticals demand more intricate logistics services and have
elevated standards for service requirements. Our alignment with these industry verticals
positions us to create tailored solutions, striving for excellence in meeting their complex needs.
Our key targeted industry verticals include:
 Communications and technology industries: By enhancing our comprehensive
services capabilities, we further solidify cooperation with key accounts in the
communications and technology industries to meet their growing needs. For
example, we have extended our service coverage to the front-end production
logistics supply chain scenario to draw a blueprint for our customers’ planning and
implementation of their supply chain.
 Apparel industry: To achieve innovative breakthroughs and sustainable growth in
the apparel industry, we have been continuously enriching our service offerings. For
example, to address a long-outstanding unmet need in the luxury goods industry to
extend the ultimate offline services experience to customers online, we create an
end-to-end standardized “Shangpai Services (ਕ)” for a luxury goods
customer through technology empowerment and terminal delivery capabilities. As a
result, we have achieved the two-way empowerment of the SF brand and this
customer’s premium brand image.
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 Consumer goods industry: We help customers in the consumer goods industry
reform their supply chain. Leveraging our warehousing network planning, sales
forecasting, and smart replenishment attributable to our smart supply chain, we
gradually help customers achieve the transition from online inventory management
to online and offline inventory management, establishing a supply chain integrating
to-B and to-C capabilities.
 E-commerce industry: In the e-commerce industry, we focus on ensuring a
high-quality customer experience and providing personalized services. We have
strengthened our parcel return services for e-commerce platforms, and increased our
wallet share with various e-commerce platforms. Empowered by our technologies,
we also integrate our resources, like warehousing, express delivery, freight delivery
and international all-cargo flights, to offer end-to-end solutions from local to
cross-border delivery, helping our e-commerce customers expand their international
business.
 Other high-growth industries: For customers in other high-growth industries, such as
electric vehicle, new energy, live-streaming e-commerce and new retail, we focus on
large-scale customers and actively identify customer needs through multi-
dimensional customer reviews and key account business planning.
PRICING MODEL
Generally, we maintain a catalog of standardized pricing for our service offerings, which
is mainly determined based on a cost-plus pricing basis. We adopt a differentiated pricing
model for solutions customized for our customers based on their requests. For pricing of
customized solutions, our pricing is also determined with reference to various factors.
 Express and freight delivery services : pricing for express and freight delivery is
determined with reference to factors such as time sensitivity, distance, weight and
volume of the delivery and transportation method.
 Intra-city on-demand delivery services : we use differentiated pricing models for our
intra-city delivery services to merchants and consumers. For merchants, we
generally charge a fixed fee for each order, as adjusted by variables such as distance,
weight of the goods and order placement time. For consumers, we charge service
fees taking into account factors such as region, distance, weight of the goods and
order placement time.
 Supply chain and international services : pricing for our supply chain services takes
into account complexity of supply chain solutions provided and specific requests of
customers, as well as applicable costs such as warehousing costs and transportation
costs. Pricing for international delivery services takes into account factors such as
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time sensitivity, distance, weight and volume of the delivery and transportation
method. Pricing for international freight forwarding services takes into account
factors such as prevailing market rates, distance, weight and volume of the delivery
and transportation method.
OUR NETWORK AND INFRASTRUCTURE
Deeply rooted in the logistics services industry for 31 years, we have established an
efficient, reliable and synergetic logistics infrastructure network with extensive geographical
coverage globally covering 202 countries and regions across six continents, integrating
aviation, ground and information networks into one unified services network. Our extensive
network and comprehensive infrastructure have laid the foundation for further enhancing our
delivery timeliness and integrated logistics services capabilities, which in turn improve
customer satisfaction and customer adherence. By continuously expanding our reach and
capabilities, we are able to meet the growing demands of the global logistics industry and stay
ahead of the global competition.
Aviation Network
We have a well-established and world-leading aviation network, featuring SF Airlines,
laying the foundation for our air transportation capabilities. Our comprehensive aviation
network enables us to provide efficient and reliable logistics services to customers around the
world. We are committed to further expanding our reach to new destinations, and our ongoing
investments in our aviation network will ensure that we continue to maintain the highest
standards of safety, reliability, and speed in our operations.
In 2009, we established SF Airlines, our own cargo airline, and became the first private
logistics service provider with a self-operated cargo airline in China, according to Frost &
Sullivan. According to the same source, in 2009, we became the first private logistics service
provider in China to operate all-cargo aircraft. According to Frost & Sullivan, SF Airlines was
the largest cargo airline in Asia in 2021, 2022 and 2023 in terms of daily flight frequency,
number of routes, total air cargo volume and number of all-cargo aircraft operated. As of June
30, 2024, we operated a total of 99 all-cargo aircraft, consisting of 87 self-operated aircraft and
12 chartered-in aircraft, and such aircraft were skillfully manned by our dedicated crew of 772
highly trained pilots. Notably, this makes us the leading logistics operator in Asia in terms of
pilot count, according to Frost & Sullivan, highlighting our capability to maintain high-
frequency operations and ensure timely delivery. In the first half of 2024, we achieved an
average of approximately 5,100 daily flights, including both our self-operated flights and
consolidated air freight services, marking the highest daily average air cargo flight frequency
in Asia during the same period, according to Frost & Sullivan. Such high-frequency air
connectivity supported our proven leadership in speed in the industry. We have built a highly
connected and extensive global aviation network that spans across six continents. Moreover,
we have established a dominant presence in Southeast Asia, demonstrated by three to four
average daily direct all-cargo flights from the PRC to the region in 2023, which was the highest
in Asia in 2023, according to Frost & Sullivan. In addition, according to the same source, we
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had the highest number of average daily direct all-cargo flights from the PRC to both North
America and Europe in 2023. As a result, our total air cargo volume continued to increase
during the Track Record Period. In 2023, our total air cargo volume exceeded 2,100,000 tons.
The Ezhou Cargo Hub
The Ezhou cargo hub is the first dedicated air cargo hub in Asia, and fourth in the world,
which is of strategic value and scarce position. The hub mainly comprises Ezhou Huahu
International Airport and our logistics complex. The Ezhou cargo hub is strategically located
at the significant economic and transportation center in central China, through which we can
reach areas that account for more than 90% of China’s GDP within two-hour flight radiance.
It is expected to become an international hub that connects the world, especially as a bridge
to connect Southeast Asia and Europe. The Ezhou cargo hub adopts the hub-and-spoke mode,
which will enable us to further expand our network coverage, bring even higher time-
definiteness, achieve higher operational efficiency, and lower our costs.
We officially commenced operation of our logistics complex in the Ezhou cargo hub in
September 2023. Our logistics complex has an aggregate GFA exceeding 700,000 sq.m. and is
equipped with automated machines to support its automated operations.
Ground Network
Our ground network works in harmony with our aviation network to deliver exceptional
logistics services to our customers. As of June 30, 2024, we operated over 86,000 line-haul and
short-haul trucks and over 100,000 first and last-mile delivery vehicles globally, the largest
fleet in Asia according to Frost & Sullivan, supporting the broadest road coverage in Asia. We
also have an extensive network of service outlets and sorting centers in Asia.
Service Outlets
We operate an extensive network of service outlets that are strategically located within
designated geographical coverage areas, and are responsible for parcel pickup and last-mile
delivery services within their designated areas. As of June 30, 2024, we had over 37,000
service outlets (including our directly operated service outlets and other service stations) in the
PRC. This enables us to provide fast and reliable logistics services to our customers, regardless
of their location.
Some of our larger-scale service outlets are also equipped with regional sorting and
dispatching capabilities. We constantly monitor the performance of our service outlets and
optimize our operations to ensure that we maintain high levels of customer satisfaction. Most
of our overseas service outlets are strategically located in key international markets, including
major cities in Southeast Asia, Europe, and North America. Our overseas service outlets enable
us to effectively offer integrated logistics services across different countries and regions, as
well as enhance our local operational capabilities.
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Sorting Centers
To ensure seamless integration between our aviation network and ground network, we
have established a series of sorting centers that act as crucial nodes in our integrated network.
Our sorting centers are responsible for collecting parcels from service outlets within their
respective geographical coverage area, sorting parcels by delivery destinations, and
dispatching. We adopt a centralized management strategy for our sorting centers, which covers
key aspects such as new site selection, existing site expansion, and deployment of equipment
and facilities used therein, with a focus on optimizing the layout and design of our sorting
centers to ensure smooth operations and reliable services. Our sorting centers are strategically
located to provide convenient access to highways and major transportation hubs, improving our
efficiency and reducing operational costs.
We allocate specific workloads for each level of our sorting centers according to their
geographical coverage and connectivity. As of June 30, 2024, we operated 380 sorting centers
for our express and freight delivery services globally. Attributable to our technological
capabilities, some of our sorting centers adopt the automated sorting system and achieve
digitalized and automated operations, through the deployment of technology-driven solutions.
Our application of automated sorting systems and equipment effectively increased our
operational efficiency in our sorting centers. In addition, we adopt a centralized waybill
tracking system in our sorting centers to monitor real-time parcel movement status, so as to
quickly identify the sorting centers in need of additional resources to enhance their operational
efficiency.
Transportation Resources
We possess an abundant array of ground transportation resources to ensure our integrated
logistics services capabilities. Our transportation resources mainly consist of road
transportation and rail transportation.
As of June 30, 2024, our transportation fleet consisted of over 86,000 line-haul and
short-haul trucks and over 100,000 first and last-mile delivery vehicles globally, the largest
ground fleet in Asia according to Frost & Sullivan. As of the same date, we utilized more than
170,000 routes in the PRC. We generally control the route planning and dispatching of our
fleet, utilizing the capacity of both our in-house transportation fleet and those of our third-party
transportation service providers. We engage third-party transportation service providers to
fulfill additional capacity needs. We have established procedures in selecting the third-party
transportation service providers we engage with, including reviewing their operating history,
fleet condition, and reliability, among other criteria. We are committed to promoting
sustainable transportation practices, with a focus on reducing our carbon footprint and using
renewable energy vehicles. Our transportation resources are optimized to reduce emissions,
and we continuously invest in new technologies and infrastructure to further enhance our
sustainability practices.
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We also provide secure, long-distance transportation of parcels through the railway
network. As of June 30, 2024, we utilized 154 standard railway routes and 1,547 high-speed
railway lines in the PRC. In addition, as of the same date, we operated along 268 railway routes
reaching 33 overseas countries and regions. In 2023, our rail transportation network handled
a total cargo volume exceeding 2.5 million tons.
Warehouse Infrastructure
Our warehouse infrastructure is a crucial component of our integrated logistics services
capabilities, providing a comprehensive range of storage, handling, and distribution solutions
to meet the diverse needs of our customers.
Our warehouse infrastructure covered almost all counties and districts across the PRC. As
of June 30, 2024, we operated more than 700 warehouses in the PRC with an aggregate area
exceeding 7.4 million sq.m. and more than 1,100 warehouses with an aggregate area exceeding
2.5 million sq.m. overseas.
Attributable to our proven technology capabilities, we manage our warehouses effectively
and efficiently. Many of our warehouses are equipped with advanced automated storage and
retrieval systems for parcels. The extensive application of automated technology, which
perform tasks 24/7 and with fewer errors, ensures our speedy delivery during peak seasons.
Other Transportation Resources and Infrastructure
Our ground network is further supported by logistics industrial parks and logistics centers
across the PRC and Southeast Asia. These logistics industrial parks provide a range of
value-added services, including warehousing, sorting, packaging, and distribution, to support
our end-to-end logistics solutions.
To further supplement our aviation and ground networks, we cooperate with shipping
companies to enhance our bulk-cargo logistics services capabilities through sea freight. As of
June 30, 2024, we had access to over 13,000 maritime routes. This extensive sea freight
network allows us to provide reliable bulk-cargo logistics services to our customers globally.
Information Network
Our integrated logistics services capabilities are underpinned by an information network
that connects our aviation and ground networks through a free flow of information to enable
effective resource allocation and for efficient operations. Our information network empowers
us to offer intelligent transportation solutions, smart terminal arrangements, and accurate
forecasting and scheduling, which in turn allows us to provide a precise and speedy logistics
services. Through our commitment to innovation and investment in technologies, our
information network has become a cornerstone of our competitive edge. We are constantly
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exploring new ways to leverage technology to improve our service quality, enhance our
efficiency, and deliver greater value to our customers. For more details of our technology, see
“— Technology and Research and Development.”
Leveraging our synergetic aviation, ground and information networks, our multi-network
integration lays the foundation for our complete end-to-end comprehensive logistics services
capabilities.
TECHNOLOGY AND RESEARCH AND DEVELOPMENT
Continuous commitment and investment in technology and research and development
grants us technological capabilities, evidenced by international awards such as “World Internet
of Things Ranking List” by World Internet of Things Convention, and “Fortune Magazine’s
Most Influential IoT Innovation List” by Fortune Magazine in 2022 and 2023. Our technology
not only streamlines and strengthens our internal management process, but also provides our
customers with superior services and enhances their operational efficiency through our
technological empowerment.
Research and Development
Our unwavering commitment to research and development is deeply ingrained in our
DNA to enhance our integrated logistics services capabilities. Our research and development
focuses on improving our digital and intelligent internal operations and providing smart
logistics services and supply chain solutions to customers. For example, in 2003, according to
Frost & Sullivan, we revolutionized the industry by adopting handheld terminals, which
boosted our operational efficiency and facilitated the collection and tracking of express
delivery routing information for the first time in China. In addition, we invest in emerging
technologies such as blockchain and cloud computing to improve our logistics services
capabilities. For example, we have developed a forecasting system for predicting demand and
optimizing supply chain operations.
As of June 30, 2024, we had a dedicated research and development with more than 4,400
staff. We have also established research centers focusing on different areas of logistics
innovation, such as the computer vision engineering research center for logistics, which is
dedicated to developing smart solutions for logistics. As of June 30, 2024, we had 4,199 patents
and patent applications, 9,741 trademarks and trademark applications, and 2,535 software
copyrights, demonstrating our commitment to innovation and our focus on enhancing our
logistics services and solutions.
Technology
We are dedicated to driving our operations with technology and innovations applied
primarily towards enhancing our operational efficiencies and expanding business scale.
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Enhancing Operational Efficiencies
We implement advanced technologies to accelerate our internal digitalization, building a
smart logistics supply chain that empowers each step of our operations.
Foundation for Digital and Intelligent Operations: Data
We place great emphasis on data as the foundation for our digital and intelligent
operations. We leverage on an interoperable data system which utilizes common and highly
reusable data. This system allows for the creation of a trustworthy data ecosystem across our
service offerings, while also launching data consumption tools such as data markets to achieve
analysis of different data. Through this approach, we are able to conduct data analysis, improve
the efficiency of data retrieval and usage, and reduce costs through refined operations
management.
We place the utmost importance on data security, diligently safeguarding data privacy,
integrity, and security in accordance with applicable laws.
SF Smart Brain – Optimization of a Digitalized and Intelligent Logistics Network
We have developed our SF smart brain, a technological platform that manages highly
complex operations across a seamless network. By digitalizing the entire logistics services and
supply chain services process, including parcel collection, distribution, transit, and
transportation, and leveraging big data predictions, visual monitoring, and early warning
systems, we have achieved intelligent planning and dispatch, dynamic resource allocation, and
streamlined management.
Our digitalized and intelligent finance management and control focuses the full-stack
integration of business and finance, adopting a comprehensive approach to cover pre-testing,
monitoring, and post-analysis. With such full-stack integration, we can unify our business and
finance systems, enabling us to better track and analyze financial data related to our logistics
operations and identify areas where we can reduce costs. For pre-testing, we develop advanced
production decision-making tools through big data analysis, algorithm modeling, and system
establishment, assisting financial personnel in formulating precise investment and production
strategies. For monitoring, we focus on the continuous tracking of expenses and have data
modeling and monitoring in place to identify opportunities for improvement. Through prompt
notifications, we can achieve closed-loop business process control and management. For
post-analysis, we focus on multi-dimensional data analysis after service delivery to identify
areas for improvement.
We place great emphasis on improving the meticulousness, accuracy, stability, and
timeliness of our operation forecasts. We continuously explore and apply forecasting methods
to further refine our operations across a wider range of scenarios. By doing so, we enhance our
overall efficiency and profitability. During peak seasons, such as the Double Eleven period, we
conduct timely and accurate updates to our forecasts to pre-allocate our network and
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infrastructure resources. This enables us to achieve and secure accurate resource allocation,
reduce delays, and ensure timely and efficient delivery. In addition, we use dynamic
forecasting by refreshing our forecasts every two hours. This allows us to provide early
warnings for unexpected changes in parcel volumes which could exceed the handling capacity
of our service outlets, and make timely adjustments ahead of time to ensure service quality
consistency.
Intelligent network planning is a key component of our digital and intelligent operations.
We have developed an advanced planning system that enables us to effectively manage and
optimize our resources while reducing costs. We continuously improve the efficiency and
capabilities of our network to achieve better resource sharing and scale effect. By identifying
areas with low coverage density and insufficient customer-facing service capabilities, we are
able to establish new service outlets in these areas, extending our reach and enhancing service
coverage. This allows us to better serve our customers and shorten delivery times. We have also
established more multi-purpose service outlets by integrating sorting centers, collecting and
dispatch services outlets and warehouses, and we have integrated the network of large and
small parcels to achieve greater synergies under our multi-network integration initiatives.
Moreover, we are able to identify inefficient service outlets and close them as appropriate. We
have also streamlined our line-haul routes to increase loading capacity and reduce transit times.
This includes investing in direct delivery routes and increasing the frequency of truck routes.
We also adopt financial calculations to guide the accurate execution of resource planning
during peak seasons and daily operations. For line haul routes and short-haul routes, we apply
digital intelligent tools for planning to achieve overall optimization. This includes analyzing
data on customer demand, traffic flow, and other factors to identify the most efficient routes
and schedules.
We have implemented a real-time scheduling system that allows us to allocate resources
and optimize our operations. Key features of our real-time scheduling system include (i) 24/7
monitoring of our transportation, distribution, and delivery processes, enabling us to respond
quickly to unexpected events such as extreme weather conditions or traffic congestion; (ii)
automatic adjustment of delivery routes based on traffic conditions and other real-time data,
helping to avoid delays and improve delivery times; and (iii) predictive analytics that allow us
to anticipate potential delays or bottlenecks in the delivery process, and take proactive
measures to mitigate them.
One of our key initiatives is the development of automated, visualized, and intelligent
distribution. We have implemented automation technology to increase our sorting capabilities.
In 2023, we successfully used automated sorting for over 86% of small parcels, compared with
an industry average automated sorting rate for small parcels of approximately 60% in the PRC
in 2023, according to Frost & Sullivan. Automated sorting has not only improved our sorting
efficiency, but has also reduced the likelihood of errors and damages during the sorting
process. In addition to automation, we also focus on implementing intelligent planning-driven
sorting plans with the ability to make dynamic adjustments. This allows us to optimize our
resource allocation based on real-time data, such as parcel volume and delivery routes, and
adjust our sorting plans accordingly. As a result, we can reduce costs and improve the overall
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efficiency of our transit operations. We also have video tracking and monitoring systems in
place, which enables us to monitor the movement of parcels throughout the transit process.
This provides real-time visibility into our operations and enables us to quickly identify any
issues or delays.
Our full-stack end-to-end management of transportation involves multiple modes of
transportation. For aviation transportation, we conduct research in flight scheduling, container
flow, and container loading model in order to optimize our air cargo loads. In addition, by
utilizing data analytics, we are able to identify spare capacity in flight routes and optimize our
air cargo loads, reducing transportation costs while maintaining high services levels. For
ground transportation, we also implement dynamic route optimization for our fleet of trucks,
which allows us to efficiently allocate resources based on real-time demand, reducing delivery
times and costs. For example, during peak seasons, we use data analytics to identify areas with
high parcel volumes and allocate more trucks to those regions to ensure timely delivery.
We utilize automated technologies to enhance our network operation efficiency, ensuring
safe deliveries while reducing costs, manage and automate end-to-end logistics processes, and
enables us to monitor in real-time the efficiency and utilization of our network.
Expanding Business Scale
We employ innovative technologies to support our external growth. In particular, we
effectively address complex scenarios and incubate new service offerings. Our high level of
digitalization enable us to address new and complex logistics needs across a multitude of
industry verticals and practical applications. We cater to wide-ranging scenarios across online
and offline and services through diverse business models from B2B, B2C, C2C to B2B2C. As
our capability to address complex scenarios increases, our ability to rapidly incubate new
service offerings also strengthens, as we apply these scenarios on a wider basis across the
industry through our highly efficient network.
We also empower customers’ supply chains through our technologies, such as automation,
and IoT, to empower our customers’ digitalization and intelligent transformation, automation,
and technological upgrades to their supply chain. For more details of our smart supply chain
services, see “— Our Service Offerings — Supply Chain and International Services — Supply
Chain Services.”
We also offer digitalized and intelligent customer services to customers, aiming to
provide standardized and efficient online services for the full life cycle of customer services
management. Furthermore, we have implemented a one-stop claim platform that captures claim
data and builds a self-service claim model and claims solution model to enable unmanned and
intelligent rapid claims processing. Our focus on digitalized and intelligent customer services
have allowed us to continuously improve our customer experience and maintain our reputation
as the go-to logistics service brand.
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Moreover, we have introduced numerous innovative smart tools and applications to
support our digitalized and intelligent logistics services, including:
 SF Cloud Chain (ᔮ౽ථᗡ). SF Cloud Chain is a cloud-based tool which integrates
digital technologies across the supply chain. It leverages our supply chain solutions
matrix, as well as intelligent algorithms, to offer SaaS-based services. It is designed
to be flexible and capable of serving customers in different industries, addressing
issues in multiple scenarios, and adapting to businesses of different scale. The goal
is to provide a one-stop solution for the supply chain, enabling enterprises to quickly
achieve the innovation of supply chain management modes. The services cluster is
scalable and can be rapidly deployed to meet the unique needs of each customer,
making it an ideal solution for those seeking to streamline their supply chain
operations and optimize efficiency.
 SF Trace . SF Trace is an innovative solution that utilizes self-developed trustworthy
blockchain technologies and privacy protection algorithms to ensure complete
traceability. This technology combines blockchain and IoT to create a sophisticated
tool that leverages our integrated logistics services capabilities. With SF Trace,
enterprises can achieve complete traceability at each stage of the supply chain.
 SF United Store . SF United Store is a comprehensive digital logistics solution aimed
at apparel and fast-moving retail industries. It offers a range of online and offline
order fulfillment services, including performance monitoring, after-sales services
processing, and smart logistics management across various order fulfillment
scenarios. As a SaaS-based platform, it helps customers complete comprehensive
digital and intelligent transformations, and refine business management and control
for improved cost reduction and efficiency.
 SF Network . SF Network is a solution that analyzes terminal demand and employs
multi-factor considerations, multi-scenario configuration, and multi-objective
calculations to analyze and solve supply chain network problems. It can provide
optimization solutions for warehouse infrastructure, routes, inventory, and product
selection at the planning level, with visualized analysis results. With SF Network,
enterprises can address issues such as high transportation costs, cross-warehouse
consignment, slow delivery times, and low customer satisfaction, and improve their
supply chain efficiency. The solution is highly adaptable and can be customized to
fit the specific needs of each customer, making it a valuable tool for businesses
seeking to optimize their supply chain management.
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OUR CUSTOMERS AND CUSTOMER SERVICES
Our Customer Services
We believe our customer-centered services deliver an ever-improving customer
experience and improve customer satisfaction, enhancing customer loyalty and stickiness. We
have been constantly expanding our service offerings to adjust to the continuously evolving
needs of our customers.
We adhere to our “user-centered, demand-oriented, and experience-based” services
philosophy to ensure efficient, punctual, and safe services. As a result, we have won numerous
market recognition, including recognition from official sources. As published by the State Post
Bureau, we ranked:
– 1st for 15 consecutive years (2009 to 2023) for overall customer satisfaction;
– 1st for nine consecutive years (2013 to 2021
*) in delivery timeliness (within 48
hours); and
– 1st for nine consecutive years (2013 to 2021 *) in delivery punctuality (within 72
hours).
Our directly operated model is the foundation of our high quality and reliable customer
services. It enables us to exert greater control and coordination of our network, leading to
higher stability and efficiency, which is essential to our ability to provide expedient and timely
deliveries. With our directly operated model, we are well-positioned to capture the increasing
demand for time-definite express delivery. We design and customize our services to satisfy our
customers’ exact needs based on their requirements and budgets.
Our highly trained and trustworthy couriers are the high-frequency outreach of our
logistics services, providing efficient and reliable delivery services to customers every day.
Therefore, our couriers act as the frontline for our customer services. We understand the
importance of real-time customer services, which is why we offer multiple channels of
communication, including a call center 95338, SF App (a mobile application), and WeChat
Mini-Program, all available 24/7 through a combination of customer services representatives
and self-service assistance. Our designated call-back team follows up with customers to ensure
their needs are met, and ensure any problems are resolved within two days. We also conduct
customer satisfaction surveys to gather feedback and improve our services continually. We take
pride in our customer-centric service philosophy, which has resulted in no material claims from
customers during the Track Record Period and up to the Latest Practicable Date.
Note:
* The State Post Bureau has not published new rankings for delivery timeliness and delivery punctuality since
2021.
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Our Customers
We have fostered an extensive customer base covering various industries around the
world. We adopt a tiered approach for both business customers and retail customers.
We serve a wide range of blue-chip business customers across various industries,
including many of the Top 500 Enterprises in China. In 2023, 476 of these enterprises were our
customers, and they spread across all industry verticals. We have the highest coverage for
blue-chip customers among integrated logistics service providers in Asia, which reflects our
commitment to providing high-quality services. We take a holistic and dynamic approach in
assessing customers, factoring in current and future logistics expenditures, industry verticals
located, industry positions, and opportunities for integrated logistics and supply chain
optimization, and categorize our business customers into three categories, namely:
– strategic key accounts (“ SKA”): mainly blue-chip and leading enterprises in
strategically important industries, such as e-commerce and circulation industry,
communication and high-tech industry, apparel industry and consumer goods
industry. In general, SKAs not only have high logistics expenditure, but also pose
significant strategic value to us in the form of expected long-term mutual growth;
– key accounts (“ KA”): large-scale business customers in other industries. KAs
demonstrate high growth and high value and are willing to collaborate with us across
various scenarios for mutual benefits; and
– small and medium-sized enterprises. These customers often show high-value
potential for future growth and partnerships with us.
We strive to provide tailored solutions for our customers, regardless of their size or
industry. Our ability to serve customers across various industries is a testament to the
versatility of our services and our commitment to meeting the evolving needs of our customers.
As a result, the number of customers with active credit accounts continued to increase during
the Track Record Period, amounting to approximately 1.6 million, 1.8 million, 2.0 million and
2.2 million as of December 31, 2021, 2022 and 2023 and June 30, 2024, respectively. This
growth not only showcases the broad appeal of our services, but also our ability to foster
enduring relationships with our customers. In 2023, approximately 64% of our business
customers used more than one of our services, highlighting our ability to provide
comprehensive, integrated solutions that address a variety of logistics needs.
For example, our relationship with a globally leading smart electronics manufacturer
showcases our strategy of growing with our customers and diversifying our service portfolio
to meet their dynamic needs. When we first partnered with this customer, we only provided
time-definite express services to it. We ensured prompt, secure, and reliable delivery of their
products across the PRC, playing a crucial role in this customer’s domestic distribution
strategy. Our ability to guarantee time-sensitive deliveries enhanced its customer satisfaction
and reinforced their reputation for service excellence. As this customer expanded its smart
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electronics portfolio, we stepped in to provide solutions beyond our time-definite express
services. Recognizing its unmet need for efficient large-scale electronics transportation, we
also provided freight delivery services to this customer. This enabled this customer to transport
bulk goods, such as refrigerators and televisions, cost-effectively and safely across different
regions. Then, the growth of this customer’s business necessitated advanced supply chain
solutions. We tailored our supply chain services to optimize its inventory management,
streamline warehouse operations, and improve the overall efficiency of its supply chain. Later,
as this customer ventured into international markets, our international express services became
a vital asset for its global expansion. We facilitated the seamless delivery of its smart
electronics, supporting its growth into new markets. Since our collaboration starting in 2014,
our success is evident in the remarkable growth of revenue from this customer, underscoring
the effectiveness and value of our diverse service portfolio.
We also serve a large base of retail customers. The number of our retail customers
continued to increase during the Track Record Period, amounting to approximately 491
million, 585 million, 663 million and 699 million as of December 31, 2021, 2022 and 2023 and
June 30, 2024, respectively. We have cultivated both online and offline channels for outreach
to retail customers to ensure the growth of our retail business.
SF App and WeChat Mini-Program provide easy online access to our retail customers,
allowing them to easily place orders and track their express deliveries. SF App offers expanded
service offerings to meet the diverse needs of retail customers. Expanded service offerings
through SF App include, among others, moving, mobile phone maintenance, mobile phone
replacement, and used clothing recycling. In 2022, we also launched a new WeCom channel on
WeChat to efficiently respond to retail customers’ questions and improve user engagement. Our
efforts to continuously improve our online services capabilities have led to an increase in the
number of total retail users in 2023.
We offer a wide range of diverse offline services to our retail customers, catering to their
various needs. Our extensive network coverage ensures retail customers have access to our
services wherever they are located. Our services tailored for retail customers include, among
others:
– luggage delivery services;
– holiday gift delivery services; and
– public welfare delivery, which allows retail customers to donate goods for charitable
purposes.
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We take pride in having a diverse customer base, which means we do not depend on a
single customer and thus have low concentration risk. Our top five customers for each
year/period during the Track Record Period accounted for 5.6%, 5.0%, 9.2% and 9.1% of our
total revenue for the respective period, respectively. For each year/period during the Track
Record Period, no single customer contributed more than 3% of our revenue. None of our
Directors, their associates or any shareholders of our Company, who or which to the knowledge
of our Directors owned more than 5% of our Company’s issued share capital, had any interest
in any of our five largest customers during the Track Record Period.
Key Terms of Agreements with Our Customers
We typically sign master service agreements with business customers which cover various
terms including duration, scope of services, and payment terms, among other things. The
following table sets forth a summary of key terms of the master service agreement with our
business customers:
Key Terms Description
Duration Typically one year, subject to annual automatic
renewal unless objected by either party
Service Type One or multiple service offerings of our integrated
logistics services, as the case may be
Payment Terms Typically monthly settlement
Termination May be terminated by either party upon one-month
notice under certain circumstances
Our retail customers primarily enjoy our express and freight delivery services and enter
into our standard express and freight delivery services agreement with us at order placement.
The duration for such agreement is on a per transaction basis. For damages and losses caused
by us, losses will be reimbursed for all insured deliveries, subject to the maximum declared
value of an insured delivery.
EMPLOYEES
Our people-centric culture promotes sustainable growth internally and customer bonding
externally. We are dedicated to creating a fair, just and open environment for our employees.
SF’s brand name stands for a platform for global shining talents to realize their dreams, seeking
excellence and achieve career pride.
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As of June 30, 2024, we had 158,674 full-time employees around the world. The
following table sets forth the number of our full-time employees categorized by region as of
June 30, 2024:
Region
Number of
Employees % of Total
China ..................................................... 1 19,341 75.2
Asia (excluding China) ..................................... 36,526 23.0
Other countries and regions ................................. 2,807 1.8
Total ..................................................... 158,674 100.0
The following table sets forth the numbers of our full-time employees categorized by
function as of June 30, 2024:
Function
Number of
Employees % of Total
Operational ............................................... 92,908 58.6
Professional (1) ............................................. 40,097 25.3
Management .............................................. 25,669 16.2
Total ..................................................... 158,674 100.0
Note:
(1) Primarily include employees responsible for technology, research and development, administration,
finance and marketing.
We are committed to providing an equal, diverse inclusive, supportive and rewarding
working environment for our employees. We have many labor unions and employee
representatives who help to maintain an open channel of communication with our employees.
In addition, we seek monthly feedback from employees and provide hotlines for any issues or
concerns they may have.
We believe in providing a clear career path for our employees, which includes various
promotion opportunities and training tailored to employees across functions. Our “Fengyun”
training program is an example of this commitment, as it provides career, educational and
emotional support for our employees.
We take recruitment seriously, with various channels such as on-campus recruitment,
internal referral, and online recruitment, as well as through recruitment agencies. We have
established the SF Recruitment Management Guidelines, which set out our recruitment
principles, standards, and procedures clearly. We believe that taking care of our employees is
essential, which is why we participate in various governmental statutory employee benefits
plans. We also provide support for our employees’ physical and mental health and take
measures to ensure their working safety.
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We have established market-competitive and fair remuneration, taking into account
working hours and the complexity of the work involved. We enter into standard labor
agreements with our employees, as well as confidentiality and non-compete agreements with
our key personnel. We maintain a good working relationship with our employees, and we have
not experienced any material labor disputes or claims during the Track Record Period and up
to the Latest Practicable Date.
Couriers
“There is always a SF courier in your contacts to make your life easier.”
Within our organization, we fondly refer to our couriers as “Yige (ࡩYijie ( ɓ֎)”
which attributes our respect to them, signifies their vital role in our operations and
acknowledges the pivotal contributions they make, underscoring their invaluable status within
our operations. We deeply respect and cherish their tireless efforts, recognizing the immense
value they bring us.
Our highly trained and trustworthy courier team is the backbone of our premium logistics
services. Their dedication to ensuring the safe and timely delivery underpins our business
operations and drives our success. Couriers are the main point of contact with our customers
and are integral to providing the customer-centric and personalized services that we are known
for. We encourage them to interact directly with customers more often to further enhance our
service quality and enhance customer stickiness. In the late 1990s, as a pioneering move in the
logistics services industry in the PRC, we initiated an innovative courier commission structure.
According to Frost & Sullivan, this marked the first time in the logistics services industry in
the PRC which had an incentive model that tied courier compensation to the number of parcels
delivered, thereby enhancing service efficiency and quality by aligning employee interests with
our organizational performance. This commission structure proved so effective and influential
that it was subsequently adopted across the entire logistics services industry in the PRC,
highlighting our leadership and ability to set industry standards. According to Frost & Sullivan,
the average compensation of our couriers in 2023 was the highest in each province in the PRC
among all logistics service providers.
We have also developed a comprehensive career path planning system with tailored
trainings to help our couriers develop their skills and grow their careers with us. As of June 30,
2024, we had the largest courier team among all logistics players in Asia, according to Frost
& Sullivan. The extensive coverage of our customers, reaching into the heart of communities,
enables us to deeply understand customer needs and dynamically innovate, helping us to
continually develop and launch new service offerings. We have been continuously optimizing
our courier management practices to ensure that their rights and interests are protected. We are
committed to providing attractive and above industry average compensation based on factors
including local compensation levels, working hours, and complexity of work.
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In our endeavor to create an environment that nurtures growth and fosters a strong sense
of belonging, we prioritize the career development and well-being of our couriers. We
genuinely believe that their empowerment through continuous learning and skill enhancement
ultimately fuels our collective success. We encourage couriers to participate in educational
programs, offering support such as reimbursement for certain expenses to aid their self-
development. All eligible couriers can opt for methods such as self-study examinations and
adult college entrance examinations for on-the-job concurrent academic advancement. In
addition, we offer opportunities for skill enhancement to the couriers to provide them with
more career choices in the future. We proudly support educational initiatives, providing
couriers with opportunities to expand their knowledge base and advance their careers. This
proactive investment in their personal and professional development has yielded inspiring
success stories. For instance, many couriers have risen through the ranks to join our
management team, and a few of them have joined our pilot team. These transformative journeys
underscore our belief that investing in our people is investing in our future. Our dedication to
fostering their growth encapsulates the essence of our culture, one that values and celebrates
every individual’s potential. As we look ahead, we remain committed to empowering couriers,
continuing to forge a path of shared success and innovation in the logistics services industry.
In line with the industry norm in the logistics services industry, we rely on a blend of
self-employed and outsourcing arrangements for our couriers. This flexible employment model
is instrumental in managing the seasonality inherent in our operations, allowing us to adapt to
peak and trough seasons efficiently. Given the diverse range of our logistics services, this
flexible arrangement aids in smoothing out courier demand fluctuations. We can strategically
allocate couriers across various scenarios, ensuring operational efficiency. Importantly, we
extend the same level of care and consideration to both our self-employed and outsourced
couriers. We believe that every courier plays an integral part in our service offering and is our
valuable asset. For details, see “— Procurement and Suppliers — Our Suppliers.”
SALES AND MARKETING
Our marketing strategy covers both retaining existing customers and attracting new
customers through our continuous efforts in improving customer experience and loyalty. We
believe our top-in-class service quality is our best sales and marketing tool, as we have
established a dominant mindshare as the go-to brand of time-definite express services in the
PRC. We have a premium brand that is widely recognized for top-notch services and is a
commonly used verb in Chinese, with “Let me SF this to you” having become synonymous
with “Let me express mail this to you.” In addition, many retailers actively advertise that they
exclusively use SF delivery as a way to convey a sense of their services and product quality
to their customers. Customers’ recognition of our distinctive services helps us market ourselves
through our brand name.
We continuously expand our services to attract more customers, and we also engage in
cross-selling by offering integrated logistics services and supply chain solutions to our
business customers. We also have local offices and overseas agents in overseas countries and
regions to maximize our potential for localized operations.
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PROCUREMENT AND SUPPLIERS
Procurement
We adhere to a transparent procurement policy, which emphasizes the principles of
fairness, justice, and openness, ensuring we engage in equitable transactions that are in the best
interests of all parties involved. We mainly adopt a centralized procurement approach, which
includes screening, tendering and bidding, and procuring various assets, consumables, and
services used in our business, including but not limited to, sorting equipment, vehicles,
waybills, barcode scanners and uniforms.
Our Suppliers
Due to seasonal fluctuation of logistics demand and the imbalanced supply and demand
across different regions, we leverage outsourced service providers as a constructive supplement
to our resources. When there is a shortage in couriers and vehicles, outsourced resources could
effectively and promptly satisfy our demand. According to Frost & Sullivan, outsourcing
arrangement is a common market practice in the logistics industry. During the Track Record
Period, some of our suppliers were service providers for the above-mentioned services to us.
We did not encounter any material labor disputes as a result of the above-mentioned services
during the Track Record Period.
Our top five suppliers for each year/period during the Track Record Period accounted for
13.6%, 16.8%, 22.0% and 21.5% of our total purchases for the respective period, respectively.
None of our Directors, their associates or any shareholders of our Company, who or which to
the knowledge of our Directors owned more than 5% of our Company’s issued share capital,
had any interest in any of our five largest suppliers during the Track Record Period.
We believe we have sufficient alternative suppliers for our business that can provide us
with substitutes of comparable quality and prices. During the Track Record Period and up to
the Latest Practicable Date, we did not experience any disruption to our business as a result of
any significant shortage or delay in supply of the related services and products.
ESG
We have built an ESG management system aligned with our vision of “foster shared
growth, celebrate better life.” To that end, we are committed to strengthening our sustainable
logistics supply chain services, taking care of our employees and couriers, engaging with
broader stakeholders, and promoting rural revitalization through contributing to the supply side
reform of rural industries, leveraging our unique strengths in the logistics industry.
As we continue to improve our sustainability performance, we are honored to be listed
among Fortune Magazine’s first-ever China’s ESG Influential List in 2022, marking the only
express logistics service provider on the list, and to be awarded the same prize subsequently
in 2023 and 2024 for three consecutive years.
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ESG Governance
We have established a four-layer sustainability management framework for the
formulation of sustainable development goals and strategies, and assessment of risk and
opportunities relating to ESG:
– At the top of the framework, the Board of Directors’ strategy committee is
responsible for the overall supervision and guidance for our ESG-related functions,
such as determining our strategic objectives, strategies and focuses relevant to
sustainability, supervising and guiding the implementation of ESG work, and
ensuring that ESG governance is integrated into our strategic development;
– The sustainability leadership group comprising of the chief strategy officer, the chief
financial officer, the chief operational officer and the chief human resource officer,
is responsible for setting sustainability goals in line with our sustainability strategies
and development, and reviewing the progress regularly and making periodic reports
to the strategy committee of the Board;
– The sustainable development working group is composed of representatives of the
office of the Board, various functional departments, business departments, and
business units related to sustainable development. The sustainable development
working group is responsible for the overall implementation and promotion of
ESG-related work, accelerating the implementation of our goals in each business
unit and functional departments, and gradually promoting the normalization of
sustainable development governance;
– Business units and functional departments are responsible for implementing specific
ESG-related work in accordance with the established management indicators and
mechanisms, and report to the sustainable development working group on a daily
basis.
We began publishing our ESG report since 2020, which replaced our corporate social
responsibility report published since 2016. We publish our ESG report in the first quarter of the
year on an annual basis. We intend to continue disclosing relevant information about our ESG
strategy, progress and performance in accordance with the requirements of the Stock Exchange
and good international industry practice.
We have established diverse and efficient communication channels with various
stakeholders for ESG, including government and regulatory agencies, investors, directors and
senior management, employees, community residents and charitable organizations, customers,
partners along our industry value chain, and media. These diverse and efficient communication
channels help to ensure that we address concerns and expectations from stakeholders on ESG
issues. We also place strong emphasis on corporate governance, risk management, anti-
corruption management, cybersecurity and information technology security management.
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These measures help to ensure that we are operating ethically and responsibly and minimizing
risks to our business operations and stakeholders. For details, see “— Risk Management and
Internal Control” and “— Data Privacy and Protection.”
Governance on Climate Change-Related Issues
We integrate climate change into our risk management system, proactively identifying
climate change-related risks and opportunities, and strive to improve our governance on
climate change-related issues. We aim to become an industry leader in sustainable
development.
Our risk management committee of the Board has a clear understanding of climate change
risks and guides our overall risk management. The risk committee under the risk management
committee of the Board is responsible for formulating our overall risk management strategy,
including those relating to climate change-related risks, and deciding on our major risk
prevention, control and coping strategies. Our risk control and compliance office regularly
analyses our climate change-related issues and risks, and reports to the risk management
committee of the Board on our overall risks, including climate change-related risks. For details,
see “— Risk Management and Internal Control.”
We have identified potential climate risks that are most applicable to our business through
surveys, internal discussion, expert consultation, situation analysis, policy analysis and
industry benchmarking. These potential climate risks include: (i) physical risks, such as
operational risk arising from extreme weather conditions of typhoon and flood that disrupt our
operation in land transportation, air transportation or industrial parks, freight quality risks
arising from potential adverse impacts on the packaging materials caused by unusual
temperature; (ii) transition risks, such as policy or regulatory risks that would enforce
emissions reduction to our business operations which may incur additional expenses to our
business operations, and technical risks, where alternative technologies that are necessary for
us to increase our research and development investments into the emerging technologies and
their applications.
Climate change also presents new opportunities for us. As global policies shift towards
green products and services such as green packaging and more efficient transportation, we
anticipate a steady increase in the market demand for environmentally friendly solutions.
Boasting a strong track record in green packaging research and development and design,
bolstered by our significant portfolio of related intellectual property rights, we are well
positioned to capture opportunities in this emerging market. As conditions mature, we plan to
expansively introduce our green packaging solutions, expedite the market acceptance of green
packaging, and further enhance our reputation. In addition, emerging needs for green supply
chain solutions provide another compelling opportunity for us. As global consciousness of
climate change intensifies, customers increasingly demand green and sustainable supply chain
solutions from logistics service providers. In 2023, we developed the industry’s first ever
consignment-level carbon calculation model, which precisely calculates the carbon emissions
produced by each parcel at various transportation stages using different modes of transport,
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based on operational data. This advancement enhances the transparency and accuracy of
carbon-related information within the supply chain service scenarios between brand merchants
and logistics service providers. As a pioneer for offering green supply chain solutions in the
market, we are fast-tracking the green transformation of last-mile delivery services and the
implementation of multi-modal transportation, continually increasing our green fleet
proportion and obtaining more green supply chain certifications to offer more green supply
chain solutions.
With the ambition to lead the industry on providing green logistics supply chain services
and contribute to global climate change mitigation, we have formulated our 2030 climate
change goal in 2021, published in our Carbon Target Whitepaper. Our goal is to enhance our
carbon emission efficiency (measured by Scope 1, 2 and 3 emissions divided by revenue) by
55% in 2030 as compared with our 2021 baseline and to reduce the carbon footprint of each
parcel by 70% in 2030 as compared with our 2021 baseline. We have officially joined Science
Based Target initiative in 2023, and committed to aligning interim emission reduction targets
aligned with international best practices in the following two years, demonstrating our
dedication and commitment to achieving greenhouse gas reduction targets and striving for
net-zero emissions across our value chain by 2050.
We have formulated an action plan to achieve the abovementioned goals, resting on four
pillars, namely: (i) changes in energy consumption sources, including the use of renewable
energy and expanding electric vehicles in our fleet; (ii) leveraging technology to empower our
operations and achieve low-carbon smart operations through technologies, for example,
applying intelligent transportation route planning technology to optimize transportation routes
and effectively reduce transportation energy consumption; (iii) promoting multi-modal
transportation, optimizing routes through sorting centers, adopting green, low-carbon
packaging, implementing intelligent enterprise management, and offering our customers an
‘All Green’ sustainable supply chain solution, we aim to enhance operational efficiency and
reduce carbon emissions; and (iv) carbon offsets, including nature-based carbon solutions, as
well as planting SF Carbon Neutral Forests to achieve carbon offsetting and contribute to
environmental conservation efforts.
To achieve our goal of packaging material reduction, we implement measures including
(a) increasing investment in research and development of packaging materials, (b)
continuously innovating in green packaging materials, and exploring the refined operation of
recyclable packaging, and (c) collaborating with the downstream and upstream stakeholders to
further enhance our packaging reduction and green packaging efforts. In particular, pursuant to
our “Fengjing Plan” (ྌ), we innovate in the research and development of eight
categories of materials used for packaging, such as plastic bags, adhesive tape, stickers and
seals, in order to achieve standardized and scenario-based packaging and packaging material
reduction. By using lightweight, compact and foldable design, we have reduced the
consumption of plastics. For example, we have been promoting the use of air column
packaging to replace foam and other cushioning materials. As air column packaging better fits
the shape of parcel contents, it can reduce the use of packaging materials, reduce cost and
enhance operation efficiency in packaging, while facilitating environmental protection.
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Further, we published the SF Packaging Operation Code (නᔮ̍ༀ዁Ъ஝ᇍ), which
details the instructions of packaging operation for different types of parcels and implements the
requirements of green packaging. We continue to improve our packaging operations through
the intelligent packaging service platform, which empowers couriers to use reasonable
packaging for different types of contents with guidance, reducing excessive packaging under
the premise of parcel safety. In addition, we have successively launched green packaging
products such as “ /H9266-Box” recyclable boxes and “Feng Bag” fully degradable plastic bags. In
2023, we successfully developed and deployed plastic bags that are both easy to be recycled
and regenerated, incorporating up to 30% post-consumer recycled resin while maintaining
superior performance that meets the national standards for courier bags. This innovation earned
us the “Excellent” rating in the design certification of plastic products easy to recycle and
regenerate. Additionally, in the same year, we launched the industry’s first pilot project for a
closed-loop recycling system for plastic packaging waste in Shanghai. We distributed over
880,000 plastic bags that are both easy to be recycled and regenerated for this project and
successfully recycled more than 1.1 tons of plastic bags.
We continue to monitor our progress through tracking quantitative indicators, such as
energy consumption and intensity, greenhouse gas emissions and intensity. Against our 2030
climate change goal, in 2023, we have enhanced our carbon emission efficiency by reducing
Scope 1, 2 and 3 emissions divided by revenue by 13.6% against 2022 and 15.3% against our
2021 baseline. In 2023, we have reduced carbon footprint of each parcel by 11.4% against 2022
and 15.1% against our 2021 baseline. The following table sets forth the key metrics of our ESG
performance for the years indicated:
Y ear Ended December 31,
2021 2022 2023
Greenhouse Gas emissions (Scope
1 ,2&3 ) (tCO 2e ) ............. 9,079,312.0 11,658,310.1 11,200,065.7
Greenhouse Gas emission
intensity (tCO 2e/million
revenue in RMB) .............. 48.6 43.5 43.3
Greenhouse Gas emissions per
parcel (g CO 2e/parcel) ......... 860.6 824.5 730.9
Outsourced electricity
consumption (kWh) ............ 1,759,180,709.8 2,004,911,716.8 2,268,797,533.7
Water consumption 1 (tonnes) ..... 821,882.0 2,592,633.0 2,643,676.4
Waste production 1,2 (kilograms). . . 27,131,393.4 74,538,330.9 175,327,609.7
Use of packaging items
(kilograms) ................... 455,273,842.3 454,296,236.0 482,785,830.4
Notes:
1. The increase in 2022 as compared to that in 2021 was mainly attributable to our consolidation of Kerry
Logistics for the full year of 2022. In addition, 18 new logistics industrial parks were put into operation in
2022, leading to increase in water consumption and waste production in 2022 as compared to that in 2021.
2. In 2021 and 2022, we adopted a more flexible working arrangement for employees, while fully resuming
on-site working arrangement in 2023 with more employees working on-site, resulting in the increase in waste
production in 2023.
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The following table sets forth our key carbon reduction initiatives and measures to
achieve carbon neutrality:
Carbon Reduction Initiatives Measures for Carbon Reduction
Green Transportation ............. Green Ground Transportation:
 Optimize the structure of transportation
capacity and increase the proportion of
renewable energy applied;
 Expand adoption of renewable energy
vehicles;
 Increase vehicle loading capacity, replace
high-axle count vehicles with low-axle count;
and
 Replace high fuel consumption vehicles with
low fuel consumption vehicles and renewable
energy vehicles
Green Aviation:
 Increase the proportion of large cargo aircraft
with low energy consumption and high
efficiency to optimize composition of our air
fleet; and
 Adopt jet fuel-saving technologies such as
straight route selection
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Carbon Reduction Initiatives Measures for Carbon Reduction
Green Logistics Industrial Parks . . .  Build green logistics industrial parks and
enhance transit efficiency to save energy;
 Reduce environmental impacts through
utilizing rooftop photovoltaic equipment and
optimizing warehouse space layouts; and
 Formulate our device and equipment
management guidelines and environmental
management guidelines in our logistics
industrial parks to reduce water and electricity
consumption through equipment management,
safety management, decoration management,
environmental management and other modules
Green Packaging .................  Promote packaging material reduction,
packaging reuse, recyclability, and
degradability; and
 Implement green packaging standard
Green Office Management ........  Internal policies in place governing office
management and water and electricity
management to effectively integrate the
sustainable development concept into our day-
to-day operations, encourage employees to
abide by the low-carbon practice and routines,
forge a green and environmental-friendly
working environment under concerted efforts;
and
 Encourage employees to hold online meetings
to avoid unnecessary travels foster shared
office space and regular teleworking, and
endeavor to achieve reductions in energy
consumption and emissions
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Carbon Reduction Initiatives Measures for Carbon Reduction
Application of Green Technology . .  Reduce transportation energy consumption
through intelligent transportation route
planning; and
 Promote electronic proof of delivery, photo
uploading, and paperless reimbursement
Other Initiatives .................  Initiate the “SF Carbon-Neutral Forest”, as
well as other environmentally friendly projects
and campaigns, to achieve carbon offset with
the aim of cultivating public awareness of
environmental protection
 Implement the uniform points redemption
mechanism to motivate the courier to reduce
the frequency of uniform replacement and
reduce material consumption
Other Environmental Matters
We have established a sound environmental management system and an energy
management system, and will continue to facilitate the completion of official environmental
and energy management system certifications for our services. We have obtained the ISO14001
Environmental Management System certification needed for all of our business operations and
SF Airlines has obtained the ISO50001 Energy Management System certification.
We have developed our digitalized and intelligent carbon management platform, namely,
Fenghe ( ᔮձ) sustainability platform. This platform integrates multiple functions such as
measuring carbon emission, setting carbon emission targets, and achieving carbon
management, and covers key processes of our service offerings, including packaging,
transportation, transit and delivery. Fenghe sustainability platform uses over 120 indicators in
more than 60 typically used cases in our business operations and is further enhanced by the
industry leading emission calculation model at parcel level. During the Track Record Period
and up to the Latest Practicable Date, we had not been subject to any material fines or other
material penalties due to non-compliance with environmental laws or regulations.
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Employee Health and Safety
We place great importance on employee health and safety matters. Under the supervision
of our safety production committee chaired by our chief operating officer, we have formalized
a safety management structure covering our headquarters down to the local operational units.
The safety production committee meets quarterly to discuss ongoing safety matters. We have
obtained the ISO45001 occupational health and safety management system certification needed
for all of our business operations.
We set clear targets and track performance on key health and safety metrics, and provide
health and safety training to our employees. To achieve continuous safety management, we
provide safety trainings to our employees. In 2023, 100% of our employees received safety
training. During the Track Record Period, we did not encounter any material health and safety
incidents, and we aim to continue our health and safety track record. During the Track Record
Period and up to the Latest Practicable Date, we had not been subject to any material fines or
other material penalties due to non-compliance with health and safety laws or regulations.
Employee Engagement
We are committed to providing an equal, diverse, supportive and rewarding working
environment for our employees and investing in their career development for a sustainable
talent base to support our future growth. Our established training system is designed
specifically for junior employees, intermediate administrative roles, specialized and technical
teams, and senior management. Our training programs for junior employees focus on the basics
of our operations and services. We ensure that they are well-versed with our corporate culture,
and understand their roles and responsibilities. We also provide them with necessary skills
training to ensure safety and efficiency in their operations. For our intermediate administrative
employees, we provide programs that focus on enhancing their managerial skills and
understanding of business operations. We cover topics such as advanced communication,
leadership, and project management. For our specialized and technical teams, our training
programs focuses on fostering a culture of continuous learning. These teams receive advanced
training tailored to their specific roles. We also keep them abreast of the latest industry trends
and technological advancements. For our senior management, we have designed executive
development programs to enhance their strategic thinking, decision-making, and leadership
skills. These programs help them understand global market trends and advanced management
practices, enabling them to make strategic decisions that foster our growth and
competitiveness. In 2023, we offered training with an aggregate time exceeding 5.6 million
hours.
To attract and retain talents for our long-term development, we have formulated various
measures to affirm and motivate talents, including stock option incentives, on-the-job
interviews and regular counselling, and awarding employees for outstanding achievements, etc.
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We believe that an inclusive corporate culture is essential to our success. We value the
opinions of our employees and encourage them to participate in the decision-making process.
We believe such approach fosters a sense of ownership among our employees and creates a
more engaged and productive workforce.
In addition, we have established a comprehensive and diverse welfare and care system in
respect of our social responsibility in respect of employee wellness, catering to employees’
unique situations in both their work and personal life, including pivotal moments and major
family events. Through a multi-faceted, grassroots care and support mechanism, we understand
our employees’ genuine needs, assisting them in addressing real-life challenges. This approach
not only enhances employees’ sense of belonging and well-being but also strengthens their
cohesion and identification with us.
We have always been committed to safeguarding the rights and interests of the employees.
During business acquisition and disposals, we offer the following protection schemes, which
cover franchisees as well:
 We offer various internal job openings. For those willing to continue their service
with us, we conduct thorough assessments on those employees. Those who meet the
criteria are given priority to be transferred to relevant departments within our Group,
while simultaneously ensuring they continue in roles of a similar nature.
 For employees with preference to join disposed or acquired entities, we proactively
communicate with relevant parties to provide relevant job positions to support
smooth transitions and increase the likelihood of the employees’ future success.
 For employees with preference to leave, we negotiate amicably and, in accordance
with applicable laws and regulations, offer appropriate financial compensation to
ensure the best interests of the employees are protected.
Diversity and Inclusion
We place a high value on equality and diversity in the workplace. We are committed to
providing equal opportunities to all employees, regardless of gender, ethnicity, or any other
personal characteristic. We believe that a diverse workforce is essential to our success and that
it enhances our ability to innovate and adapt to changing market conditions. To this end, we
have implemented a number of programs and initiatives that promote equality and diversity. We
actively recruit and promote female employees, veterans, and people with disabilities, and we
provide occupational assistance to veterans and people with disabilities to ensure that they can
fully participate in our operations. As of December 31, 2023, among our Directors, Supervisors
and senior management 27.4% were females. As of December 31, 2023, we had over 600
employees with disabilities. We also provide training and development opportunities to all
employees, regardless of their background or experience, to help them reach their full
potential.
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Corporate Governance
We have implemented comprehensive policies and mechanisms to uphold integrity and
ethical standards, including anti-bribery policies, whistleblowing mechanisms, and anti-
harassment policies, ensuring a transparent and secure working environment.
 Anti-bribery policies: we integrate anti-corruption management into our daily
operations through anti-corruption risk assessments, audits, and educational
initiatives. These efforts continuously strengthen our capacity to control business
ethics related to anti-corruption and anti-bribery. To prevent and combat corruption,
safeguarding the legal interests of our Group, employees, clients, and partners, and
promoting sustainable and healthy corporate development, we actively encourage all
employees to sign the anti-corruption commitment.
 Whistleblowing Mechanisms: we provide several 24/7 reporting channels for both
internal and external stakeholders, including email, hotline numbers, and the
company website, encouraging employees and suppliers to report any misconduct.
Upon receiving a report, the whistleblower is responded to within one business day,
and a decision to whether to initiate an investigation is made within one week. If an
investigation is warranted, it is completed along with a response to the findings
within one month. Following the verification of any misconduct we impose penalties
based on the severity of the infraction, and legal authorities handle cases suspected
of violating the law.
 Anti-harassment policies: we adhere to a zero-tolerance policy toward forced labor,
child labor, discrimination, and harassment in all our global business operations as
part of our commitment to protecting rights of employees. We prohibit harassment,
including disrespectful behavior and verbal provocation toward colleagues, as well
as verbal harassment of colleagues, clients, or external partners. Moreover, our
Rewards and Disciplinary Regulations clearly stipulate the disciplinary measures
for harassment-related offenses.
Sustainable Procurement
We adopt high standards to ensure a sustainable procurement environment. We required
all of our suppliers to sign our supplier agreement with specific requirements on social
responsibility, integrity and honesty in 2023. We established and implemented Management
Regulations on Procurement and Suppliers (), which we believe
helps us ascertain our suppliers’ compliance with relevant laws and regulations. In particular,
we (i) conduct thorough supplier evaluation before cooperating with them, (ii) establish an
evaluation mechanism for suppliers and conduct regular evaluations on them, (iii) establish a
robust management system, through regular training, audits and inspections, to further
strengthen supplier management, and (iv) disciplinarily manage suppliers, taking measures
such as warn, fine, suspend or terminate cooperation for suppliers confronted non-compliance
with relevant laws and regulations or breach of contract.
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We have formulated the regulations on green procurement management to address
environmental protection requirements applicable to the life cycle management of suppliers
and, to some extent, it gives priority to the procurement and use of raw materials, products and
services that take environmental protection features into consideration, such as energy saving,
water saving and material saving. Moreover, we are committed to working with suppliers in the
areas of environment, society and labor rights. We pay close attention to our suppliers on
whether they have obtained ISO certifications relating to environmental, occupational health
and safety and information security-related systems. We have also integrated environmental
and health responsibility as important indicators into the regular evaluation and assessment of
suppliers, so as to encourage suppliers to strengthen their own environmental, safety and other
social responsibility performance.
Other Social Responsibility Matters
We are of the full conviction that enterprises are closely bound up with society, and
accordingly, social responsibility is part of enterprise development. Adhering to the goal of
driving the supply chain reform of rural industries, we continue to consolidate and expand the
achievements of common prosperity by capitalizing on our logistics services capabilities. For
example, we have been actively contributing to the national rural revitalization strategy
through our efforts in fresh food logistics services. For details, see “— Our Service Offerings
— Cold Chain and Pharmaceuticals Logistics Services — Fresh and Seasonal Food Logistics
Services.”
In addition, we proactively fulfill our corporate social responsibilities by supporting
public services, carrying out voluntary public service activities in various fields such as
medical care, education, charity and environmental protection, contributing to the national
rural revitalization strategy, empowering agricultural development in rural areas with digital
technology, securing stable production and supply. Moreover, leveraging our supply chain and
technological competitive advantages, we endeavor to ensure the rapid delivery of household
goods, and strive to contribute to the building of a harmonious society.
SEASONALITY
In 2021, 2022 and 2023 and the first half of 2024, our parcel volumes (including domestic
express logistics parcel volume and international shipment volume) amounted to 10.6 billion,
11.1 billion, 12.0 billion and 6.2 billion, respectively. Our parcel volumes during the Track
Record Period were subject to seasonal fluctuation, primarily due to the impact of major
shopping events and Chinese New Y ear. We typically experience a peak in parcel volumes
during shopping events such as China’s online shopping events on November 11 and June 18,
and experience comparatively lower parcel volumes during Chinese New Y ear. We believe that
this pattern is likely to continue in the foreseeable future.
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INTELLECTUAL PROPERTY
We put a premium on intellectual property protection, and strictly comply with applicable
laws and regulations relating to intellectual property in the PRC and overseas. To further
improve our management and protection of intellectual property, in 2023, we established
several new guidelines, including guidelines for the assessment of overseas patent applications,
and updated our guidelines for managing patent (software copyright) outcomes and trademark
(trade name). As of June 30, 2024, we had 4,199 patents and patent applications, 9,741
trademarks and trademark applications, and 2,535 software copyrights. Our patents primarily
relate to smart devices applied in the logistics industry and software algorithms.
During the Track Record Period and up to the Latest Practicable Date, we had not been
subject to any material intellectual property infringement claims by third parties or suffered
any material intellectual property infringement by third parties.
COMPETITION
Global logistics represents an enormous market opportunity, with an estimated US$11.1
trillion spent on logistics in 2023, according to Frost & Sullivan. Across the globe there are
only around ten integrated logistics service providers that are able to provide a full spectrum
of logistics services. Asia is currently the largest, fastest growing, and one of the most
fragmented regions in the global logistics market, presenting the most attractive growth
prospects.
Across various services and geographies, we primarily compete with three major types of
logistics service providers, namely, other global integrated logistics service providers, other
China-based integrated logistics service providers, and non-integrated logistics service
providers. We were Asia’s largest and the world’s fourth largest integrated logistics service
provider in terms of revenue in 2023, according to Frost & Sullivan. According to the same
source, we were also the fastest growing integrated logistics service provider among the global
top four integrated logistics service providers, in terms of revenue growth from 2021 to 2023.
In addition, we are a market leader in our home market in nearly all of the logistics
sub-segments in which we operate, an achievement that is unmatched by any global or Asian
player in its respective market. We believe that our core strengths provide us with competitive
advantages over existing and potential competitors. For more details of our industry, see
“Industry Overview” in this prospectus.
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Furthermore, as our business continues to grow rapidly, we face significant competition
for highly skilled personnel. The success of our growth strategy depends in part on our ability
to retain existing personnel and attract additional highly skilled personnel.
PROPERTIES
Our corporate headquarter is located in Shenzhen. As of June 30, 2024, our owned
buildings and land were primarily used as offices, warehouses and logistics industrial parks.
Our logistics complex in the Ezhou cargo hub has an aggregate GFA exceeding 700,000 sq.m.
As of the same date, our leased properties were primarily used as offices, warehouses, service
outlets and logistics industrial parks, with relevant lease agreements to expire between 2024 to
2035. We believe that our existing facilities are generally adequate to meet our current needs,
but we expect to expand our logistics network by leasing, building, or purchasing additional
properties in the PRC and overseas over the next several years.
As of the Latest Practicable Date, we were in the process of obtaining land use right
certificates for two parcels of land, where no construction activities had been carried out yet
on these two parcels of land. In addition, as of the Latest Practicable Date, we had seven
properties with each having a GFA exceeding 1,000 sq.m. that had not obtained ownership
certificates in the PRC. For more details of the risks and uncertainties associated with such
defects, see “Risk Factors — Risks Relating to Our Business and Industry — Title defects with
respect to or encumbrances on certain land and buildings may cause interruptions to our
business operations.” We are of the view that, and our PRC Legal Adviser concurs, the
aforementioned defects would not materially or adversely affect our business, results of
operations and financial condition.
As of June 30, 2024, none of the properties owned by us had a carrying amount of 15%
or more of our consolidated total assets. According to Chapter 5 of the Listing Rules and
section 6(2) of the Companies Ordinance (Exemption of Companies and Prospectuses from
Compliance with Provisions) Notice, this prospectus is exempt from the requirements of
section 342(1)(b) of the Companies (Winding up and Miscellaneous Provisions) Ordinance to
include all interests in land or buildings in a valuation report as described under paragraph
34(2) of the Third Schedule to the Companies (Winding up and Miscellaneous Provisions)
Ordinance.
INSURANCE
We consider our insurance coverage adequate and in accordance with the commercial
practices in the industries in which we operate. We provide social security insurance, including
pension insurance, work injury insurance, maternity insurance, medical insurance and
unemployment insurance for our employees. Additionally, we provide group accident insurance
for the couriers we employed and liability insurance for third-party service providers. We do
not maintain business interruption insurance or key-man insurance. Our management evaluate
the adequacy of our insurance coverage from time to time and purchase additional insurance
policies as needed.
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LICENSES AND PERMITS
During the Track Record Period and up to the Latest Practicable Date, we have obtained
all licenses and permits that are material for our business operations in the PRC and overseas,
and such licenses and permits are valid and subsisting.
The following table sets forth a list of our material licenses and permits:
Holder Name of License/Permit Expiration Date
Shenzhen S.F. Shuntai
Logistics Co., Ltd.* ( ଉέන
ʮ̡)........
Courier service operation permit
(Ҟ჈ุਕ຾ᐄ஢̙ᗇ)
March 24, 2026
SF Airlines Company
Limited* (ʮ
̡).........................
Public air transport air
operator’s certificate
(༶፩Άุ຾ᐄ஢̙ᗇ)
Long-term
SF Airlines Company
Limited .....................
CAAC operational qualification
certificate (҅༶Б
ᗇ)
Long-term
SF Airlines Company
Limited .....................
Maintenance license
(஢̙ᗇ)
December 6, 2025
SF Airlines Company
Limited .....................
Certification of dangerous
goods air transportation
(༶፩஢̙)
July 13, 2026
Shenzhen Shunlu Logistics
Co., Ltd.* (Ϟ
ʮ̡) .....................
Road transportation operation
permit ( ༸༩༶፩຾ᐄ஢̙ᗇ)
March 2, 2026
S.F. Express Co., Ltd.*
(ʮ̡) .........
Courier service operation permit August 12, 2029
LEGAL PROCEEDINGS AND COMPLIANCE
Legal Proceedings
We may from time to time be subject to various legal claims and proceedings arising in
the ordinary course of our business. During the Track Record Period and up to the Latest
Practicable Date, we had not been and were not a party to any material legal, arbitral or
administrative proceedings, and we were not aware of any pending or threatened legal, arbitral
or administrative proceedings against us or our Directors that could, individually or in the
aggregate, have a material adverse effect on our business, financial condition and results of
operations.
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Compliance
We keep abreast of regulatory requirements applicable to our operations. We always
endeavor to comply with all applicable laws and regulations, and regularly conduct internal
inspections to identify potential risks and promptly address these risks once spotted. As advised
by our PRC Legal Adviser, during the Track Record Period and up to the Latest Practicable
Date, we had not been and were not involved in any material non-compliance incidents that
have led to fines, enforcement actions or other penalties that could, individually or in the
aggregate, have a material adverse effect on our business, financial condition and results of
operations.
IMPACT OF THE COVID-19 PANDEMIC
During the Track Record Period, the COVID-19 pandemic affected the global economy.
Our directly operated model makes us highly resilient to macroeconomic headwinds as our
directly operated model allows us to have a more stable network than our competitors,
primarily the Tongda Operators that use a franchising model. Our directly operated model
inherently offers a heightened degree of control over operational standards, quality of service,
and real-time adaptability, ensuring uniformity in service processes and service quality across
all locations. As a result of our visionary and strategic layout in 2013 to tap into cold chain and
pharmaceuticals logistics, our pharmaceuticals logistics services captured the market demand
arising from the COVID-19 pandemic for the transportation of vaccines and IVD. For details,
see “— Our Service Offerings — Cold Chain and Pharmaceuticals Logistics Services —
Pharmaceuticals Logistics Services.” As our cold chain and pharmaceuticals logistics services
continue to address the significant unmet demand for cold chain logistics in the PRC from
customers mainly from the food, agricultural products and pharmaceuticals sectors with our
nationwide coverage and comprehensive service offerings, we believe our results of operations
for cold chain and pharmaceuticals logistics services would not be adversely affected in the
post-pandemic era. Moreover, we were able to quickly ramp up our network to fulfil demands
in other cities if the demand in one city falters. In addition, during the pandemic, many
consumers preferred to shop online to minimize exposure to public premises, which created
demand for our express and freight delivery services. We have not experienced material
shortages in courier capacity or material disruptions to our business due to the COVID-19
pandemic. In addition, during the Track Record Period and up to the Latest Practicable Date,
we did not experience any material interruption or suspension of services and businesses.
DATA PRIV ACY AND PROTECTION
We are dedicated to securing information about our customers’ delivery and protecting
our customers’ and employees’ privacy, and we strive to provide a safe, secure environment for
our customers. We are committed to compliance with applicable personal information
protection laws, regulations and industry standards. We have formulated comprehensive
response measures over information system risks.
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First, we continue to optimize information security and privacy information management.
As of June 30, 2024, we had obtained the ISO27001 information security management system
certification and the ISO27701 privacy information management system certification, and
these certifications remained valid as of the date of this prospectus. We have implemented
information security control and protection according to established policies and strategies for
information security, and continuously update the procedures and systems. We continuously
reinforce risk awareness among our employees, conduct staff training on operational standards,
develop internal information circulation guidelines, implement rules over sensitive
information, and construct monitoring and pre-warning and response systems for abnormal
behaviors to reduce information system security risks.
Second, according to regulatory requirements, we carry out multi-level security
assessment of information systems. We conduct continuous and regular security intervention in
the business system construction phase to build on anti-security attack capabilities. We have
established security capability baseline (measurable cyberspace security capability evaluation),
safe operation capability (situational awareness of privacy data risks, MTTD and MTTR
indicators based on offensive and defensive confrontations), DevOps security capability
(DevSecOps process and tool chain), and security ecology capability (external perception and
linked stop loss) to enhance the capability of our IT infrastructures to discover and defend
against cybersecurity attacks. Moreover, we have established a comprehensive system for
prevention and control of information risks, and formulated standardized manuals, such as the
recovery guidelines for IT systems under emergencies and incidents (ITݴࣩ
೻) and the management procedures for IT system major incidents (ɽԫ΁၍ଣ
೻), to implement closed-loop risk prevention and control through pre-warning, in-process
control and post-recording.
In addition, aiming to minimize privacy compliance risks, reduce potential business loss
and effectively protect our customers and employees, we assess privacy compliance of our
apps, implement multiple special programs concerning publicity and provide training on
compliance with the Data Security Law () and Personal Information
Protection Law (). Moreover, we continuously conduct security
intervention during information processing and business system building activities, in
accordance with compliance requirements, such as the Privacy Data Security Compliance
Management Standards (ᒯӷᅰኽτΌΥ஝၍ଣᅺ๟) and the Data Asset Classification,
Grading Identification and Safety Management System (ᅰኽ༟ପʱᗳʱॴʿτΌ၍ଣՓ
), so as to enhance our ability to withstand security attacks and to prevent the
non-compliance issues. We participated in the formulation of three information security
standards of the National Information Security Standardization Technical Committee, namely,
the Information Security Technology – Basic Requirements for Collecting Personal Information
in Mobile Internet Applications (τΌҦஔ – ୅ਗʝᑌၣᏐ͜೻ҏ(App)ਿ
Ӌ), the Information Security Technology – Data Security Requirements for Express
Logistics Services (Ӌ), and the Information
Security Technology – Implementation Guidelines for Notices and Consent in Personal
Information Processing (). In
addition, we regularly hold and participate in security summits and security salons to facilitate
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information sharing with industry leaders and industry elites. We have established alliance and
cooperation with information security teams from leading Internet and e-commerce enterprises
for the creation of a safe and orderly cyberspace.
As of the Latest Practicable Date, we had not received any notice that requires us to go
through a cybersecurity review, had not received any notice that our data processing activity
affected or may affect national security, and had not been subject to any material cybersecurity-
related penalties or sanctions imposed by the CAC or any other relevant PRC regulatory
authorities. As such, our PRC Data Compliance Legal Adviser is of the view that we are in
compliance with the applicable PRC data privacy and protection laws and regulations in all
material aspects, on the following grounds: (i) the type and nature of personal information and
operational data we collect are mainly related to our principle business, and we do not engage
in the processing of core data or important data as defined under the Data Security Law; (ii)
during the Track Record Period and as of the Latest Practicable Date, we had not been subject
to any material fine or administrative penalty, mandatory rectifications, or other sanctions by
any competent authorities in relation to any infringement of PRC data privacy and protection
laws and regulations, and there had been no material leakage of data or personal information
or violation of PRC data privacy and protection related laws and regulations by us which would
have a material adverse impact on our business operations; (iii) we have implemented effective
data privacy and protection policies, procedures, and measures to ensure secured storage, usage
and transmission of data, and to prevent unauthorized access or use of data; and (iv) we
continuously pay close attention to the legislative and regulatory development in data privacy
and protection, maintain ongoing communications with relevant regulatory authorities and
implement all necessary measures in a timely manner to ensure compliance with the relevant
laws and regulations. As of the Latest Practicable Date, in accordance with the Measures for
the Security Assessment of Cross-border Data Transfer, we have submitted relevant materials
for cross-border data transfer security assessment, which have been approved by the CAC.
Attributable to our efforts in ensuring compliance with applicable data protection and
cybersecurity related regulations, during the Track Record Period and up to the Latest
Practicable Date, we had not been subject to any material penalties in relation to applicable
data protection and cybersecurity requirements in jurisdictions where we operated.
RISK MANAGEMENT AND INTERNAL CONTROL
We have established a robust internal control and risk management system to strengthen
and standardize our internal management and to promote our sustainable development.
Our risk management is led by the Risk Management Committee of the Board. The risk
committee under the Risk Management Committee of the Board is responsible for the overall
management and control of our risks at the group level. Its main responsibilities include
deliberation and decision-making of our risk management system and policies, preventing of
major risk and responding to major crises. The risk committee reports to the Risk Management
Committee of the Board quarterly and annually. Our chief financial officer is responsible for
implementing our risk management strategy, guiding and evaluating the establishment and
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improvement of risk management and control mechanisms in functional departments, business
department, business units and different regions. Our risk control compliance department
coordinates risk control and compliance work among our different departments. The leaders of
each functional department, business department, business unit, and region are responsible for
related risk control in their work area. They are also responsible for identifying and evaluating
daily risks as well as the implementation of risk management and control measures.
We have built a risk management system and an internal control and compliance platform
and established our compliance management system. Through continuous improvement of the
systems, we have achieved management of the whole process from risk identification,
assessment, monitoring, early warning and response, to loop closing, effectively improving the
efficiency of risk identification and management:
 Risk management system: mainly responsible for risk management monitoring and
control of our priority areas (such as market risk, credit risk, liquidity risk,
operational risk and climate change-related risk) and managing risk events;
 Internal control and compliance platform: mainly responsible for our regular
internal control inspection of our business processes and supervising rectification;
and
 Compliance management system: mainly responsible for the intelligent capture and
analysis of external regulation requirements and public opinion information, and
monitoring the quality of internal implementation of external regulations.
In addition, in terms of operational risk management, we strictly adhere to applicable
laws and regulations regarding security and safety in each jurisdiction we operate in. We
proactively manage operational risks by regularly organizing safety training sessions and
conducting multiple emergency response drills to ensure all personnel are well-prepared for
potential safety incidents. We also employ technologies to identify risks such as driver fatigue
during operations and non-compliant practices by operational staff at sorting centers, further
reinforcing our commitment to safety. We maintain lists of unsafe, prohibited, restricted or
regulated items based on jurisdiction, local industry regulations and shipping method. We have
established standardized parcel security screening protocols throughout the whole delivery
process. We require that pickup personnel visually inspect all items sent by customers before
acceptance. We also employ measures such as X-ray screening of parcels to detect potential
hazardous or prohibited items. We may refuse to accept suspicious items upon inspection.
Penalties are imposed on the responsible personnel for picking up or delivering prohibited
items when relevant personnel fail to adhere to our required protocols and measures. Our safety
screening system will continue to evolve to meet changing needs. During the Track Record
Period and up to the Latest Practicable Date, we had not been subject to any material
administrative or criminal penalties as a result of transporting or delivering unsafe, prohibited
or restricted items.
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In terms of ESG risk management, we fully integrate environmental, social and
governance risks in the identifying and sorting of risk information databases. The ESG risk
management structure is consistent with our overall risk management organizational structure,
and the Risk Management Committee of the Board functions as the highest risk management
body, which is responsible for the identification, prevention and control of ESG risks. In 2023,
we held 24 risk control meetings, generating an aggregate of 52 resolutions, of which four
meetings and five resolutions involved ESG-related issues.
In addition, we follow the climate-related risk classification of the Taskforce on
Climate-related Financial Disclosures. Through surveys, team discussion, expert consultation,
situation analysis, policy analysis and industry benchmarking, we identify the potential risks
and formulate the corresponding measures.
We broadly categorize climate-related risks into two groups, physical risk and transition
risk. Physical risk generally includes acute risk associated with extreme weather and chronic
risk in connection with the rise in temperature. Transition risk generally refers to risks in
connection with policy and regulatory change, technical updates and changes in market trends.
To tackle the acute risk associated with extreme weather, we have formulated the
following countermeasures. For land transportation, we implement pre-warning for vehicle use
in abnormal weather; for renewable-energy powered vehicles, we develop courses for winter
use, charging, power supplementation, maintenance and other matters that vehicle management
personnel need to learn. For air transportation, we formulate standard operating manuals for
safeguarding operations under severe weather conditions such as thunderstorms, turbulence
and low-level wind shear, and set up posts of meteorological engineers to monitor and give
early warnings about the weather situation and the development of important weather systems,
thus fully guaranteeing the stable operation of daily flights. For logistics industrial parks, we
have developed a weather warning function in our property system, including dispatching
emergency work orders, sending weather warnings and emergency preparedness messages to
enhance the response speed of industrial parks to extreme weather and lessen the negative
impact caused by extreme weather.
In terms of the chronic risk caused by rise in temperature, we have been focused on the
packing material safety risk and employee health risk. For packing material safety risks, based
on the national urban temperature data and routing data collection, we have developed an
environmental temperature model, dividing the country into different temperature zones, using
different temperature control materials and composite temperature control technologies, and
output the recommended settings for temperature control packaging schemes and refrigerant
configuration requirements based on temperature zones and flow directions to cope with the
potential adverse effects of low temperature in winter, high temperature in summer and
north-south temperature differences during transportation. For employee health risk, we have
issued yellow or higher heat warnings in areas with a high incidence of heat-related illnesses
and reduce the number of people working outdoors during hot periods by combining
areas/shifts according to the volume of work. Also, employees are provided with heat
protection materials, such as portable fans, hats and other heatstroke preventive equipment. We
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are also equipped with cooling equipment (fans, air conditioners, etc.) at the premises, have
installed heat insulation on the roof for solar insulation so that the premises will not be
overheated by solar radiation, and have installed sun-proof curtains for windows that are
exposed to direct sunlight.
In terms of policy and regulatory risks in connection with climate change, we have been
focused on green energy policy risk, offshore compliance risk and green packaging policy risk.
For green energy policy risk, we keep a close watch on green energy-related policy trends,
respond to regulatory requirements in a timely manner and promote internal management
optimization. We have built up national and local policy research teams to make an in-depth
analysis on the relevant policies that have been introduced and to make forward-looking
arrangements based on changes in the internal and external environment. Furthermore, with the
rapid expansion of our air fleet size and the increase in demand for intercontinental routes, we
are highly concerned about the international carbon emission-related laws and regulatory
requirements. To better comply with these offshore regulatory requirements, we have formed
a designated working group to research on carbon emissions for E.U. routes and prepared an
E.U. carbon emissions work plan to cope with changes in E.U. policies, familiarize ourselves
with the E.U. carbon market operation mechanism in advance and ensure the normal operation
of our E.U. routes. In terms of the green packaging policy risk, we are committed to exploring
and innovating the sustainability of green packaging, promoting packaging reduction, reuse,
recyclability and degradability, and have successively launched green packaging products such
as “ /H9266-Box” recyclable boxes and “Feng Bag” fully-degradable plastic bags.
We also keep a close watch on the risks associated with changes in environmental trends.
For example, in connection with low carbon transition risk, we gain keen insights into industry
development trends by taking the external environment and policy changes into consideration,
pay close attention to our own environmental impact, and utilize data and other technologies
to adjust the energy consumption structure, upgrades transport and business models, and
promote green low-carbon transformation. We have also formulated the Carbon Target White
Paper. In response to the green consumption trend, we provide more environmentally friendly
and sustainable logistics services to consumers by adopting sustainable logistics solutions,
reducing resource waste, promoting green logistics services, optimizing logistics networks and
facilities, and supporting environmental organizations and initiatives.
We have implemented the following internal control and risk management measures
against potential sanctions risks, ensuring adherence to international standards and regulations:
 Entity screening and control : we have procured and implemented a sanctions
“blacklist” database and system, which covers applicable sanctions lists
administrated by the United Nations Security Council, the United States government
(such as the Office of Foreign Assets Control of the U.S. Department of the Treasury
and U.S. Department of Commerce), the European Union and other relevant
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sanctions authorities, and perform dynamic screenings on entities or individuals we
collaborate with, which include but not limited to customers, suppliers and other
business partners. Any high-risk entities or individuals identified are prohibited
from our engagement.
 Country/Region control : we evaluate the risk of geographical areas involved in our
business (including but not limited to the origin, destination, transit locations, the
location of transaction parties, their residences, and nationalities). Based on such
assessment, we determine if an exported item falls under the jurisdiction of export
controls and sanctions for specific regions. We strictly prohibit any business and
transactions in any country or territory that is, or whose government is, the subject
of comprehensive sanctions.
 Item control : for logistics services, our customers are required to ensure that the
consigned items are either not controlled or have the necessary permits, or meet
permit exceptions. If discrepancies arise, such as mismatched packaging and
declared item content or vague responses from the sender about item content
(flagged as “red flag warnings”), we will immediately suspend the service. We will
then request further information from the sender until the matter is cleared, while
maintaining records of such incidents. For international express deliveries, we
require our customers to file an automated export system declaration truthfully if
their consignments are controlled by relevant governmental bodies.
Attributable to our robust management strategy against potential sanction risks and
efforts in ensuring adherence to international standards and regulations, we are not aware of
any material violations in relation to export control and economic sanctions during the Track
Record Period and up to the Latest Practicable Date. Therefore, our Directors, to the best of
their knowledge, are of the view that we are not subject to any material sanctions risk.
Furthermore, we constantly carry out diversified risk training and empowerment courses,
raising employees’ risk awareness through online learning and examination. In 2023, we
opened 29 courses in our headquarters, involving training on business risk control, verification
training on recent major risks, training on new functions of business risk control system and
other contents. During the same year, we also opened ten risk control masterclasses in different
regions, covering topics such as the establishment of regional business risk control system. We
delivered an aggregate of over 86,400 hours of risk-specific training courses in 2023, and 100%
of our new employees had risk-specific training.
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A W ARDS AND RECOGNITION
We are recognized for the quality and market reception of our services. The following
table sets forth major awards and recognitions we received during the Track Record Period and
up to the Latest Practicable Date:
Y ear Name of Award or Recognition Awarding Entity
2024 ........... 415th of Fortune Global 500 Fortune Magazine
2024 .......... China ESG 50 List Fobest China
2022 – 2024 .... China ESG Influential Listing Fortune Magazine
2017 – 2024 .... Fortune Magazine’s Most Admired
Chinese Companies
Fortune Magazine
2022 – 2023 .... 2022 Most Influential IoT Innovation
List
Fortune Magazine
2009 – 2023 .... 1 s t i n overall customer satisfaction the State Post Bureau
2013 – 2021* . . . 1st in delivery timeliness
(within 48 hours)
the State Post Bureau
2013 – 2021* . . . 1st in delivery punctuality
(within 72 hours)
the State Post Bureau
2019 – 2023 .... 1 s t o f Chinese Top 50 Private
Logistics Enterprises
China Federation of
Logistics and Purchasing
Note:
* The State Post Bureau has not published new rankings for delivery timeliness and delivery punctuality
since 2021.
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OVERVIEW
Our Board of Directors consists of seven Directors, comprising four executive Directors
and three independent non-executive Directors. Our Directors are elected for a term of three
years and are subject to re-election, provided that the cumulative term of an independent
non-executive Director shall not exceed six years pursuant to the relevant PRC laws and
regulations.
The PRC Company Law requires a joint stock company to establish a board of supervisors
that is primarily responsible for supervising the performance of the board and senior
management and the financial operations, internal control and risk management. Our Board of
Supervisors consists of four Supervisors including two employee representative Supervisors.
Our Supervisors are elected for a term of three years and may be subject to re-election.
Our senior management is responsible for the daily operations of our Company.
Directors, Supervisors and Senior Management
The following table sets forth certain information regarding our Directors:
Name Age Position(s)
Date of
Joining
our Group
Date of
Appointment
as a Director
Role and
Responsibility
Executive Directors
Mr. W ANG Wei
(ˮ㠛΋͛)
54 Chairman of our Board,
executive Director
and general manager
March 26,
1993
December 28,
2016
Responsible for overall
strategic planning
and business
direction and
management of our
Company
Mr. HO Chit
(Оઠ΋͛)
49 Executive Director,
deputy general
manager and head of
finance
September 29,
2021
November 15,
2021
Responsible for
finance, investments
and capital market
activities of our
Company
Ms. W ANG Xin
(ɾɻ)
51 Executive Director January 1,
2022
December 20,
2022
Responsible for
strategic planning
and implementation
of our Company
Mr. XU Bensong
(΋͛)
39 Executive Director December 3,
2007
October 29,
2024
Responsible for sales
and marketing
operation of our
Company
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Name Age Position(s)
Date of
Joining
our Group
Date of
Appointment
as a Director
Role and
Responsibility
Independent non-executive Directors
Mr. CHAN Charles
Sheung Wai
(ਃ΋͛)
70 Independent non-
executive Director
December 20,
2022
December 20,
2022
Responsible for
supervising and
providing
independent advice
on the operation and
management of our
Company
Mr. LEE Carmelo Ka Sze
(ҽྗɻ΋͛)
64 Independent non-
executive Director
December 20,
2022
December 20,
2022
Responsible for
supervising and
providing
independent advice
on the operation and
management of our
Company
Dr. DING Yi
(ɕू௹ɻ)
60 Independent non-
executive Director
December 20,
2022
December 20,
2022
Responsible for
supervising and
providing
independent advice
on the operation and
management of our
Company
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The following table sets forth certain information about our Supervisors:
Name Age Position(s)
Date of
Joining
our Group
Date of
Appointment
as a
Supervisor
Role and
Responsibility
Ms. W ANG Jia
(ˮԳɾɻ)
45 Supervisor November 17,
2014
April 9, 2021 Responsible for
supervising the
performance of
duties by our
Directors and our
senior management
Mr. LIU Jilu
(ᄎ኏ኁ΋͛)
77 Supervisor December 28,
2016
December 28,
2016
Responsible for
supervising the
performance of
duties by our
Directors and our
senior management
Ms. LI Juhua
(ɾɻ)
45 Employee
representative
Supervisor
May 15, 2012 December 27,
2019
Responsible for
supervising the
performance of
duties by our
Directors and our
senior management
Mr. ZHANG Shun ( ੵන
΋͛)
33 Employee
representative
Supervisor
August 3,
2015
December 20,
2022
Responsible for
supervising the
performance of
duties by our
Directors and our
senior management
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The following table sets out certain information regarding the senior management of our
Company.
Name Age Position(s)
Date of
Joining our
Group
Date of
Appointment
as a senior
management
Role and
Responsibility
Mr. W ANG Wei
(ˮ㠛΋͛)
54 Chairman of our Board,
executive Director
and general manager
March 26,
1993
December 28,
2016
Responsible for overall
strategic planning
and business
direction and
management of our
Company
Mr. HO Chit
(Оઠ΋͛)
49 Executive Director,
deputy general
manager and head of
finance
September 29,
2021
September 29,
2021
Responsible for
finance, investments
and capital market
activities of our
Company
Mr. LI Sheng
(ҽ௷΋͛)
58 Deputy general
manager
April 19, 2005 December 28,
2016
Responsible for overall
management of SF
Airlines
Mr. ZHOU Haiqiang
(մऎ੶΋͛)
47 Deputy general
manager
April 23, 2001 December 20,
2022
Responsible for
human resources
management and
cold chain business
of our Group
Mr. GENG Y ankun ( অᝣ
տ΋͛)
38 Deputy general
manager
September 11,
2017
December 20,
2022
Responsible for
technology R&D
related business of
our Company
Ms. GAN Ling
(ɾɻ)
50 Deputy general
manager, Board
secretary and the
joint company
secretary
December 24,
2015
December 28,
2016
Responsible for Board
related matters,
corporate finance
and corporate
governance
None of our Directors, Supervisors and members of senior management is related to other
Directors, Supervisors and members of senior management.
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BOARD OF DIRECTORS
Executive Directors
Mr. W ANG Wei ( ˮ㠛΋͛), aged 54, is our founder, and was appointed as a Director,
chairman of our Board and general manager of our Company in December 2016 and was
re-designated as our executive Director on August 1, 2023. He is primarily responsible for
overall strategic planning and business direction and management of our Company. Mr. Wang
is a Controlling Shareholder of our Company.
Mr. Wang has more than 32 years of experience in the logistics industry. Mr. Wang was
the president of our Group from March 1993 to March 2015 and has been the chief executive
officer of our Group since March 2015. Mr. Wang has been the chairman of the board of
directors and a non-executive director of Kerry Logistics (0636.HK) since October 2021. Mr.
Wang was the non-executive director and the chairman of the board of directors of SF REIT
Asset Management Limited (the manager of SF REIT (2191.HK)) from February 2021 to
August 2023.
Mr. Wang was a director of the following companies which were incorporated in Hong
Kong prior to their dissolution:
Name of the company
Principal
business activity
prior to
dissolution
Date of
dissolution
Means of
dissolution
Reason for
dissolution
SF Secretarial Limited
(ʮ̡)
Secretarial
services
June 30, 2011 Deregistration Cessation of
business
Middle C Limited Education &
training
December 30,
2011
Deregistration Cessation of
business
Fortune Gate (Asia) Limited
(ʕਿ(ݲ)ʮ̡)
Dormant September 1,
2006
Deregistration Cessation of
business
To the best of our Directors’ knowledge, information and belief after making reasonable
enquiries, there was no judgment or findings of fraud, dishonesty, any misconduct or wrongful
act on the part of Mr. Wang involved in the dissolution of the above companies, and as at the
Latest Practicable Date, there was no outstanding liability or ongoing claim or litigation
against Mr. Wang in his capacity as a director prior to their respective dissolution. Mr. Wang
confirmed that these companies were solvent at the time of their respective dissolution.
Mr. HO Chit ( Оઠ΋͛), aged 49, was appointed as a Director in November 2021, and
a deputy general manager and the head of finance of our Company in September 2021. He was
re-designated as our executive Director on August 1, 2023. He is primarily responsible for the
finance, investments and capital market activities of our Company.
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Mr. Ho has more than 27 years of experience in auditing, financial control, corporate
finance and business management. He has been the chief financial officer of our Group since
September 2021. Mr. Ho is currently a director of various subsidiaries of our Company. Mr. Ho
is also a non-executive director since April 2022 and the chairman of the board of directors
since August 2023 of SF REIT Asset Management Limited (the manager of SF REIT
(2191.HK)). He has also been a non-executive director of Kerry Logistics (0636.HK) from
October 2021 to August 2024, and an executive director and chief strategy officer since
September 2024.
Prior to joining our Group, Mr. Ho was a senior manager in the auditing and advisory
division of Arthur Andersen (הand PricewaterhouseCoopers ( ౷ശ͑༸ึ
הfrom 1997 to 2005. Mr. Ho has held positions in various companies listed on the
NASDAQ and SZSE, including (i) the senior financial director of Sohu.com Limited
(SOHU.US) from January 2005 to December 2008, (ii) the chief financial officer of
Changyou.com Limited (which was listed on the NASDAQ with stock code CYOU.US until its
privatization in 2020) from March 2009 to March 2014, and (iii) an independent director of
China Great Wall Securities Co., Ltd.* (ʮ̡) (002939.SZSE) from August
2015 to May 2022. He was the chief executive officer of Fox Financial Technology Group
Limited from March 2014 to May 2021, and he has also been a director of this company since
April 2014.
Mr. Ho obtained his bachelor’s degree in Business Administration in Accounting and
Finance from the University of Hong Kong (ಥɽኪ) in December 1997, and an Executive
Master of Business Administration degree from Tsinghua University ( ૶ശɽኪ) in July 2013.
Mr. Ho is a member of both the Hong Kong Institute of Certified Public Accountants and the
American Institute of Certified Public Accountants.
Mr. Ho was a director of the following company which was incorporated in Hong Kong
prior to its dissolution:
Name of the company
Principal
business activity
prior to
dissolution
Date of
dissolution
Means of
dissolution
Reason for
dissolution
Vision Jupiter Investments
Company Limited ( қ̀༺ҳ
ʮ̡)
Investment
Holding
February 6,
2009
Striking-off Cessation of
business
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To the best of our Directors’ knowledge, information and belief after making reasonable
enquiries, there was no judgment or findings of fraud, dishonesty, any misconduct or wrongful
act on the part of Mr. Ho involved in the dissolution of the above company, and as at the Latest
Practicable Date, there was no outstanding liability or ongoing claim or litigation against Mr.
Ho in his capacity as a director prior to its dissolution. Mr. Ho confirmed that the company was
solvent at the time of its dissolution.
Ms. W ANG Xin (ɾɻ), aged 51, was appointed as a Director in December 2022 and
was re-designated as our executive Director on August 1, 2023. She is primarily responsible for
strategic planning and implementation of our Company.
Ms. Wang has various experiences in management. She has been the assistant chief
executive officer and chief human resources officer of our Group from January 2022 to January
2024, and has been the assistant chief executive officer and chief strategy officer of our Group
since January 2024. Ms. Wang has also been a director, and the chairman of the board of KEX
Thailand (KEX.BK) since May 2024. Prior to joining our Group, Ms. Wang was a director of
A.T. Kearney (Shanghai) Management Consulting Co., Ltd. (ဧ̵(ɪऎ)ʮ̡)
from September 2008 to January 2011, and a senior partner of Roland Berger Enterprise
Management Beijing Branch (Άุ၍ଣ(ɪऎ)ʮ̡̏ԯʱʮ̡) from April 2011
to December 2021.
Ms. Wang obtained a master’s degree in Business Administration from China Europe
International Business School (CEIBS) ( ʕᆄ਷ყʈਠኪ৫) in April 2001.
Mr. XU Bensong (΋͛), aged 39, was appointed as an executive Director on
October 29, 2024. He is primarily responsible for sales and marketing operation of our
Company.
Mr. Xu has approximately 17 years of experience in the logistics industry. Mr. Xu joined
our Group in 2007 and successively held various positions, including the operation manager of
Y unnan district, senior operation manager of Sichuan district, general manager of Chongqing
district, head of Group sales center, general manager of Beijing district, and assistant chief
operating officer. He has been chief marketing officer of our Company since May 2024.
Mr. Xu obtained a master’s degree in Business Administration from Sichuan University
in China in December 2017, and an executive master of Business Administration (EMBA)
degree from Peking University in China in July 2024.
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Independent Non-executive Directors
Mr. CHAN Charles Sheung Wai (ਃ΋͛), aged 70, was appointed as an
independent non-executive Director in December 2022. He is primarily responsible for
supervising and providing independent advice on the operation and management of our
Company.
Mr. Chan has more than 46 years of experience in corporate finance, financial regulations
and risk management. Mr. Chan started his career as an auditor at the Canadian office of Arthur
Andersen in September 1977 and became a partner in August 1988. He subsequently joined the
China & Hong Kong office of Arthur Andersen as an audit partner in 1994. From July 2002 to
June 2012, Mr. Chan was a partner of the China & Hong Kong office of
PricewaterhouseCoopers. He later joined Protiviti (ʮ̡) and was a senior
managing director from July 2012 to December 2017.
Mr. Chan is an independent non-executive director of various companies listed on the
Stock Exchange. He has been serving as an independent non-executive director for Maoyan
Entertainment (ᆀ) (1896.HK) since January 2019, Hansoh Pharmaceutical Group
Company Limited (ʮ̡) (3692.HK) since May 2019, and Sun Art Retail
Group Limited (ʮ̡) (6808.HK) since January 2021. Mr. Chan was also an
independent non-executive director of various companies listed on the Stock Exchange,
Shanghai Stock Exchange or NASDAQ. He served as an independent non-executive director
for Shanghai Bio-heart Biological Technology Co., Ltd.* (ʮ̡)
(2185.HK) from November 2020 to June 2024, CITIC Securities Company Limited (൛Վ
ʮ̡) (600030.SSE, 6030.HK) from May 2016 to May 2019, Changyou.com Limited
(which was listed on the NASDAQ with stock code CYOU.US until its privatization in 2020)
from September 2013 to April 2020, and SRE Group Limited (ʮ̡) (1207.HK)
from July 2012 to October 2022.
Mr. Chan obtained his bachelor’s degree in Commerce from the University of Manitoba,
Canada in May 1977. He is a member of both the Chartered Professional Accountants of
Canada and the Hong Kong Institute of Certified Public Accountants. Mr. Chan was a member
of the Election Committee for the first Legislative Council of Hong Kong in 1998 and a
member of the Listing Committee of the Stock Exchange from 1998 to 2001.
Mr. Chan was a director of the following company which was incorporated in Hong Kong
prior to its dissolution:
Name of the company
Principal business
activity prior to
cessation of
business
Date of
dissolution
Means of
dissolution
Reason for
dissolution
Canada China Trade
Development Association
(Hong Kong) Limited
(ʮ
̡)
Dormant January 10, 2003 Striking-off Cessation of
business
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To the best of our Directors’ knowledge, information and belief after making reasonable
enquiries, there was no judgment or findings of fraud, dishonesty, any misconduct or wrongful
act on the part of Mr. Chan involved in the dissolution of the above company, and as at the
Latest Practicable Date, there was no outstanding liability or ongoing claim or litigation
against Mr. Chan in his capacity as a director prior to its dissolution. Mr. Chan confirmed that
this company was solvent at the time of its dissolution.
Mr. LEE Carmelo Ka Sze ( ҽྗɻ΋͛), aged 64, was appointed as an independent
non-executive Director in December 2022. He is primarily responsible for providing
independent advice on the operation and management of our Company.
Mr. Lee has more than 40 years of experience in the legal industry. He has been a partner
of Woo Kwan Lee & Lo (Б) since April 1989, was appointed to a senior partner
in July 1998, and is now the managing partner. Mr. Lee holds positions in various companies
listed on the Stock Exchange and the Shanghai Stock Exchange. He has been serving as an
independent non-executive director of China Mobile Limited (ʮ̡)
(600941.SSE, 0941.HK) since May 2022 and a non-executive director of Safety Godown
Company, Limited (ʮ̡) (0237.HK) and Playmates Holdings Limited (ණྠ
ʮ̡) (0635.HK) since September 2004 and November 2019, respectively. In the three
years prior to the Latest Practicable Date, Mr. Lee was also an independent non-executive
director of KWG Group Holdings Limited (ʮ̡) (1813.HK) (until 1
March 2024).
Mr. Lee obtained a bachelor’s degree in Laws from the University of Hong Kong (ಥ
ɽኪ) in November 1982 and a Postgraduate Certificate in Laws from the University of Hong
Kong (ಥɽኪ) in July 1983. Mr. Lee is qualified as a solicitor in Hong Kong, England and
Wales (non-practising), Singapore (non-practising) and the Australian Capital Territory
(non-practising). Mr. Lee served as one of the members of chairmen pool of the Listing Review
Committee of the Stock Exchange (ึ) from 2019 to July 2024. Mr. Lee
is also a committee member of HKSAR InnoHK Steering Committee (InnoHKึ)o f
the Innovation and Technology Commission of Hong Kong (Ҧ໇), the Chairman of
the Appeal Tribunal Panel (Buildings) ( ɪൡᄲ൒ྠ(يa member of the Campaign
Committee of The Community Chest of Hong Kong (ږand the co-chairman of the
Community Chest Corporate Challenge Half Marathon Organising Committee. Mr. Lee had
been the chairman of the Listing Committee (ึ) of the Stock Exchange from May
2012 to July 2015, and a Convenor cum member of the Financial Reporting Review Panel ( ৌ
ྠ) of the Accounting and Financial Reporting Council of Hong Kong (ʿ
ৌਕිజ҅) from July 2016 to July 2022.
Dr. Ding Yi ( ɕू௹ɻ), aged 60, was appointed as an independent non-executive
Director in December 2022. She is primarily responsible for supervising and providing
independent advice on the operation and management of our Company.
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Dr. Ding has more than 36 years of experience in financial management. Dr. Ding had
been a lecturer of School of Finance of Renmin University of China ( ʕ਷ɛ͏ɽኪ) from July
1988 to November 1993, the deputy division director, division director and deputy general
manager in security department of Huaneng Power International, Inc. (ࠢ
ʮ̡) from November 1993 to September 2001, the deputy general manager of the investment
management department of The People’s Insurance Company of China Limited* (ڭ
ᎈʮ̡) (now known as The People’s Insurance Company (Group) of China Limited* ( ʕ਷ɛ
ʮ̡)) (601319.SSE, 1339.HK) from September 2001 to July 2003, a
director and the assistant general manager of PICC Asset Management Company Limited* ( ʕ
ʮ̡) from July 2003 to September 2005, the deputy general manager,
general manager and chairwoman of Huaneng Capital Services Co., Ltd.* (ࠢ
ʮ̡) from September 2005 to July 2019, the chairwoman of Invesco Great Wall Fund
Management Company Limited* (ʮ̡) from December 2018 to
October 2020, and Dr. Ding has been an independent director of Huatai Asset Management
Company Limited* (ʮ̡) since September 2020 and an independent
non-executive director of Zhangjiakou Y uanshi Advanced Materials Co., Ltd.* (༲อ
ʮ̡) since November 2021. Dr. Ding is a director of various companies listed
on the Shanghai Stock Exchange and the SZSE. She has been serving as a director of Tongwei
Co., Ltd.* (ʮ̡) (600438.SSE) since May 2020, and as an independent
non-executive director of Hua Xia Bank Co., Limited* (ʮ̡) (600015.SSE)
since September 2020.
Dr. Ding obtained a bachelor’s degree in Economics majoring in International Finance in
July 1985, a master’s degree in Economics majoring in International Finance in July 1988 and
a doctoral degree in Economics majoring in Public Finance from Renmin University of China
(ʕ਷ɛ͏ɽኪ) in June 1993. She qualified as a senior economist in November 1995.
BOARD OF SUPERVISORS
Ms. W ANG Jia ( ˮԳɾɻ), aged 44, is a Supervisor appointed in April 2021. She is
primarily responsible for supervising the performance of duties by our Directors and our senior
management.
Ms. Wang has more than 20 years of work experience. Ms. Wang has held various
positions within our Group since November 2014, including the financial planning expert and
the head of internal control, and is now the head of risk control and compliance of our Group.
Prior to joining our Group, she worked at Deloitte Touche Tohmatsu Certified Public
Accountants LLP Shenzhen Branch* (הwhere she last served
as a senior auditor from October 2002 to June 2006. She also worked at Ernst & Y oung (China)
Advisory Limited Shenzhen Branch* ( τ͑(ʕ਷)ʮ̡ଉέʱʮ̡), where she
last served as a senior manager from March 2007 to October 2014.
Ms. Wang obtained her bachelor’s degree in Economics from Shenzhen University ( ଉέ
ɽኪ) in July 2002. She was awarded the professional designation of Certified Internal Auditor
in November 2008 by the Institute of Internal Auditors (՘ึ). She has been
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a non-practising member of the Chinese Institute of Certified Public Accountants ( ʕ਷ൗ̅ึ
՘ึ) since March 2010. She qualified as the Certified Information Systems Auditor ( ਷
ࢪࠇin October 2017 granted by the Information Systems Audit and Control
Association (ձછՓ՘ึ).
Mr. LIU Jilu ( ᄎ኏ኁ΋͛), aged 77, is a Supervisor appointed in December 2016. He is
primarily responsible for supervising the performance of duties by our Directors and our senior
management.
Mr. Liu has various experience in management. Prior to joining our Group, Mr. Liu was
the person in charge of Ma’anshan Dingtai Metal Products Co., Ltd.* (ۜ
ʮ̡) from April 1994 to May 2003, the chairman and general manager of Ma’anshan Dingtai
Technology Co., Ltd.* (ப΂ʮ̡) (later known as Dingtai New
Materials and now known as our Company) from May 2003 to October 2007. Mr. Liu was also
the director and chairman from October 2007 to December 2016, and the general manager from
October 2007 to February 2011 of Dingtai New Materials (a predecessor of our Company).
Mr. Liu graduated from Anhui University ( τᏏɽኪ) in the PRC in July 1986 and
specialized his studies in Economics and Management.
Mr. Liu was a director of the following companies which were incorporated in the PRC
prior to their dissolution:
Name of the company
Principal business
activity prior to
cessation of
business
Date of
dissolution
Means of
dissolution
Reason for
dissolution
Chongqing Y ushen Technology Co.
Ltd.*
(ப΂ʮ̡)
Manufacturing and
sale of products
and tools
August 9, 2017 Revocation of
business
license
Cessation of
business
Ma’anshan Dingtai Installation
Engineering Co. Ltd.*
(ப΂
ʮ̡)
Highway guardrail
installation,
mechanical and
electrical
equipment
installation
October 25,
2004
Revocation of
business
license
Cessation of
business
To the best of our Directors’ knowledge, information and belief after making reasonable
enquiries, there was no judgment or findings of fraud, dishonesty, any misconduct or wrongful
act on the part of Mr. Liu involved in the dissolution of the above companies, and as at the
Latest Practicable Date, there was no outstanding liability or ongoing claim or litigation
against Mr. Liu in his capacity as a director prior to their respective dissolution. Mr. Liu
confirmed that this company was solvent at the time of their respective dissolution.
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Ms. LI Juhua (ɾɻ), aged 45, is an employee representative Supervisor appointed
in December 2019. She is primarily responsible for supervising the performance of duties by
our Directors and our senior management.
Ms. Li has more than 22 years of work experience. Ms. Li successively held various key
positions within our Group from May 2012 to December 2023, including the head of
accounting department, head of tax department, head of financial shared service center and
head of CFO office. She has been assistant CFO of our Group since January 2024. Ms. Li is
currently a director of various subsidiaries of our Company. She is also a non-executive
director of SF Intra-city (9699.HK) since November 2023 and has been a non-executive
director of SF REIT Asset Management Limited (the manager of SF REIT (2191.HK)) from
August 2023 to April 2024. Prior to joining our Group, Ms. Li was an accountant and a finance
manager of Shanghai Totole Food Limited.* (ʮ̡) from June 2002
to December 2004, an assistant accountant and an assistant finance manager of Wal-Mart
(China) Investment Co., Ltd.* ( Ӝဧီ(ʕ਷)ʮ̡) from December 2004 to March
2008, a finance manager of Shenzhen B&Q Decoration & Building Material Co., Ltd.* ( ଉέ
ʮ̡) from April 2008 to February 2010, and the financial director of
Maoye International Holdings Limited (ʮ̡) (0848.HK) from January 2011
to May 2012.
Ms. Li obtained her bachelor’s degree in Management from Tongji University ( Ν᏶ɽኪ)
in July 2002. Ms. Li is a Fellow of the Chartered Management Accountants (FCMA) and the
Chartered Global Management Accountant (CGMA).
Mr. ZHANG Shun ( ੵන΋͛), aged 33, is an employee representative Supervisor of our
Company appointed in December 2022. He is primarily responsible for supervising the
performance of duties by our Directors and our senior management.
Mr. Zhang has more than eight years of experience in the logistics industry. Mr. Zhang
successively held various positions within our Group from August 2015 to November 2020,
including procurement management coordinator, procurement management senior coordinator
and operation management senior coordinator. Mr. Zhang has been the head of culture and
employee relations division of our Company from November 2020 to February 2024, and the
assistant head of SF Express business region since March 2024.
Mr. Zhang obtained his master’s degree in Economics from Sun Y at-sen University ( ʕʆ
ɽኪ) in June 2015.
Except as disclosed in this prospectus, to the best of the knowledge, information and
belief of the Directors and Supervisors, having made all reasonable inquiries, there were no
additional matters with respect to the appointment of the Directors and Supervisors that need
to be brought to the attention of the Shareholders and there were no additional information
relating to the Directors or Supervisors that are required to be disclosed pursuant to Rules
13.51(2)(h) to (v) of the Listing Rules as of the Latest Practicable Date.
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SENIOR MANAGEMENT
For biographical details of Mr. W ANG Wei ( ˮ㠛), see “— Board of Directors —
Executive Directors.”
For biographical details of Mr. HO Chit ( Оઠ), see “— Board of Directors — Executive
Directors.”
Mr. LI Sheng ( ҽ௷΋͛), aged 58, is a deputy general manager of our Company
appointed in December 2016. He is responsible for overall management of SF Airlines.
Mr. Li has more than 19 years of experience in the logistics industry. He joined our Group
in April 2005 and successively held various positions within our Group, including general
manager of Hubei region, general manager of Sichuan region, vice president of our Group,
president of Central China operation and president of West China operation, and is currently
president and chairman of SF Airlines Company Limited* (ʮ̡). He has been
the assistant chief executive officer of the Group since May 2024. In addition, Mr. Li is also
currently a director of several subsidiaries of our Company. Prior to joining our Group, Mr. Li
worked at Wal-Mart (China) Investment Co., Ltd.* ( Ӝဧီ(ʕ਷)ʮ̡), where he last
served as a senior regional manager from November 1998 to March 2005.
Mr. Li graduated from Sichuan Normal University (ᇍɽኪ) in the PRC in
December 2006, majoring in law via long distance learning. Mr. Li passed the examination of
civil aviation safety production knowledge and management capability and obtained the
certificate for person in charge issued by the Civil Aviation Administration of China. Mr. Li has
been a director of the SF Foundation (ึ) since October 2016.
Mr. ZHOU Haiqiang ( մऎ੶΋͛), aged 46, is a deputy general manager of our
Company appointed in December 2022. He is responsible for human resources management
and cold chain business of our Group.
Mr. Zhou has more than 23 years of experience in the logistics industry. He joined our
Group in April 2001 and successively held various positions within our Group from April 2001
to November 2020, including senior manager of general affairs department of East China
region operation headquarter, general manager of Hangzhou region, deputy president of
e-commerce logistics business unit, assistant chief human resources officer and head of
Shanghai operations. Mr. Zhou has been the assistant chief executive officer of our Group since
November 2020 and chief human resources officer since November 2024.
Mr. Zhou obtained a college diploma in foreign business from Zhejiang Business and
Economics School* ((ࣧwhich was merged into Taizhou V ocational and
Technical College ( ̨ψᔖุҦஔኪ৫) in 2006) in PRC in 1997. In 2009, Mr. Zhou completed
his study in the Eight Session of SF Group Senior Management MBA Course Programme ( න
ᔮණྠ৷၍MBAࡌ08फ) at Xiamen University (ɽኪ) in PRC.
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Mr. GENG Y ankun ( অᝣտ΋͛), aged 38, is a deputy general manager of our Company
appointed in December 2022. He is responsible for technology R&D related business of our
Company.
Mr. Geng has more than 14 years of experience in technology R&D and operation
management. He joined our Group in September 2017, and currently holds various positions
within our Group, including (i) the chief information and technology officer of our Group, (ii)
head of the North China region of the Group; (iii) the chief executive officer and chairman of
SF Technology, (iv) the chief executive officer and chairman of Beijing SF Intra-city
Technology Co., Ltd.* (ʮ̡), and (v) non-executive director of SF
Intra-city (9699.HK). Mr. Geng is also currently a director of several subsidiaries of our
Company. Prior to joining our Group, Mr. Geng was the senior manager of Baidu Online
Network Technology (Beijing) Company Limited* (ίᇞၣഖҦஔ(̏ԯ)ʮ̡) from
July 2009 to September 2015, and the chief technology officer of Beijing Xiaodu Information
and Technology Co., Ltd.* (ʮ̡) from October 2015 to September
2017.
Mr. Geng obtained a bachelor’s degree in Engineering from the Harbin Institute of
Technology (ဧᏵʈุɽኪ) in July 2007 and a master’s degree in Engineering from Peking
University ( ̏ԯɽኪ) in July 2009. Mr. Geng was a member of the Professional Science and
Innovation Committee of the China Express Association (ึ)
from July 2021 to July 2023. He has been the vice chairman of the 2022 China digital logistics
development report (2022జѓ) drafting committee of the China Federation
of Logistics & Purchasing (ၾમᒅᑌΥึ) since November 2022, and was recognized
by that industry body as the 2016-2021 Double Chain Five Y ear Anniversary Most Influential
Person (ᑌ2016-2021يand 2022 China Double Chain Annual
Conference Innovative Digital Supply Chain Most Influential Person (ᑌ2022 ϋʕ਷ᕐᗡ
يin December 2021 and January 2023, respectively.
Ms. GAN Ling (ɾɻ), aged 50, is a deputy general manager and secretary of our
Board appointed in December 2016 and was appointed as joint company secretary of our
Company in August 2023. She is responsible for Board related matters, corporate finance and
corporate governance.
Ms. Gan has more than 17 years of experience in investment, corporate finance and
corporate governance. She joined our Group in December 2015 and currently holds various
positions within our Group and its associates, including (i) the deputy general manager and
secretary of our Board since December 2016, and (ii) a non-executive director of SF REIT
Asset Management Limited (the manager of SF REIT (2191.HK)) since December 2022. Prior
to joining our Group, Ms. Gan was (i) an analyst at Coatue Management, L.L.C., one of the
Tiger cub funds, in New Y ork from December 2006 to April 2010, (ii) the deputy general
manager of Maoye International Holdings Limited (ʮ̡) (0848.HK) from
October 2010 to February 2015, (iii) a director of Chengshang Group Co., Ltd.* (ٰ
ʮ̡) (now known as Maoye Commercial Co., Ltd.* (ʮ̡))
(600828.SSE) from June 2011 to March 2015.
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Ms. Gan obtained a master’s degree in Business Administration from The University of
Texas in Austin in the United States of America in May 2005 and an executive master of
Business Administration (EMBA) degree from PBCSF Tsinghua University ( ૶ശɽኪʞ༸ɹ
ፄኪ৫) in China in January 2023. She has been a member of the Appeal Review Committee
of the Shenzhen Stock Exchange since June 2017, and was awarded the “5A level for board
secretaries ( ʕ਷ɪ̹ʮ̡՘ึ5Aॴ໨।)” by the China Association of Listed Companies ( ʕ
਷ɪ̹ʮ̡՘ึ) for two consecutive years in December 2022 and 2023. Ms. Gan was
recognized as a “New Fortune Board Secretary (೐໨।)” by the PRC magazine “New
Fortune ( อৌబ)” for five consecutive years from 2018 to 2022, and was inducted into the
“Board Secretary Hall of Fame ( ໨।Τɛੀ)” by the same magazine in April 2023.
OTHER DISCLOSURE
Except as disclosed in this section none of our Directors, Supervisors or members of the
senior management of our Company hold any other directorship in other public companies, the
securities of which are listed on any securities markets in Hong Kong or overseas, in the three
years prior to the Latest Practicable Date. For our Directors’ interest in our Shares within the
meaning of Part XV of the SFO, see “Statutory and General Information — 3. Further
Information about our Directors, Supervisors and Substantial Shareholders — C. Disclosure of
Interests — (c) Disclosure of Interests of Directors, Supervisors and Chief Executive” in
Appendix IV to this prospectus.
None of our Directors, Supervisors and members of the senior management is related to
other Directors, Supervisors and members of the senior management.
Each of our Directors confirms that he or she (i) has obtained the legal advice referred
to under Rule 3.09D of the Listing Rules in either August 2023 or October 2024, and (ii)
understands his or her obligations as a director of a listed issuer under the Listing Rules.
Each of the independent non-executive Directors has confirmed (i) his/her independence
as regards each of the factors referred to in Rules 3.13(1) to (8) of the Listing Rules, (ii) he/she
has no past or present financial or other interest in the business of the Company or its
subsidiaries or any connection with any core connected person of the Company under the
Listing Rules as of the Latest Practicable Date, and (iii) that there are no other factors that may
affect his/her independence at the time of his/her appointments.
JOINT COMPANY SECRETARIES
Ms. GAN Ling (ɾɻ), is the deputy general manager, secretary of our Board and our
joint company secretary. For biographical details of Ms. GAN Ling (ޛsee “— Senior
Management.”
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Ms. SO Ka Man ( ᘽྗઽɾɻ), is our joint company secretary. She is a director of the
corporate services division of Tricor Services Limited and has been providing professional
corporate services to Hong Kong listed companies as well as multi-national, private and
offshore companies. Ms. So has over 20 years of experience in the corporate secretarial and
compliance service field. Ms. So is currently acting as the company secretary or joint company
secretary of a few listed companies on the Stock Exchange.
Ms. So graduated from The Hong Kong Polytechnic University (ಥଣʈɽኪ)i n
November 1996 with a bachelor’s degree of Arts in Accountancy. Ms. So is a chartered
secretary, a chartered governance professional and a fellow of both The Hong Kong Chartered
Governance Institute and The Chartered Governance Institute in the United Kingdom.
COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
Our Company’s corporate governance practices are based on principles and code
provisions as set out in the Corporate Governance Code in Appendix C1 of the Listing Rules
(the “ CG Code ”). Except for the deviation from provision C.2.1 of Part 2 of the CG Code, our
Company’s corporate governance practices have complied with the CG Code.
Provision C.2.1 of Part 2 of the CG Code stipulates that the role of chairman and chief
executive should be separated and should not be performed by the same individual. Mr. Wang
is the chairman of our Board and the general manager (same nature as chief executive) of our
Company. Since Mr. Wang has been operating and managing SF Taisen, the main operating
subsidiary of our Company since its incorporation and due to his familiarity with the operations
of our Group, our Board is of the view that it is in the best interest of our Group to have Mr.
Wang taking up both roles for effective management and business development of our Group
following the Listing and Mr. Wang will provide a strong and consistent leadership to our
Group. This arrangement ensures a more effective and efficient overall strategic planning of
our Group as this structure enables our Company to make and implement decisions promptly
and effectively. Further, our Company has put in place an appropriate check-and-balance
mechanism through our Board and three independent non-executive Directors. Our
independent non-executive Directors are able to retain independence in terms of character and
judgment and are able to express their views without undue constraint. In addition, our Board
also consists of three other executive Directors, Mr. HO Chit, Ms. W ANG Xin and Mr. XU
Bensong, who are familiar with the day-to-day business of our Company. Our Company will
consult our Board for any major decisions. Therefore, our Board considers that the balance of
power and authority of the present arrangement will not be impaired because such arrangement
would not result in excessive concentration of power in one individual which could adversely
affect the interest of minority Shareholders. As such, the deviation from provision C.2.1 of Part
2 of the CG Code is appropriate in such circumstance. Our Board will continue to review and
consider splitting the roles of the chairman of our Board and the general manager of our
Company at a time when it is appropriate and suitable by taking into account the circumstances
of our Group as a whole.
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COMPETING INTERESTS
As of the Latest Practicable Date, none of our Directors (other than independent
non-executive Directors) had interests in any business, which competes or is likely to compete,
either directly or indirectly with our business.
COMMITTEES UNDER OUR BOARD OF DIRECTORS
In accordance with relevant PRC laws, regulations, our Articles of Association and the
corporate governance practice in the Listing Rules, we have formed five board committees,
namely the Audit Committee, the Nomination Committee, the Remuneration and Appraisal
Committee, the Strategy Committee and the Risk Management Committee.
Audit Committee
The Audit Committee of our Company consists of three Directors, namely, Mr. CHAN
Charles Sheung Wai, Mr. LEE Carmelo Ka Sze and Dr. DING Yi. Mr. CHAN Charles Sheung
Wai serves as the chairman of the committee. The primary duties of the Audit Committee of
our Company include (but are not limited to):
 supervising the annual audit work, making judgment on the authenticity, accuracy
and completeness of the information in the audited financial reports before
submitting to our Board for review;
 providing recommendations on engaging or changing external auditors, and
supervising the performance of external auditors;
 responsible for the communication between internal auditors and external auditors;
and
 handling other matters required by laws, rules and regulations of the jurisdictions
where our Shares are listed, our Articles of Association, or as authorized by our
Board.
Nomination Committee
The Nomination Committee of our Company consists of three Directors, namely, Mr.
Wang, Mr. LEE Carmelo Ka Sze and Dr. DING Yi. Mr. LEE Carmelo Ka Sze serves as the
chairman of the committee. The primary duties of the Nomination Committee of our Company
include (but not limited to):
 formulating procedures and standards for the election of Directors and senior
management and make recommendations to our Board on the proposed procedures
and standards;
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 making recommendations to our Board on the nomination of candidates for
Directors and general manager;
 preliminarily examining the eligibility of candidates for Directors, general manager
and secretary to our Board;
 making recommendations to our Board on the nomination of candidates for
chairmen and members of our Board committees; and
 handling other matters required by laws, rules and regulations of the jurisdictions
where our Shares are listed, our Articles of Association, or as authorized by our
Board.
Remuneration and Appraisal Committee
The Remuneration and Appraisal Committee of our Company consists of three Directors,
namely Dr. DING Yi, Mr. CHAN Charles Sheung Wai and Mr. LEE Carmelo Ka Sze. Dr. DING
Yi serves as the chairman of the committee. The primary duties of the Remuneration and
Appraisal Committee of our Company include (but not limited to):
 formulating and submitting the allowances plan of Directors to our Shareholders’
meeting upon our Board’s approval;
 reviewing and making recommendations on the assessment and remuneration
management system for senior management, and evaluating performance of senior
management;
 managing our Company’s stock incentive plan, including reviewing the
qualifications, granting conditions, and exercise conditions of the personnel who
receive incentives under our Company’s stock incentive plan; and
 handling other matters required by laws, rules and regulations of the jurisdictions
where our Shares are listed, our Articles of Association, or as authorized by our
Board.
Strategy Committee
The Strategy Committee of our Company consists of three Directors, namely Mr. CHAN
Charles Sheung Wai, Dr. DING Yi and Mr. Wang. Mr. CHAN Charles Sheung Wai serves as
the chairman of the committee. The primary duties of the Strategy Committee of our Company
include (but not limited to):
 reviewing the overall development strategy plan of our Company, including our ESG
development strategy, and advising our Board accordingly;
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 evaluating the overall development of each business unit of our Company and
making recommendations to our Board regarding any adjustments;
 reviewing our Company’s business investment and financing plans, and making
recommendations to our Board;
 reviewing the annual financial budget and final accounts plan, and making
recommendations to our Board; and
 handling other matters required by laws, rules and regulations of the jurisdictions
where our Shares are listed, our Articles of Association, or as authorized by our
Board.
Risk Management Committee
The Risk Management Committee of our Company consists of three Directors, namely
Mr. HO Chit, Mr. CHAN Charles Sheung Wai and Mr. LEE Carmelo Ka Sze. Mr. HO Chit
serves as the chairman of the committee. The primary duties of the Risk Management
Committee of our Company include (but not limited to):
 providing guidance to our Company’s overall risk management and providing
support for our Board to perform risk management functions;
 evaluating the integrity of the risk management system and issuing opinions; and
 handling other matters required by laws, rules and regulations of the jurisdictions
where our Shares are listed, our Articles of Association or as authorized by our
Board.
BOARD DIVERSITY POLICY
Our Company adopted a board diversity policy (the “ Board Diversity Policy ”) setting
out the approach to achieve diversity on our Board.
The Nomination Committee of our Company reviews and assesses our Board composition
on behalf of our Board and recommends the appointment of new Directors, taking into account
a number of aspects, including but not limited to gender, age, cultural and educational
background, ethnicity, professional experience, skills, knowledge, industry and regional
experience, and length of service. All Board appointments will be based on meritocracy, and
candidates will be considered against objective criteria, having due regard for the benefits of
diversity on our Board. The Nomination Committee will disclose the composition of our Board
annually in the corporate governance report and monitor the implementation of the Board
Diversity Policy. The Nomination Committee will review the Board Diversity Policy and assess
its effectiveness, and where necessary, make any revisions that may be required and
recommend any such revisions to our Board for consideration and approval.
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Our Board has a balanced mix of experiences and industry background. Our Directors
have a diverse education background including economics, law, accounting, business
administration and management, as well as different industry backgrounds and professional
qualifications. We have three independent non-executive Directors with different industry
backgrounds, representing more than one third of the members of our Board. Furthermore, our
Board has two female Directors, and has a wide age range comprising members from their 30s
to 70s. Taking into account our Company’s business model and the backgrounds and abilities
of our Directors, the composition of our Board satisfies the Board Diversity Policy.
The Nomination Committee is responsible for ensuring the diversity of our Board and will
use its best efforts to identify and recommend suitable candidates for our Board’s
consideration, subject to our Directors being satisfied with the qualification and experience of
the relevant candidates after a reasonable review process based on the relevant criteria, and
fulfilling their fiduciary duties to act in the best interests of our Company and our Shareholders
as a whole when making the relevant appointments.
For details of the composition of the Nomination Committee of our Company, see “—
Committees under our Board of Directors — Nomination Committee.”
COMPLIANCE ADVISER
In accordance with Rule 3A.19 of the Listing Rules, our Company has appointed Caitong
International Capital Co., Limited (ʮ̡) as our compliance adviser.
Pursuant to Rule 19A.05 of the Listing Rules, our Company will consult with and seek advice
from the compliance adviser on a timely basis in the following circumstances:
(a) before the publication of any regulatory announcement, circular or financial report;
(b) where a transaction, which might be a notifiable or connected transaction under
Chapter 14 or 14A of the Listing Rules, is contemplated including share issues and
share repurchases;
(c) where our Company proposes to use the proceeds of the Listing in a manner
different from that detailed in this prospectus or where the business activities,
developments or results of our Group deviate from any forecast, estimate, or other
information in the listing document; and
(d) where the Stock Exchange makes an inquiry of the listed issuer under Rule 13.10 of
the Listing Rules.
The term of appointment of the compliance adviser of our Company shall commence on
the Listing Date and end on the date on which our Company complies with Rule 13.46 of the
Listing Rules in respect of the financial results for the first full financial year commencing
after the Listing Date and such appointment shall be subject to extension by mutual agreement.
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COMPENSATION AND REMUNERATION OF DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT
The aggregate remuneration (including fees, salaries, bonuses, allowances and benefits in
kind, and pension scheme contributions, but excluding share-based compensation expenses) for
our Directors, former Directors, Supervisors and former Supervisors for the years ended
December 31, 2021, 2022 and 2023 and the six months ended June 30, 2024 were
approximately RMB19.7 million, RMB19.8 million, RMB19.9 million and RMB11.1 million,
respectively.
The aggregate remuneration (including fees, salaries, allowances and benefits in kind, and
pension scheme contributions, but excluding share-based compensation expenses) for our
Company’s five highest paid individuals for the years ended December 31, 2021, 2022 and
2023 and the six months ended June 30, 2024 were approximately RMB22.3 million, RMB28.2
million, RMB18.6 million and RMB11.8 million, respectively.
During the Track Record Period, no remuneration was paid by us to, or receivable by, our
Directors, former Directors, Supervisors, former Supervisors or the five highest-paid
individuals as an inducement to join or upon joining our Company. No compensation was paid
by us to, or receivable by, our Directors, former Directors, Supervisors, former Supervisors or
the five highest-paid individuals during the Track Record Period for the loss of any office in
connection with the management of the affairs of any subsidiary of our Company. Save as
disclosed above, no other payments have been made or are payable in respect of the years
ended December 31, 2021, 2022 and 2023, and the six months ended June 30, 2024, by any
member of our Group to any of our Directors, former Directors, Supervisors, former
Supervisors or the five highest-paid individuals.
EMPLOYEE SHARE INCENTIVE SCHEMES
Stock Option Incentive Plan for Executive Directors, Senior Management and Key
Employees
Our Company adopted the 2022 Stock Option Incentive Plan on May 30, 2022, for the
purpose of improving the corporate governance structure of our Company, establishing and
improving an incentive mechanism, attracting and retaining outstanding core talents, and
connecting the interests of our Shareholders, our Company, and our core talents, so as to
promote a unified focus on the long-term development of our Company. Between May 30, 2022
and October 28, 2022 (both days inclusive), we have granted in aggregate 49,500,100 share
options to 1,493 participants under the 2022 Stock Option Incentive Plan. As of the Latest
Practicable Date, each of Mr. HO Chit, Ms. W ANG Xin, Mr. XU Bensong, Mr. LI Sheng, Mr.
ZHOU Haiqiang, Mr. GENG Y ankun, and Ms. GAN Ling, being our Directors and members of
senior management, was respectively holds 366,000, 305,000, 204,000, 366,000, 305,000,
305,000 and 170,000 share options which were outstanding under the 2022 Stock Option
Incentive Plan.
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For details of the 2022 Stock Option Incentive Plan, see “Statutory and General
Information — 4. Our Incentive Schemes and Particulars of our Capital under Option — A.
2022 Stock Option Incentive Plan” in Appendix IV to this prospectus.
Kerry Logistics Share Award Scheme
Kerry Logistics has adopted a share award scheme in January 2019 for the issue of up to
10% of the total number of Kerry Logistics shares in issue from time to time (the “ Kerry
Logistics Share Award Scheme ”). The Kerry Logistics Share Award Scheme is subject to the
requirements under Chapter 17 of the Listing Rules starting from January 1, 2023. Pursuant to
the Kerry Logistics Share Award Scheme, shares to be awarded to any selected eligible persons
will be acquired by the trustee of the Kerry Logistics Share Award Scheme through on-market
transactions at the prevailing market price using the necessary funds provided by Kerry
Logistics and held on trust for the relevant selected participant until such awarded Shares are
vested in accordance with the Kerry Logistics Share Award Scheme.
SF Intra-city Employee Incentive Scheme
SF Intra-city has adopted an employee incentive scheme in March 2023 for promoting the
achievement of its long-term sustainable development and performance goals (the “ SF
Intra-city Employee Incentive Scheme ”), under which units of beneficial rights under a trust
(the “ Trust Benefit Units ”) will be granted to the eligible employees. The SF Intra-city
Employee Incentive Scheme is subject to the requirements under Chapter 17 of the Listing
Rules. The SF Intra-city Employee Incentive Scheme shall be valid and effective for a term of
ten years commencing on the adoption date, after which no additional Trust Benefit Units shall
be granted. The source of the H shares of SF Intra-city under the SF Intra-city Employee
Incentive Scheme shall be existing shares to be acquired by a trustee through on-market or
off-market transactions. The maximum number of shares corresponding to the Trust Benefit
Units which may be granted under the SF Intra-city Employee Incentive Scheme shall not
exceed 5% of the SF Intra-city’s H shares in issue as at the adoption date.
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OVERVIEW
As of the Latest Practicable Date, the equity interest in our Company was controlled
directly and indirectly (through Shenzhen Weishun) as to approximately 55.27% by Mingde
Holding, and Mr. Wang directly held 99.90% of the equity interest in Mingde Holding.
Immediately following completion of the Global Offering (assuming the Over-allotment
Option is not exercised and no further Shares are issued pursuant to the share options granted
under the 2022 Stock Option Incentive Plan), Mr. Wang will control approximately 53.39% of
the voting rights in our share capital through Mingde Holding, which will in turn control
approximately 51.38% of the voting rights in our share capital and approximately 2.01% of the
voting rights in our share capital through its wholly-owned subsidiary, Shenzhen Weishun. As
such, Mr. Wang, Mingde Holding and Shenzhen Weishun will remain as our Controlling
Shareholders immediately upon the completion of the Global Offering.
For a simplified corporate structure chart of our Group, see “History, Development and
Corporate Structure — Our Shareholding and Corporate Structure” in this prospectus.
NON-COMPETITION UNDERTAKINGS
Non-Competition Undertaking Given by Mingde Holding
In connection with the Material Asset Restructuring, Mingde Holding provided a
non-compete undertaking to our Company on May 22, 2016, pursuant to which Mingde
Holding undertakes to, among others:
(1) upon completion of the Material Asset Restructuring and so long as Mingde Holding
exercises direct or indirect control over, or significant influence on the Company,
Mingde Holding and its wholly-owned subsidiaries, controlled subsidiaries and
other companies over which Mingde Holding exercises actual control or significant
influence (except for our Company and its subsidiaries, hereinafter referred to as the
“Companies Controlled by Mingde Holding ”) will not engage in any business that
poses material competition to the Company’s current or future business;
(2) upon completion of the Material Asset Restructuring and so long as Mingde Holding
and the Companies Controlled by Mingde Holding may engage in material
competition with the Company in the future or may engage in a conflict of interest
with the Company, Mingde Holding will forego or cause the Companies Controlled
by Mingde Holding to forego any such business opportunities that may compete
with us, or inject into our Company all such businesses of Mingde Holding and the
Companies Controlled by Mingde Holding that may compete with us at a fair and
equitable market price at an appropriate time;
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
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(3) Mingde Holding will not use any information made known to it by the Company to
assist any third party to engage in or participate in any business activities that pose
material competition with or that may potentially compete with us; and
(4) if Mingde Holding or the Companies Controlled by Mingde Holding violate the
above undertakings, as a result of which our Company suffers a loss, Mingde
Holding shall be liable for damages in accordance with applicable laws.
Non-Competition Undertaking Given by Mr. Wang
In connection with the Material Asset Restructuring, Mr. Wang provided a non-compete
undertaking to our Company on May 22, 2016, pursuant to which Mr. Wang undertakes to,
among others:
(1) upon completion of the Material Asset Restructuring and so long as Mr. Wang
exercises direct or indirect control over, or significant influence on the Company,
Mr. Wang and such other companies/entities directly or indirectly controlled by him
(except for our Company and its subsidiaries, hereinafter referred to as the
“Companies Controlled by Mr. Wang ”) will not engage in any business that poses
material competition to the Company’s current or future business;
(2) upon completion of the Material Asset Restructuring and so long as Mr. Wang and
the Companies Controlled by Mr. Wang may engage in material competition with the
Company in the future or may engage in a conflict of interest with the Company, Mr.
Wang will forego or cause the Companies Controlled by Mr. Wang to forego any
such business opportunities that may compete with us, or inject into our Company
all such businesses of Mr. Wang and the Companies Controlled by Mr. Wang that
may compete with us at a fair and equitable market price at an appropriate time;
(3) Mr. Wang will not use any information made known to him by the Company to assist
any third party to engage in or participate in any business activities that pose
material competition with or that may potentially compete with us; and
(4) if Mr. Wang or the Companies Controlled by Mr. Wang violate the above
undertakings, as a result of which our Company suffers a loss, Mr. Wang shall be
liable for damages in accordance with applicable laws.
CONFIRMATION IN RELATION TO ANY COMPETING INTEREST
Mingde Holding is a limited liability company established under the laws of the PRC on
November 5, 1997. Apart from the investments in the Company, Mingde Holding is an
investment holding company having investments in many other companies and industries, such
as Shenzhen Fengxiang Information Technology Co., Ltd.* (ʮ̡,
“Shenzhen Fengxiang ”), Fengtu Technology (Shenzhen) Co., Ltd.* (Ҧ(ଉέ)ʮ̡,
“Fengtu ”) and Hive Box Holdings Limited (ʮ̡,“ Hive Box ”). For details of
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
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the businesses of these companies, see “Connected Transactions” in this prospectus. For details
of the biography of Mr. Wang, see “Directors, Supervisors, Senior Management and Employees
— Board of Directors — Executive Directors” in this prospectus.
Each of our Controlling Shareholders has confirmed that he/it does not have any interests
in any business (apart from the business of the Group) that competes or is likely to compete,
directly or indirectly, with our principal business, which is required to be disclosed under Rule
8.10 of the Listing Rules.
INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
Having considered the following factors, our Directors are of the view that we are able
to conduct our business independently from our Controlling Shareholders after the Global
Offering.
Management Independence
Our business has been managed and conducted by our Board and senior management. Our
Board consists of seven Directors, comprising four executive Directors and three independent
non-executive Directors, and we also have six senior management members (of which two are
executive Directors). Each of our Directors and senior management possesses relevant
management, financial or industry-related experience to contribute to the management of our
business. For further information on the qualifications and experience of our Directors and
senior management, see “Directors, Supervisors, Senior Management and Employees” in this
prospectus.
Save for Mr. Wang (chairman of the Board, executive Director and general manager of our
Company and a director of certain subsidiaries of the Company) who is an executive director
of Mingde Holding, as of the Latest Practicable Date, none of the other Directors or senior
management of the Company held any position in the Mingde Holding Group (excluding our
Group). Hence, we have sufficient Board and senior management team members who do not
hold any position in and are not our Controlling Shareholders and/or their respective close
associates, and are with adequate relevant experience to manage our business and operations.
In addition, our Directors consider that the Board and senior management of our
Company are capable of functioning independently from our Controlling Shareholders for the
following reasons:
(1) save for Mr. Wang, none of our Directors and senior management hold any position
in Mingde Holding Group (excluding our Group), and are able to devote sufficient
time and efforts to manage the daily operations of our Group and make decisions
independent of the Controlling Shareholders. In addition, there are three
independent non-executive Directors in our seven-member Board, who have been
providing independent oversight and will continue to independently monitor the
formulation and implementation of major decisions of our Group based on their
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
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skills and qualification and related professional experience. Members of the senior
management of our Company have been with our Group in management capacity for
a number of years, and therefore, have substantial working experience in the
industries we are engaged in, and their familiarity with our Group’s business and
with the competitive landscape we are in will therefore enable them to make
business decisions that are in the best interests of our Group;
(2) given Mr. Wang is the founder of both our Group and Mingde Holding, it is
necessary for him to remain as a director of both companies. Nevertheless, when
performing his duty as one of the executive Directors and the general manager of the
Company, Mr. Wang has been devoting and will continue to allocate adequate
amount of time and effort to the management and operation of our Group and would
bear the best interests of the Company and the Shareholders as whole in mind;
(3) we have established clear reporting lines among the management team of our
Company and between our management team and the Board, and our management
team ultimately reports to the executive Directors, who are responsible for reporting
to the Board. The Board supervises and monitors the performance of our Company’s
management team generally through receiving regular reports from our executive
Directors, attending regular meetings and other ad hoc meetings of our Board to
consider, deliberate and approve material matters which exceed the delegated
authorities of our management team, as well as through the regular updates provided
to our Directors of our operational and financial information;
(4) each Director is aware of his/her fiduciary duties as a director which require, among
other things, that he/she must act for the benefit and in the interest of our Company
and the Shareholders as a whole, and not allow any conflict between his/her duties
as a Director and his/her personal interests;
(5) as an A-share listed company, we have formulated and adopted a comprehensive
internal control and management system in compliance with the relevant
requirements of the rules of the SZSE. The Articles of Association has also included
relevant provisions to manage conflict of interest, pursuant to which our Directors
are prohibited from voting in any Board resolution approving any contract or
arrangement or any other proposal in which he/she or any of his/her close associates
has a material interest, and shall not be counted in the quorum present at the
particular Board meeting;
(6) each of Mingde Holding and Mr. Wang has entered into an undertaking in favor of
our Company to maintain the independence of our Company, which particularly
enshrines the independence of personnel of the Company. For further information,
see “— Undertaking to Maintain the Independence of our Company”; and
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(7) we have adopted a series of corporate governance measures to manage potential
conflicts of interest, if any, between our Group and our Controlling Shareholders,
which would enhance our independent management. For further information, see
“— Corporate Governance Measures.”
In light of the above, our Directors are of the view that our Company has our own
management team which is capable of maintaining the independence of our Company from our
Controlling Shareholders and supporting the independent operation of our Group.
Operational Independence
Our Directors are of the view that we can continue operating independently from our
Controlling Shareholders after the Listing. Despite the controlling interest in our Company
retained by our Controlling Shareholders after the Listing, we hold and enjoy the benefit of all
relevant permits and licenses necessary for carrying out our business in all material respect,
and we have sufficient capital, facilities, equipments and employees to operate our business
independently from our Controlling Shareholders. We also have full powers to make all
decisions regarding, and to carry out, our own business operations independently from our
Controlling Shareholders. In addition, our access to, and relationship with, our key customers
and suppliers are independent from our Controlling Shareholders.
Notwithstanding that we have procured and will continue to procure goods and services
in respect of employee benefits of our Group and comprehensive goods and services in relation
to our business operations from, and we have leased and will continue to lease certain premises
to and from the Mingde Connected Persons, and our Group has also provided and will continue
to provide certain logistics, technology, telecommunications and other miscellaneous services
to the Mingde Connected Persons and the Hive Box Connected Persons, the details of which
are set out in the section headed “Connected Transactions” in this prospectus, these
transactions did not and are not expected to involve significant transaction amounts and are not
material to the operation and conduct of our Group’s principal business. Such connected
transactions with the Mingde Connected Persons and the Hive Box Connected Persons will be
conducted on arm’s length basis and on normal commercial terms in the ordinary and usual
course of our business. Therefore, our Directors believe that these connected transactions with
the Mingde Connected Persons and the Hive Box Connected Persons do not affect our
operational independence.
In light of the above, our Directors are satisfied that we have been operating
independently from our Controlling Shareholders and their respective associates during the
Track Record Period and will continue to be able to operate independently upon Listing.
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
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Financial Independence
We have adopted our own independent internal control, accounting, funding, reporting
and financial management systems, and we also have an independent accounting and finance
department responsible for discharging relevant financial and treasury function with relevant
finance personnel. Moreover, our Board has established the Audit Committee comprising
solely of independent non-executive Directors to provide independent oversight to, among
others, our accounting and financial reporting processes.
Moreover, we open and manage our bank accounts independently, and have never shared
any bank account with Mingde Holding Group (excluding our Group) and/or Mr. Wang. We are
also capable of obtaining financing from third parties, if necessary, without reliance on our
Controlling Shareholders in view of our Group’s strong financial position, steady cash flow
generation and level of liquid assets as well as our ability to raise funds on a standalone basis.
No loan or guarantee has been provided by, or granted to, our Controlling Shareholders
or their respective associates during the Track Record Period and as of the Latest Practicable
Date.
In light of the above, our Directors are of the view that we are able to maintain financial
independence from our Controlling Shareholders and their respective close associates.
Undertaking to Maintain the Independence of our Company
In connection with the Material Asset Restructuring, each of Mingde Holding and Mr.
Wang undertook on May 22, 2016 to maintain the independence of our Company, in particular
and among others:
Independence of Personnel of the Company
(1) The senior management members of the Company shall work full-time for the Company
and receive remuneration from the Company, and shall not hold any positions in Mingde
Holding apart from directorship and shall not retain any duties other than as a director or
supervisor in the Companies Controlled by Mingde Holding and/or the Companies
Controlled by Mr. Wang (as applicable);
(2) The financial personnel of the Company shall not engage in dual roles with Mingde
Holding, Mr. Wang, the Companies Controlled by Mingde Holding and/or the Companies
Controlled by Mr. Wang (as applicable);
(3) The Company’s personnel and labor relations shall be independent of Mingde Holding,
Mr. Wang, the Companies Controlled by Mingde Holding and/or the Companies
Controlled by Mr. Wang (as applicable); and
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
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(4) Mingde Holding and Mr. Wang (as applicable) shall only exercise its/his rights as
Shareholders through general meetings and shall recommend candidates to act as
Directors, Supervisors, and senior management member of the Company in accordance
with laws and regulations or the provisions of the Articles of Association and other
applicable rules and regulations. Mingde Holding and Mr. Wang (as applicable) shall not
intervene with the Company’s personnel appointments or dismissals beyond the exercise
of rights in general meetings or of the Board.
Independence of Assets of the Company
(1) The Company has independent and complete assets, and the assets of the Company are
completely under the control of the Company and are owned and operated independently
by the Company;
(2) Mingde Holding, Mr. Wang, the Companies Controlled by Mingde Holding and/or the
Companies Controlled by Mr. Wang (as applicable) shall not illegally appropriate the
capital and assets of the Company in any manner; and
(3) No guarantees or securities shall be provided illegally using the assets of the Company
against any liability of Mingde Holding, Mr. Wang, the Companies Controlled by Mingde
Holding and/or the Companies Controlled by Mr. Wang (as applicable).
Financial Independence of the Company
(1) The Company and its subsidiaries have established independent accounting and finance
department and independent finance and accounting systems and financial management
systems;
(2) The Company and its subsidiaries are able to make financial decisions independently, and
Mingde Holding and Mr. Wang (as applicable) shall not intervene in the use of funds by
the Company beyond the exercise of rights in general meetings or of the Board;
(3) The Company and its subsidiaries can independently open bank accounts, and shall not
share any bank account with Mingde Holding, Mr. Wang, the Companies Controlled by
Mingde Holding and/or the Companies Controlled by Mr. Wang (as applicable); and
(4) The Company and its subsidiaries shall pay taxes independently.
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
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Independence of Organization of the Company
(1) The Company has established and implemented a corporate governance structure in
accordance with laws, and established an independent and complete organizational
structure separate from those of controlled by Mingde Holding and Mr. Wang (as
applicable). The Company will not share the same office or other business premises
together with Mingde Holding, Mr. Wang, the Companies Controlled by Mingde Holding
and/or the Companies Controlled by Mr. Wang (as applicable); and
(2) The Company operates independently and autonomously, and Mingde Holding and Mr.
Wang (as applicable) will not intervene in the management of the Company beyond the
exercise of rights in general meetings or of the Board.
Independence of the Business of the Company
(1) Upon completion of the Material Asset Restructuring, the Company independently holds
the ownership of its assets, personnel and qualifications to carry out its business activities
and has the ability to operate independently in the market;
(2) Mingde Holding, Mr. Wang, the Companies Controlled by Mingde Holding and/or the
Companies Controlled by Mr. Wang (as applicable) shall avoid engaging in businesses
competing with the Company and its subsidiaries; and
(3) Mingde Holding and Mr. Wang (as applicable) shall not illegally appropriate funds or
assets of the Company. Mingde Holding and Mr. Wang (as applicable) shall strictly abide
by the Company’s related party transaction policies, regulate and minimize the occurrence
of related party transactions with the Company. In respect of related party transactions
with the Company, Mingde Holding and Mr. Wang (as applicable) shall, and shall procure
the Companies Controlled by Mingde Holding and/or the Companies Controlled by Mr.
Wang (as applicable) to, conduct the transactions in accordance with fair, reasonable, and
normal commercial terms, and shall not require or accept terms given by the Company
that are more favorable than those received by third parties in fair market transactions,
and shall ensure strict performance of such related party transaction agreements executed
with the Company in good faith. Mingde Holding and Mr. Wang (as applicable) shall
strictly comply with the related party transactions decision-making procedures and the
corresponding disclosure obligations in accordance with the Articles of Association and
relevant laws and regulations.
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
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CORPORATE GOVERNANCE MEASURES
Our Directors acknowledge the importance of good corporate governance in protection of
our Shareholders’ interests. In order to further manage any potential conflicts of interest with
the Controlling Shareholders and their respective close associates, we have adopted the
following measures:
(1) as part of our preparation for the Global Offering, we have amended our Articles of
Association to comply with the Listing Rules, and in particular, our Articles of
Association provide that, a Director shall not vote on any resolution approving any
contract or arrangement or any other proposal in which such Director or any of
his/her close associates have a material interest nor shall such Director be counted
in the quorum present at the meeting in respect of the resolution considering the
approval of such contract or arrangement or proposal. In addition, where a general
meeting of our Shareholders is to be held for considering proposed transactions in
which any of our Controlling Shareholders or their respective close associates has
a material interest, the relevant Controlling Shareholders will abstain from voting on
the relevant resolutions;
(2) our Company has formulated and adopted policies and mechanisms in relation to (i)
internal controls and decision-making procedures for related party transactions and
connected transactions, (ii) the prevention of appropriation of funds by Controlling
Shareholders, actual controllers and other related parties, (iii) provision of external
guarantee, and (iv) internal audit;
(3) if our Group and our Controlling Shareholders or any of their associates intend to
engage in any connected transaction, our Company will comply with the relevant
requirements relating to connected transactions under the Listing Rules;
(4) as required by the Listing Rules, our independent non-executive Directors shall
review any continuing connected transactions annually and confirm in our annual
reports that such transactions have been entered into in our ordinary and usual
course of business, are either on normal commercial terms or on terms no less
favorable to us than those available to or from Independent Third Parties and on
terms that are fair and reasonable and in the interests of our Shareholders as a whole;
(5) we will keep a balanced composition of executive and independent non-executive
Directors on the Board. We have appointed three independent non-executive
Directors and we believe our independent non-executive Directors possess sufficient
experience and are free of any business or other relationship that could interfere in
any material manner with the exercise of their independent judgment. We also
believe that our independent non-executive Directors are able to provide impartial
opinions to safeguard the interests of our Shareholders as a whole;
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
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(6) our independent non-executive Directors will continuously review whether there are
any conflicts of interests between our Group and our Controlling Shareholders and
the compliance and observance by our Controlling Shareholders of their non-
competition and independence undertakings, and provide impartial and professional
advice to protect the interests of our minority Shareholders. The Controlling
Shareholders has also undertaken to perform the disclosure obligations in
accordance with the Company’s Articles of Association and relevant laws and
regulations;
(7) where our independent non-executive Directors request or are requested to review
any conflict of interests circumstances between our Group and our Controlling
Shareholders and their respective close associates, our Controlling Shareholders
and/or our other Directors shall provide our independent non-executive Directors
with all necessary information for consideration and our independent non-executive
Directors shall be provided with access to independent advisers at the expense of our
Company;
(8) our audit committee, comprising only of our three independent non-executive
Directors, will conduct a review on the effectiveness of the above internal control
measures on an annual basis; and
(9) we have appointed Caitong International Capital Co., Limited as our compliance
advisor to provide advice and guidance to us in respect of compliance with the
applicable laws and regulations and the Listing Rules, including various
requirements relating to corporate governance, upon Listing.
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
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We will engage in certain transactions with our connected persons after the Listing, which
will constitute continuing connected transactions under Chapter 14A of the Listing Rules.
OUR CONNECTED PERSONS
The following persons, with whom we have entered into certain transaction in our
ordinary course of business, will become our connected persons as defined under the Listing
Rules upon completion of the Listing:
Connected persons Connected relationship
Connected persons at the issuer level
Mingde Holding Group (including without
limitation Shenzhen Fengxiang and Fengtu,
each of which is a subsidiary of Mingde
Holding), and companies in which Mingde
Holding controls 30% or more of its voting
power at general meetings (the “ Mingde
Connected Persons ”)
Mingde Holding is one of our Controlling
Shareholders, which will directly and
indirectly control approximately 53.39% of
the voting rights in our total issued share
capital upon completion of the Global
Offering (assuming the Over-allotment
Option is not exercised and no further
Shares are issued pursuant to the share
options granted under the 2022 Stock
Option Incentive Plan). Accordingly,
members of the Mingde Holding Group
(excluding our Group) and 30%-controlled
entities of Mingde Holding will become our
connected persons upon completion of the
Listing.
Hive Box and companies in which Hive Box
controls 30% or more of its voting power at
general meetings (together, the “ Hive Box
Connected Persons ”)
As of the Latest Practicable Date, Mr.
Wang, one of our Controlling Shareholders
and our executive Director indirectly
exercises over 30% of the voting rights in
Hive Box. Accordingly, Hive Box and the
subsidiaries and 30%-controlled entities of
Hive Box are associates of Mr. Wang and
will become our connected persons upon
completion of the Listing.
CONNECTED TRANSACTIONS
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Connected persons Connected relationship
Connected persons at the
subsidiary level
Kerry Properties and its subsidiaries
(the “ KPL Group ”)
As of the Latest Practicable Date, Kerry
Properties directly held 20.84% of the total
issued share capital, and is a substantial
shareholder, of our subsidiary, Kerry
Logistics. Therefore, the KPL Group will
become our connected persons at the
subsidiary level upon completion of the
Listing.
Kerry Group Limited (“ KGL”) and its
subsidiaries, including Kerry Holdings and
Kuok Registrations Limited (“ KRL”), and
30%-controlled entities
As of the Latest Practicable Date, KGL
indirectly held 32.97% of the total issued
share capital, and is one of the controlling
shareholders, of our subsidiary, Kerry
Logistics. Therefore, KGL and its
subsidiaries and 30%-controlled entities will
become our connected persons at the
subsidiary level upon completion of the
Listing.
SUMMARY OF OUR CONTINUING CONNECTED TRANSACTIONS
Nature of transaction Counterparty
Applicable Listing
Rules Waiver sought
Fully-exempt continuing connected transactions
– with connected person(s) at the issuer level
1 Provision of technology,
communication and
miscellaneous services and
goods by our Group
Mingde Connected
Persons and the Hive
Box Connected
Persons
14A.76(1)(a) N/A
2 Leasing of premises and
equipment by our Group as
tenant or landlord
Mingde Connected
Persons
14A.76(1)(a) N/A
CONNECTED TRANSACTIONS
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Nature of transaction Counterparty
Applicable Listing
Rules Waiver sought
– with connected persons at the subsidiary level
3 Provision and procurement
of comprehensive services
by our Group
KGL and its
subsidiaries and
30%-controlled
entities
14A.76(1)(b) N/A
4 Provision of warehouses
management services by a
subsidiary of Kerry
Logistics
KHL Group 14A.76(1)(b) N/A
5 Framework agreement in
respect of the provision of
services, leasing of premises
and procurement of
comprehensive services by
Kerry Logistics
Kerry Holdings 14A.76(1)(b) N/A
6 Framework agreements in
respect of the provision of
services and leasing of
premises by Kerry Logistics
Kerry Properties 14A.76(1)(b) N/A
7 Brand license granted to
Kerry Logistics and its
subsidiaries
KRL 14A.76(1)(b) N/A
Partially-exempt continuing connected transactions
8 Procurement of goods and
services in respect of
employees benefits of our
Group
Shenzhen Fengxiang 14A.76(2)(a) Announcement
requirement
9 Procurement of
comprehensive goods and
services in relation to our
business operations
Fengtu and Hive
Box
14A.76(2)(a) Announcement
requirement
10 Provision of integrated
logistics services by our
Group
Shenzhen Fengxiang
and Hive Box
14A.76(2)(a) Announcement
requirement
CONNECTED TRANSACTIONS
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FULLY-EXEMPT CONTINUING CONNECTED TRANSACTIONS
Transactions with Connected Persons at the Issuer Level
We have entered into, and expect to continue to enter into, the following types of
transactions with our connected persons at the issuer level, which were entered into on normal
commercial terms or better and are expected to continue after the Listing. Our Directors
currently expect that the highest applicable percentage ratio in respect of the aggregate
transaction amount of transactions within each such category as set out below, calculated for
the purpose of Chapter 14A of the Listing Rules, will be less than 0.1% on an annual basis.
Under Rule 14A.76(1) of the Listing Rules, these transactions will be fully exempted from the
reporting, annual review, announcement and independent Shareholders’ approval requirements
under Chapter 14A of the Listing Rules:
1. Provision of technology, communication and miscellaneous services and goods
We have entered into, and will continue to enter into post-Listing, certain agreements with
certain of the Mingde Connected Persons and/or the Hive Box Connected Persons, pursuant to
which we supply to the Mingde Connected Persons and/or the Hive Box Connected Persons
various types of services and goods and the relevant Mingde Connected Persons and/or the
Hive Box Connected Persons pay services fees and procurement costs, respectively, to us in
respect thereof, including:
(i) technical and technological related services provided by certain subsidiaries of our
Company, including without limitation SF Technology and Shenzhen SF
Communications Services Co., Ltd.* (ʮ̡)( “ SF
Communications ”) and their respective subsidiaries, to certain of the Mingde
Connected Persons and/or the Hive Box Connected Persons, such as (i) big data and
system maintenance services, customized research and development services and
risk management and security services provided to Mingde Connected Persons with
a view to supporting and optimizing its systems and operations; and (ii) customer
services-related services provided by SF Communications and its subsidiaries to the
Hive Box Connected Persons and/or the Mingde Connected Persons, where a
designated customer services team will, under our guidelines and protocols, provide
hotline consultation and post-sale services to calling customers; and
(ii) various other supplementary operational and back-office services, or consumable
products, provided or supplied to certain Mingde Connected Persons and/or Hive
Box Connected Persons, such as administration services, property and premise
management services, security management services, routine human resources
management services, hospitality and meetings services, payment channel and
agency services, e-commerce clients platform services and consumable products
provided by certain subsidiaries of our Company,
(together, the “ Comprehensive Services and Goods Supply Arrangements ”).
CONNECTED TRANSACTIONS
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Pricing policy
The services fees to be charged to Mingde Connected Persons and/or Hive Box Connected
Persons by our Group under the Comprehensive Services and Goods Supply Arrangements
have been and will be determined on arm’s length basis, and are generally charged with
reference to factors including, where relevant and appropriate, (i) the fee and price quotes for
similar services and goods we charge to other users of such services our subsidiaries offer; (ii)
the prevailing market price for the relevant services, taking into account the nature and the
complexity of the services provided; and (iii) the relevant costs incurred by our Group in
rendering such services, including labor cost, administrative expenses and other overhead
expenses, and the amount of resources (including human resources) and volume of the services
incurred in the provision of such services.
Reasons for the transactions
Our Group is the largest integrated logistics service provider in Asia in terms of revenue
in 2023, committed to becoming a data and technology-driven company providing solutions to
third parties. Given the scale of our business and our leading position within the industry, we
have developed and have extensive experience in the operation of technology solutions
complimentary to the operation of our business. We have also developed mature capability to
provide high quality customer services from our experience working with our broad business
and retail customers base over the years. The provision of technical and technological related
services to the Mingde Connected Persons and/or the Hive Box Connected Persons will allow
our Group to monetize on our expertise and more efficiently utilize such resources originally
available to us to grow its business and develop its reputation in the market. The provision of
certain operational and back-office supplemental services has also, in many instances, enabled
us to achieve economies of scale and improve our efficiency.
In addition, our Group has been providing technological and technical related services,
supplementary operational and back-office services and a small amount of consumable goods
to the Mingde Connected Persons and/or the Hive Box Connected Persons for a number of
years. The fees that we charge the Mingde Connected Persons and/or the Hive Box Connected
Persons for such services or goods is comparable to the prevailing market price for such
services and goods. Over the years, the Mingde Connected Persons and the Hive Box
Connected Persons have developed an amicable and effective working relationship with our
Group and have complied with the relevant terms of the supply contracts in all material
respects.
CONNECTED TRANSACTIONS
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2. Leasing of premises
We have entered into, and expect to continue to enter into, property leasing arrangements
with certain Mingde Connected Persons, including Hangzhou Fengtai E-Commerce Industrial
Park Management Co., Ltd.* (ʮ̡)( “ Fengtai E-Commerce ”),
pursuant to which we rent office premises owned by Fengtai E-Commerce and pay rental fees
to the Mingde Connected Persons, and we lease office premises owned by us to Mingde
Holding and Shenzhen Fengxiang (and/or its subsidiaries) in return for rental fees.
Pricing policy
The rental fees in respect of the leasing of properties by our Group from the Mingde
Connected Persons and the leasing of properties by the Mingde Connected Persons from our
Group shall be determined based on arm’s length negotiation between us and the relevant
Mingde Connected Person, with reference to, among others, the prevailing market rent offered
by Independent Third Parties at the relevant time when the rental agreement is entered into for
comparable properties with similar gross floor area and functions in nearby area, among others.
Reasons for the transactions
Our Group leases certain properties to and from the Mingde Connected Persons for office
use and we expect that we will continue such leases of properties after the Listing. We believe
that it is mutually beneficial and would save our Group administrative costs and time that
would otherwise be spent on negotiating and entering into contracts with different Independent
Third Party property owners or tenants (as applicable). Further relocation of our existing leased
properties to other properties may also cause unnecessary disruptions to our business and
additional costs and expenses.
A majority of our office premises and warehouses are either properties owned by us or
leased from Independent Third Party property owners, and we have not been and will not be
bound to lease our office premises and warehouses from or to the Mingde Connected Persons.
We will continue to use our best effort to identify the most favorable leasing terms for our
office premises and warehouses in the future, and expect to lease office premises and
warehouses from Independent Third Party property owners if the terms and conditions of the
lease and/or the location or infrastructure of the premises offered by such Independent Third
Party property owners are more favorable to us.
Transactions with Connected Persons at the Subsidiary Level
We have also entered into the following agreements with our connected persons at the
subsidiary level, which was entered into on normal commercial terms or better and is expected
to continue after the Listing. Our Directors currently expect that the highest applicable
percentage ratio of these transactions calculated for the purpose of Chapter 14A of the Listing
CONNECTED TRANSACTIONS
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--- page 339 ---
Rules will be less than 1% on an annual basis. Under Rule 14A.76(1) of the Listing Rules, these
transactions will be fully exempted from the reporting, annual review, announcement and
independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.
3. Provision and procurement of comprehensive services by our Group with KGL
Certain members of our Group (excluding Kerry Logistics and its subsidiaries (the “ KLN
Group ”)) and KGL and its subsidiaries and 30%-controlled entities (the “ KGL Connected
Persons ”) have conducted or will conduct certain transactions, including the lease of premises
by the KGL Connected Persons for our services points or delivery lockers, provision of hotel
accommodation and hospitality services by the KGL Connected Persons and integrated
logistics services to the KGL Connected Persons. Such agreements were entered into or will
be entered into on normal commercial terms in the ordinary and usual course of our business
and are expected to continue after the Listing.
Pricing policy
Fees for the aforementioned services provided or procured by us shall be determined
based on arm’s length negotiation between us and the relevant member of the KGL Connected
Persons, and in particular, fees for property leasing shall be determined with reference to the
prevailing market rent offered by Independent Third Parties on comparable circumstances; fees
for hotel accommodation and hospitality services shall be such market rate as charged by the
KGL Connected Persons; and fees for integrated logistics services shall be in the range of
applicable price we charge Independent Third Party customers comparable to the KGL
Connected Persons.
Reasons for the transactions
KGL is a multinational conglomerate with investment holdings in various areas of
business, including as one of the controlling shareholders of Kerry Properties (a company
listed on the Stock Exchange, stock code: 0683.HK, which engages in property development
in the PRC and the Asia Pacific region), and is interested in more than 30% shareholding of
Shangri-la Asia Limited (a company listed on the Stock Exchange, stock code: 0069.HK, which
is a global hotel chain operator and hospitality service provider). On the other hand, we are the
largest integrated logistics service provider in Asia with a full-spectrum of logistics services
capability. Given the leading market positions and extensive services networks of both the
KGL Connected Persons and our Group in their respective industries, it is natural for, and in
the best interest of our Group to, from time to time, enter into leases for certain commercial
premises owned by members of the KGL Connected Persons for our business operations, and
provide integrated logistics services to members of the KGL Connected Persons. Therefore, we
believe that it is beneficial and in the best interests for our Group and the Shareholders as a
whole to enter into the aforementioned transactions.
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4. Warehouses Management Agreements
On August 28, 2024, Kerry Warehouse (Hong Kong) Limited (the “ Warehouses
Manager ”) (a wholly-owned subsidiary of Kerry Logistics) has entered into seven warehouses
management agreements with, respectively, the legal owners of seven Hong Kong warehouses
(the “ Warehouses ”) to provide building management services, leasing management services,
operation of warehouse facilities and other related services (the “ Warehouses Management
Services ”) for the Warehouses (collectively the “ Warehouses Management Agreements ”).
The legal owners of the Warehouses are wholly-owned subsidiaries of Kerry Holdings,
and are our connected persons at the subsidiary level.
The term of each Warehouses Management Agreement (as amended) commenced on
October 4, 2024 and will expire on October 3, 2027, unless terminated earlier pursuant to its
terms.
Fees under the Warehouses Management Agreements and pricing policy
In consideration for the provision of the Warehouses Management Services, the relevant
legal owners shall pay certain management fees (including monthly lease management fees
charged as a percentage of the income from the operations of the relevant Warehouses, monthly
building manager fees charged as a percentage of the actual management expenses incurred,
reimbursement of estate agent commissions on an “at-cost basis”, and payment of certain
outgoings and expenses) to the Warehouses Manager. The management fee was determined
after arm’s length negotiations between the parties and is on normal commercial terms, taking
into account various factors, including the services fees charged by Independent Third Party
warehouse service providers for standard building management services, and adjusted
according to the type, size and location of the premises, and the relevant parties’ or customers’
specific Warehouses Management Services required.
In addition, under certain Warehouses Management Agreements (as amended), the
Warehouses Manager has agreed to guarantee relevant legal owners of certain Warehouses a
minimum level of gross revenue during the term of the Warehouses Management Agreements
(as amended). If the Warehouses Manager is unable to seek tenants for the relevant Warehouses
and achieve the guaranteed gross revenue for the relevant Warehouse, the Warehouses Manager
shall, as principal, satisfy such minimum guaranteed gross revenue. The guaranteed gross
revenue was determined after arm’s length negotiations between the parties with reference to
the estimated rate of occupancy and/or usage of the relevant Warehouse throughout the term
of the Warehouses Management Agreements (as amended), and the estimated market rental and
other revenue to be generated from such occupancy and/or usage of the relevant Warehouse.
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Reasons for the transactions
Given the experience of the KLN Group in operating warehouses, the KLN Group can
leverage on its existing set-up and resources to generate revenue by providing the Warehouses
Management Services. In addition, due to the long-standing business relationship between the
KLN Group and Kerry Holdings (together with its subsidiaries, the “ KHL Group ”), we believe
that it is beneficial to our Group and Shareholders as a whole to enter into the Warehouses
Management Agreements as these transactions will facilitate the operation and growth of our
business in general.
5. KHL Framework Services Agreement
On July 31, 2024, Kerry Logistics entered into a framework services agreement with
Kerry Holdings (the “ KHL Framework Services Agreement ”). Pursuant to the KHL
Framework Services Agreement:
(i) the KLN Group agreed to provide in places outside Taiwan services including
delivery and transportation services, local courier services, freight services, freight
agency services, insurance brokerage and related services, catering services and
food and beverages trading, and services relating to management and operation of
warehouse facilities (including building management, leasing and licensing
management, warrant operations, IT support, human resources, administration and
related services, and excluding the Warehouses Management Services to be provided
pursuant to the Warehouses Management Agreements) to the KHL Group (excluding
Kerry Properties and its subsidiaries, the “ Relevant KHL Group ”);
(ii) the Relevant KHL Group agreed to lease their premises in Hong Kong to the KLN
Group; and
(iii) the Relevant KHL Group agreed to provide services in and/or from Taiwan including
land transportation, freight services, freight agency services and other logistics
services, and warehousing services to the KLN Group.
The KHL Framework Services Agreement (as amended) will take effect on September 16,
2024 and will expire on the third anniversary of the commencement date. The KHL Framework
Services Agreement can be extended for a further term of three years with the mutual written
agreement of Kerry Logistics and Kerry Holdings. Individual agreements will be entered into
from time to time and as required between members of the KLN Group (on the one hand) and
members of the Relevant KHL Group (on the other hand) with respect to specific services
covered by the KHL Framework Services Agreement (as amended).
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Pricing policy
Pursuant to the KHL Framework Services Agreement, the pricing of each of the
underlying transactions entered into thereunder shall be determined by the parties at the time
of entry into the relevant agreements for such transactions with reference to the applicable
market practice and value. In particular:
(i) with respect to the services to be provided by the KLN Group to Relevant KHL
Group: (a) in relation to logistics and freight services, services fees shall be charged
with reference to the weight and type of cargo, mode of shipment, freight rate of the
carrier, type of storage space required and the prevailing market services fees
charged by comparable Independent Third Party service providers; (b) in relation to
insurance brokerage and related services, the services fee shall be determined with
reference to the prevailing market insurance brokerage fees charged by Independent
Third Party insurance companies; and (c) in relation to services relating to
management and operation of warehouse facilities, the services fee shall be
determined with reference to the type, size and location of the premises, the relevant
party/customers’ specific requirements and the prevailing market services fees
charged by Independent Third Party warehouse service providers;
(ii) with respect to the leasing of properties by the Relevant KHL Group to the KLN
Group, the rental shall be determined with reference to the prevailing market rent
offered by Independent Third Parties at the relevant time for comparable properties
in the nearby area; and
(iii) with respect to the services to be provided by the Relevant KHL Group to the KLN
Group: (a) in relation to logistics and freight services, services fees shall be charged
with reference to the weight and type of cargo, mode of shipment, freight rate of the
carrier, type of storage space required and the prevailing market services fees
charged by comparable Independent Third Party service providers; and (b) in
relation to warehousing services, the services fee shall be determined with reference
to the type, size and location of the premises, the relevant party/customers’ specific
requirements and the prevailing market services fees charged by Independent Third
Party warehouse service providers.
Reasons for the transaction
As an integrated logistics service provider, the KLN Group has been providing logistics
services, freight services and related services, such as insurance brokerage to the Relevant
KHL Group in places outside Taiwan, and by continuing to provide its services to the Relevant
KHL Group, the KLN Group is able to further enhance its operational scale. In relation to the
provision of services relating to management and operation of warehouse facilities, the
Relevant KLN Group can leverage on its existing set-up and resources to generate revenue. On
the other hand, the KHL Group has been providing, among other businesses, integrated
logistics and international freight forwarding services in and from Taiwan, and, the Relevant
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KHL Group has been providing international freight forwarding agency and related services to
the KLN Group and its customers in and from Taiwan where the KLN Group do not have a
presence. In addition, the KLN Group has setup and has been operating its businesses in and
from the leased properties owned by the Relevant KHL Group, and may require to lease
additional premises for its business operations due to the continuing growth in the Group’s
operations in Hong Kong. We believe that owing to the long-term business relationship
between the KLN Group and the Relevant KHL Group, it would be beneficial to our Group and
Shareholders as a whole to enter into the KHL Framework Services Agreement to facilitate the
operation and growth of our business.
6. KPL Framework Agreements
On November 30, 2022, Kerry Logistics entered into (i) a framework agreement (the
“KLN-KPL Services Framework Agreement ”) with Kerry Properties, pursuant to which the
KLN Group agreed to provide services including delivery services, local courier services,
freight services, freight agency services, insurance brokerage and related services, and services
relating to management and operation of warehouse facilities (including building management,
leasing and licensing management, warrant operations, IT support, human resources,
administration and related services) to the KPL Group; and (ii) a framework agreement (the
“KPL Services Framework Agreement ”, together with the KLN-KPL Services Framework
Agreement, the “ KPL Framework Agreements ”) with Kerry Properties pursuant to which the
KPL Group agreed to lease premises owned by the KPL Group, including without limitation
office premises, residential premises and warehouses, to the KLN Group.
The KPL Framework Agreements are for a fixed term of three years commencing on
January 1, 2023. Individual agreements will be entered into from time to time and as required
between members of the KLN Group (on the one hand) and members of the KPL Group (on
the other hand) with respect to specific services covered by the KPL Framework Agreements.
Pricing policy
Pursuant to the KPL Framework Agreements, the pricing of each of the underlying
transactions entered into thereunder shall be determined by the parties at the time of entry into
the relevant agreements for such transactions with reference to the applicable market practice
and value. In particular:
(i) with respect to the services to be provided by the KLN Group to KPL Group: (a) in
relation to logistics and freight services, services fees shall be charged with
reference to the weight and type of cargo, mode of shipment, freight rate of the
carrier, type of storage space required and the prevailing market services fees
charged by comparable Independent Third Party service providers; (b) in relation to
insurance brokerage and related services, the services fee shall be determined with
reference to the prevailing market insurance brokerage fees charged by Independent
Third Party insurance companies; and (c) in relation to services relating to
management and operation of warehouse facilities, the services fee shall be
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determined with reference to the type, size and location of the premises, the relevant
party/customers’ specific requirements and the prevailing market services fees
charged by Independent Third Party warehouse service providers; and
(ii) with respect to the leasing of properties by the KPL Group to the KLN Group, the
rental shall be determined with reference to the prevailing market rent offered by
Independent Third Parties at the relevant time for comparable properties in the
nearby area.
Reasons for the transactions
As an integrated logistics service provider, the KLN Group has been providing logistics
related services including insurance brokerage and related services, and has been able to
enhance its operational scale by expanding its services to the KPL Group. In relation to the
provision of services relating to management and operation of warehouse facilities, the KLN
Group can leverage on its existing set-up and resources to generate revenue. In addition, the
KLN Group requires to continue its leasing of premises from the KPL Group for its business
operations due to the continuing growth in the KLN Group’s operations in Hong Kong. We
believe that owing to the long-term business relationship between the KLN Group and the KPL
Group, it would be beneficial to our Group and Shareholders as a whole to enter into the KPL
Framework Agreements to facilitate the operation and growth of our business.
7. Kerry Brand Licence Agreements
On March 25, 2021, in order to ensure that Kerry Logistics and its subsidiaries will be
able to continue to use its brand name upon completion of the acquisition of a majority stake
in Kerry Logistics by our Company, the following brand name and trademarks licensing
agreements have been entered into by the relevant parties:
(i) a brand license agreement entered into between Kerry Logistics and KRL (a
subsidiary of Kerry Holdings), pursuant to which KRL agreed to grant to Kerry
Logistics (i) a limited, non-exclusive, non-assignable and revocable licence for
certain existing Kerry licensed trademarks, and a limited, non-exclusive, non-
assignable and revocable right to use “KERRY” as part of company name, trade
name, internet domain names and social media handles, in both cases in relation to
certain permitted purposes and territories as set out in the agreement; and (ii) a right
to grant sub-licences to certain existing sub-licensees and, subject to KRL’s prior
written consent (such consent not to be unreasonably withheld or delayed), a right
to sub-license additional sub-licences to its subsidiaries (the “ Kerry Logistics
Brand Licence Agreement ”); and
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(ii) a brand license agreement entered into between KEX Thailand and KRL, pursuant
to which KRL agreed to grant to KEX Thailand (i) a limited, non-exclusive,
non-assignable and revocable licence for certain existing Kerry Express licensed
trademarks, and a limited, non-exclusive, non-assignable and revocable right to use
“KERRY EXPRESS” as part of company name, trade name, internet domain names
and social media handles, in both cases in relation to certain permitted purposes and
territories as set out in the agreement; and (ii) a right to grant sub-licences to certain
existing sub-licensees and, subject to KRL’s prior written consent (such consent not
to be unreasonably withheld or delayed), a right to sub-license additional sub-
licences to its subsidiaries (the “ KEX Brand Licence Agreement ”, together with
the Kerry Logistics Brand Licence Agreement, the “ Kerry Brand Licence
Agreements ”).
The Kerry Logistics Brand License Agreements took effect on September 16, 2021 and
will expire on June 30, 2025. With respect to the KEX Brand Licence Agreement, given Kerry
Logistics ceased to be a shareholder of KEX Thailand, on May 23, 2024, KRL has served a
termination notice to KEX Thailand for the termination of the KEX Brand Licence Agreement,
pursuant to which the Agreement will be terminated with effect from 9 months after the date
on which such termination notice was served (i.e. on February 22, 2025), and the right for KEX
Thailand to use the names and trademarks associated with “KERRY EXPRESS” brand will
cease on February 22, 2025.
The licence fee for each of the Kerry Brand Licence Agreements is a nominal one-off
amount of HK$100, which was determined by arm’s length negotiations between the parties
with reference to historical licence fees and use of the licence.
Reasons for the transactions
The KLN Group and KEX Thailand have adopted its trademarks and trade names
involving the use of “KERRY” or “KERRY EXPRESS” (as the case may be) across all the
international markets in which the KLN Group operates. The ongoing use of trademarks and
trade names involving the use of “KERRY” or “KERRY EXPRESS” (as the case may be) by
the KLN Group and KEX Thailand would enable it to continue to retain its brand identity and
culture and maintain customer familiarity in the overseas markets. We believe that the Kerry
Brand Licence Agreements are in the interests of our Group and Shareholders as a whole.
PARTIALLY-EXEMPT CONTINUING CONNECTED TRANSACTIONS
We have entered into the following framework agreements with the relevant Mingde
Connected Persons, which were entered into on normal commercial terms or better and are
expected to continue after the Listing. Our Directors currently expect that the highest
applicable percentage ratio of these transactions calculated for the purpose of Chapter 14A of
the Listing Rules will be more than 0.1% but less than 5% on an annual basis. Under Rule
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14A.76(2) of the Listing Rules, these transactions will be subject to the reporting, annual
review and announcement requirements under Chapter 14A of the Listing Rules but will be
exempted from the independent Shareholders’ approval requirement under Chapter 14A of the
Listing Rules:
8. Employees Benefit Goods and Services Procurement Framework Agreement
Parties (i) our Company; and
(ii) Shenzhen Fengxiang, a Mingde Connected Person which is
principally engaged in the business of development and
provision of employees benefits related systems and services
and merchandise.
Principal terms
The Company entered into a framework agreement with Shenzhen Fengxiang on
December 28, 2023 (the “ Employees Benefit Goods and Services Procurement Framework
Agreement ”), pursuant to which our Group will procure from Shenzhen Fengxiang and its
subsidiaries and 30%-controlled entities certain types of goods and services for the purpose of
our employees’ benefits, including (i) information technology services via the “Fengshi (࠮”)
business system, an online group catering services platform offering enterprise customers staff
meals and meals ordering services; (ii) software and hardware for our staff canteen, meal
delivery services for our staff canteen and overtime meal deliveries; (iii) operation,
development, launch, technology and maintenance services in respect of the development and
operation of a tailor-made benefit platform for our employees, which allows our employees to
earn points on the platform and use points earned to exchange for goods; (iv) consumer
merchandises for employees’ benefit purpose; (v) services for the planning, organizing and
implementing team building, annual events, training, seminars, tea sessions and other
employees’ benefits events; and (vi) other related ancillary services and goods (the
“Employees Benefit Procurement Arrangements ”).
The Employees Benefit Goods and Services Procurement Framework Agreement is valid
for a term commencing on January 1, 2024 and ending on December 31, 2026, and subject to
renewal for another three years upon parties’ mutual agreements and we will comply with the
applicable requirements under the Listing Rules and applicable internal requirements upon
renewal. Shenzhen Fengxiang and/or members of its subsidiaries and 30%-controlled entities
(on the one hand) and members of the Group (on the other hand) will enter into separate
underlying agreements, which will set out the specific terms and conditions according to the
principles provided in the Employees Benefit Goods and Services Procurement Framework
Agreement.
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Pricing Policy
The procurement fees charged by the relevant Mingde Connected Persons under the
transactions subject to the Employees Benefit Goods and Services Procurement Framework
Agreement have been and will be determined on arm’s length basis, with reference to factors
including (i) the fee and price quotes for similar services and goods in the market, and with
respect to certain tailor-made services and products provided by Shenzhen Fengxiang to us
where there is limited supply of the same type of services and products offered by Independent
Third Parties in the market, the degree of tailor-made and specifications required of such
services and products provided by Shenzhen Fengxiang; (ii) where relevant and appropriate,
the relevant costs incurred by the relevant Mingde Connected Persons in rendering such goods
and services, including labor cost and administrative expenses; (iii) the volume of the service
or the amount of goods purchased, as applicable and appropriate; and/or (iv) the quality of the
services and goods offered by Shenzhen Fengxiang in the previous year as reflected from the
feedback collected from our employees through the appraisal system adopted. The price
charged by Shenzhen Fengxiang for the benefits platform services offered to us is also
comparable to the price charged by Shenzhen Fengxiang to its other independent customers
with similar services requirements, and Shenzhen Fengxiang has an internal price comparison
system to compare the pricing of consumer merchandise sold on its benefits platform to the
pricing on other e-commerce platforms. To ensure that the pricing of the services and goods
provided by the relevant Mingde Connected Persons is on normal commercial terms, fair and
reasonable and in the interests of our Shareholders as a whole, prior to entering into
transactions with the relevant Mingde Connected Persons, we would conduct an assessment
process whereby we will compare the pricing and terms of the services and goods offered by
Shenzhen Fengxiang (and/or its subsidiaries and 30%-controlled entities) with those offered by
other suppliers.
Historical amount
Shenzhen Fengxiang started providing services and goods relating to employees’ benefit
to us from July 2021. The approximate aggregate transaction amounts between our Group and
Shenzhen Fengxiang and its subsidiaries for the Employees Benefit Procurement Arrangements
for the years ended December 31, 2021, 2022 and 2023 and for the six months ended June 30,
2024 are as follows:
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2024
(RMB’000) (RMB’000) (RMB’000) (RMB’000)
121,006 255,349 285,325 122,391
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The increase in the above transaction amounts during the Track Record Period is mainly
due to (i) our increased demand for such goods and services under the Employees Benefit
Procurement Arrangements to cope with the continued growth of our workforce; and (ii)
Shenzhen Fengxiang started providing the relevant services to us from July 2021.
Annual caps
We expect the maximum aggregate amount payable by our Group to the relevant Mingde
Connected Persons for the Employees Benefit Procurement Arrangements for the years ending
December 31, 2024, 2025 and 2026 to be as follows:
For the year ending December 31,
2024 2025 2026
(RMB’000) (RMB’000) (RMB’000)
420,000 530,000 662,500
Basis of annual caps
In determining the annual caps for the transactions contemplated under the Employees
Benefit Goods and Services Procurement Framework Agreement, we have primarily
considered, among other things, the following:
(i) the historical transaction amounts in respect of the Employees Benefit Procurement
Arrangements and the expected increase in procurement costs of the goods and
services subject to the Employees Benefit Procurement Arrangements and the pilot
launch of our new incentive system “Feng Dou ( ᔮԌ)” to reward our couriers for
their positive conduct during the courier process in 2023 in the form of points that
can be spent on our existing tailor-made benefit platform for our employees to
exchange for consumer merchandises such as groceries, apparel and gadgets, among
others, which is expected to gradually expand, cumulating to an estimated overall
growth rate of approximately 17% per annum in this regard. Under the “Feng Dou”
platform launched in 2023, our couriers and employees are now able to earn points
for redeeming goods multiple times throughout any given year based on their
performance and conduct at work;
(ii) since the goods and services we procure from the relevant Mingde Connected
Persons under the Employees Benefit Procurement Arrangements are goods and
services to be used for the purpose of employees benefits for our employees, and the
expected expansion of our workforce generally at an estimated rate of approximately
10% per annum to cope with the expansion of our business will increase our need
for employees benefit-related services and goods; and
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(iii) given the aforementioned incentive scheme was only launched in 2023 and is
therefore relatively new from the perspective of our employees, we expect that as
our employees get more accustomed with this incentive system in the second half of
2024, they may choose to spend more of the points they earnt to exchange for goods
on the benefits platform, as compared with the six months ended June 30, 2024. At
the same time, such benefit points do not have an expiration date, which means that
our employees can choose to spend those benefit points they have earnt and
accumulated throughout 2023 and the first six months of 2024 in the second half of
2024. Given benefit points are given out throughout the year and order volume is
expected to be higher in the second half of a year owing to seasonality, it is expected
that our employees would receive more benefit points in the second half of 2024.
Furthermore, the variety of goods available for exchange on our benefits platform
have been increasing, which we expect to further enhance the attractiveness of such
platform to our employees and may encourage them to spend more points on the
platform. The goods available for exchange on our benefits platform includes both
goods of a lower value (such as daily necessities) and those of a higher value (such
as electronic devices), so it is possible that some of our employees may save up
points to exchange for goods that are of higher value in the latter part of the year.
Reasons for the transaction
In line with our people-centric culture and management philosophy, and considering the
nature of our business, the size of our workforce and the geographical span of our business
operations across Asia and the rest of the world, we would require tailor-made employees
benefit solutions, as opposed to a generic employees benefit system. On the other hand, the
Mingde Connected Persons have a proven track record of operating e-commerce and retail
business operations. At the same time, we have established a long-term and stable business
relationship with the Mingde Connected Persons, and the Mingde Connected Persons have
through past cooperation acquired a comprehensive understanding of our business and
operational requirements and could translate their understanding and experience working with
us into designing and adapting employees benefit solutions that would best suit our business.
In addition, given we have already adopted the employees benefit platform provided by the
relevant Mingde Connected Persons, and our employees have been familiar with the existing
platform, we consider that it would bring about unnecessary inconvenience to our business and
to our employees, and additional costs and expenses, if we were to discontinue the Employees
Benefit Procurement Arrangements with the relevant Mingde Connected Persons and to
migrate our employees benefit system to another platform operated by an Independent Third
Party. Accordingly, we believe it is in the best interest of the Group and our Shareholders as
a whole to continue the Employees Benefit Procurement Arrangements with the relevant
Mingde Connected Persons as they are capable of fulfilling our demands with a stable and high
quality supply of goods and services on terms which are similar to or better than those offered
by Independent Third Parties.
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9. Comprehensive Goods and Services Procurement Arrangements
Parties (As to Fengtu Comprehensive Goods and Services Procurement
Framework Agreement)
(i) our Company; and
(ii) Fengtu, a Mingde Connected Person, which is principally
engaged in the development and provision of logistics mapping
systems and related technologies and systems.
(As to Hive Box Comprehensive Goods and Services Procurement
Framework Agreement)
(i) our Company; and
(ii) Hive Box, which is principally engaged in the provision of
out-of-home delivery and shipment services using smart
lockers, alongside other value-added services.
Principal terms
The Company entered into a comprehensive goods and services procurement framework
agreement with Fengtu on December 28, 2023 (the “ Fengtu Comprehensive Goods and
Services Procurement Framework Agreement ”), pursuant to which our Group will procure
from Fengtu and its subsidiaries and 30%-controlled entities certain types of goods and
services, including:
(i) certain services in support of the operation and back-office functions of our Group,
including logistical mapping services and development, launch, technology and
systems maintenance services in respect of the mapping systems, delivery and road
safety risk management technology services, and services in respect of the
development of other system solutions or project-based technology products offered
by Fengtu and its subsidiaries to support our delivery services;
(ii) certain goods in support of our operation and back-office functions, such as software
and hardware equipment from time to time sourced from Fengtu supplementary to
the vehicle system and the systems solutions we procure from Fengtu (including
services in respect of the installation and maintenance of the same); and
(iii) other ancillary services and goods in relation to (i) and (ii) above,
(together, the “ Fengtu Procurement Arrangements ”).
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The Company also entered into a comprehensive goods and services procurement
framework agreement with Hive Box on December 28, 2023 (the “ Hive Box Comprehensive
Goods and Services Procurement Framework Agreement ”, together with the Fengtu
Comprehensive Goods and Services Procurement Framework Agreement, the “ Comprehensive
Goods and Services Procurement Framework Agreements ”), pursuant to which our Group
will procure from the Hive Box Connected Persons certain types of goods and services,
including:
(i) certain services in support of the operation of our Group’s logistics services
business, including drop-off and pick-up smart locker services, delivery-related
services, e-commerce platform services, project-based research and development
services and advertising services provided by the Hive Box Connected Persons;
(ii) certain goods in support of our business operations, such as smart lockers and
delivery boxes from time to time sourced from the Hive Box Connected Persons; and
(iii) other ancillary services and goods in relation to (i) and (ii) above (together, the
“Hive Box Procurement Arrangements ” and together with the Fengtu Procurement
Arrangements, the “ Comprehensive Goods and Services Procurement
Arrangements ”).
Given the Fengtu Procurement Arrangements and the Hive Box Procurement
Arrangements both involved our procurement of goods and services that are used in our
integrated logistics services, and both Fengtu and Hive Box are companies controlled by our
Controlling Shareholders, the Fengtu Procurement Arrangements and the Hive Box
Procurement Arrangements are aggregated pursuant to Rule 14A.82(1) of the Listing Rules.
Each of the Comprehensive Goods and Services Procurement Framework Agreements is
valid for a term commencing on January 1, 2024 and ending on December 31, 2026, and subject
to renewal for another three years upon parties’ mutual agreements and we will comply with
the applicable requirements under the Listing Rules and applicable internal requirements upon
renewal. Members of the Mingde Connected Persons and/or the Hive Box Connected Persons
(on the one hand) and members of the Group (on the other hand) will enter into separate
underlying agreements, which will set out the specific terms and conditions in accordance with
the principles provided in the Comprehensive Goods and Services Procurement Framework
Agreements.
Pricing Policy
The procurement fees to be charged by the relevant Mingde Connected Persons and/or the
Hive Box Connected Persons for transactions conducted under the Comprehensive Goods and
Services Procurement Arrangements will be determined on arm’s length basis, with reference
to factors including where relevant and appropriate, (i) the fee and price quotes for similar
goods and services in the market, and with respect to certain tailor-made services and products
provided by Fengtu to us where there is limited supply of the same type of services and
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products offered by Independent Third Parties in the market, the degree of tailor-made and
specifications required of such services and products provided by Fengtu; (ii) where relevant
and appropriate, the relevant costs incurred by the relevant supplier in rendering such goods
and services, including labor cost and administrative expenses; (iii) with respect to the smart
locker products and services provided by the Hive Box Connected Persons, the prices of similar
products and services offered by the Hive Box Connected Persons to other logistics service
providers; and/or (iv) the volume of the services or the amount of goods purchased.
Historical amount
The approximate aggregate transaction amounts between our Group and the relevant
Mingde Connected Persons and/or the Hive Box Connected Persons for the Comprehensive
Goods and Services Procurement Arrangements for the years ended December 31, 2021, 2022
and 2023 and for the six months ended June 30, 2024 are as follows:
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2024
(RMB’000) (RMB’000) (RMB’000) (RMB’000)
281,354 578,842 662,245 253,176
The upward trend in the above transaction amounts during the Track Record Period is
mainly due to (i) our increased demand for such goods and services and our expanded scope
of business collaboration under the Comprehensive Goods and Services Procurement
Arrangements to cope with the continued growth of our business during the Track Record
Period; and (ii) the fact that Fengtu became our connected person since October 2021. In
particular, the transaction amount in 2022 experienced a significant increase, primarily because
2022 was the first full financial year during which annual transaction amount of the Fengtu
Procurement Arrangements was fully reflected in the overall transaction amount for the
Comprehensive Goods and Services Procurement Arrangements, as Fengtu only became our
connected person in October 2021.
Annual caps
We expect the maximum aggregate amount payable by our Group to the relevant Mingde
Connected Persons and/or the Hive Box Connected Persons for the Comprehensive Goods and
Services Procurement Arrangements for the years ending December 31, 2024, 2025 and 2026
to be as follows:
For the year ending December 31,
2024 2025 2026
(RMB’000) (RMB’000) (RMB’000)
710,000 820,000 950,000
CONNECTED TRANSACTIONS
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Basis of annual caps
In determining the annual caps for the transactions contemplated under the
Comprehensive Goods and Services Procurement Arrangements, we have considered, among
other things, the following:
(i) the historical transaction amounts and volume in respect of the Comprehensive
Goods and Services Procurement Arrangements, taking into account the seasonality
we typically experience where higher volume of orders are expected in the second
half of the year;
(ii) most of the goods and services we procure from the relevant Mingde Connected
Persons and the Hive Box Connected Persons are goods and services to be used to
support the logistics business operation of our Group. Given (a) the expected
expansion of our services network; (b) the expected rising demand from our
customers for our services; and (c) the potential for development of new
collaboration scenarios with the Hive Box Connected Persons alongside us seeking
new logistics solutions for our customers, we expect that the operation and scale of
our business will continue to increase in the next three years, which will further
drive up our demand for the Comprehensive Goods and Services Procurement
Arrangements. By way of illustration, we currently expect that our demand for the
logistic mapping services to be provided by Fengtu will continue to increase at
approximately 15% to 16% year-on-year between 2024 and 2026 and that our
demand for services from Hive Box Connected Persons in support of our business
will increase at approximately 14% to 20% year-on-year between 2024 and 2026;
and
(iii) the relevant Mingde Connected Persons and the Hive Box Connected Persons have
continued to expand their services offerings and market shares in the sectors that
they operate and we expect that our cooperation with such supplier up and down the
supply chain of the logistics services industry will continue to diversify and deepen.
Reasons for the transaction
Mingde Holding and Mr. Wang have invested in businesses which provides services and
goods (such as mapping services and smart delivery lockers) that logistics service providers
would require. Many of the Mingde Connected Persons and the Hive Box Connected Persons
have significant market share and reputation in the relevant area of business that they operate
and are able to provide the goods and services required by the Group in its business operations.
The Company and its subsidiaries have been procuring the relevant goods and services from
the relevant Mingde Connected Persons and the Hive Box Connected Persons to satisfy its
business and operational needs, and we have established a long-term and stable business
relationship with such connected persons, while the relevant Mingde Connected Persons and
the Hive Box Connected Persons have through past cooperation acquired a comprehensive
understanding of our business and operational requirements. Taking into consideration that
CONNECTED TRANSACTIONS
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certain Mingde Connected Persons and Hive Box Connected Persons have provided goods and
services to us for a long period of time and the reliable quality of the goods and services
provided, we believe it is in the best interest of the Group and our Shareholders as a whole to
continue the Comprehensive Goods and Services Procurement Arrangements from the relevant
Mingde Connected Persons and the Hive Box Connected Persons as they are capable of
fulfilling our demands with a stable and high quality supply of goods and services on terms
which are similar to or better than those offered by Independent Third Parties. Entering into the
Comprehensive Goods and Services Purchasing Framework Agreements will also minimize
inconvenience to the Group’s operation and internal procedures.
10. Integrated Logistics Services Provision Arrangements
Parties (As to Fengxiang Integrated Logistics Services Provision Framework
Agreement)
(i) our Company; and
(ii) Shenzhen Fengxiang, a Mingde Connected Person.
(As to Hive Box Integrated Logistics Services Provision Framework
Agreement)
(i) our Company; and
(ii) Hive Box.
Principal terms
The Company entered into an integrated logistics services provision framework
agreement with Shenzhen Fengxiang on December 28, 2023 (the “ Fengxiang Integrated
Logistics Services Provision Framework Agreement ”), pursuant to which our Group will
provide to Shenzhen Fengxiang and its subsidiaries and 30%-controlled entities (the
“Fengxiang Connected Persons ”) certain types of integrated logistics services that the
Fengxiang Connected Persons would require in their respective ordinary course of business,
including logistics services, transportation and delivery services, freight delivery services,
warehousing and storage services, and other related ancillary services (the “ Fengxiang
Integrated Logistics Services Provision Arrangements ”).
CONNECTED TRANSACTIONS
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The Company entered into an integrated logistics services provision framework
agreement with Hive Box on December 28, 2023 (the “ Hive Box Integrated Logistics
Services Provision Framework Agreement ”, together with the Fengxiang Integrated
Logistics Services Provision Framework Agreement, the “ Integrated Logistics Services
Provision Framework Agreements ”), pursuant to which our Group will provide to Hive Box
and its subsidiaries and 30%-controlled entities certain types of integrated logistics services,
including logistics services (such as delivery services in respect of return of goods by
customers of certain e-commerce platforms using smart lockers operated by the Hive Box
Connected Persons), transportation and delivery services, freight delivery services,
warehousing and storage services, and other related ancillary services (the “ Hive Box
Integrated Logistics Services Provision Arrangements ”, together with the Fengxiang
Integrated Logistics Services Provision Arrangements, the “ Integrated Logistics Services
Provision Arrangements ”).
Given the Fengxiang Integrated Logistics Services Provision Arrangements and the Hive
Box Integrated Logistics Services Provision Arrangements both involved our provision of
integrated logistics services to companies that are controlled by our Controlling Shareholders,
the Fengxiang Integrated Logistics Services Provision Arrangements and the Hive Box
Integrated Logistics Services Provision Arrangements are aggregated pursuant to Rule
14A.82(1) of the Listing Rules.
Each of the Integrated Logistics Services Provision Framework Agreements is valid for
a term commencing on January 1, 2024 and ending on December 31, 2026, and subject to
renewal for another three years upon parties’ mutual agreements and we will comply with the
applicable requirements under the Listing Rules and applicable internal requirements upon
renewal. Members of the Fengxiang Connected Persons and/or the Hive Box Connected
Persons (on the one hand) and members of the Group (on the other hand) will enter into
separate underlying agreements or work orders, which will set out the specific terms and
conditions in accordance with the principles provided in the Integrated Logistics Services
Provision Framework Agreements.
Pricing policy
The fees we charge the Fengxiang Connected Persons and/or the Hive Box Connected
Persons in respect of our provision of integrated logistics services for transactions conducted
under the Integrated Logistics Services Provision Arrangements will be (i) in the range of
applicable price we charge Independent Third Party customers which are strategic customers
of our Group; (ii) determined in accordance with the prevailing market rates, taking into
account the volume of business and our premium position within the industry; and (iii) charged
with reference to the weight and type of parcel or cargo delivered, mode of parcel pick-up,
delivery or shipment, freight rate of the carrier and type of storage space required, as
applicable.
CONNECTED TRANSACTIONS
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Historical amount
The approximate aggregate transaction amounts between our Group and the relevant
Fengxiang Connected Persons and/or the Hive Box Connected Persons for the Integrated
Logistics Services Provision Arrangements for the years ended December 31, 2021, 2022 and
2023 and for the six months ended June 30, 2024 are as follows:
For the year ended December 31,
For the six months
ended June 30,
2021 2022 2023 2024
(RMB’000) (RMB’000) (RMB’000) (RMB’000)
9,088 17,313 25,493 707,621
The increase in the transaction amount for the year ended December 31, 2023 was mainly
due to the increased demand for the integrated logistics services from our Group to cope with
the continued growth of business of the relevant Fengxiang Connected Persons and the Hive
Box Connected Persons.
Annual caps
We expect the maximum aggregate amount payable to our Group by the relevant
Fengxiang Connected Persons and/or the Hive Box Connected Persons for the Integrated
Logistics Services Provision Arrangements for the years ending December 31, 2024, 2025 and
2026 to be as follows:
For the year ending December 31,
2024 2025 2026
(RMB’000) (RMB’000) (RMB’000)
1,815,000 2,218,000 2,821,600
Basis of annual caps
In determining the annual caps for the transactions contemplated under the Integrated
Logistics Services Provision Arrangements, we have considered, among other things, the
following:
(i) in 2024, we have reached an agreement with Hive Box Connected Persons in respect
of the mode of settlement for the return of goods services for certain e-commerce
platforms. For such e-commerce platforms goods return services, Hive Box
Connected Persons have been receiving delivery orders from consumers for return
of goods services for e-commerce platforms conducted through smart lockers. When
consumers request for goods return on e-commerce platforms and choose to drop off
the returned goods at the smart lockers of the Hive Box Connected Persons, the
CONNECTED TRANSACTIONS
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consumers will pay relevant fees for the return of goods to e-commerce platforms,
and the e-commerce platforms will pay service fees (which includes both fees for
using the smart lockers and for the logistics services involved for the delivery of the
returned goods to the merchants on the e-commerce platforms) to the Hive Box
Connected Persons.
(a) Under the new arrangement, if we provide logistics services for the delivery of
the returned goods for orders received through Hive Box Connected Persons,
after receiving the service fees from the e-commerce platforms as
aforementioned, the Hive Box Connected Persons would pay an amount to our
Group representing the integrated logistics service fees charged by our Group
to Hive Box Connected Persons for the use of our integrated logistics services
for delivery of the returned goods.
(b) Whereas under the previous arrangement, after receiving the service fees from
the e-commerce platforms as aforementioned, the Hive Box Connected Persons
would pay to our Group the gross amount of service fees for such goods return
services and we would then pay a service fee to the Hive Box Connected
Persons for the use of smart lockers in the provision of such e-commerce
platforms goods return services;
(ii) our cooperation with the Hive Box Connected Persons in respect of the delivery
services for return of goods for e-commerce platforms will continue to strengthen
due to:
(a) the expected increase in the use of smart lockers operated by Hive Box
Connected Persons for return of goods by consumers;
(b) the expected growth of business of the e-commerce platforms currently
cooperating with the Hive Box Connected Persons, which will further drive
demand for delivery services for return of goods; and
(c) the plan of the Hive Box Connected Persons to explore and commence
cooperation with more e-commerce platforms for the use of smart lockers
operated by Hive Box Connected Persons for return of goods; and
(iii) the historical transaction amounts and volume in respect of the integrated logistics
services provided to the Hive Box Connected Persons (other than under the
e-commerce platforms return of goods services) and the Fengxiang Connected
Persons in their day-to-day operations.
CONNECTED TRANSACTIONS
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--- page 358 ---
Reasons for the transactions
As the largest integrated logistics service provider in Asia and the fourth largest
integrated logistics service provider globally, we are the go-to brand for premium logistics
services for customers including businesses in the PRC such as the Fengxiang Connected
Persons and the Hive Box Connected Persons in recognition of our full-spectrum logistics
services capability. Given our market position, extensive customer base and broad services
network, it is natural for, and in the best interest of our Group to provide the Fengxiang
Connected Persons and the Hive Box Connected Persons with logistics services in exchange for
services fees. From the perspective of the Fengxiang Connected Persons and the Hive Box
Connected Persons, given our Group’s leading position in integrated logistics services industry
in Asia, we are able to provide comprehensive and high-quality solutions and services to the
Fengxiang Connected Persons and the Hive Box Connected Persons. Therefore, we believe that
it is mutually beneficial for our Group (on the one hand) and the Fengxiang Connected Persons
and the Hive Box Connected Persons (on the other hand), and is in the best interest of our
Shareholders as a whole, to continue our business cooperation on the provision of integrated
logistics services.
W AIVER GRANTED BY THE STOCK EXCHANGE
After the Listing, the Group expects to continue to carry out the transactions
contemplated under the Employees Benefit Goods and Services Procurement Framework
Agreement, the Comprehensive Goods and Services Procurement Arrangements and the
Integrated Logistics Services Provision Arrangements (the “ Partially-Exempt Continuing
Connected Transactions ”) on a recurring and continuing basis. As the Partially-Exempt
Continuing Connected Transactions are expected to be carried out on a continuing basis and to
extend over a period of time, and the material terms of the Partially-Exempt Continuing
Connected Transactions post-Listing are disclosed in this prospectus and potential investors
will participate in the Global Offering on the basis of (among others) these disclosures, our
Directors consider that strict compliance with the announcement requirements under Chapter
14A of the Listing Rules would be unduly burdensome and, in particular, would induce
unnecessary administrative costs to our Company.
As a result, our Company has applied to the Stock Exchange for, and the Stock Exchange
has granted, subject to the condition that the maximum aggregate annual transaction amount
shall not exceed the annual caps as stated above, a waiver under Rule 14A.105 of the Listing
Rules to exempt transactions set out in “— Partially-Exempt Continuing Connected
Transactions” from strict compliance with the announcement requirement under Chapter 14A
of the Listing Rules.
Our independent non-executive Directors and auditors of our Company will review
whether the above continuing connected transactions have been entered into pursuant to the
principal terms and pricing policies as disclosed in this section. The confirmation from our
independent non-executive Directors and our auditors will be disclosed annually in accordance
with the requirements of the Listing Rules. In addition, we confirm that we will comply with
CONNECTED TRANSACTIONS
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the relevant requirements under Chapter 14A of the Listing Rules and immediately inform the
Stock Exchange if any of the annual caps set out above is exceeded, or when there is a material
change in the terms of these transactions.
CONFIRMATION FROM OUR DIRECTORS
Our Directors (including our independent non-executive Directors) are of the view that
the Partially-Exempt Continuing Connected Transactions as set out above have been and will
be carried out in our ordinary and usual course of business and on normal commercial terms
(or better), and are fair and reasonable and in the interest of our Company and Shareholders
as a whole, and the proposed annual caps for those transactions are fair and reasonable and in
the interest of our Company and Shareholders as a whole.
CONFIRMATION FROM THE JOINT SPONSORS
The Joint Sponsors have (i) reviewed the relevant documents and information provided
by the Company in relation to the aforesaid partially exempt continuing connected transactions,
(ii) obtained necessary representations and confirmations from the Company and the Directors,
and (iii) participated in the due diligence and discussions with the management of our Group.
Based on the above, the Joint Sponsors are of the view that, as of the date of this prospectus,
the aforesaid Partially-Exempt Continuing Connected Transactions have been and will be
entered into in the ordinary and usual course of business of the Company on normal
commercial terms (or better) which are fair and reasonable, and in the interests of the Company
and its Shareholders as a whole, and the proposed annual caps in respect of such
Partially-Exempt Continuing Connected Transactions are fair and reasonable and in the
interests of the Company and its Shareholders as a whole.
CONNECTED TRANSACTIONS
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SUBSTANTIAL SHAREHOLDERS
So far as our Directors are aware, as of the Latest Practicable Date and immediately
following the completion of the Global Offering and without taking into account any further
Shares which may be issued pursuant to the exercise of the share options granted under the
2022 Stock Option Incentive Plan, each of the following persons will have an interest or short
position (as applicable) in our Shares or underlying Shares which would be required to be
disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3
of Part XV of the SFO, or, directly or indirectly, be interested in 10% or more of the issued
voting shares of our Company:
Assuming no exercise of the
Over-allotment Option
Assuming full exercise of the
Over-allotment Option
Name of
substantial
Shareholder
Nature of
interest
Description
of Shares
Number
of Shares
directly or
indirectly held
Approximate
percentage of
interest in the
total issued
share capital of
our Company
as of the Latest
Practicable
Date
Approximate
percentage of
shareholding in
our A Shares
Approximate
percentage of
interest in the
total issued
share capital of
our Company
Approximate
percentage of
shareholding in
our A Shares
Approximate
percentage of
interest in the
total issued
share capital of
our Company
M r . W a n g.... Interest held by
controlled
corporations
(1)
A Shares 2,661,927,139 55.27% 55.27% 53.39% 55.27% 53.11%
Mingde Holding . Beneficial
owner (1)
A Shares 2,561,927,139 (2) 53.19% 53.19% 51.38% 53.19% 51.12%
Interest held by
controlled
corporations
(1)
A Shares 100,000,000 2.08% 2.08% 2.01% 2.08% 1.99%
Notes:
(1) As of the Latest Practicable Date, Mingde Holding was held by Mr. Wang as to approximately 99.90%.
Shenzhen Weishun, which held 100,000,000 A Shares as of the Latest Practicable Date, is a wholly-owned
subsidiary of Mingde Holding. As such, Mingde Holding will be deemed to be interested in the A Shares held
by Shenzhen Weishun and Mr. Wang will be deemed to be interested in the A Shares held by Mingde Holding
and Shenzhen Weishun for purpose of Part XV of the SFO.
(2) As of the Latest Practicable Date, out of the 2,561,927,139 A Shares held by Mingde Holding, (i) 42,430,000
A Shares of Mingde Holding were pledged to the EB Pledge Agent and placed in security and trust account
“Mingde Holding – Huatai United Securities – 21 Mingde EB Guarantee and Trust Property Account* (ᅃ
ٰ–ശइᑌΥᗇՎ–21ᅃEBৄৌପਖ਼˒)” (the “ 2021 EB Security Account ”) maintained in
respect of the 2021 Mingde Exchangeable Bonds, (ii) 340,000,000 A Shares of Mingde Holding were pledged
to the EB Pledge Agent and placed in a security and trust account maintained in respect of the 2024 Mingde
Exchangeable Bonds, and (iii) an aggregate of another 737,400,000 A Shares held by Mingde Holding were
subject to pledges granted under certain loan and credit facilities in favor of certain PRC financial institutions
regulated by NAFR and/or CSRC. Part of the proceeds raised by Mingde Holding from the 2024 Mingde
Exchangeable Bonds have been utilised to partially redeem the 2021 Mingde Exchangeable Bonds and the
remaining balance of the proceeds from the 2024 Mingde Exchangeable Bonds are expected to be used for
repayment of the remaining outstanding 2021 Mingde Exchangeable Bonds. Following the repayment of the
2021 Mingde Exchangeable Bonds, the corresponding amount of A Shares pledged in the 2021 EB Security
Account will be released accordingly. For further details of the exchangeable bonds issued by Mingde Holding
and the share pledges granted by Mingde Holding, see “— Exchangeable Bonds Issued by Mingde Holding”
and “— Share Pledges by Mingde Holding”, respectively, in this section below.
SUBSTANTIAL SHAREHOLDERS
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For those who are directly and/or indirectly interested in 10% or more of the issued voting
shares of any other members of our Group, see “Statutory and General Information — 3.
Further Information about our Directors, Supervisors and Substantial Shareholders — C.
Disclosure of Interests — (b) Interests in our Company’s subsidiaries” in Appendix IV to this
prospectus.
Save as disclosed above and in Appendix IV to this prospectus, our Directors are not
aware of any person who will, immediately following the Global Offering (and the offering of
any additional H Shares pursuant to the Over-allotment Option), have an interest or short
position in the Shares or underlying Shares of our Company which would be required to be
disclosed to our Company and the Stock Exchange under the provisions of Divisions 2 and 3
of Part XV of the SFO, or will, directly or indirectly, be interested in 10% or more of the issued
voting shares of any other members of our Group.
EXCHANGEABLE BONDS ISSUED BY MINGDE HOLDING
2021 Mingde Exchangeable Bonds
On November 23, 2021, Mingde Holding conducted a non-public issuance of the 2021
Mingde Exchangeable Bonds to institutional investors in an aggregate principal amount of
RMB8 billion for a fixed term of three years with maturity date on November 23, 2024 at a
coupon rate of 0.01%, which are exchangeable for A Shares held by Mingde Holding. The 2021
Mingde Exchangeable Bonds are listed on the SZSE and are tradable by institutional investors.
The exercise period of the 2021 Mingde Exchangeable Bonds commenced on May 24, 2022
and will end on November 18, 2024 (the “ 2021 EB Exercise Period ”), during which holders
of the 2021 Mingde Exchangeable Bonds can, at their own discretion, exercise their rights to
exchange their holdings in the 2021 Mingde Exchangeable Bonds into A Shares held by
Mingde Holding at any time during the EB Exercise Period.
2021 EB Share Adjustments
The number of A Shares that can be exchanged under the 2021 Mingde Exchangeable
Bonds is calculated by dividing the principal amount of the 2021 Mingde Exchangeable Bonds
held by a bondholder by a specified share exchange price (the “ 2021 EB Exchange Price ”).
The initial 2021 EB Exchange Price is subject to downward adjustments (i) automatically upon
occurrence of certain events, including the distribution of stock dividends or making any
capital conversion, the issuance of new Shares at a subscription price lower than the Exchange
Price and distribution of cash dividends by our Company (the “ 2021 EB Automatic
Adjustments ”), and (ii) at the discretion of Mingde Holding when the closing price of A Shares
falls below 85% of the prevailing 2021 EB Exchange Price for at least 15 trading days in any
period of 30 consecutive trading days on the condition that the 2021 EB Exchange Price as
adjusted by Mingde Holding shall not be lower than the closing price of the A Shares in the
preceding trading day and the average closing price of the A Shares for the 20 preceding trading
days (the “ 2021 EB Discretionary Adjustments ”, together with the 2021 EB Automatic
Adjustments called “ 2021 EB Share Adjustments ”).
SUBSTANTIAL SHAREHOLDERS
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(1) 2021 EB Automatic Adjustments
The 2021 EB Exchange Price will be adjusted according to the following formula on the
occurrence of the following events:
(a) for distribution of stock dividends or making any capital conversion: P1=P0/(1+n)
(b) for issuing new shares (or allotment of shares): P1=(P0+A×k)/(1+k)
(c) for the simultaneous conduct of both (a) and (b): P1=(P0+A×k)/(1+n+k)
(d) for distribution of cash dividends: P1=P0-D
(e) for the simultaneous conduct of (a), (b) and (d): P1=(P0-D+A×k)/(1+n+k)
Whereby, “P0” means the 2021 EB Exchange Price prior to the adjustments, “n” means
percentage of shares issued subject to stock dividend or shares resulting from capital
conversion, “k” means percentage of new shares issuance or allotment, “A” means the price for
new shares issuance or allotment, “D” means cash dividend per share, and “P1” means the 2021
EB Exchange Price after the adjustments.
Our Company may from time to time raise funds according to its requirements by issuing
new shares or bonus shares and from time to time distribute cash dividends. These corporate
actions, if taken before the maturity of the 2021 Mingde Exchangeable Bonds, may trigger the
2021 EB Automatic Adjustments. As neither Mingde Holding has absolute control over these
corporate actions nor any control over whether or to what extent the bondholders will exercise
their exchange rights, it is possible (although very remote) that Mingde Holding may cease to
be a Controlling Shareholder due to the 2021 EB Automatic Adjustments during the 2021 EB
Exercise Period.
(2) 2021 EB Discretionary Adjustments
During the 2021 EB Exercise Period, Mingde Holding may exercise its discretion to make
2021 EB Discretionary Adjustments subject to the terms of the 2021 Mingde Exchangeable
Bonds. Any 2021 EB Discretionary Adjustments to be made will be conducted under the
circumstances and in the manner as provided for in accordance with the terms of the 2021
Mingde Exchangeable Bonds.
Mingde Holding does not intend to exercise the 2021 EB Discretionary Adjustments to the
extent that it will cease to be a Controlling Shareholder during the twelve months from the date
of Listing.
SUBSTANTIAL SHAREHOLDERS
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Pledge of A Shares in favour of EB Pledge Agent
As security for the obligations of Mingde Holding under the 2021 Mingde Exchangeable
Bonds, Mingde Holding entered into a share pledge agreement with the EB Pledge Agent on
November 10, 2021, pursuant to which 42,430,000 A Shares held by Mingde Holding,
representing approximately 0.88% of the total issued share capital of our Company as at the
Latest Practicable Date, were pledged to the EB Pledge Agent as the pledge agent of the holders
of the 2021 Mingde Exchangeable Bonds (the “ 2021 EB Share Pledge ”). Under the 2021
Mingde Exchangeable Bonds, Mingde Holding is obliged to pledge additional A Shares, which
would be triggered upon (i) a decrease in the trading price of the A Shares to a level such that
the required pledge ratio falls below 100% for 20 consecutive trading days, where the pledge
ratio is computed by dividing the market value of the A Shares pledged with the EB Pledge
Agent based on the average trading price of the A Shares in the preceding trading day by the
sum of the outstanding principal amount and the accrued interest; and/or (ii) a downward
adjustment in the 2021 EB Exchange Price in circumstances where the downward adjustment
would lead to the total number of A Shares subject to the exchange rights of the bondholders
exceeding the number of A Shares pledged to the EB Pledge Agent.
The prevailing 2021 EB Exchange Price represents a substantial premium to A Share
closing price as of the Latest Practicable Date. As of the Latest Practicable Date, (i) the
outstanding principal amount of the 2021 Mingde Exchangeable Bond was
RMB1,144,150,000; and (ii) none of the bondholders has exercised their right of exchange.
Early Redemption and Latest Developments
As of the Latest Practicable Date, Mingde Holding had initiated an offer for the early
redemption of all outstanding 2021 Mingde Exchangeable Bonds, pursuant to which holders of
the 2021 Mingde Exchangeable Bonds were entitled to elect for the redemption by Mingde
Holding of the exchangeable bonds it held from June 17, 2024 to June 20, 2024. Upon the
expiry of the election period on June 20, 2024, the number of 2021 Mingde Exchangeable
Bonds being applied for redemption corresponded to a principal amount of
RMB6,855,850,000. Upon completion of the redemption on June 27, 2024, the outstanding
principal amount of the 2021 Mingde Exchangeable Bonds was reduced from
RMB8,000,000,000 to RMB1,144,150,000, and as a result of which a pledge by Mingde
Holding to the EB Pledge Agent of 200,000,000 A Shares with respect to the 2021 Mingde
Exchangeable Bonds was released on July 5, 2024. On November 23, 2024, the 2021 Mingde
Exchangeable Bonds will mature, pursuant to which the remaining outstanding interest and
principal amount of the 2021 Mingde Exchangeable Bonds will be repaid from proceeds
derived from the 2024 Mingde Exchangeable Bonds and internal funds of Mingde Holding.
Following repayment of the 2021 Mingde Exchangeable Bonds, the corresponding 2021 EB
Share Pledge will be released accordingly.
SUBSTANTIAL SHAREHOLDERS
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2024 Mingde Exchangeable Bonds
On May 23, 2024, Mingde Holding conducted a non-public issuance of the 2024 Mingde
Exchangeable Bonds to institutional investors in an aggregate principal amount of RMB8
billion for a fixed term of three years with maturity date on May 23, 2027 at a coupon rate of
2.90%, which are exchangeable for A Shares held by Mingde Holding. Part of the proceeds
raised by Mingde Holding from the 2024 Mingde Exchangeable Bonds have been utilised to
partially redeem the 2021 Mingde Exchangeable Bonds and the remaining balance of the
proceeds from the 2024 Mingde Exchangeable Bonds are expected to be used for its repayment
of the remaining outstanding 2021 Mingde Exchangeable Bonds. The 2024 Mingde
Exchangeable Bonds are listed on the SZSE and are tradable by institutional investors. The
exercise period of the 2024 Mingde Exchangeable Bonds shall commence on November 25,
2024 and will end on May 17, 2027 (the “ 2024 EB Exercise Period ”), during which holders
of the 2024 Mingde Exchangeable Bonds can, at their own discretion, exercise their rights to
exchange their holdings in the 2024 Mingde Exchangeable Bonds into A Shares held by
Mingde Holding at any time during the 2024 EB Exercise Period.
2024 EB Share Adjustments
The number of A Shares that can be exchanged under the 2024 Mingde Exchangeable
Bonds is calculated by dividing the principal amount of the 2024 Mingde Exchangeable Bonds
held by a bondholder by a specified share exchange price (the “ 2024 EB Exchange Price ”).
The initial 2024 EB Exchange Price is subject to downward adjustments (i) automatically upon
occurrence of certain events, including the distribution of stock dividends or making any
capital conversion, the issuance of new Shares at a subscription lower than the Exchange Price
and distribution of cash dividends by our Company (the “ 2024 EB Automatic Adjustments ”),
and (ii) at the discretion of Mingde Holding when the closing price falls below 85% of the
prevailing 2024 EB Exchange Price for at least 15 trading days in any period of 30 consecutive
trading days on the condition that the 2024 EB Exchange Price as adjusted by Mingde Holding
shall not be lower than the closing price of the A Shares in the preceding trading day and the
average price of the A Shares for the 20 preceding trading days (the “ 2024 EB Discretionary
Adjustments ”), together with the 2024 EB Automatic Adjustments called “ 2024 EB Share
Adjustments ”).
(1) 2024 EB Automatic Adjustments
The 2024 EB Exchange Price will be adjusted according to the following formula on the
occurrence of the following events:
(a) for distribution of stock dividends or making any capital conversion: P1=P0(1+n)
(b) for issuing new shares (or allotment of shares): P1=(P0+Axk)/1+k)
(c) for the simultaneous conduct of both (a) and (b): P1=(P0+Axk)/(1+n+k)
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(d) for the distribution of cash dividends: P1=P0-D
(e) for the simultaneous conduct of (a), (b) and (d): P1=(P0-D+Axk)/(1+n+k)
Whereby, “P0” means the 2024 EB Exchange Price prior to the adjustments, “n” means
percentage of shares issued subject to stock dividends or shares resulting from capital
conversion, “k” means percentage of new shares issuance or allotment, “A” means the price for
new shares issuance or allotment, “D” means cash dividend per share, and “P1” means the 2024
EB Exchange Price after adjustments.
After the Listing, our Company may from time to time raise funds according to its
requirements by issuing new shares or bonus shares and from time to time distribute cash
dividends. These corporate actions, if taken after the Listing but before the maturity of the 2024
Mingde Exchangeable Bonds, may trigger the 2024 EB Automatic Adjustments. As neither
Mingde Holding has absolute control over these corporate actions nor any control over whether
or to what extent the bondholders will exercise their exchange rights, it is possible (although
very remote) that Mingde Holding may cease to be a Controlling Shareholder due to the 2024
EB Automatic Adjustments during the twelve months from the date of Listing.
(2) 2024 EB Discretionary Adjustments
During the 2024 EB Exercise Period, Mingde Holding may exercise its discretion to make
2024 EB Discretionary Adjustments subject to the terms of the 2024 Mingde Exchangeable
Bonds. Any 2024 EB Discretionary Adjustments to be made will be conducted under the
circumstances and in the manner as provided for in accordance with the terms of the 2024
Mingde Exchangeable Bonds.
Mingde Holding does not intend to exercise the 2024 EB Discretionary Adjustments to the
extent that it will cease to be a Controlling Shareholder during the twelve months from the date
of Listing.
Pledge of A Shares in favour of EB Pledge Agent
As security for the obligations of Mingde Holding under the 2024 Mingde Exchangeable
Bonds, Mingde Holding entered into a share pledge agreement with the EB Pledge Agent on
May 7, 2024, pursuant to which 340,000,000 A Shares held by Mingde Holding, representing
approximately 7.06% of the total issued share capital of our Company as at the Latest
Practicable Date, were pledged to the EB Pledge Agent as the pledge agent of the holders of
the 2024 Mingde Exchangeable Bonds (the “ 2024 EB Share Pledge ”). Under the 2024 Mingde
Exchangeable Bonds, Mingde Holding is obliged to pledge additional A Shares and/or cash,
which would be triggered upon (i) a decrease in the trading price of the A Shares to a level such
that the required pledge ratio falls below 100% for 20 consecutive trading days, where the
pledge ratio is computed by dividing the sum of the market value of the A Shares pledged with
the EB Pledge Agent based on the average trading price of the A Shares in the preceding trading
day and cash pledged with the EB Pledge agent (if any), by the sum of the outstanding principal
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amount and the accrued interest; and/or (ii) a downward adjustment in the 2024 EB Exchange
Price in circumstances where the downward adjustment would lead to the total number of A
Shares subject to the exchange rights of the bondholders exceeding the number of A Shares
pledged to the EB Pledge Agent.
The prevailing 2024 EB Exchange Price represents a substantial premium to A Share
closing price as of the Latest Practicable Date. As of the Latest Practicable Date, (i) the
outstanding principal amount of the 2024 Mingde Exchangeable Bond was RMB8 billion; and
(ii) none of the bondholders has exercised their rights of exchange.
Transfer of beneficial interest of pledged A Shares to holders of 2021 Mingde
Exchangeable Bonds and 2024 Mingde Exchangeable Bonds
In the event any holder of the 2021 Mingde Exchangeable Bonds or 2024 Mingde
Exchangeable Bonds at its own discretion exercises its right to exchange its holdings in the
2021 Mingde Exchangeable Bonds or 2024 Mingde Exchangeable Bonds into A Shares held by
Mingde Holding during the 2021 EB Exercise Period and 2024 EB Exercise Period, Mingde
Holding would be required to transfer the beneficial interest in the relevant number of pledged
A Shares to such requesting holders of the 2021 Mingde Exchangeable Bonds or 2024 Mingde
Exchangeable Bonds. In such event, the pledge of the relevant number of pledged A Shares
would be released and the corresponding principal amount of the 2021 Mingde Exchangeable
Bonds or 2024 Mingde Exchange Bonds held by the bondholder being canceled. As of the
Latest Practicable Date, the maximum number of pledged A Shares which may be required to
be transferred to the bondholders amounted to 151,268,675 A Shares, representing (i)
approximately 3.1% of the Company’s issued share capital as of the Latest Practicable Date,
and (ii) approximately 3.0% of the Company’s issued share capital upon the completion of the
Global Offering and the exercise of the Over-allotment Option in full and assuming no further
Shares have been issued pursuant to the share options granted under the 2022 Stock Option
Incentive Plan. This may however be subject to upward adjustment as a result of the 2021 EB
Share Adjustments and 2024 EB Share Adjustments.
Upon the completion of the Global Offering and the exercise of the Over-allotment
Option in full, assuming the final Offer Price is fixed at the lowest end of our Company’s Offer
Price range, assuming no further Shares have been issued pursuant to the share options granted
under the 2022 Stock Option Incentive Plan and assuming the 2021 Mingde Exchangeable
Bonds have been fully repaid, 139,178,845 pledged A Shares may be required to be transferred
to the bondholders upon the exercise of exchange rights in respect of all outstanding principal
amount under the 2024 Mingde Exchangeable Bonds as a result of the 2024 EB Automatic
Adjustments.
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SHARE PLEDGES BY MINGDE HOLDING
Apart from its investments in our Company, Mingde Holding has invested in many other
companies and industries, such as Shenzhen Fengxiang, Fengtu and Hive Box, the details of
the businesses of which are set out in the section headed “Connected Transactions” in this
prospectus. Given its nature and scale of businesses, Mingde Holding has genuine funding
requirements from time to time. Pledging A Shares held by Mingde Holding is a typical kind
of collateral to support its external financing. As of the Latest Practicable Date, in addition to
the 2021 EB Share Pledge and 2024 EB Share Pledge, an aggregate of 737,400,000 A Shares
held by Mingde Holding, representing approximately 15.31% of the total issued share capital
of our Company, were subject to pledges granted in favor of certain PRC financial institutions
regulated by NAFR and/or CSRC (collectively, “ PRC Regulated Financial Institutions ”),
such as PRC banks or PRC branch of the authorised institutions (as defined in the Banking
Ordinance) regulated by NAFR, PRC trust companies regulated by NAFR and PRC securities
companies regulated by CSRC, as security for Mingde Holding’s loans and credit facilities in
support of its external financing activities.
Certain loan and credit facilities of Mingde Holding secured by share pledges in respect
of the A Shares it holds are subject to margin call, close-out or loan-to-value ratio requirements
that would be triggered by a material variation in value of our A Shares. Nevertheless, with
respect to a vast majority of such loan and credit facilities, Mingde Holding can opt to repay
a portion of the relevant outstanding loans and/or provide additional margin funds in the event
such margin call or loan-to-value ratio requirement is triggered to avoid having to pledge
additional Shares in respect of such loan or credit facilities. As of the Latest Practicable Date,
apart from holding Shares in our Company, Mingde Holding held sizeable amount of liquid
assets which can be used to repay its indebtedness as and when it falls due, including cash and
cash equivalent, financial products issued by financial institutions and equity investments in a
number of companies with revenue-generating business operations, and has been able to obtain
financing through a variety of financing channels. In particular, as of the Latest Practicable
Date, Mingde Holding has directly and indirectly received dividends declared by our Company
in relation to the financial years ended December 31, 2021, 2022 and 2023 in an aggregate
amount of approximately RMB2.75 billion. On November 7, 2024, Mingde Holding directly
and indirectly further received dividends in the amount of RMB3.7 billion. Furthermore, to the
best knowledge of our Directors having made all reasonable enquiries, there has not been any
adverse credit records against Mingde Holding in respect of any breach of repayment
obligations under its indebtedness.
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BEFORE THE GLOBAL OFFERING
As of the Latest Practicable Date, the total issued share capital of our Company was
RMB4,816,186,983, comprising 4,816,186,983 A Shares of nominal value RMB1.00 each, all
of which are listed on the SZSE.
Description of Shares Number of Shares
Percentage of
issued share
capital
A Shares ........................................... 4,816,186,983 100.00%
Total ............................................... 4,816,186,983 100.00%
UPON COMPLETION OF THE GLOBAL OFFERING
Immediately following completion of the Global Offering, assuming that the Over-
allotment Option is not exercised and no further Shares are issued pursuant to the share options
granted under the 2022 Stock Option Incentive Plan, the entire share capital of our Company
would be as follows:
Description of Shares Number of Shares
Percentage of
issued share
capital
A Shares ........................................... 4,816,186,983 96.59%
H Shares issued pursuant to the Global Offering ....... 170,000,000 3.41%
Total ............................................... 4,986,186,983 100.00%
Immediately following completion of the Global Offering, assuming that the Over-
allotment Option is fully exercised, and no further Shares are issued pursuant to the share
options granted under the 2022 Stock Option Incentive Plan, the entire share capital of our
Company would be as follows:
Description of Shares Number of Shares
Percentage of
issued share
capital
A Shares ........................................... 4,816,186,983 96.10%
H Shares issued pursuant to the Global Offering ...... 195,500,000 3.90%
Total .............................................. 5,011,686,983 100.0%
OUR SHARES
Our H Shares in issue upon completion of the Global Offering and our A Shares are
ordinary shares in the share capital of our Company and are considered as one class of Shares.
However, apart from qualified domestic institutional investors and persons who are entitled to
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hold our H Shares pursuant to relevant PRC laws and regulations or upon approval of any
competent authority, or (if our H Shares are eligible securities for that purpose) through
Shenzhen-Hong Kong Stock Connect or Shanghai-Hong Kong Stock Connect pursuant to
relevant PRC laws and regulations, our H Shares may not be subscribed by or traded between
legal or natural persons of the PRC.
Shenzhen-Hong Kong Stock Connect has established a stock connect mechanism between
the PRC and Hong Kong. Our A Shares can be subscribed for and traded by PRC investors,
qualified foreign institutional investors or qualified foreign strategic investors and must be
traded in RMB. As our A Shares are eligible securities under the Northbound Trading Link,
they can also be subscribed for and traded by Hong Kong and other overseas investors pursuant
to the rules and limits of Shenzhen-Hong Kong Stock Connect. If our H Shares are eligible
securities under the Southbound Trading Link, they can also be subscribed for and traded by
PRC investors in accordance with the rules and limits of Shanghai-Hong Kong Stock Connect
or Shenzhen-Hong Kong Stock Connect.
RANKING
Our H Shares and our A Shares are regarded as one class of Shares under our Articles of
Association and will rank pari passu with each other in all other respects and, in particular, will
rank equally for all dividends or distributions declared, paid or made after the date of this
prospectus. All dividends in respect of our H Shares are to be paid by us in Hong Kong dollars
whereas all dividends in respect of our A Shares are to be paid by us in RMB. In addition to
cash, dividends may also be distributed in the form of Shares. Holders of our H Shares will
receive share dividends in the form of H Shares, and holders of our A Shares will receive share
dividends in the form of A Shares.
NO CONVERSION OF OUR A SHARES INTO H SHARES FOR LISTING AND
TRADING ON THE HONG KONG STOCK EXCHANGE
Our A Shares and our H Shares are generally neither interchangeable nor fungible, and the
market prices of our A Shares and our H Shares may be different after the Global Offering. The
Guidelines on Application for “Full Circulation” of Domestic Unlisted Shares of H-share
Companies (H΅͡ሗ“ஷ”ˏ) announced by the CSRC are
not applicable to companies dual listed in the PRC and on the Hong Kong Stock Exchange. As
of the Latest Practicable Date, there were no relevant rules or guidelines from the CSRC
providing that A shares holders may convert A shares held by them into H shares for listing and
trading on the Hong Kong Stock Exchange.
APPROV AL FROM HOLDERS OF A SHARES REGARDING THE GLOBAL OFFERING
We have obtained approval from our holders of A Shares to issue H Shares and seek the
listing of H Shares on the Hong Kong Stock Exchange. Such approval was obtained at the
general meeting of our Company held on August 17, 2023 upon, among other things, the
following major terms:
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(i) Size of the offer
The number of H Shares to be offered under the Global Offering shall not exceed 10% of
the total share capital of our Company as enlarged by the H Shares to be issued pursuant to the
Global Offering (before the exercise of the Over-allotment Option). The number of H Shares
to be issued pursuant to the exercise of the Over-allotment Option shall not exceed 15% of the
total number of H Shares to be offered pursuant to the Global Offering.
(ii) Method of offering
The method of offering shall be by way of a public offer for subscription in Hong Kong
and an international offering to institutional and professional investors.
(iii) Target investors
The H Shares shall be issued to overseas professional organizations, institutions
individual investors and other eligible investors.
(iv) Price determination basis
The issue price of the H Shares will be determined after due consideration of the interests
of existing Shareholders, the acceptance of investors and issuance risks and in accordance with
international practices through the demands for orders and book building process, subject to
the domestic and overseas capital market conditions and by reference to the valuation level of
comparable companies in domestic and overseas markets.
(v) Valid period
The issue of H Shares and listing of H Shares on the Hong Kong Stock Exchange shall
be completed within 18 months from the date when the Shareholders’ meeting was held on
August 17, 2023.
There is no other approved offering plan for any other shares except for the Global Offering.
SHAREHOLDERS’ GENERAL MEETINGS
For details of circumstance under which our Shareholders’ general meeting is required,
see “Summary of Articles of Association — Shareholders and Shareholders’ General Meetings”
in Appendix III to this prospectus.
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You should read the following discussion and analysis in conjunction with our
audited consolidated financial statements included in the Accountant’ s Report set out in
Appendix I to this prospectus, together with the accompanying notes. Our financial
information has been prepared in accordance with IFRS, which may differ in material
aspects from generally accepted accounting principles in other jurisdictions.
The following discussion and analysis contain forward-looking statements that
reflect our current views with respect to future events and financial performance that
involve risks and uncertainties. These statements are based on assumptions and analysis
made by us in light of our experience and perception of historical events, current
conditions and expected future developments, as well as other factors we believe are
appropriate under the circumstances. However , whether actual outcomes and
developments will meet our expectations and predictions depends on a number of risks
and uncertainties, many of which we cannot control or foresee. In evaluating our
business, you should carefully consider all of the information provided in this prospectus,
including the sections headed “Risk Factors” and “Business.”
Unless the context otherwise requires, financial information described in this
section is described on a consolidated basis.
OVERVIEW
We are a leading global integrated logistics service provider, the largest player in China
and Asia, and the fourth largest player globally, in terms of revenue in 2023, according to Frost
& Sullivan. We are a Fortune Global 500 company with market leadership in five logistics
sub-segments in China and four in Asia, offering a complete range of logistics services
including express, freight, cold chain, intra-city on-demand, supply chain solutions and
international logistics services.
We have a premium brand that is widely recognized for top-notch services and is a
commonly used verb in Chinese, with “Let me SF this to you” having become synonymous
with “Let me express mail this to you.” We were the only logistics company recognized as one
of the Top Five Most Admired Chinese Companies by Fortune Magazine in 2024. As of June
30, 2024, we had an extensive global delivery network covering 202 countries and regions,
supported by 99 aircraft and over 186,000 vehicles, the largest air and ground delivery fleet in
Asia, according to Frost & Sullivan. We are also a technology-driven company with 4,199
patents and patent applications as of June 30, 2024, and we continuously leverage proprietary
technologies to deliver innovative solutions and execution excellence. We had approximately
2.2 million customers with active credit accounts and approximately 699 million retail
customers as of June 30, 2024, both of which were the highest among all logistics service
providers in Asia, according to Frost & Sullivan.
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We have achieved high-quality and sustainable growth during the Track Record Period.
Our revenue increased from RMB207.2 billion in 2021 to RMB258.4 billion in 2023,
representing a CAGR of 11.7%; our revenue also increased by 8.1% from RMB124.4 billion
for the six months ended June 30, 2023 to RMB134.4 billion for the same period in 2024. Our
profit for the year attributable to owners of our Company was RMB4.7 billion, RMB6.2 billion
and RMB8.2 billion in 2021, 2022 and 2023, respectively, representing a CAGR of 31.9% from
2021; our profit for the period attributable to owners of our Company also increased by 15.1%
from RMB4.2 billion for the six months ended June 30, 2023 to RMB4.8 billion for the same
period in 2024. Our EBITDA (non-IFRS measure) increased from RMB21.8 billion in 2021 to
RMB29.4 billion in 2023, representing a CAGR of 16.3%; our EBITDA (non-IFRS measure)
also increased by 8.2% from RMB14.7 billion for the six months ended June 30, 2023 to
RMB15.9 billion for the same period in 2024. For details, see “— Non-IFRS Measures.”
MAJOR FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our results of operations have been, and are expected to continue to be, affected by a
number of factors, including but not limited to the following:
Macroeconomic and Other Factors That Affect Logistics Markets in China, Asia and
Globally
As an integrated logistics service provider offering a full spectrum of logistics services
to business customers in various industries and to retail customers, our results of operations
depend on the continuous development of logistics markets in China, Asia and globally. The
prospects of regional and global logistics markets are subject to the influence of a number of
macroeconomic and other factors, such as regional or global economic conditions, level of
economic activities, purchasing power and disposable income of consumers, progress of
urbanization, development of public infrastructure, inflation, currency and interest rate
fluctuations, development and deployment of technology, government policies, as well as
regional and international political uncertainties and other force majeure events. In particular,
regional and global logistics markets, and hence our results of operations, could be highly
sensitive to certain factors, such as: (i) fluctuating levels of economic conditions and
manufacturing activities in China, Asia and globally, as well as cross-border commerce,
leading to changes in demand for logistics services; (ii) evolving customer demands and
expectations for logistics services, as well as our ability to meet these demands and
expectations; (iii) changing industry trends including emergence of new e-commerce sales
channels and marketing formats; (iv) changes in labor supply and cost; and (v) fluctuations in
transportation costs, as a result of various factors such as changes in fuel prices and air and sea
freight rates.
We anticipate further growth in the logistics industry. According to Frost & Sullivan, total
global logistics spending was US$11.1 trillion in 2023, and is expected to reach US$13.7
trillion in 2028, representing a significant global market opportunity. Within the global
logistics market, Asia is the largest and fastest-growing market, representing 45.5% of global
logistics spending in 2023, and is expected to grow at a CAGR of 5.5% from 2023 to 2028.
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Given our leading market position, premium service quality, broad customer base, business
model, synergistic network infrastructure and advanced technologies, we believe we are
resilient against changes in macroeconomic conditions, and are well positioned to capture the
most attractive growth opportunities in the logistics markets in Asia and continue to expand
globally.
Our Ability to Expand Our Customer Base, and to Retain and Grow the Wallet Share of
Our Existing Customers
Our business growth is driven by our ability to expand our customer base, and to retain
and grow the wallet share of our existing customer base by increasing penetration of existing
services and cross-selling new services.
Our future growth will depend on our ability to expand our customer base. We have
accumulated an extensive customer base spread across major industry verticals in Asia. We
have developed industry-tailored logistics services to address the specific needs of industry
verticals, and are continuously expanding into emerging industry verticals. We believe our
ability to innovate and upgrade our full-spectrum services capabilities, so as to provide tailored
services to meet the needs of our customers, is a key factor for our success. With the emergence
and development of various e-commerce platforms, as well as the resulting significant increase
in demand for third-party express and other logistics services, we as an independent third party
logistics service provider are expanding our customer base and gaining market share in
e-commerce logistics. The number of our customers with active credit accounts increased from
approximately 1.6 million as of December 31, 2021 to approximately 2.2 million as of June 30,
2024. We also endeavor to meet the ever-changing expectations of our retail customers, and
provide both easy online accesses for, and a wide range of offline services to, our retail
customers. The number of our retail customers increased from approximately 491 million as of
December 31, 2021 to approximately 699 million as of June 30, 2024. Empowered by our
existing capabilities and resources, we believe we are well-positioned to further expand our
operations along the industry value chain, both in Asia and globally, and hence to grow our
customer base.
In addition, we must continually meet the demand of our existing customer base. We
believe our services are fast, reliable and customer-centric, which empower us to retain and
grow the wallet share of our existing customer base. We achieve business growth by, among
other things, cross-selling other logistics services and solutions, for example, from
procurement to distribution and to cross-border solutions. As our business customers continue
to grow and their demand for logistics services increases in scale and complexity, we are able
to increase the penetration of existing services and cross-sell new services, and thus deepen our
wallet share among these customers. In 2023, 64% of our business customers used more than
one of our services. Attributable to our ability to provide fast, reliable and customer-centric
services, we also believe we are able to meet our customers’ demand, and maintain premium
pricing for our time-definite and economy express services.
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Our Ability to Maintain and Expand Our Logistics Infrastructure and Networks
Our results of operations depend in part on our ability to effectively maintain and expand
our logistics infrastructure and networks. Leveraging our synergistic aviation, ground and
information networks, our multi-network integration lays the foundation for our
comprehensive logistics services capabilities. As of June 30, 2024, our multi-network
integration featured, among other things: (i) an aviation network with 99 all-cargo aircraft,
consisting of 87 self-operated aircraft and 12 chartered-in aircraft; (ii) a ground network
enabled by our ground fleet consisting of over 86,000 line-haul and short-haul trucks and over
100,000 first and last-mile delivery vehicles globally, as well as numerous service outlets,
sorting centers and warehouses; and (iii) an information network that connects our aviation and
ground networks through technology. With our efficient, reliable and synergistic networks, we
swiftly and economically enter new segments through weaving in more interconnections on top
of our already highly dense networks, while ensuring premium service quality at commercially
reasonable costs.
We endeavor to further strengthen our services capabilities through enhancing network
integration and coverage, as well as improving our network infrastructure. For instance, we
have further complemented our aviation network with our investment in the Ezhou cargo hub,
which is expected to serve as the center for our aviation network. We are also committed to
enhancing our information network, further empowering us to offer intelligent transportation
solutions, smart terminal arrangements, and accurate forecasting and scheduling, hence
ensuring our capabilities to provide precise and speedy logistics services. We believe our
consistent efforts to maintain and expand our logistics infrastructure and networks will lead to
sustainable, profitable growth.
Our Ability to Manage and Further Improve Our Operational Efficiency
Our results of operations also depend in part on our ability to manage and further improve
our operational efficiency. As the leading Asia-based integrated logistics service provider with
a directly operated model, we provide independent, third-party logistics services to our
customers. As a result of our business model, we are able to exert full control over our
operations and assets, which in turn allow us to manage and deploy our services capabilities
efficiently and achieve economies of scale. For example, we efficiently coordinated the
deployment and use of our service outlets, sorting centers and warehouses, and hence improved
utilization of such service outlets, sorting centers and warehouses while controlling costs. Our
directly operated model also empowers us to swiftly adapt our existing capabilities and
resources to changing market demand and expectations, enabling us to quickly seize emerging
business opportunities in a cost-effective manner.
In addition, we are a technology-driven company. We believe our operational efficiency
also benefits from our technologies. For instance, our technology platform utilizes proprietary
techniques to manage and automate end-to-end logistics processes. It enables us to monitor in
real-time the efficiency and utilization of our networks, enabling us to better plan and budget
our capital investments and realize operational efficiencies. We have also developed a
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proprietary and comprehensive digital toolset to support the delivery process performed by our
couriers. Moreover, we have been committed to the digital transformation of our business
operations and administrative routines, with a view to further improving our cost efficiency.
We believe our directly operated model, as well as the continual investment in, and adoption
of technologies, will empower us to achieve optimal operational efficiency in the long run.
Our Ability to Execute Acquisitions and Investments and Successful Integration
Besides the organic growth of our business, we also seek further expansion by strategic
acquisitions and investments. During the Track Record Period, we expanded our service
offerings and customer base through acquisitions and investments. We believe these
acquisitions and investments create synergies with our existing businesses and enable us to
operate in a more efficient manner, provided that we are able to successfully integrate the
acquisitions and investments into our existing business. In addition, during the Track Record
Period, we invested in and, in due course, may continue to invest in, non-controlling interests
in companies along the industry value chain with synergies to our core business. Such
acquisitions and investments may impact our results of operations and financial condition,
depending on the consideration involved and the performance of target companies in which we
invest or that we acquire.
BASIS OF PREPARATION
Our historical financial information has been prepared in accordance with the
International Financial Reporting Standards issued by the International Accounting Standards
Board (“ IFRS Accounting Standards ”). The historical financial information has been
prepared on a historical cost basis, except for financial assets at fair value through other
comprehensive income and financial assets and financial liabilities at fair value through profit
or loss, which are carried at fair value.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Some of our accounting policies require us to apply estimates and assumptions as well as
complex judgments relating to accounting items. The estimates and assumptions we use and the
judgments we make in applying our accounting policies have a significant impact on our
financial position and results of operations. Our management continually evaluates such
estimates, assumptions and judgments based on experience and other factors, including the
expectation of future events that are believed to be reasonable under the circumstances. There
has not been any material deviation between our management’s estimates or assumptions and
actual results, and we have not made any material changes to these estimates or assumptions
during the Track Record Period. We do not expect any material changes in these estimates and
assumptions in the foreseeable future.
Set forth below are discussions of the accounting policies that we believe are of critical
importance to us or involve the most significant estimates, assumptions and judgments used in
the preparation of our financial statements. Other material accounting policies, critical
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estimates, assumptions and judgments, which are important for understanding our financial
condition and results of operations, are set forth in detail in Notes 2 and 4 to the Accountant’s
Report in Appendix I to this prospectus.
Revenue Recognition
We recognize revenue when or as the control of the goods or services is transferred to a
customer. Depending on the terms of the contract and the laws that apply to the contract,
control of the goods and services may be transferred over time or at a point in time. Control
of the goods and services is transferred over time if our performance:
 provides all of the benefits received and consumed simultaneously by the customer;
 creates or enhances an asset that the customer controls as we perform; or
 does not create an asset with an alternative use to us and we have an enforceable
right to payment for performance completed to date.
If control of the asset transfers over time, revenue is recognized over the period of the
contract by reference to the progress towards complete satisfaction of that performance
obligation. Otherwise, revenue is recognized at a point in time when the customer obtains
control of the asset.
The progress towards complete satisfaction of the performance obligation is measured
based on one of the following methods that best depict our performance in satisfying the
performance obligation:
 direct measurements of the value we transferred to the customer; or
 our efforts or inputs to the satisfaction of the performance obligation relative to the
total expected efforts or inputs.
Incremental costs incurred to obtain a contract, if recoverable, are capitalized as contract
assets and subsequently amortized when the related revenue is recognized.
Revenue From Logistics and Freight Forwarding Services
We derive revenue from provision of logistics and freight forwarding services, including
express and freight delivery services (comprising, time-definite express services, economy
express services, freight delivery services, and cold chain and pharmaceuticals logistics
services), intra-city on-demand delivery services, and supply chain and international services.
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We recognize revenue based on the progress of the services performed within the relevant
period, which is determined based on proportion of costs incurred to date to the estimated total
costs or days spent to the estimated total days. As of the end of the relevant reporting period,
we re-estimate the progress of the services performed to reflect the actual status of contract
performance.
When we recognize revenue based on the progress of the services performed, the amount
with unconditional right to consideration we obtained is recognized as trade receivables, and
the rest is recognized as contract assets. Meanwhile, provision for trade receivables and
contract assets are recognized on the basis of expected credit losses. If the contract
consideration received or receivable exceeds the progress of the services performed, the excess
portion will be recognized as contract liabilities. Contract assets and contract liabilities under
the same contract are presented on a net basis.
Contract costs include costs to fulfil a contract and costs to obtain a contract. Costs
incurred for provision of the aforesaid services are recognized as costs to fulfil a contract,
which is carried forward to the cost of revenue when revenue recognized based on the progress
of the services performed. Incremental costs we incurred for the acquisition of the aforesaid
services contract are recognized as the costs to obtain a contract. For the costs to obtain a
contract with an amortization period of less than one year, the costs are charged to profit or loss
when incurred. For the costs to obtain a contract with an amortization period more than one
year, the costs are charged in the profit or loss on the same basis as revenue of rendering of
services recognized under the relevant contract, as described above. If the carrying amount of
the contract costs is higher than the remaining consideration expected to be obtained by
rendering the services net of the estimated cost to be incurred, we make provision for
impairment on the excess portion and recognize it as asset impairment losses. As of the end of
the relevant reporting period, based on whether the amortization period of the costs to fulfil a
contract is more than one year when initially recognized, the amount of our costs to fulfil a
contract net of related provision for asset impairment is presented as inventories or other
non-current assets. For costs to obtain a contract with an amortization period of more than one
year at the initial recognition, the amount net of related provision for asset impairment is
presented as other non-current assets.
Sales of Goods
Sales are recognized when control of the products has transferred, being when the
products are delivered to the customer, the customer has full discretion over the channel and
there is no unfulfilled obligation that could affect the customer’s acceptance of the products.
Delivery occurs when the products have been shipped to the specific location, the risks
of obsolescence and loss have been transferred to the customer, and either the customer has
accepted the products in accordance with the sales contract or we have objective evidence that
all criteria for acceptance have been satisfied.
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Revenue from these sales is recognized based on the price specified in the contract. As
our sales transactions are made in accordance with our credit policies allowing credit terms that
normally range from 30 to 90 days, which are consistent with market practices, no financing
element is deemed present in our sales transactions.
A receivable is recognized when the goods are delivered as this is the point in time that
the consideration is unconditional because only the passage of time is required before the
payment is due.
Other Services
Our services also include telecommunication services, repairment services, research and
development and technical services and other services.
With regard to certain maintenance services, research and development and technical
services, we recognize revenue at a point in time when the services are delivered to customers.
For other services, we recognize revenue based on the progress of the services performed
within period, which is determined based on proportion of costs incurred to date to the
estimated total costs as of the date of end of the reporting period.
Goodwill
Goodwill is initially measured as the excess of the consideration transferred, amount of
any non-controlling interest in the acquired entity, and acquisition date fair value of any
previous equity interest in the acquired entity over the fair value of the net identifiable assets
acquired.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not
amortized but it is tested for impairment annually, or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an entity include the carrying amount
of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The
allocation is made to those cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the goodwill arose. The units or
groups of units are identified at the lowest level at which goodwill is monitored for internal
management purposes, being the operating segments.
We determine whether goodwill is impaired at least on an annual basis. The recoverable
amount of goodwill is determined at higher of fair value less costs of disposal and value in use
amount. The calculations of value in use amount require use of estimates. The cash flow
projections used to determine the value in use of a CGU is based on significant assumptions,
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such as revenue growth rate, net profit margins before tax and interests, and pre-tax discount
rate applied to the projected cash flows. These assumptions may be affected by unexpected
changes in future market or economic conditions.
Impairment Tests
Our carrying amount of goodwill is allocated to several groups of CGUs, including,
among others, Kerry Logistics CGU, acquired by our Group in September 2021, and Fenghao
Supply Chain CGU, acquired by our Group in February 2019. The following table sets out the
key assumptions used for value in use calculations of Kerry Logistics CGU and Fenghao
Supply Chain CGU. For details, see Note 17(b) to the Accountant’s Report in Appendix I to
this prospectus.
Y ear ended December 31,
Six months
ended June 30,
2021 2022 2023 2024
Revenue growth rate over
the forecast period ....... -1.90%~14.20% -16.50%~17.00% 2.50%~16.64% 2.50%~29.69%
Terminal revenue growth rate . 3.00% 2.00%~3.00% 2.00%~2.50% 2.00%~2.50%
Net profit margin before tax
and interests ............ 2.00%~6.22% -0.47%~7.16% -0.20%~6.60% -0.83%~6.61%
Pre-tax discount rate ....... 13.37% 11.71%~14.10% 11.90%~14.00% 11.30%~13.45%
For the year ended December 31, 2021, the recoverable amount of Kerry Logistics CGU
was determined based on the closing stock price of Kerry Logistics. For the years ended
December 31, 2022 and 2023 and the six months ended June 30, 2024, the recoverable amount
of Kerry Logistics CGU was determined based on discounted cash flow method.
V arious factors were taken into consideration in determining the appropriate terminal
revenue growth rate to be used over the forecast period. These factors include, but are not
limited to, the long-term inflation rates of the geographic markets where the CGUs operate.
The terminal revenue growth rate does not exceed the long-term average growth rate for the
relevant geographic market where we operate.
We determined budgeted profit margins and revenue growth rates based on our historical
performance and our expectations of the relevant market(s).
The pre-tax discount rates reflected the current market assessment of the time value of
money, and the risks specific to the business of the relevant CGUs.
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Impact of Possible Changes in Key Assumptions
The recoverable amount of Kerry Logistics CGU was estimated to exceed its carrying
amount as of December 31, 2022 and 2023 and June 30, 2024 by RMB4,279 million,
RMB1,375 million and RMB456 million, respectively.
The recoverable amount of Fenghao Supply Chain CGU was estimated to exceed its
carrying amount as of December 31, 2021, 2022 and 2023 and June 30, 2024 by RMB300
million, RMB267 million, RMB411 million and RMB1,293 million, respectively.
We have considered and assessed the reasonably possible changes for the key
assumptions, and have not identified any instances that could cause the carrying amount of
each CGU to exceed its respective recoverable amount.
The recoverable amount of each CGU would equal to the respective carrying amount if
each key assumption was to change as follows with all other variables held constant:
Kerry Logistics CGU
As of December 31, As of June 30,
2022 2023 2024
Revenue growth rate over the
forecast period ................ -19.56%~8.97% 8.98%~12.05% 5.69%~29.08%
Terminal revenue growth rate ...... 0.34% 1.50% 1.86%
Net profit margin before tax
and interests ................... 4.88%~5.03% 4.76%~5.41% 5.03%~5.53%
Pre-tax discount rate .............. 15.56% 14.48% 13.60%
Fenghao Supply Chain CGU
As of December 31, As of June 30,
2021 2022 2023 2024
Revenue growth rate over
the forecast period .... -2.68%~13.36% 2.40%~16.57% 2.02%~16.19% -0.88%~11.88%
Terminal revenue growth
rate ............... 2.49% 2.65% 1.89% 0.28%
Net profit margin before
tax and interests ..... 2.47%~5.98% -0.69%~6.93% -0.55%~6.25% -2.82%~5.58%
Pre-tax discount rate .... 13.82% 11.99% 12.41% 12.99%
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Current and Deferred Income Tax
The income tax expense or credit for the period is the tax payable on the current period’s
taxable income, based on the applicable income tax rate for each jurisdiction, adjusted by
changes in deferred tax assets and liabilities attributable to temporary differences and to
unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the end of the reporting period in the countries where our Company
and our subsidiaries operate and generate taxable income. Our management periodically
evaluate positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation and consider whether it is probable that a taxation
authority will accept an uncertain tax treatment. We measure our tax balances either based on
the most likely amount or the expected value, depending on which method provides a better
prediction of the resolution of the uncertainty.
Deferred income tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their carrying amounts in
the consolidated financial statements. However, deferred tax liabilities are not recognized if
they arise from the initial recognition of goodwill. Deferred income tax is also not accounted
for if it arises from initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable
profit or loss. Deferred income tax is determined using tax rates (and laws) that have been
enacted or substantially enacted by the end of the reporting period and are expected to apply
when the related deferred income tax asset is realized, or the deferred income tax liability is
settled.
We are subject to income taxes in numerous jurisdictions. Significant judgment is
required in determining the worldwide provision for income taxes. Where the final tax outcome
of these matters is different from the amounts that were initially recorded, such differences will
impact current income tax and deferred income tax in the period in which such determination
is made.
Deferred tax assets are recognized for unused tax losses and deductible temporary
difference to the extent that it is probable that taxable profit will be available against which the
losses and deductible temporary difference, and the carry forward of unused tax credits and
unused tax losses can be utilized. Significant management judgment is required to determine
the amount of deferred tax assets that can be recognized, based upon the likely timing and level
of future taxable profits together with future tax planning strategies. To determine the future
taxable profits, reference was made to the latest available profit forecast. The key assumptions
adopted in the future taxable profit forecast include revenue growth rates and gross margin
rates.
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Measurement of the Expected Credit Losses
For financial assets and contract assets at amortized cost, we calculate expected credit
losses based on exposure at default and expected credit loss rates.
We refer to internal historical information, such as credit losses, and consider the impact
of historical credit loss experience according to the current situation and forward-looking
information to determine expected credit loss rates. Our management also consider the
customer’s credit status, credit history, operating status as well as collateral, the guarantee
ability of the guarantor and other information.
We monitor and review relevant assumptions about expected credit losses regularly.
Where there is a difference between the actual bad debts and the original estimate, such
difference will affect our provision for bad debts of the above assets in the future period.
Estimated Impairment of Long-Term Assets (Other Than Goodwill)
We test whether property, plant and equipment, right-of-use assets, investment properties,
intangible assets (other than goodwill), and other non-current assets have been impaired in
accordance with the accounting policy stated in Note 4.1 to the Accountant’s Report in
Appendix I to this prospectus. The recoverable amount of the cash-generating unit has been
determined based on the higher of its value in use and its fair value less costs of disposal. The
cash flow projections used to determine the value in use of a cash-generating unit is based on
significant assumptions, such as revenue growth rate, long term growth rate, gross margin
rates, and discount rate applied to the projected cash flows. These assumptions may be affected
by unexpected changes in future market or economic conditions.
Assessment of the Fair Value of Identifiable Net Assets in Acquisition Transactions and
Goodwill Recognition
We recognize identifiable net assets acquired in business combinations involving
enterprises not under common control at the fair value at the acquisition date, and if the
combination cost exceeds our interest in the fair value of the acquiree’s identifiable net assets,
the difference is recognized as goodwill.
The assessment of the fair value of identifiable assets and liabilities involves critical
estimates and judgements from management, in particular, the identification of intangible
assets and the evaluation of their fair values, thereby affecting the recognition of goodwill. The
assessment of the fair value of identifiable net assets on the acquisition date includes the
identification of various kinds of assets, the selection of valuation methods, and the forecast
of future cash flows, which involves critical estimates and judgements about key assumptions
including revenue growth rate, gross profit rate and discount rate. Different inputs used in these
key assumptions may lead to significant differences between fair value estimates.
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Level 3 Fair Value Measurement
In respect of the level 3 fair value measurement of our financial assets, with reference to
the guidance under the “Guidance Note on Directors’ Duties in the Context of V aluations in
Corporate Transactions” issued by the SFC in May 2017 (the “ Guidance ”) applicable to
directors of companies listed on the Stock Exchange, our Directors adopted the following
procedures: (i) selected qualified finance personnel with adequate knowledge and conducted
valuation on the financial assets without readily determinable fair value; (ii) carefully
considered available information in assessing the financial data and assumptions including but
not limited to recent transaction price, discount for lack of marketability, expected rate of
return, and macroeconomic and industry conditions; (iii) reviewed the terms of the underlying
agreements of our financial assets, as well as the fair value measurement reports prepared by
our qualified finance personnel. Based on the above procedures, our Directors are of the view
that the level 3 fair value measurement of our financial assets is fair and reasonable and our
financial statements are properly prepared.
Details of the fair value measurement of our financial assets, particularly the fair value
hierarchy, the valuation techniques and key inputs, including significant unobservable inputs,
the relationship of unobservable inputs to fair value are disclosed in Note 3.3 to the
Accountant’s Report in Appendix I to this prospectus, which was reported on by the Reporting
Accountant in accordance with Hong Kong Standard on Investment Circular Reporting
Engagement 200 “Accountants’ Reports on Historical Financial Information in Investment
Circulars” issued by the Hong Kong Institute of Certified Public Accountants. The Reporting
Accountant’s opinion on our historical financial information, as a whole, for the Track Record
Period is set out on I-1 to I-3 in the Accountant’s Report in Appendix I to this prospectus.
The Joint Sponsors have conducted the following independent due diligence work in
relation to level 3 fair value measurement: (i) reviewed the relevant notes included in the
Accountant’s Report in Appendix I to this prospectus; (ii) discussed with us on the primary
factors that we take into account, key assumptions and methodologies adopted for valuation of
the level 3 financial assets, and the internal control measures we undertake for reviewing and
approving the relevant valuation; and (iii) discussed with the Reporting Accountant in respect
of the work performed in relation to the valuation of the level 3 financial assets for the purpose
of reporting on the historical financial information of our Group for the Track Record Period
as a whole. Based on the above due diligence and having considered the work done by the
Directors and the Reporting Accountant as stated above, nothing has come to the attention of
the Joint Sponsors that would cause the Joint Sponsors to question the valuation analysis
performed by us.
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DESCRIPTION OF SELECTED COMPONENTS OF CONSOLIDATED STATEMENTS
OF PROFIT OR LOSS
The following table sets forth a summary of our consolidated statements of profit or loss
with line items in absolute amounts and as percentages of our revenue for the years/periods
indicated, which has been derived from the Accountant’s Report in Appendix I to this
prospectus:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Revenue ................. 207,186,647 100.0 267,490,414 100.0 258,409,403 100.0 124,365,598 100.0 134,409,720 100.0
Cost of revenue ............. (181,409,103) (87.6) (234,478,008) (87.7) (225,775,678) (87.4) (107,767,733) (86.7) (116,096,281) (86.4)
Gross profit ............... 25,777,544 12.4 33,012,406 12.3 32,633,725 12.6 16,597,865 13.3 18,313,439 13.6
Selling and marketing expenses ..... (2,837,899) (1.4) (2,784,114) (1.0) (2,991,589) (1.2) (1,392,755) (1.1) (1,470,892) (1.1)
General and administrative expenses . . (15,115,275) (7.3) (17,694,719) (6.6) (17,766,049) (6.9) (8,999,978) (7.2) (9,049,272) (6.7)
Research and development expenses . . (2,154,839) (1.0) (2,222,865) (0.8) (2,285,314) (0.9) (1,174,970) (0.9) (1,301,455) (1.0)
Net (impairment losses)/reversal of
impairment losses on financial assets
and contract assets .......... (579,851) (0.3) (825,170) (0.3) 33,480 0.0 66,022 0.1 (159,872) (0.1)
Other income .............. 2,089,534 1.0 2,494,659 0.9 2,281,202 0.9 880,404 0.7 572,750 0.4
Other gains, net ............. 1,956,535 1.0 831,262 0.3 408,474 0.3 257,072 0.2 293,793 0.2
Operating profit ............ 9,135,749 4.4 12,811,459 4.8 12,313,929 4.8 6,233,660 5.1 7,198,491 5.3
Finance income ............. 187,794 0.1 345,662 0.1 633,373 0.2 292,849 0.2 415,064 0.3
Finance costs .............. (1,562,963) (0.8) (2,054,360) (0.8) (2,269,700) (0.9) (1,092,673) (0.9) (1,230,918) (0.9)
Share of profit/(loss) of associates and
joint ventures, net ........... 42,660 0.0 7,549 0.0 (67,190) (0.0) (13,486) (0.0) (62,580) (0.0)
Impairment provision for investments in
associates and joint ventures ..... (52,384) (0.0) (72,474) (0.0) (123,907) (0.0) – – – –
Profit before income tax ........ 7,750,856 3.7 11,037,836 4.1 10,486,505 4.1 5,420,350 4.4 6,320,057 4.7
Income tax expense ........... (3,368,762) (1.6) (3,980,922) (1.5) (2,574,896) (1.0) (1,526,110) (1.3) (1,559,135) (1.2)
Profit for the year/period ....... 4,382,094 2.1 7,056,914 2.6 7,911,609 3.1 3,894,240 3.1 4,760,922 3.5
Attributable to:
Owners of our Company ....... 4,731,979 2.3 6,227,058 2.3 8,234,493 3.2 4,176,282 3.4 4,806,714 3.6
Non-controlling interests ....... (349,885) (0.2) 829,856 0.3 (322,884) (0.1) (282,042) (0.3) (45,792) (0.1)
4,382,094 2.1 7,056,914 2.6 7,911,609 3.1 3,894,240 3.1 4,760,922 3.5
FINANCIAL INFORMATION
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Non-IFRS Measures
To supplement our consolidated financial statements which are presented in accordance
with IFRS, we also use certain non-IFRS measures, namely, EBITDA (non-IFRS measure) and
EBITDA margin (non-IFRS measure), as additional financial metrics. These non-IFRS
measures are not required by or presented in accordance with IFRS.
We believe that these non-IFRS measures facilitate comparisons of our operating
performance by eliminating potential impacts of certain items listed below. We also believe
that such non-IFRS measures present useful information in understanding and evaluating our
consolidated results of operations in the same manner as they help our management. However,
our presentation of such non-IFRS measures may not be comparable to similarly titled
measures presented by other companies. The use of these non-IFRS measures has limitations
as an analytical tool, and you should not consider it in isolation from, or as substitute for
analysis of, our results of operations or financial condition as reported under IFRS.
The following table reconciles EBITDA (non-IFRS measure) to our profit for the
year/period, presented in accordance with IFRS, for the years/periods indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Profit for the year/period .... 4,382,094 7,056,914 7,911,609 3,894,240 4,760,922
Add:
Depreciation and
amortization* ............. 12,654,902 16,241,432 17,319,107 8,498,107 8,789,650
Finance costs, net ........... 1,375,169 1,708,698 1,636,327 799,824 815,854
Income tax expense .......... 3,368,762 3,980,922 2,574,896 1,526,110 1,559,135
EBITDA (non-IFRS
measure) ................ 21,780,927 28,987,966 29,441,939 14,718,281 15,925,561
Note:
* Depreciation and amortization equals the sum of depreciation of right-of-use assets and depreciation and
amortization (excluding right-of-use assets).
EBITDA margin (non-IFRS measure) represents our EBITDA (non-IFRS measure) for a
relevant year divided by revenue for the same year, expressed as a percentage. Our EBITDA
margin (non-IFRS measure) was 10.5%, 10.8%, 11.4%, 11.8% and 11.9% for the years ended
December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024,
respectively.
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Revenue
During the Track Record Period, we generated revenue primarily from our (i) express and
freight delivery segment, (ii) intra-city on-demand delivery segment, and (iii) supply chain and
international segment. The following table sets forth a by-segment breakdown of our revenue,
in absolute amounts and as percentages of our total revenue, for the years/periods indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Express and freight delivery
segment (1) ............... 160,675,510 77.6 169,764,860 63.5 186,890,137 72.4 90,058,986 72.5 96,820,175 72.1
Time-definite express services .... 98,961,735 47.8 105,696,512 39.5 115,456,067 44.7 56,069,720 45.1 59,185,770 44.0
Economy express services ....... 25,428,003 12.3 25,551,306 9.6 25,051,548 9.7 12,129,430 9.8 13,254,012 9.9
Freight delivery services ....... 27,290,961 13.2 27,917,012 10.4 33,078,821 12.8 15,120,722 12.2 17,554,101 13.1
Cold chain and pharmaceutical
logistics services .......... 7,802,610 3.8 8,612,665 3.2 10,312,988 4.0 5,338,545 4.3 5,062,524 3.8
Others (2) ............... 1,192,201 0.5 1,987,365 0.8 2,990,713 1.2 1,400,569 1.1 1,763,768 1.3
Intra-city on-demand delivery
segment ................ 5,117,905 2.5 6,567,057 2.4 7,371,250 2.8 3,406,837 2.8 4,022,952 2.9
Intra-city on-demand delivery
services ............... 5,003,156 2.4 6,436,102 2.4 7,249,500 2.8 3,339,291 2.7 3,956,020 2.9
Others (2) ............... 1 14,749 0.1 130,955 0.0 121,750 0.0 67,546 0.1 66,932 0.0
Supply chain and international
segment ................ 39,979,632 19.3 89,916,599 33.6 62,859,302 24.3 30,283,063 24.3 32,914,104 24.5
Supply chain and international
services ............... 39,203,772 18.9 87,866,143 32.8 59,978,741 23.2 28,857,391 23.2 31,195,538 23.2
Others (2) ............... 775,860 0.4 2,050,456 0.8 2,880,561 1.1 1,425,672 1.1 1,718,566 1.3
Undistributed units (3) ......... 1,413,600 0.6 1,241,898 0.5 1,288,714 0.5 616,712 0.4 652,489 0.5
Total ................... 207,186,647 100.0 267,490,414 100.0 258,409,403 100.0 124,365,598 100.0 134,409,720 100.0
Notes:
(1) We adjusted our reportable segments in 2023 by merging two segments, previously named as “express delivery
segment” and “freight delivery segment,” into “express and freight delivery segment.” As a result, our segment
information for the years ended December 31, 2021 and 2022 has been restated, see Note 5 to the Accountant’s
Report in Appendix I to this prospectus.
(2) Others primarily represents our ancillary non-logistics services, such as sales of goods, provided under the
banner of the relevant segment. Primarily incidental to our comprehensive supply chain solutions, we at times
provided, as per our key accounts’ requests, certain raw materials and machineries.
(3) Undistributed units primarily include our non-principal businesses, such as leasing and provision of
technology services.
FINANCIAL INFORMATION
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Our express and freight delivery segment mainly comprises time-definite express,
economy express, freight delivery and cold chain and pharmaceutical logistics services.
Increases in revenue from our express and freight delivery segment during the Track Record
Period were primarily driven by high-quality growth in each of the sub-segments, while we
continued improving the competitiveness of our services, including but not limited to our
service quality, as well as optimizing our product mix.
We provide intra-city on-demand delivery for merchants and consumers. Increases in
revenue from our intra-city on-demand delivery segment during the Track Record Period were
primarily driven by the growth of high-value orders resulting from further diversification of
and upgrades to our service offerings to cover more service scenarios, and further expansion
of our services network to cover lower-tier cities, counties and districts in China.
Our supply chain and international segment primarily consists of supply chain services,
international express services and international freight forwarding services. Revenue from our
supply chain and international segment fluctuated during the Track Record Period, primarily
reflecting (i) our consolidation of Kerry Logistics since September 2021, as well as the organic
growth of our self-developed supply chain and international segment, and (ii) fluctuations in
the market demand for, and the fee rates of, international sea and air freight.
The following table sets forth a breakdown of our revenue by geographical area, in
absolute amounts and as percentages of our total revenue, for the years/periods indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Within mainland China (1) ........ 189,029,359 91.2 208,562,879 78.0 223,510,607 86.5 107,339,757 86.3 115,996,449 86.3
Hong Kong, Macau, Taiwan (2) ...... 5,080,415 2.5 10,389,782 3.9 9,134,850 3.5 4,334,903 3.5 4,512,024 3.4
Other international (3) .......... 13,076,873 6.3 48,537,753 18.1 25,763,946 10.0 12,690,938 10.2 13,901,247 10.3
Total ................... 207,186,647 100.0 267,490,414 100.0 258,409,403 100.0 124,365,598 100.0 134,409,720 100.0
Notes:
(1) Revenue from our operations within mainland China;
(2) Revenue from our operations within Hong Kong, Macau and Taiwan regions;
(3) Revenue from our operations in other overseas markets; such revenue was primarily derived from our supply
chain and international segment.
FINANCIAL INFORMATION
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Cost of Revenue
Our cost of revenue primarily consists of labor costs (comprising our employee benefit
expenses and labor outsourcing costs), transportation costs, and depreciation and amortization.
The following table sets forth a breakdown of our cost of revenue by nature, in absolute
amounts and as percentages of total cost of revenue, for the years/periods indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Labor costs ............... 83,576,212 46.1 91,585,902 39.1 102,785,139 45.5 49,141,500 45.6 53,523,463 46.1
Employee benefit expenses ...... 13,622,676 7.5 15,222,082 6.5 15,683,015 6.9 7,843,962 7.3 7,832,687 6.7
Labor outsourcing costs ........ 69,953,536 38.6 76,363,820 32.6 87,102,124 38.6 41,297,538 38.3 45,690,776 39.4
Transportation costs ........... 70,854,194 39.1 106,844,961 45.6 82,930,208 36.7 39,307,703 36.5 42,765,854 36.8
Depreciation and amortization ...... 1 1 , 1 12,275 6.1 14,327,602 6.1 15,202,588 6.7 7,498,720 7.0 7,663,668 6.6
Others .................. 15,866,422 8.7 21,719,543 9.2 24,857,743 11.1 11,819,810 10.9 12,143,296 10.5
Total ................... 181,409,103 100.0 234,478,008 100.0 225,775,678 100.0 107,767,733 100.0 116,096,281 100.0
Our labor costs comprise (i) employee benefit expenses, representing employee benefits
in relation to couriers and other operational staff employed by us, and (ii) labor outsourcing
costs, representing expenses charged by service providers, mainly relating to first-mile pick-up
and last-mile delivery services provided to us.
The sensitivity analysis below has been determined based on a 1.0% increase/decrease in
our labor costs, categorized into employee benefit expenses and labor outsourcing costs. 1.0%
is the sensitivity rate used and represents our management’s assessment of the reasonably
possible change in our labor costs. A positive (negative) number below indicates an
increase/(decrease) in our gross profit.
For the years ended December 31, 2021, 2022 and 2023 and six months ended June 30,
2023 and 2024, if our labor costs increase or decrease by 1.0%, our gross profit would decrease
or increase by approximately RMB835.8 million, RMB915.9 million, RMB1,027.9 million,
RMB491.4 million and RMB535.2 million, respectively.
Our transportation costs comprise (i) transportation expenses, primarily in relation to fuel
costs, road and bridge tolls, as well as sea freight, air freight and rail freight charges, and (ii)
transportation outsourcing costs, representing expenses charged by outsourced transportation
service providers, mainly relating to certain line-haul and short-haul transportations.
FINANCIAL INFORMATION
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Depreciation and amortization categorized under cost of revenue are primarily in relation
to freehold land and buildings, aircraft, aircraft engines, rotables and high-value maintenance,
machinery and equipment, as well as transportation vehicles.
Gross Profit and Gross Profit Margin
Our gross profit represents our revenue less our cost of revenue. Our gross profit margin
represents our gross profit divided by our revenue, expressed as a percentage. Despite the
continued impact of challenging market conditions, our gross profit margin remained relatively
stable at 12.4% and 12.3% in 2021 and 2022, respectively, and increased to 12.6% in 2023,
primarily driven by (i) our multi-network integration, which allowed us to improve synergy
across our business segments and achieve better economies of scale, and (ii) our continuous
pursuit of lean management. Mainly driven by the same reasons set forth above, our gross
profit margin also increased from 13.3% for the six months ended June 30, 2023 to 13.6% for
the same period in 2024.
Selling and Marketing Expenses
Our selling and marketing expenses primarily include: (i) labor costs, comprising
employee benefit expenses relating to selling and marketing staff employed by us, and labor
outsourcing costs relating to call center outsourcing; (ii) depreciation and amortization,
primarily representing amortization of customer relationships acquired in relation to our
acquisitions of subsidiaries; and (iii) marketing expenses.
The following table sets forth a breakdown of our selling and marketing expenses, in
absolute amounts and as percentages of total selling and marketing expenses, for the
years/periods indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Labor costs ............... 1,922,949 67.8 1,811,750 65.1 1,753,192 58.6 840,605 60.4 881,757 59.9
Depreciation and amortization ...... 232,845 8.2 378,299 13.6 420,002 14.0 200,616 14.4 215,422 14.6
Marketing expenses ........... 362,953 12.8 263,958 9.5 393,464 13.2 163,848 11.8 164,348 11.2
Others .................. 319,152 11.2 330,107 11.8 424,931 14.2 187,686 13.4 209,365 14.3
Total ................... 2,837,899 100.0 2,784,114 100.0 2,991,589 100.0 1,392,755 100.0 1,470,892 100.0
FINANCIAL INFORMATION
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General and Administrative Expenses
Our general and administrative expenses primarily include: (i) labor costs, primarily
including employee benefit expenses relating to our administrative staff; (ii) depreciation and
amortization; and (iii) professional service fees, primarily relating to audit service, legal
service and other professional services.
The following table sets forth a breakdown of our general and administrative expenses,
in absolute amounts and as percentages of total general and administrative expenses, for the
years/periods indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Labor costs ............... 12,514,808 82.8 14,626,666 82.7 14,607,199 82.2 7,647,847 85.0 7,511,917 83.0
Depreciation and amortization ...... 770,803 5.1 813,041 4.6 797,263 4.5 362,978 4.0 375,144 4.1
Professional service fees ........ 422,148 2.8 371,833 2.1 418,159 2.4 191,769 2.1 132,847 1.5
Others .................. 1,407,516 9.3 1,883,179 10.6 1,943,428 10.9 797,384 8.9 1,029,364 11.4
Total ................... 15,115,275 100.0 17,694,719 100.0 17,766,049 100.0 8,999,978 100.0 9,049,272 100.0
Research and Development Expenses
Our research and development expenses primarily include: (i) labor costs, primarily
including employee benefit expenses relating to our research and development staff; (ii)
depreciation and amortization; and (iii) information technology expenses, primarily relating to
our use of third party software or information technology services.
The following table sets forth a breakdown of our research and development expenses, in
absolute amounts and as percentages of total research and development expenses, for the
years/periods indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Labor costs ............... 1,306,796 60.6 1,254,195 56.4 1,247,128 54.6 640,375 54.5 679,305 52.2
Depreciation and amortization ...... 538,979 25.0 722,490 32.5 899,254 39.3 435,793 37.1 535,416 41.1
Information technology expenses .... 217,361 10.1 165,026 7.4 88,200 3.9 59,028 5.0 55,899 4.3
Others .................. 91,703 4.3 81,154 3.7 50,732 2.2 39,774 3.4 30,835 2.4
Total ................... 2,154,839 100.0 2,222,865 100.0 2,285,314 100.0 1,174,970 100.0 1,301,455 100.0
FINANCIAL INFORMATION
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Net (Impairment Losses)/Reversal of Impairment Losses on Financial Assets and
Contract Assets
Our net (impairment losses)/reversal of impairment losses on financial assets and contract
assets primarily represent loss allowances, or reversals of loss allowances, for trade and note
receivables and other financial assets, as well as contract assets, made based on our estimates.
Other Income
Our other income primarily consists of (i) government grants, mainly including
preferential tax treatments and other fiscal subsidies related to our principle business, such as
fiscal subsidies for logistics service providers and cargo airline subsidies, and (ii) dividends
income.
The following table sets forth a breakdown of our other income in absolute amounts and
as percentages of total other income for the years/periods indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Government grants ........... 1,787,501 85.6 2,255,563 90.4 1,983,551 87.0 752,237 85.4 404,911 70.7
Dividends income ............ 31,853 1.5 13,811 0.6 2,438 0.1 2,535 0.3 426 0.1
Others .................. 270,180 12.9 225,285 9.0 295,213 12.9 125,632 14.3 167,413 29.2
Total ................... 2,089,534 100.0 2,494,659 100.0 2,281,202 100.0 880,404 100.0 572,750 100.0
Other Gains, Net
Our net other gains primarily reflect (i) fair value change in financial assets at fair value
through profit or loss, or FVPL, (ii) gains on disposal of investments in associates and joint
ventures, (iii) gains on disposal of investments in subsidiaries, (iv) (losses)/gains on disposal
of property, plant and equipment, right-of-use assets and other non-current assets, (v)
impairment of inventories, property, plant and equipment and other non-current assets, and (vi)
net exchange (losses)/gains.
Finance Income
Our finance income represents interest income on deposits in financial institutions. In
2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024, we had finance income
of RMB187.8 million, RMB345.7 million, RMB633.4 million, RMB292.8 million and
RMB415.1 million, respectively.
FINANCIAL INFORMATION
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Finance Costs
Our finance costs primarily consist of (i) interest expense on borrowings and (ii) interest
expense on lease liabilities.
The following table sets forth a breakdown of our finance costs, in absolute amounts and
as percentages of total finance costs, for the years/periods indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Interest expenses on borrowings ..... 1,015,357 65.0 1,570,293 76.4 1,808,850 79.7 866,130 79.3 997,654 81.1
Interest expenses on lease liabilities . . 553,613 35.4 609,652 29.7 564,374 24.9 289,013 26.4 262,301 21.3
Less: Interest capitalized ........ (6,007) (0.4) (125,585) (6.1) (103,524) (4.6) (62,470) (5.7) (29,037) (2.4)
Total ................... 1,562,963 100.0 2,054,360 100.0 2,269,700 100.0 1,092,673 100.0 1,230,918 100.0
Share of Profit/(Loss) of Associates and Joint Ventures, Net
We recorded a net share of profit of associates and joint ventures of RMB42.7 million and
RMB7.5 million in 2021 and 2022, respectively. We recorded a net share of loss of associates
and joint ventures of RMB67.2 million, RMB13.5 million and RMB62.6 million in 2023 and
the six months ended June 30, 2023 and 2024, respectively. The change of position in 2023,
and the subsequent increase in the net share of loss of associates and joint ventures in the six
months ended June 30, 2024 as compared to the same period in 2023, were primarily related
to our shareholding in a joint venture in relation to the Ezhou cargo hub.
Impairment Provision for Investments in Associates and Joint Ventures
We recorded impairment provision for investments in associates and joint ventures of
RMB52.4 million, RMB72.5 million, RMB123.9 million in 2021, 2022 and 2023, respectively.
Our impairment provision for investments in associates and joint ventures experienced a
year-on-year increase of 71.0% in 2023, mainly because we made provisions for certain
loss-making associates, in line with our accounting policies and for prudence’s sake, in the
same year. We did not make impairment provision for investments in associates and joint
ventures for the six months ended June 30, 2024.
FINANCIAL INFORMATION
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Income Tax Expense
Our income tax expense primarily consists of (i) current income tax and (ii) deferred
income tax. The general enterprise income tax rate in the PRC is 25%. During the Track Record
Period, certain entities within our Group enjoyed preferential tax treatments. In 2021, 2022,
2023 and the six months ended June 30, 2023 and 2024, we recorded income tax expense of
RMB3.4 billion, RMB4.0 billion, RMB2.6 billion, RMB1.5 billion and RMB1.6 billion,
respectively.
Mainland China
Pursuant to the EIT Law, our Company and subsidiaries in mainland China are generally
subject to EIT at 25%.
In addition, in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024,
several subsidiaries in mainland China were qualified as small and micro enterprises under the
PRC EIT regime, and as such enjoyed a corporate income tax rate of 2.5%-10%.
Further, during the Track Record Period, certain of our subsidiaries benefited from a
preferential tax rate of 15% under the EIT Law as they were qualified as high and new
technology enterprises under relevant regulations or located in the applicable regions, such as
certain western regions and special economic zones, subject to certain general restrictions
described in the EIT Law and other related regulations.
Other Jurisdictions
Income tax on profit arising from other jurisdictions, including Hong Kong, Macau,
Singapore, Japan, South Korea, the USA and Thailand, had been calculated on the estimated
assessable profit for the year/period at the respective rates prevailing in the relevant
jurisdictions, ranging from 8.25% to 24%.
PERIOD-TO-PERIOD COMPARISON OF RESULTS OF OPERATIONS
Six months Ended June 30, 2024 Compared with Six months Ended June 30, 2023
Revenue
Our revenue increased by 8.1% from RMB124.4 billion for the six months ended June 30,
2023 to RMB134.4 billion for the same period in 2024.
FINANCIAL INFORMATION
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By Segment
The increase in revenue from express and freight delivery segment was primarily
attributable to:
(i) an increase in revenue from time-definite express services by 5.6% from RMB56.1
billion for the six months ended June 30, 2023 to RMB59.2 billion for the six
months ended June 30, 2024, primarily driven by (a) our top-notch service
capabilities, complemented by enhanced delivery efficiency and a further diversified
matrix of service offerings with a tiered time of delivery, boosting the cost
performance and attractiveness of our service offerings; (b) a surge in business
volume of our air cargo freight, enabled by smart planning, integration and
enrichment of our aviation resources, including our access to commercial flight
cargo space, and our business development achievements in attracting
manufacturing customers, such as high technology, pharmaceutical, and new energy
vehicle companies; (c) the broadening of and upgrades to our service offerings to
cover more scenarios, such as our time-definite delivery services between major
cities within half a day; and (d) our efforts to fortify and grow the market share in
e-commerce reverse logistics business;
(ii) an increase in revenue from economy express services by 9.3% from RMB12.1
billion for the six months ended June 30, 2023 to RMB13.3 billion for the six
months ended June 30, 2024. We disposed of Fengwang Information Technology in
June 2023, in pursuit of healthy and sustainable development of our principal
business. Our revenue from economy express services (excluding the impact of
Fengwang Information Technology) increased by 15.6% for the six months ended
June 30, 2024 as compared to the same period in 2023, primarily attributable to (a)
the stable growth of our e-commerce related businesses, underpinned by the
relentless optimization of our service capabilities, as well as innovations in our
service offerings addressing unmet demands of underserved yet high-value
e-commerce verticals, (b) our smart warehousing network planning, coupled with
our positioning as an independent third-party logistics service provider, well
positioned us to retain and grow the wallet share of our existing consumer goods and
e-commerce customers, and (c) our solid pricing power, bolstered by our superior
service quality;
(iii) an increase in revenue from freight delivery services by 16.1% from RMB15.1
billion for the six months ended June 30, 2023 to RMB17.6 billion for the six
months ended June 30, 2024, primarily attributable to (i) the bespoke solutions
underpinned by our superior service quality and delivery timeliness, which
spearheaded our penetration of high-growth and high-value industries, such as home
appliances, electronics and automobiles industries; (ii) the intelligent planning of
our rich LTL freight delivery resources to tackle market pain points, thereby
boosting business volume from customers in manufacturing industries, such as new
energy vehicle and communications and technology companies;
FINANCIAL INFORMATION
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(iv) the revenue from cold chain and pharmaceuticals logistics services of RMB5.1
billion for the six months ended June 30, 2024, compared to revenue of the same line
of business of RMB5.3 billion for the six months ended June 30, 2023. Due to severe
weather conditions such as frost and continuous rainfall in southern China, the
production of certain seasonal fruits experienced a significant reduction during the
first half of 2024, affecting the fresh and seasonal food logistics industry in general.
Despite the chills seeping from tough weather conditions, we were able to render
reliable and cost-effective fresh and seasonal food logistics services, while further
exploring other growth opportunities. The foregoing decrease was partially offset by
increases in our revenues from food cold chain logistics services and
pharmaceuticals logistics services. Our food cold chain logistics business
experienced stable growth in revenue, primarily attributable to our cold chain
logistics solutions that were continuously customized to entertain the fast-evolving
needs of our key accounts. Our pharmaceuticals logistics business also recorded a
revenue growth, primarily driven by an expansion of service scenarios.
The increase in revenue from our intra-city on-demand delivery segment was primarily
driven by: (i) our professional and high-quality on-demand delivery services, catering and
customized to numerous types of customers, which allowed us to deepen cooperations with key
accounts and expand the scale of our annual active merchants and consumers; (ii) our
technology-enabled hour-level delivery network, efficaciously meeting the speed-up
requirements of intra-city express delivery, while ensuring our operational efficiency, thereby
bolstering our service capabilities; and (iii) our continued exploration of the new business
landscape in local lifestyle services, further broadening our readily expansive service
scenarios, and the further penetration of lower-tier cities, counties and districts in China.
Revenue from the supply chain and international segment increased by 8.7% for the six
months ended June 30, 2024 as compared to that for the same period in 2023, benefitting from
the recent market rebound which gave rise to increases in fee rates. In addition, capitalizing on
our market leadership and enhanced service capabilities, we swiftly tapped into growth
opportunities arising from key and emerging trends including Chinese companies’ overseas
expansions, and imports of fresh and seasonal food. As we navigated through the fluctuations
in the international sea and air freight market, we again showcased our strong resilience, our
business acumen and agility, which we believe were of paramount importance in capturing
burgeoning growth opportunities soon as they emerged from the horizon. For further
background, see “–Y ear Ended December 31, 2023 Compared with the Y ear Ended December
31, 2022” in this prospectus.
By Region
Our revenue from mainland China increased by 8.1% from RMB107.3 billion for the six
months ended June 30, 2023 to RMB116.0 billion for the six months ended June 30, 2024.
Contribution by revenue from mainland China to our total revenue, expressed as a percentage,
remained stable at 86.3% for the six months ended June 30, 2023 and the same period in 2024.
FINANCIAL INFORMATION
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Our revenue from outside of mainland China increased by 8.1% from RMB17.0 billion for
the six months ended June 30, 2023 to RMB18.4 billion for the six months ended June 30,
2024. The increase in revenue from outside of mainland China for the six months ended June
30, 2024 was in line with the increase in revenue from our supply chain and international
segment. Contribution by revenue from outside of mainland China to our total revenue,
expressed as a percentage, remained stable at 13.7% for the six months ended June 30, 2023
and the same period in 2024.
Cost of Revenue
Our cost of revenue increased by 7.7% from RMB107.8 billion for the six months ended
June 30, 2023 to RMB116.1 billion for the six months ended June 30, 2024, primarily
attributable to (i) an increase in labor costs by 8.9% from RMB49.1 billion for the six months
ended June 30, 2023 to RMB53.5 billion for the same period in 2024, and (ii) an increase in
our transportation costs from by 8.8% from RMB39.3 billion for the six months ended June 30,
2023 to RMB42.8 billion for the same period in 2024.
The increase in our labor costs was primarily attributable to further pay raises for our
couriers and other frontline employees to improve the competitiveness of our employee
benefits, further incentivizing the couriers and other frontline employees to provide services of
superior quality. Our labor costs-to-revenue ratio remained relatively stable at 39.5% and
39.8% for the six months ended June 30, 2023 and the same period in 2024, respectively.
The increase in our transportation costs was generally in line with the increase in the
transportation costs of our supply chain and international segment, which had experienced a
rebound in business volume, bolstered by the recent market recovery and the initiatives we
took in tapping into growth opportunities arising from key and emerging trends, such as
Chinese companies’ overseas expansions and imports of fresh and seasonal food. Our
transportation costs-to-revenue ratio remained relatively stable at 31.6% and 31.8% for the six
months ended June 30, 2023 and the same period in 2024, respectively.
Gross Profit and Gross Profit Margin
As a result of the foregoing, our overall gross profit increased by 10.3% from RMB16.6
billion for the six months ended June 30, 2023 to RMB18.3 billion for the six months ended
June 30, 2024. Our gross profit margin increased from 13.3% for the six months ended June
30, 2023 to 13.6% for the six months ended June 30, 2024, primarily driven by efficiency gains
achieved through, among other things, our continuous efforts in multi-network integration and
the pursuit of lean management.
Selling and Marketing Expenses
Our selling and marketing expenses remained stable at RMB1.4 billion and RMB1.5
billion for the six months ended June 30, 2023 and 2024, respectively.
FINANCIAL INFORMATION
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General and Administrative Expenses
Our general and administrative expenses remained stable at RMB9.0 billion for the six
months ended June 30, 2023 and 2024.
Research and Development Expenses
Our research and development expenses remained relatively stable at RMB1.2 billion and
RMB1.3 billion for the six months ended June 30, 2023 and 2024, respectively.
Net (Impairment Losses)/Reversal of Impairment Losses on Financial Assets and Contract
Assets
We recorded net impairment losses on financial assets and contract assets of RMB159.9
million for the six months ended June 30, 2024, as compared to a reversal of net impairment
losses on financial assets and contract assets of RMB66.0 million for the same period in 2023.
The change of position was primarily due to an increase in loss allowances for our trade
receivables and other financial assets, which was based on our assessment and generally in line
with our business growth.
Other Income
Our other income decreased by 34.9% from RMB880.4 million for the six months ended
June 30, 2023 to RMB572.8 million for the same period in 2024, mainly reflecting a decrease
in our government grants, which was primarily because the policy granting certain tax
incentive had expired in December 2023.
Other Gains, Net
Our net other gains increased by 14.3% from RMB257.1 million for the six months ended
June 30, 2023 to RMB293.8 million for the six months ended June 30, 2024, primarily driven
by an increase in our net exchange gains, resulting from foreign exchange fluctuations. The
increase was partially offset by a decrease in our gains on disposal of investments in
subsidiaries, primarily because we disposed of Fengwang Information Technology in June
2023, in pursuit of healthy and sustainable development of our principal business, while we did
not have similarly sized disposals in the first half of 2024.
Finance Income
Our finance income increased by 41.7% from RMB292.8 million for the six months ended
June 30, 2023 to RMB415.1 million for the six months ended June 30, 2024, representing an
increase in our interest income on deposits in financial institutions.
FINANCIAL INFORMATION
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Finance Costs
Our finance costs increased by 12.7% from RMB1.1 billion for the six months ended June
30, 2023 to RMB1.2 billion for the six months ended June 30, 2024. The increase was primarily
attributable to an increase in our interest expenses on borrowings, as we generally maintained
higher average balances of borrowings for the six months ended June 30, 2024 as compared to
the same period in 2023.
Income Tax Expense
Our income tax expense remained relatively stable at RMB1.5 billion and RMB1.6 billion
for the six months ended June 30, 2023 and 2024, respectively.
Profit for the Period
As a result of the foregoing, our profit for the period increased by 22.3% from RMB3.9
billion for the six months ended June 30, 2023 to RMB4.8 billion for the six months ended June
30, 2024. The increase was primarily driven by efficiency gains achieved through, among other
things, our continuous efforts in multi-network integration and the pursuit of lean management.
Y ear Ended December 31, 2023 Compared with the Y ear Ended December 31, 2022
Revenue
Our revenue remained relatively stable at RMB258.4 billion in 2023, as compared to
revenue of RMB267.5 billion in 2022.
By Segment
The increase in revenue from express and freight delivery segment was primarily
attributable to:
(i) an increase in revenue from time-definite express services by 9.2% from RMB105.7
billion in 2022 to RMB115.5 billion in 2023, primarily driven by (a) the continuous
enhancement and integration of our strong service capabilities, which ensured
superior service quality, featuring, among other things, further optimized delivery
efficiency and customer experience, allowing us to capture the growth opportunities
presented by the gradual economic and consumption recovery, (b) the further
diversification of and upgrades to our time-definite express service offerings to
cover more service scenarios, including our time-definite delivery services between
major cities within half a day, and (c) the surge in our e-commerce reverse logistics
business volume, attributable in part to our continued cooperation with emerging
e-commerce platforms;
FINANCIAL INFORMATION
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(ii) the revenue from economy express services of RMB25.1 billion in 2023, compared
to revenue of the same line of business of RMB25.6 billion in 2022. We disposed of
Fengwang Information Technology in June 2023. Our revenue from economy
express services (excluding the impact of Fengwang Information Technology)
experienced a year-on-year increase of 8.6% in 2023, primarily attributable to (a)
the stable growth of our e-commerce related businesses, capturing the demands for
mid to high-end service offerings in this vertical, and (b) our enhanced pricing
power, resulting from the continuous diversification of our service offerings and our
efforts in upholding superior service quality;
(iii) an increase in revenue from freight delivery services by 18.5% from RMB27.9
billion in 2022 to RMB33.1 billion in 2023, primarily attributable to (a) the
continuous improvements in and integration of our logistics networks, enabling
superior services quality and bespoke solutions tackling market pain points, all of
which allowed us to further penetrate high-growth and high-value industries and
markets, such as advanced manufacturing and smart home appliances, and (b) our
efforts in upholding superior service quality and delivery timeliness, which
enhanced the competitive edge and secured our pricing power; and
(iv) an increase in revenue from cold chain and pharmaceuticals logistics services by
19.7% from RMB8.6 billion in 2022 to RMB10.3 billion in 2023, primarily because
we, as a leading player in the sector, enjoyed competitive edges in terms of (a)
service capabilities, as China strengthened infrastructure development and supply-
side reform of its cold chain logistics industry, we were better poised to benefit from
the favorable policies and enhanced infrastructure, and (b) our well-established and
extensive cold-chain logistics networks, which better positioned us to capitalize on
and penetrate key consumer trends including live stream e-commerce, newly
emerged service scenarios in the fresh and seasonable food vertical, as well as
community e-commerce.
The increase in revenue from our intra-city on-demand delivery segment was primarily
driven by: (i) robust demand for food delivery services, with consumers expanding the habit
of on-demand delivery into retail consumption scenarios, and non-food delivery scenarios
maintaining steady growth; (ii) our integrated capabilities in logistics infrastructure which has
enabled us to provide professional and high-quality on-demand delivery services to different
types of customers, deepen cooperation with key account customers, and achieve expansion of
the scale of annual active merchants and consumers; (iii) the further expansion of our services
network to cover lower-tier cities, counties and districts in China; (iv) actively exploring the
new business landscape in local lifestyle service in conjunction with major traffic platforms,
thereby deepening cooperation scenarios; (v) our hour-level delivery network effectively
meeting the speed-up requirements of intra-city express delivery; and (vi) the adoption of a
proactive pricing strategy, which has been instrumental to strengthening the competitiveness of
our products.
FINANCIAL INFORMATION
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Revenue from the supply chain and international segment decreased, as the international
sea and air freight market experienced a slowdown, primarily due to the softening demand, and
the de-stocking in certain countries, as the global supply chain continued to normalize
gradually post-pandemic. The pandemic had a material impact on the supply and demand
dynamics in the international sea and air freight market. Specifically, fee rates of international
sea and air freight increased during the pandemic, primarily attributable to transportation
capacity shortages on the supply side. Such shortages eased and transportation capacity on the
supply side gradually recovered towards the end of 2022 and in 2023. Despite a tough market,
new opportunities emerged amid changing consumer demands and the reshuffle of global
supply chains. We were able to steadfastly tackle market headwinds, and provided customers
with reliable and cost-effective services. Our supply chain and international segment’s overall
performance in 2023 was in line with expectations and on par with global peers.
By Region
Our revenue from mainland China increased by 7.2% from RMB208.6 billion in 2022 to
RMB223.5 billion in 2023, representing 78.0% and 86.5% of our total revenue for the same
years, respectively.
Our revenue from outside of mainland China decreased by 40.8% from RMB58.9 billion
in 2022 to RMB34.9 billion in 2023, representing 22.0% and 13.5% of our total revenue for
the same years, respectively. The decrease in revenue from outside of mainland China in 2023
was primarily because the market demand for, and the fee rates of, international sea and air
freight decreased from the high levels during the pandemic.
Cost of Revenue
Our cost of revenue decreased by 3.7% from RMB234.5 billion in 2022 to RMB225.8
billion in 2023, primarily attributable to a decrease in our transportation costs by 22.4% from
RMB106.8 billion in 2022 to RMB82.9 billion in 2023. The decrease was partially offset by
an increase in labor costs by 12.2% from RMB91.6 billion in 2022 to RMB102.8 billion in
2023.
The decrease in our transportation costs was primarily attributable to: (i) a change in our
revenue mix in 2023, specifically, a decrease in revenue from our supply chain and
international segment in 2023, as the segment generally had relatively higher transportation
cost-to-revenue ratio as compared to our other segments; (ii) our continued efforts in
multi-network integration including, among other things, the synergistic coordination of our
sorting centers, service outlets and transportation capacities across all business segments to
achieve better synergy and economies of scale; and (iii) adjustments to, and the further
standardization of, our transport procurement protocols, as a part of our cost control initiatives.
For the same reasons, our transportation costs-to-revenue ratio decreased from 39.9% in 2022
to 32.1% in 2023.
FINANCIAL INFORMATION
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Increase in our labor costs was primarily attributable to the pay raises for our couriers and
other frontline employees to improve the competitiveness of our employee benefits, which we
believe would further incentivize the couriers and other frontline employees to provide quality
services. Our labor costs-to-revenue ratio increased from 34.2% in 2022 to 39.8% in 2023,
primarily attributable to (i) a change in our revenue mix, specifically, a decrease in revenue
from our supply chain and international segment in 2023, as the segment generally had
relatively lower labor cost-to-revenue ratio as compared to our other segments, and (ii) the
reasons as discussed above for the increase in our labor costs.
Gross Profit and Gross Profit Margin
As a result of the foregoing, our overall gross profit remained relatively stable at
RMB33.0 billion and RMB32.6 billion in 2022 and 2023, respectively. Our gross profit margin
increased from 12.3% in 2022 to 12.6% in 2023. The increase in gross profit margin was
primarily driven by (i) our efforts to continue optimizing our product mix, and the resulting
increase in the revenue contribution by our time definite express services, which generally
demonstrated higher profitability, (ii) a decrease in our transportation costs-to-revenue ratio as
discussed above under “— Cost of Revenue,” and (iii) efficiency gains achieved through,
among other things, our continuous efforts in multi-network integration and pursuit of lean
management.
Selling and Marketing Expenses
Our selling and marketing expenses remained relatively stable in 2022 and 2023 at
RMB2.8 billion and RMB3.0 billion, respectively.
General and Administrative Expenses
Our general and administrative expenses remained relatively stable at RMB17.7 billion
and RMB17.8 billion in 2022 and 2023, respectively.
Research and Development Expenses
Our research and development expenses remained relatively stable at RMB2.2 billion and
RMB2.3 billion in 2022 and 2023, respectively.
Net (Impairment Losses)/Reversal of Impairment Losses on Financial Assets and Contract
Assets
We recorded net impairment losses on financial assets and contract assets of RMB825.2
million in 2022, and a reversal of net impairment losses on financial assets and contract assets
of RMB33.5 million in 2023. In calculating the expected credit loss rates, our Group considers
historical loss rates, and adjusts for forward looking macro-economic data. At the end of each
reporting period, the historical observed default rates are updated and changes in the
forward-looking estimates are analyzed. For details, see Note 3.1(b)(ii) to the Accountant’s
FINANCIAL INFORMATION
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Report in Appendix I to this prospectus. Adhering to this approach, we recorded a net reversal
of impairment losses on financial assets and contract assets in 2023, primarily because the
macro-economic conditions improved, and we further enhanced our internal control measures
over credit risks.
Other Income
Our other income decreased from RMB2.5 billion in 2022 to RMB2.3 billion in 2023,
primarily due to a decrease in government grants from RMB2.3 billion in 2022 to RMB2.0
billion in 2023.
Other Gains, Net
Our net other gains decreased by 50.9% from RMB831.3 million in 2022 to RMB408.5
million in 2023, primarily due to a decrease in our gains on disposal of investments in
associates and joint ventures from RMB282.9 million in 2022 to RMB21.4 million in 2023.
The decrease was partially offset by an increase in our gains on disposal of investments in
subsidiaries from RMB32.3 million in 2022 to RMB268.2 million in 2023, mainly resulting
from our disposal of Fengwang Information Technology in June 2023, in pursuit of healthy and
sustainable development of our principal business.
Finance Income
Our finance income increased from RMB345.7 million in 2022 to RMB633.4 million in
2023, representing an increase in our interest income on deposits in financial institutions.
Finance Costs
Our finance costs increased by 10.5% from RMB2.1 billion in 2022 to RMB2.3 billion in
2023. The increase was primarily attributable to an increase in our interest expenses on
borrowings from RMB1.6 billion in 2022 to RMB1.8 billion in 2023, primarily because we
generally maintained higher average balances of borrowings in 2023 as compared to 2022.
Income Tax Expense
Our income tax expense decreased by 35.3% from RMB4.0 billion in 2022 to RMB2.6
billion in 2023, mainly because certain of our previously loss-making subsidiaries turned
profitable in 2023, and accordingly (i) utilized previously unrecognized tax losses and
temporary differences of RMB378.1 million in 2023, as compared to RMB85.0 million in
2022, and (ii) recognized tax losses and temporary differences not recognized in prior years of
RMB157.3 million in 2023, as compared to RMB43.5 million in 2022.
FINANCIAL INFORMATION
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Profit for the Y ear
As a result of the foregoing, our profit for the year increased by 12.1% from RMB7.1
billion in 2022 to RMB7.9 billion in 2023. The increase was primarily driven by the further
improvement of the overall profitability of our express and freight delivery segment in 2023,
bolstered by, among other things, (a) our continued business structure optimization with a
focus on high-quality, differentiated services, and the disposal of the Fengwang Information
Technology in pursuit of healthy and sustainable development of our principal business, and
(b) enhanced lean management and cost control measures, which we believe allowed us to
continuously promote multi-network synergies and optimize the segment’s cost structure for
further operational efficiency. In addition, our intra-city on-demand delivery segment achieved
profitability turnaround in 2023.
Y ear Ended December 31, 2022 Compared with the Y ear Ended December 31, 2021
Revenue
Our revenue increased by 29.1% from RMB207.2 billion in 2021 to RMB267.5 billion in
2022, primarily driven by (i) an increase in revenue from our supply chain and international
segment by 124.9% from RMB40.0 billion in 2021 to RMB89.9 billion in 2022, which was
primarily due to our consolidation of Kerry Logistics since September 2021; and (ii) an
increase in revenue from our express and freight delivery segment by 5.7% from RMB160.7
billion in 2021 to RMB169.8 billion in 2022, and an increase in revenue from our intra-city
on-demand delivery segment by 28.3% from RMB5.1 billion in 2021 to RMB6.6 billion in
2022, both of which were primarily due to the further penetration and expansion in these two
segments.
By Segment
The increase in revenue from our express and freight delivery segment was primarily
attributable to:
(i) an increase in revenue from time-definite express services by 6.8% from RMB99.0
billion in 2021 to RMB105.7 billion in 2022, which was primarily due to an increase
in the demand for our parcel return services for e-commerce platforms, as well as
improvements on our time-definite express service capabilities through, among
other things, the further integration of our logistics networks;
(ii) an increase in revenue from economy express services by 0.5% from RMB25.4
billion in 2021 to RMB25.6 billion in 2022, resulting from our continuous and
proactive adjustment and optimization of the customer focus and service offerings
of our economy express services, partially offset by the softness in demand;
FINANCIAL INFORMATION
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(iii) an increase in revenue from freight delivery services by 2.3% from RMB27.3 billion
in 2021 to RMB27.9 billion in 2022, primarily attributable to our continuous and
proactive adjustment and optimization of the customer focus and service offerings
of our freight delivery services, partially offset by the softness in demand; and
(iv) an increase in revenue from cold chain and pharmaceuticals logistics services by
10.4% from RMB7.8 billion in 2021 to RMB8.6 billion in 2022, which in turn was
primarily attributable to our continued efforts to develop and upgrade our cold chain
and pharmaceutical logistics service offerings and capabilities, and as a result were
able to serve more customers.
The increase in revenue from our intra-city on-demand delivery segment was primarily
attributable to (i) further diversification of and upgrades to our service offerings to cover more
service scenarios, allowing us to achieve growth in high-value orders, and (ii) further
expansion of our intra-city on-demand services networks to cover lower-tier cities, counties
and districts in China.
The increase in revenue from our supply chain and international segment was primarily
driven by the consolidation of Kerry Logistics for the full year of 2022, while we only
consolidated Kerry Logistics since September 2021.
By Region
Our revenue from mainland China increased by 10.3% from RMB189.0 billion in 2021
to RMB208.6 billion in 2022, representing 91.2% and 78.0% of our total revenue for the same
years, respectively.
Our revenue from outside of mainland China increased by 224.5% from RMB18.2 billion
in 2021 to RMB58.9 billion in 2022, representing 8.8% and 22.0% of our total revenue for the
same years, respectively. The increase in revenue from outside of mainland China in 2022 was
primarily attributable to our continued expansion into the global logistics market through
organic growth and acquisitions, including our consolidation of Kerry Logistics since
September 2021.
Cost of Revenue
Our cost of revenue increased by 29.3% from RMB181.4 billion in 2021 to RMB234.5
billion in 2022, primarily attributable to an increase in our transportation costs by 50.8% from
RMB70.9 billion in 2021 to RMB106.8 billion in 2022, and an increase in our labor costs by
9.6% from RMB83.6 billion in 2021 to RMB91.6 billion in 2022.
FINANCIAL INFORMATION
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The increase in our transportation costs was primarily attributable to (i) the increase in
the transportation costs relating to our supply chain and international segment, which had
experienced a rapid growth in business volume, stemming from both our organic growth and
the consolidation of Kerry Logistics, and (ii) rises in fuel prices in 2022. Such increases were
partially offset by (i) our continued multi-network integration efforts, which led to improved
economies of scale due to a more efficient route design leading to reduced transit, and higher
vehicle load rates; and (ii) further improvement on our transport capacity structure through, for
instance, increasing the use of our self-owned vehicles. For the same reasons, our
transportation costs-to-revenue ratio increased from 34.2% in 2021 to 39.9% in 2022.
The increase in our labor costs was primarily attributable to (i) an increasing need for
labor resources in line with our revenue growth and business expansion, and (ii) pay raises for
our couriers and other frontline employees to improve the competitiveness of our employee
benefits, which we believe would further incentivize couriers and other frontline employees to
provide quality services. Our labor costs-to-revenue ratio decreased from 40.3% in 2021 to
34.2% in 2022. The decrease was primarily attributable to (i) our continued multi-network
integration and investments in automated equipment, which led to improved operational
efficiency, and (ii) the rapid growth in revenue from our supply chain and international
segment, while labor costs of this segment remained relatively stable.
Gross Profit and Gross Profit Margin
As a result of the foregoing, our gross profit increased by 28.1% from RMB25.8 billion
in 2021 to RMB33.0 billion in 2022. Despite the continued impact of challenging market
conditions, our gross profit margin remained stable at 12.4% and 12.3% in 2021 and 2022,
respectively, primarily attributable to (i) our efforts to further optimize our product mix
through, among other things, strategically focusing on mid to high-end service offerings, which
generally demonstrated higher profitability, and (ii) efficiency gains achieved in certain of our
cost components through the further integration of our logistics networks, infrastructure and
service capabilities.
Selling and Marketing Expenses
Our selling and marketing expenses remained stable at RMB2.8 billion and RMB2.8
billion in 2021 and 2022, respectively.
General and Administrative Expenses
Our general and administrative expenses increased by 17.1% from RMB15.1 billion in
2021 to RMB17.7 billion in 2022, which was generally in line with our business growth. Our
general and administrative expenses-to-revenue ratio, representing our general and
administrative expenses divided by revenue for the same year, expressed as a percentage,
decreased from 7.3% in 2021 to 6.6% in 2022, reflecting our further improvement on cost
efficiency. Such an improvement was primarily due to our continuous pursuit of lean
management through the digital transformation of our administrative routines.
FINANCIAL INFORMATION
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Research and Development Expenses
Our research and development expenses remained stable at RMB2.2 billion and RMB2.2
billion in 2021 and 2022, respectively. Research and development expenses incurred in 2022
were primarily in relation to further digital transformation of our business operations, as well
as exploring technological innovations in the logistics industry that could improve operational
efficiency and generate new revenue streams.
Net (Impairment Losses)/Reversal of Impairment losses on Financial Assets and Contract
Assets
Our net impairment losses on financial assets and contract assets increased by 42.3% from
RMB579.9 million in 2021 to RMB825.2 million in 2022, primarily due to an increase in loss
allowances for our trade receivables and other financial assets, which was based on our
assessment and generally in line with our business growth.
Other Income
Our other income increased by 19.4% from RMB2.1 billion in 2021 to RMB2.5 billion
in 2022, which was primarily attributable to an increase in government grants from RMB1.8
billion in 2021 to RMB2.3 billion in 2022.
Other Gains, Net
Our net other gains decreased from RMB2.0 billion in 2021 to RMB831.3 million in
2022, mainly attributable to higher gains on disposal of investments in subsidiaries recorded
in 2021 of RMB1.8 billion, while we did not have similarly sized disposals of subsidiaries in
2022.
Finance Income
Our finance income increased by 84.1% from RMB187.8 million in 2021 to RMB345.7
million in 2022, reflecting the increase in our interest income on deposits in financial
institutions in 2022 as compared to 2021.
Finance Costs
Our finance costs increased by 31.4% from RMB1.6 billion in 2021 to RMB2.1 billion in
2022. The increase was primarily attributable to an increase in our interest expenses on
borrowings from RMB1.0 billion in 2021 to RMB1.6 billion in 2022, as we generally
maintained higher average balances of borrowings during 2022 as compared to 2021.
FINANCIAL INFORMATION
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Income Tax Expense
Our income tax expense increased from RMB3.4 billion in 2021 to RMB4.0 billion in
2022, primarily attributable to an increase in our current income tax from RMB2.8 billion in
2021 to RMB3.9 billion in 2022, which was generally in line with the growth in our taxable
income in 2022.
Profit for the Y ear
As a result of the foregoing, our profit for the year increased by 61.0% from RMB4.4
billion in 2021 to RMB7.1 billion in 2022.
DISCUSSION OF SELECTED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
The following table sets forth selected information from our consolidated statements of
financial position as of the dates indicated, which has been extracted from the Accountant’s
Report in Appendix I to this prospectus:
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment .......... 47,650,309 56,903,667 60,104,416 59,577,127
Right-of-use assets . . . . . ............. 23,779,667 22,179,348 20,890,047 19,972,478
Investment properties . . .............. 4,850,233 4,875,366 6,418,720 6,658,540
Intangible assets . . . ................. 19,485,614 22,084,612 21,030,998 20,582,712
Deferred tax assets . ................. 1,584,478 1,632,964 2,263,870 2,053,570
Prepayments, other receivables and
other assets ...................... 3,435,382 2,257,364 2,333,562 2,229,314
Investments in associates and joint
ventures ......................... 7,260,087 7,858,000 7,378,831 6,859,813
Financial assets at fair value through
other comprehensive income . . ....... 6,810,771 7,365,684 9,489,535 8,344,293
Financial assets at fair value through
profit or loss ..................... 878,023 1,012,209 589,996 508,313
Total non-current assets ............... 115,734,564 126,169,214 130,499,975 126,786,160
FINANCIAL INFORMATION
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As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current assets
Inventories ......................... 1,546,821 1,948,354 2,440,425 2,559,211
Contract assets ..................... 1,038,247 1,522,996 1,632,592 2,039,379
Trade and note receivables . . . . ........ 30,759,013 25,796,677 25,360,433 26,095,410
Prepayments, other receivables and
other assets ...................... 14,992,856 12,801,911 12,622,706 10,667,582
Financial assets at fair value through
other comprehensive income . . ....... – 63,310 99,978 125,633
Financial assets at fair value through
profit or loss ..................... 10,384,493 7,385,379 6,809,742 18,047,323
Restricted cash ..................... 576,926 874,919 1,576,496 1,029,244
Cash and cash equivalents. . . . . . . . . . . . . 34,813,768 40,279,947 40,448,308 32,515,989
Total current assets ................... 94,112,124 90,673,493 90,990,680 93,079,771
Total assets ......................... 209,846,688 216,842,707 221,490,655 219,865,931
LIABILITIES
Non-current liabilities
Borrowings ........................ 19,384,466 26,586,761 30,396,912 30,600,682
Lease liabilities ..................... 10,941,938 8,582,372 8,038,495 7,472,393
Deferred tax liabilities . . ............. 4,402,160 4,657,954 4,550,974 4,536,857
Other payables and accruals . . . ........ 544,300 191,871 140,329 144,477
Deferred income .................... 690,242 860,791 1,090,644 1,210,871
Total non-current liabilities ............ 35,963,106 40,879,749 44,217,354 43,965,280
Current liabilities
Trade and note payables .............. 23,467,675 24,748,051 24,914,300 23,810,332
Contract liabilities ................... 1,675,836 1,244,418 1,832,018 1,802,509
Borrowings ........................ 25,715,952 23,281,547 22,309,103 29,034,420
Lease liabilities ..................... 5,989,616 6,596,956 5,769,965 5,540,079
Financial liabilities at fair value through
profit or loss ..................... 7,658 96,647 92,120 94,614
Income tax payable . . ................ 2,066,730 1,630,863 1,394,250 1,221,636
Other payables and accruals . . . ........ 17,070,777 20,029,392 17,637,171 15,444,502
Advances from customers . . . .......... 27,385 49,035 40,714 41,209
Total current liabilities .............. 76,021,629 77,676,909 73,989,641 76,989,301
Total liabilities ..................... 111,984,735 118,556,658 118,206,995 120,954,581
Net assets ......................... 97,861,953 98,286,049 103,283,660 98,911,350
FINANCIAL INFORMATION
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As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Equity attributable to owners of
our Company
Share capital ....................... 4,906,213 4,895,202 4,895,202 4,815,911
Less: Treasury shares . . . ............. (394,993) (2,040,377) (2,575,532) (378,490)
Reserves .......................... 50,186,242 50,037,565 51,634,675 43,385,333
Retained earnings . . ................. 28,192,470 33,371,351 38,835,999 40,748,443
Equity attributable to owners of
our Company ..................... 82,889,932 86,263,741 92,790,344 88,571,197
Non-controlling interests . . ............ 14,972,021 12,022,308 10,493,316 10,340,153
Total equity ....................... 97,861,953 98,286,049 103,283,660 98,911,350
Property, Plant and Equipment
Our property, plant and equipment consist of freehold land and buildings, aircraft, aircraft
engines, rotables and high-value maintenance, machinery and equipment, transportation
vehicles, computers and electronic equipment, office and other equipment, leasehold
improvements, as well as construction-in-progress. Our property, plant and equipment were
RMB47.7 billion, RMB56.9 billion, RMB60.1 billion and RMB59.6 billion as of December 31,
2021, 2022 and 2023 and June 30, 2024, respectively. The increases in property, plant and
equipment during the Track Record Period were primarily attributable to (i) acquisition and
consolidation of subsidiaries, such as Kerry Logistics, during the Track Record Period, and (ii)
the continued development and integration of our logistics networks and infrastructure. The
following table sets forth a breakdown of our property, plant and equipment as of the dates
indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Freehold land and buildings . . 13,458,571 18,529,197 26,267,016 27,848,389
Aircraft, aircraft engines,
rotables and high-value
maintenance ............. 6,754,760 7,766,736 8,853,163 9,163,503
Machinery and equipment .... 6,496,199 7,838,395 10,634,212 10,466,425
Transportation vehicles ...... 2,576,601 2,516,835 2,628,610 2,337,785
Computers and electronic
equipment ................ 1,632,879 1,550,147 1,346,110 1,191,704
FINANCIAL INFORMATION
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As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Office and other equipment . . 6,006,980 5,456,094 4,200,743 3,511,093
Leasehold improvements ..... 2,153,116 2,096,403 2,141,678 2,119,112
Construction-in-progress ..... 8,571,203 11,149,860 4,032,884 2,939,116
Total ....................... 47,650,309 56,903,667 60,104,416 59,577,127
Right-of-Use Assets
Our right-of-use assets primarily represent the carrying amount of our leasehold land and
land use rights, leased buildings, and leased motor vehicles. Our right-of-use assets decreased
from RMB23.8 billion as of December 31, 2021 to RMB22.2 billion as of December 31, 2022
and further to RMB20.9 billion as of December 31, 2023, and further to RMB20.0 billion as
of June 30, 2024, mainly due to amortization.
Investment Properties
Our investment properties represent the carrying amount of properties held primarily for
leasing purposes, including properties under construction for such purpose. Our investment
properties remained relatively stable at RMB4.9 billion and RMB4.9 billion as of December
31, 2021 and 2022, respectively. Our investment properties increased by 31.7% to RMB6.4
billion as of December 31, 2023, primarily driven by our acquisition of assets through the
acquisition of subsidiaries, and the reclassification of certain assets to investment properties
upon their completion of construction. Our investment properties remained relatively stable at
RMB6.7 billion as of June 30, 2024.
Intangible Assets
Our intangible assets primarily consist of development expenditures, goodwill, customer
relationships, software, trademarks and others. Intangible assets increased from RMB19.5
billion as of December 31, 2021 to RMB22.1 billion as of December 31, 2022, primarily
reflecting our continued efforts to improve our information systems, as well as our
consolidation of certain other subsidiaries in 2022. Our intangible assets remained relatively
stable at RMB21.0 billion and RMB20.6 billion as of December 31, 2023 and June 30, 2024,
respectively.
FINANCIAL INFORMATION
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Deferred Tax Assets
Our deferred tax assets remained relatively stable at RMB1.6 billion and RMB1.6 billion
as of December 31, 2021 and 2022, respectively. Our deferred tax assets increased by 38.6%
to RMB2.3 billion as of December 31, 2023, primarily reflecting the temporary difference
between the recognition of amortization and depreciation and of tax losses. Our deferred tax
assets remained relatively stable at RMB2.1 billion as of June 30, 2024.
Prepayments, Other Receivables and Other Assets
The non-current portion of our prepayments, other receivables and other assets primarily
consists of (i) amounts due from related parties, (ii) deferred pilot recruitment costs, (iii)
prepayments, which mainly consist of prepaid construction equipment, (iv) loans to employees,
and (v) finance lease receivables. The current portion of our prepayments, other receivables
and other assets primarily consists of (i) amounts due from related parties, (ii) value-added tax
recoverable, (iii) prepayments, which mainly consist of prepaid freight and transportation
costs, (iv) deposits, (v) cash to collect on behalf of customers, (vi) loans to employees, (vii)
prepaid corporate income tax, and (viii) finance lease receivables. The following table sets
forth details of our prepayments, other receivables and other assets as of the dates indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
Amounts due from related
parties ................... 59,725 70,794 1,363 71,751
Deferred pilot recruitment
costs ..................... 632,486 836,956 805,415 774,186
Prepayments ................ 1,746,758 622,763 944,833 845,134
Loans to employees ......... 139,422 57,058 15,575 84
Finance lease receivables .... 471,491 247,003 89,380 57,311
Others ...................... 407,484 442,403 492,174 494,494
3,457,366 2,276,977 2,348,740 2,242,960
Less: Allowance for expected
credit losses .............. (21,984) (19,613) (15,178) (13,646)
3,435,382 2,257,364 2,333,562 2,229,314
FINANCIAL INFORMATION
– 402 –


--- page 412 ---
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current:
Amounts due from related
parties ................... 475,828 526,453 1,032,722 275,159
V alue-added tax recoverable. . 7,454,169 5,048,940 4,641,173 3,862,436
Prepayments ................ 2,933,129 3,474,471 3,248,665 2,793,230
Prepayments for listing
expenses ................. – – 25,068 26,870
Deposits .................... 1,413,769 1,532,034 1,523,589 1,535,427
Cash to collect on behalf of
customers ................ 729,705 382,300 659,441 720,869
Loans to employees ......... 97,833 55,604 26,454 16,197
Prepaid corporate income tax. 236,852 768,131 551,327 367,288
Finance lease receivables .... 249,416 376,512 226,652 207,982
Others ...................... 1,699,827 1,036,855 1,043,853 1,213,812
15,290,528 13,201,300 12,978,944 11,019,270
Less: Allowance for expected
credit losses .............. (297,672) (399,389) (356,238) (351,688)
14,992,856 12,801,911 12,622,706 10,667,582
The non-current portion of our prepayments, other receivables and other assets decreased
by 34.3% from RMB3.4 billion as of December 31, 2021 to RMB2.3 billion as of December 31,
2022, primarily attributable to a decrease in non-current prepayments to RMB622.8 million as of
December 31, 2022, as we had a partial settlement of our non-current prepayments. Non-current
portion of our prepayments, other receivables and other assets remained relatively stable at
RMB2.3 billion and RMB2.2 billion as of December 31, 2023 and June 30, 2024, respectively.
The current portion of our prepayments, other receivables and other assets decreased by
14.6% from RMB15.0 billion as of December 31, 2021 to RMB12.8 billion as of December 31,
2022, which was primarily attributable to a decrease in value-added tax recoverable to RMB5.0
billion as of December 31, 2022. The current portion of our prepayments, other receivables and
other assets decreased by 15.5% from RMB12.6 billion as of December 31, 2023 to RMB10.7
billion as of June 30, 2024, primarily attributable to the decreases in our value-added tax
recoverable, the current portion of our amounts due from related parties, and the current portion
of our prepayments, which were mainly associated with freight and transportation costs.
Our loans to employees are interest-free in nature, and are a part of our employee benefits
programs. These loans take the form of entrusted loans provided by commercial banks. As
advised by our PRC Legal Adviser, the provision of entrusted loans to employees was in
compliance with the applicable PRC laws and regulations.
FINANCIAL INFORMATION
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--- page 413 ---
Our amounts due from related parties that are non-trade in nature were RMB508.9
million, RMB573.3 million, RMB1.0 billion and RMB332 million as of December 31, 2021,
2022 and 2023 and June 30, 2024, respectively. These amounts primarily comprised: (i)
logistics service fees, totalling up to RMB371.4 million, RMB405.6 million and RMB561.1
million in 2021, 2022 and 2023, respectively, collected from our customers by the Hive Box
Connected Persons on our behalf; the aforementioned fee collection arrangements were in line
with, and incidental to, the return of goods services for certain e-commerce platforms
conducted through smart lockers of the Hive Box Connected Persons; and (ii) a loan to a joint
venture of RMB329.9 million in 2023, which amount had been fully settled in January 2024.
Investments in Associates and Joint V entures
Our investments in associates and joint ventures increased by 8.2% from RMB7.3 billion
as of December 31, 2021 to RMB7.9 billion as of December 31, 2022, driven by an increase
in our investments in joint ventures from RMB2.6 billion as of December 31, 2021 to RMB3.6
billion as of December 31, 2022, resulting from our capital injection to a joint venture in
relation to the Ezhou cargo hub. Investments in associates and joint ventures remained
relatively stable at RMB7.4 billion and RMB6.9 billion as of December 31, 2023 and June 30,
2024, respectively.
Financial Assets at Fair V alue Through Other Comprehensive Income
The non-current portion of our financial assets at fair value through other comprehensive
income consists of listed equity investments at fair value and unlisted equity investments at fair
value. The current portion of our financial assets at fair value through other comprehensive
income represents notes held for sale, which are in relation to the collection of contractual cash
flows from our customers and the sale of our financial assets. The following table sets forth
details of our financial assets at fair value through other comprehensive income as of the dates
indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
– Listed equity investments,
at fair value .............. 241,936 158,936 2,418,842 1,120,309
– Unlisted equity
investments, at fair value . . 6,568,835 7,206,748 7,070,693 7,223,984
6,810,771 7,365,684 9,489,535 8,344,293
Current:
– Notes held for sale ........ – 63,310 99,978 125,633
– 63,310 99,978 125,633
FINANCIAL INFORMATION
– 404 –


--- page 414 ---
The non-current portion of our financial assets at fair value through other comprehensive
income increased from RMB6.8 billion as of December 31, 2021 to RMB7.4 billion as of
December 31, 2022, primarily due to an increase in our unlisted equity investments at fair
value from RMB6.6 billion as of December 31, 2021 to RMB7.2 billion as of December 31,
2022. Our unlisted equity investments primarily represent our investments in the shares of
certain companies that are not traded on the open market. Such investments were classified as
financial assets at FVOCI with level 3 fair value measurement. For the assumptions utilized in
our level 3 fair value measurement, see “— Critical Accounting Policies and Estimates —
Level 3 Fair V alue Measurement” and Note 3.3 to the Accountant’s Report in Appendix I to this
prospectus. Our unlisted equity investments at fair value increased during the Track Record
Period, primarily reflecting the recent equity sales prices of the relevant investee companies.
The non-current portion of our financial assets at fair value through other comprehensive
income further increased to RMB9.5 billion as of December 31, 2023, primarily attributable to
the increase in our listed equity investments, at fair value, from RMB158.9 million as of
December 31, 2022 to RMB2.4 billion as of December 31, 2023, mainly reflecting our
investment in J&T Global Express Limited. The non-current portion of our financial assets at
fair value through other comprehensive income decreased to RMB8.3 billion as of June 30,
2024, primarily due to a decrease in our listed equity investments, at fair value, which was
associated with our investment in J&T Global Express Limited.
Financial Assets at Fair V alue Through Profit or Loss
The non-current portion of our financial assets at fair value through profit or loss consists
of our industry fund investments, Special Scheme equity-class securities, and others. The
current portion of our financial assets at fair value through profit or loss primarily consists of
cash management products issued by reputable commercial banks, namely, structured deposits
and fund investment. The following table sets forth details of our financial assets at fair value
through profit or loss as of the dates indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
– Industry fund investments . . 552,130 770,637 499,320 378,654
– Special Scheme equity-
class securities ............ 235,821 116,286 – –
– Equity investment in
unlisted entities .......... 85,243 118,324 84,401 123,504
– Others .................... 4,829 6,962 6,275 6,155
878,023 1,012,209 589,996 508,313
Current:
– Structured deposits ........ 9,730,665 7,351,158 6,542,881 17,770,993
– Fund investment ........... 653,828 34,221 266,861 276,330
10,384,493 7,385,379 6,809,742 18,047,323
FINANCIAL INFORMATION
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--- page 415 ---
The non-current portion of our financial assets at fair value through profit or loss
increased from RMB878.0 million as of December 31, 2021 to RMB1.0 billion as of December
31, 2022, primarily attributable to increases in industry fund investments during the same time.
The non-current portion of our financial assets at fair value through profit or loss decreased to
RMB590.0 million as of December 31, 2023, primarily due to (i) a decrease in industry fund
investments from RMB770.6 million as of December 31, 2022 to RMB499.3 million as of
December 31, 2023, and (ii) a decrease in Special Scheme equity-class securities from
RMB116.3 million as of December 31, 2022 to nil as of December 31, 2023. The non-current
portion of our financial assets at fair value through profit or loss subsequently decreased to
RMB508.3 million as of June 30, 2024, primarily due to a decrease in our industry fund
investments.
The current portion of our financial assets at fair value through profit or loss amounted
to RMB10.4 billion, RMB7.4 billion, RMB6.8 billion and RMB18.0 billion as of December 31,
2021, 2022 and 2023 and June 30, 2024, respectively, primarily reflecting the changes in our
structured deposits. We adjusted our structured deposits during the Track Record Period
according to our cash management plans.
Our finance department oversees our overall cash management. Below is a summary of
our internal control measures on cash management.
 Our annual cash management limit amount shall be approved by our Board of
Directors. We shall ensure ample liquidity for our Group’s daily operations,
maintain a portfolio of principal-guaranteed or low-risk products, and only invest in
short-term products with a maturity of less than 12 months.
 As authorized by our Board of Directors, our cash management shall be centralized
at our finance department, and shall follow a tiered approval process. Single
transaction exceeding a pre-determined threshold shall be submitted for approval by
our senior management.
 The finance department shall assess and approve a shortlist of financial institutions
and its low-risk cash management products, such as time deposits, call deposits,
structured deposits, interbank deposits, and low-risk fixed income products.
Specifically, we only allowed transactions with reputable domestic banks or
securities companies with total assets of more than RMB100.0 billion and
international ratings of BBB- or above, and reputable foreign banks with a strong
global or regional presence.
 We have fully standardized and systemized our cash management processes. All the
major cash management processes, ranging from short-term cash planning, quotes
(interest and tenors) from financial institutions, investment proposals to approvals,
shall be generated in and processed by the system in the interest of efficiency.
 We shall review and analyze our cash management performance on a monthly basis.
We shall also take immediate actions to improve our practices if there is any change
in regulatory or market conditions.
FINANCIAL INFORMATION
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--- page 416 ---
Trade and Note Receivables
Our trade and note receivables primarily consist of outstanding amounts payable by third
parties and related parties. The following table sets forth the details of our trade and note
receivables as of the dates indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade and note receivables
– related parties ............. 70,288 60,228 124,211 553,681
– third parties ............... 31,723,594 27,296,693 26,614,887 26,880,865
31,793,882 27,356,921 26,739,098 27,434,546
Less: Allowance for expected
credit losses .............. (1,034,869) (1,560,244) (1,378,665) (1,339,136)
30,759,013 25,796,677 25,360,433 26,095,410
Our trade and note receivables decreased by 16.1% from RMB30.8 billion as of December
31, 2021 to RMB25.8 billion as of December 31, 2022, primarily attributable to a decrease in
trade and note receivables from third parties from RMB31.7 billion as of December 31, 2021
to RMB27.3 billion as of December 31, 2022, which in turn was primarily due to our efforts
to accelerate collection of such receivables from third parties in 2022.
Our trade and note receivables remained relatively stable at RMB25.4 billion and
RMB26.1 billion as of December 31, 2023 and June 30, 2024, respectively.
We generally grant a credit period ranging from 30 to 90 days to our customers. The table
below sets forth an aging analysis, based on the invoice date, of our trade and note receivables
as of the dates indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within one year (including
one year) ................. 31,344,858 26,399,022 25,719,098 26,325,967
Between one and two years
(including two years) ...... 236,070 653,524 490,411 450,741
Over two years .............. 212,954 304,375 529,589 657,838
31,793,882 27,356,921 26,739,098 27,434,546
FINANCIAL INFORMATION
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--- page 417 ---
The following table sets forth our turnover days of our trade and note receivables for the
years/periods indicated:
Y ear ended December 31,
Six months
ended June 30,
2021 2022 2023 2024
Average turnover days of
trade and note receivables* . 42.1 38.6 36.1 34.5
Note:
* Average turnover days of trade and note receivables for each one-year period equals the average of the
beginning and ending trade and note receivables for the year divided by revenue for that year and multiplied
by 365 days; average turnover days of trade and note receivables for each six-month period equals the average
of the beginning and ending trade and note receivables for the period divided by revenue for the same period
and multiplied by 180 days.
The average turnover days of our trade and note receivables decreased from 42.1 days in
2021 to 38.6 days in 2022, to 36.1 days in 2023, and further to 34.5 days for the six months
ended June 30, 2024, primarily due to our efforts to accelerate the collection of trade and note
receivables.
As of September 30, 2024, RMB24.3 billion, or 88.5%, of our trade and note receivables
as of June 30, 2024 had been subsequently settled.
Cash and Cash Equivalents
Our cash and cash equivalents primarily consist of cash at bank and cash at other financial
institutions. Our cash and cash equivalents were RMB34.8 billion, RMB40.3 billion, RMB40.4
billion and RMB32.5 billion as of December 31, 2021, 2022 and 2023 and June 30, 2024,
respectively.
FINANCIAL INFORMATION
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--- page 418 ---
Other Payables and Accruals
The non-current portion of our other payables and accruals primarily relates to salaries,
wages and benefits for our employees, consideration payable for business combinations, and
others. The current portion of our other payables and accruals primarily relates to (i) salaries,
wages and benefits for our employees, (ii) payable for purchase of property, plant and
equipment, (iii) payables of cash collected on delivery services, (iv) deposits, (v) other taxes
payable, and (vi) amounts due to related parties. The following table sets forth details of our
other payables and accruals as of the dates indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
Salaries, wages and benefits. . 351,754 114,024 82,216 77,406
Consideration payable for
business combinations ..... 144,447 21,573 – –
Others ...................... 48,099 56,274 58,113 67,071
544,300 191,871 140,329 144,477
Current:
Amounts due to related
parties ................... 269,671 220,071 136,098 95,979
Salaries, wages and benefits. . 5,610,318 6,573,254 5,872,341 4,505,260
Payable for purchase of
property, plant and
equipment ................ 5,352,716 5,557,664 4,345,119 3,209,908
Deposits ................... 1,604,631 2,375,025 2,355,449 2,516,231
Other taxes payable ......... 806,821 1,130,283 735,465 756,972
Payables of cash collected on
delivery services .......... 1,643,510 1,220,988 1,534,338 1,442,384
Consideration payable for
business combinations ..... 83,002 1,045,334 289,306 281,790
Others ...................... 1,700,108 1,906,773 2,369,055 2,635,978
17,070,777 20,029,392 17,637,171 15,444,502
FINANCIAL INFORMATION
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--- page 419 ---
Fluctuations in our other payables and accruals were primarily driven by changes in the
current portion of other payables and accruals. The current portion of our other payables and
accruals increased by 17.3% from RMB17.1 billion as of December 31, 2021 to RMB20.0
billion as of December 31, 2022, primarily due to (i) an increase in current salaries, wages and
benefits from RMB5.6 billion as of December 31, 2021 to RMB6.6 billion as of December 31,
2022, and (ii) an increase in current consideration payable for business combinations from
RMB83.0 million as of December 31, 2021 to RMB1.0 billion as of December 31, 2022,
resulting from our acquisitions of certain subsidiaries in 2022. The current portion of our other
payables and accruals decreased to RMB17.6 billion as of December 31, 2023, primarily due
to (i) a decrease in salaries, wages and benefits, mainly due to our payment of salaries, (ii) a
decrease in current consideration payable for business combinations, and (iii) a decrease in
payable for purchase of property, plant and equipment, mainly because we made payments in
relation thereto. The current portion of our other payables and accruals further decreased to
RMB15.4 billion as of June 30, 2024, primarily due to (i) a decrease in salaries, wages and
benefits, mainly due to our payment of salaries, and (ii) a decrease in payable for purchase of
property, plant and equipment, mainly because we made payments in relation thereto.
Our amounts due to related parties categorized under other payables and accruals are
non-trade in nature, primarily comprising payables for the purchase of certain logistics
equipment. As such amounts are essentially within our ordinary course of business, and do not
interfere with our financial independence, we do not plan to fully settle all remaining balances
of our amounts due to related parties that are non-trade in nature prior to the Listing.
Trade and Note Payables
Our trade and note payables primarily consist of costs payable by us to third party
suppliers. Our trade and note payables remained relatively stable at RMB23.5 billion,
RMB24.7 billion, RMB24.9 billion and RMB23.8 billion as of December 31, 2021, 2022 and
2023 and June 30, 2024, respectively. The following table sets forth details of our trade and
note payables as of the dates indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade and note payables
– related parties ............. 405,456 505,220 421,194 397,211
– third parties ............... 23,062,219 24,242,831 24,493,106 23,413,121
23,467,675 24,748,051 24,914,300 23,810,332
FINANCIAL INFORMATION
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--- page 420 ---
The following table sets forth the aging analysis of our trade and note payables based on
invoice date as of the dates indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within one year (including
one year) ................. 23,354,313 24,654,791 24,505,848 23,527,260
Over 1 year ................. 1 13,362 93,260 408,452 283,072
Total ....................... 23,467,675 24,748,051 24,914,300 23,810,332
The following table sets forth the turnover days of our trade and note payables for the
years/periods indicated:
Y ear ended December 31,
Six months
ended June 30,
2021 2022 2023 2024
Average turnover days of
trade and note payables* . . . 39.2 37.5 40.1 37.8
Note:
* Average turnover days of trade and note payables for each one-year period equals the average of the beginning
and ending trade and note payables for the year divided by cost of revenue for that year and multiplied by 365
days; average turnover days of trade and note payables for each six-month period equals the average of the
beginning and ending trade and note payables for the period divided by cost of revenue for the same period
and multiplied by 180 days.
Average turnover days of our trade and note payables remained relatively stable at 39.2
days, 37.5 days, 40.1 days and 37.8 days in 2021, 2022 and 2023 and the six months ended June
30, 2024, respectively.
As of September 30, 2024, RMB21.1 billion, or 88.7%, of our trade and note payables as
of June 30, 2024 had been subsequently settled.
LIQUIDITY AND CAPITAL RESOURCES
During the Track Record Period and up to the Latest Practicable Date, we had met our
working capital and other capital requirements primarily through cash generated from our
operating activities, and proceeds from external debts and other fundraising activities. We had
cash and cash equivalents of RMB34.8 billion, RMB40.3 billion, RMB40.4 billion and
RMB32.5 billion as of December 31, 2021, 2022 and 2023 and June 30, 2024, respectively.
Going forward, we believe that our capital requirements will be satisfied by using a
combination of cash and cash equivalents, cash generated from our operating activities and
fundraising activities, and the estimated net proceeds from the Global Offering.
FINANCIAL INFORMATION
–4 1 1–


--- page 421 ---
Net Current Assets
The following table sets forth our current assets and liabilities as of the dates indicated:
As of December 31,
As of
June 30,
As of
September 30,
2021 2022 2023 2024 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current assets
Inventories ............... 1,546,821 1,948,354 2,440,425 2,559,211 2,369,462
Contract assets ............ 1,038,247 1,522,996 1,632,592 2,039,379 2,296,536
Trade and note receivables . . . 30,759,013 25,796,677 25,360,433 26,095,410 26,426,602
Prepayments, other receivables
and other assets .......... 14,992,856 12,801,911 12,622,706 10,667,582 10,278,805
Financial assets at fair value
through other
comprehensive income ..... – 63,310 99,978 125,633 210,851
Financial assets at fair value
through profit or loss ..... 10,384,493 7,385,379 6,809,742 18,047,323 24,604,743
Restricted cash ............ 576,926 874,919 1,576,496 1,029,244 1,103,342
Cash and cash equivalents .... 34,813,768 40,279,947 40,448,308 32,515,989 21,294,235
Total current assets ......... 94,112,124 90,673,493 90,990,680 93,079,771 88,584,576
Current liabilities
Trade and note payables ..... 23,467,675 24,748,051 24,914,300 23,810,332 24,836,388
Contract liabilities ......... 1,675,836 1,244,418 1,832,018 1,802,509 1,584,702
Borrowings ............... 25,715,952 23,281,547 22,309,103 29,034,420 23,343,558
Lease liabilities ........... 5,989,616 6,596,956 5,769,965 5,540,079 5,416,002
Financial liabilities at fair
value through profit or loss . 7,658 96,647 92,120 94,614 93,451
Income tax payable ......... 2,066,730 1,630,863 1,394,250 1,221,636 1,240,757
Other payables and accruals . . 17,070,777 20,029,392 17,637,171 15,444,502 16,546,711
Advances from customers .... 27,385 49,035 40,714 41,209 38,194
Total current liabilities ....... 76,021,629 77,676,909 73,989,641 76,989,301 73,099,763
Net current assets ........... 18,090,495 12,996,584 17,001,039 16,090,470 15,484,813
FINANCIAL INFORMATION
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--- page 422 ---
Cash Flow
The following table sets forth a summary of our cash flows for the years/periods
indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net cash generated
from operating
activities ........... 16,078,955 32,702,947 26,569,819 13,824,827 13,722,269
Net cash used in
investing activities . . (17,131,227) (12,091,458) (13,505,617) (13,633,590) (15,444,553)
Net cash generated
from/(used in)
financing activities. . 20,498,576 (16,016,950) (12,994,685) (4,963,638) (6,181,865)
Net increase in cash
and cash
equivalents ......... 19,446,304 4,594,539 69,517 (4,772,401) (7,904,149)
Cash and cash
equivalents at the
beginning of the
year/period ......... 15,466,484 34,813,768 40,279,947 40,279,947 40,448,308
Exchange
(losses)/gains on
cash and cash
equivalents ........ (99,020) 871,640 98,844 127,046 (28,170)
Cash and cash
equivalents at the
end of the
year/period ........ 34,813,768 40,279,947 40,448,308 35,634,592 32,515,989
Net Cash Generated from Operating Activities
For the six months ended June 30, 2024, our net cash generated from operating activities
was RMB13.7 billion, which was primarily attributable to our profit before income tax of
RMB6.3 billion, as adjusted by (i) non-cash and non-operating items which primarily consisted
of depreciation and amortization (excluding right-of-use assets) of RMB5.4 billion,
FINANCIAL INFORMATION
– 413 –


--- page 423 ---
depreciation of right-of-use assets of RMB3.4 billion and finance costs of RMB1.2 billion, (ii)
changes in working capital, which primarily resulted from a decrease in trade payables,
contract liabilities, and other payables of RMB1.7 billion, and (iii) income tax paid of RMB1.5
billion.
In 2023, our net cash generated from operating activities was RMB26.6 billion, which
was primarily attributable to our profit before income tax of RMB10.5 billion, as adjusted by
(i) non-cash and non-operating items which primarily consisted of depreciation and
amortization (excluding right-of-use assets) of RMB10.1 billion, depreciation of right-of-use
assets of RMB7.2 billion and finance costs of RMB2.3 billion, (ii) changes in working capital,
which primarily resulted from an increase in inventories of RMB491.3 million and an increase
in trade receivables, prepayment, contract assets and other receivable of RMB262.5 million,
partially offset by an increase in trade payables, contract liabilities, and other payables of
RMB759.0 million, and (iii) income tax paid of RMB3.2 billion.
In 2022, our net cash generated from operating activities was RMB32.7 billion, which
was primarily attributable to our profit before income tax of RMB11.0 billion, as adjusted by
(i) non-cash and non-operating items, which primarily consisted of depreciation and
amortization (excluding right-of use assets) of RMB9.0 billion, depreciation of right-of-use
assets of RMB7.3 billion, and finance costs of RMB2.1 billion, (ii) changes in working capital,
which primarily resulted from a decrease in trade receivables, prepayment, contract assets and
other receivable of RMB8.8 billion, and (iii) income tax paid of RMB5.1 billion.
In 2021, our net cash generated from operating activities was RMB16.1 billion, which
was primarily attributable to our profit before income tax of RMB7.8 billion, as adjusted by
(i) non-cash and non-operating items, which primarily consisted of depreciation of right-of-use
assets of RMB5.8 billion, depreciation and amortization (excluding right-of use assets) of
RMB6.9 billion, finance costs of RMB1.6 billion, partially offset by gains on disposal of
investments in subsidiaries of RMB1.8 billion, (ii) changes in working capital, which primarily
resulted from an increase in trade receivables, prepayment, contract assets and other receivable
of RMB6.2 billion, partially offset by an increase in trade payables, contract liabilities, and
other payables of RMB4.6 billion, and (iii) income tax paid of RMB2.6 billion.
Net Cash Used in Investing Activities
For the six months ended June 30, 2024, our net cash used in investing activities was
RMB15.4 billion, primarily attributable to payments for acquisitions of financial assets at fair
value through profit or loss of RMB39.5 billion and purchase of property, plants, and
equipments and other non-current assets of RMB5.1 billion, partially offset by proceeds from
redemption of financial assets at fair value through profit or loss of RMB28.4 billion.
FINANCIAL INFORMATION
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In 2023, our net cash used in investing activities was RMB13.5 billion, primarily
attributable to payments for acquisitions of financial assets at fair value through profit or loss
of RMB94.0 billion and purchase of property, plants, and equipments and other non-current
assets of RMB12.5 billion, partially offset by proceeds from redemption of financial assets at
fair value through profit or loss of RMB93.4 billion.
In 2022, our net cash used in investing activities was RMB12.1 billion, which was
primarily attributable to (i) payments for acquisitions of financial assets at fair value through
profit or loss of RMB151.9 billion, and (ii) payments for purchases of property, plant and
equipment and other non-current assets of RMB14.2 billion, partially offset by proceeds from
redemption of financial assets at fair value through profit or loss of RMB154.9 billion.
In 2021, our net cash used in investing activities was RMB17.1 billion, which was
primarily attributable to (i) payments for acquisitions of financial assets at fair value through
profit or loss of RMB118.2 billion, and (ii) payments for purchases of property, plant and
equipment and other non-current assets of RMB19.2 billion, partially offset by proceeds from
redemption of financial assets at fair value through profit or loss of RMB114.8 billion.
Net Cash Generated From/(Used in) Financing Activities
For the six months ended June 30, 2024, our net cash used in financing activities was
RMB6.2 billion, which was primarily attributable to repayment of bank borrowings of
RMB15.7 billion, payments of lease liabilities of RMB3.7 billion, net cash consideration paid
to non-controlling interests without change of control of RMB3.4 billion, dividend paid of
RMB2.9 billion and payments for repurchase of shares of RMB1.4 billion, partially offset by
proceeds from drawdown of bank borrowings of RMB19.6 billion and proceeds from corporate
bonds and short-term debentures issuance of RMB3.3 billion.
In 2023, our net cash used in financing activities was RMB13.0 billion, which was
primarily attributable to repayment of bank borrowings of RMB22.4 billion, repayment of
corporate bonds and short-term debentures of RMB10.1 billion, payments of lease liabilities of
RMB7.8 billion, net cash consideration paid to non-controlling interests without change of
control of RMB1.8 billion and interests paid of RMB1.8 billion, partially offset by proceeds
from drawdown of bank borrowings of RMB32.5 billion and proceeds from corporate bonds
and short-term debentures issuance of RMB1.5 billion.
In 2022, our net cash used in financing activities was RMB16.0 billion, which was
primarily attributable to repayment of bank borrowings of RMB31.2 billion, payments of lease
liabilities of RMB7.8 billion, repayment of corporate bonds and short-term debentures of
RMB6.7 billion, net cash consideration paid to non-controlling interests without change of
control of RMB3.9 billion, payments for repurchase of shares of RMB2.0 billion, interests paid
of RMB1.5 billion and dividend paid to non-controlling interests of RMB1.4 billion, partially
offset by proceeds from drawdown of bank borrowings of RMB27.7 billion and proceeds from
corporate bonds and short-term debentures issuance of RMB11.9 billion.
FINANCIAL INFORMATION
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In 2021, our net cash generated from financing activities was RMB20.5 billion, which
was primarily attributable to proceeds from drawdown of bank borrowings of RMB31.4 billion,
capital injection from owners of our Company of RMB19.9 billion, and proceeds from
corporate bonds and short-term debentures issuance of RMB13.1 billion, partially offset by
repayment of bank borrowing of RMB23.8 billion, dividend paid by subsidiaries (announced
prior to acquisition) of RMB10.8 billion, payments of lease liabilities of RMB7.0 billion and
repayment of corporate bonds and short-term debentures of RMB2.8 billion.
INDEBTEDNESS AND GUARANTEES
The following table sets out a breakdown of our indebtedness and guarantees as of the
dates indicated:
As of December 31,
As of
June 30,
As of
September 30,
2021 2022 2023 2024 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Borrowings ................ 45,100,418 49,868,308 52,706,015 59,635,102 49,485,578
Lease liabilities ............. 16,931,554 15,179,328 13,808,460 13,012,472 12,788,410
Total indebtedness .......... 62,031,972 65,047,636 66,514,475 72,647,574 62,273,988
Guarantees ................. 402,420 895,374 782,000 782,000 782,000
Total indebtedness and
guarantees ............... 62,434,392 65,943,010 67,296,475 73,429,574 63,055,988
Borrowings
The following table sets out details of our borrowings as of the dates indicated:
As of December 31,
As of
June 30,
As of
September 30,
2021 2022 2023 2024 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Non-current:
Long-term bank borrowings .... 3,510,829 7,472,010 11,355,241 10,661,466 6,611,620
Corporate bonds ............. 15,656,370 18,927,508 18,794,782 19,710,996 19,346,293
Loans from non-controlling
interests ................. 217,267 187,243 246,889 228,220 184,107
19,384,466 26,586,761 30,396,912 30,600,682 26,142,020
FINANCIAL INFORMATION
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As of December 31,
As of
June 30,
As of
September 30,
2021 2022 2023 2024 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current:
Current portion of long-term
bank borrowings ........... 1,458,374 600,680 2,813,385 2,594,948 2,199,528
Short-term bank borrowings .... 19,265,534 13,830,048 18,765,366 23,883,437 18,021,366
Short-term debentures ........ 4,029,936 5,062,357 – 2,310,195 2,322,672
Corporate bonds ............. 830,321 3,661,225 615,295 113,666 667,510
Loans from non-controlling
interests ................. 131,787 127,237 115,057 132,174 132,482
25,715,952 23,281,547 22,309,103 29,034,420 23,343,558
Our non-current borrowings amounted to RMB19.4 billion and RMB26.6 billion as of
December 31, 2021 and 2022, respectively, primarily in relation to our working capital
requirements and our acquisition and consolidation of certain subsidiaries. Our non-current
borrowings amounted to RMB30.4 billion as of December 31, 2023, primarily in relation to our
working capital requirements. Our non-current borrowings remained relatively stable at
RMB30.6 billion as of June 30, 2024. Our non-current borrowings decreased to RMB26.1
billion as of September 30, 2024, primarily due to the decrease in our long-term bank
borrowings.
Our current borrowings decreased by 9.5% from RMB25.7 billion as of December 31,
2021 to RMB23.3 billion as of December 31, 2022, primarily attributable to the repayment of
borrowings. Our current borrowings remained relatively stable at RMB22.3 billion as of
December 31, 2023. Our non-current borrowings increased by 30.1% to RMB29.0 billion as of
June 30, 2024, primarily due to the increases in our unsecured short-term bank borrowings and
short-term debentures. Our current borrowings decreased to RMB23.3 billion as of September
30, 2024, primarily due to the decrease in our short-term bank borrowings.
Bank Borrowings
Our outstanding bank borrowings amounted to RMB24.2 billion, RMB21.9 billion,
RMB32.9 billion, RMB37.1 billion and RMB26.8 billion as of December 31, 2021, 2022 and
2023 and June 30 and September 30, 2024, respectively. During the Track Record Period, most
of our bank borrowings were unsecured. As of September 30, 2024, our unutilized banking
facilities amounted to RMB65.4 billion.
FINANCIAL INFORMATION
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Corporate Bonds and Short-Term Debentures
Our corporate bonds and short-term debentures amounted to RMB20.5 billion, RMB27.7
billion, RMB19.4 billion, RMB22.1 billion and RMB22.3 billion as of December 31, 2021,
2022 and 2023 and June 30 and September 30, 2024, respectively.
Lease Liabilities
Our lease liabilities represent the leased premises for our logistics networks and
infrastructure, vehicles and machineries. We recorded non-current lease liabilities of RMB10.9
billion, RMB8.6 billion, RMB8.0 billion, RMB7.5 billion and RMB7.4 billion as of December
31, 2021, 2022 and 2023 and June 30 and September 30, 2024, respectively. We recorded
current lease liabilities of RMB6.0 billion, RMB6.6 billion, RMB5.8 billion, RMB5.5 billion
and RMB5.4 billion as of December 31, 2021, 2022 and 2023 and June 30 and September 30,
2024, respectively. Fluctuations in our lease liabilities during the Track Record Period were
primarily reflecting (i) the increased need for leased premises in line with our business growth,
(ii) our consolidation of subsidiaries, and (iii) rent payments.
Except as discussed above, as of September 30, 2024, we did not have any material
mortgages, charges, debentures, loan capital, debt securities, loans, bank overdrafts or other
similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptances
(other than normal trade bills), acceptance credits, which are either guaranteed, unguaranteed,
secured or unsecured, or guarantees or other contingent liabilities.
Our Directors confirm that our Group did not experience any difficulty in obtaining bank
loans and other borrowings, any material default in the payments of trade and non-trade
payables, bank loans and other borrowings, or any material breach of covenants during the
Track Record Period and up to the Latest Practicable Date.
Our Directors further confirm that there has not been any material change in our
indebtedness since the Latest Practicable Date up to the date of this prospectus.
CONTINGENT LIABILITIES
As of December 31, 2021, 2022 and 2023 and June 30, 2024, we did not have any material
contingent liabilities.
FINANCIAL INFORMATION
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CAPITAL COMMITMENTS
Our capital commitments are related to (i) contracted, but not provided for purchase of
property, plant and equipment, (ii) investment to be paid, and (iii) others.
The following table sets forth details of our capital commitments as of the dates indicated:
As of December 31,
As of
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Contracted, but not provided
for purchase of property,
plant and equipment ....... 10,432,197 3,571,632 1,858,672 2,378,529
Investment to be paid ........ 3,134,839 1,811,611 131,895 129,783
Others ...................... 1 1,067 – 944 4,663
Total ....................... 13,578,103 5,383,243 1,991,511 2,512,975
CAPITAL EXPENDITURES
Our capital expenditures consist of additions of freehold land and buildings, aircraft,
aircraft engines, rotables and high-value maintenance, machinery and equipment,
transportation vehicles, computers and electronic equipment, office and other equipment,
leasehold improvements and construction in progress. The following table sets forth details of
our capital expenditures for the years/periods indicated:
Y ear ended December 31,
Six months
ended June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Freehold land and buildings . . 1,554,841 1,127,848 1,272,496 888,879
Aircraft, aircraft engines,
rotables and
high-value maintenance .... 182,844 140,452 343,764 162,499
Machinery and equipment .... 442,803 482,359 346,663 139,515
Transportation vehicles ...... 1,203,826 1,050,894 1,189,776 293,188
Computers and electronic
equipment ................ 847,928 805,552 425,863 165,954
Office and other equipment . . 411,226 397,571 381,899 72,492
Leasehold improvements ..... 103,976 145,557 135,955 123,483
Construction in progress ..... 15,239,042 12,409,834 8,109,500 2,732,537
Total ....................... 19,986,486 16,560,067 12,205,916 4,578,547
FINANCIAL INFORMATION
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We funded our capital expenditure requirements during the Track Record Period primarily
with our cash from operating activities, and proceeds from external debts and other fundraising
activities. We expect to finance our capital expenditures through a combination of cash and
cash equivalents, cash generated from our operating activities and fundraising activities, and
the estimated net proceeds from the Global Offering. See “Future Plans and Use of Proceeds
— Use of Proceeds” in this prospectus. Our current capital expenditure plans for any future
period are subject to change, and we may adjust our capital expenditures according to our
future cash flows, financial condition and results of operations, our business plans, market
conditions and various other factors.
OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS
During the Track Record Period and as of the Latest Practicable Date, we did not have
any material off-balance sheet commitments or arrangements.
MATERIAL RELATED PARTY TRANSACTIONS
For details about our related party transactions during the Track Record Period, see Note
38 to the Accountant’s Report in Appendix I to this prospectus.
We enter into transactions with our related parties from time to time. Our Directors are
of the view that each of the related party transactions set out in Note 38 to the Accountant’s
Report in Appendix I to this prospectus was conducted in the ordinary course of business on
an arm’s length basis and on normal commercial terms between the relevant parties. Our
Directors are also of the view that our related party transactions during the Track Record Period
would not distort our track record results or cause our historical results to become
non-reflective of our future performance.
KEY FINANCIAL RATIOS
The following table sets forth a summary of our key financial ratios for the years/periods
indicated:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
(unaudited)
Gross profit margin (1) ..... 12.4% 12.3% 12.6% 13.3% 13.6%
Net profit margin (2) ....... 2.1% 2.6% 3.1% 3.1% 3.5%
EBITDA margin
(non-IFRS measure) (3) . . 10.5% 10.8% 11.4% 11.8% 11.9%
FINANCIAL INFORMATION
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Notes:
(1) Represents gross profit for the year/period divided by revenue for the same year, expressed as a percentage.
(2) Represents profit for the year/period divided by revenue for the same year, expressed as a percentage.
(3) For details, see “— Non-IFRS Measures.”
Our gross profit margin was 12.4%, 12.3%, 12.6%, 13.3% and 13.6% in 2021, 2022, 2023
and the six months ended June 30, 2023 and 2024, respectively. For details, see “— Description
of Selected Components of Consolidated Statements of Profit or Loss — Gross Profit and
Gross Profit Margin.”
Our net profit margin was 2.1%, 2.6%, 3.1%, 3.1% and 3.5% in 2021, 2022, 2023 and the
six months ended June 30, 2023 and 2024, respectively. For details, see “— Period-to-Period
Comparison of Results of Operations.”
Our EBITDA margin (non-IFRS measure) was 10.5%, 10.8%, 11.4%, 11.8% and 11.9%
in 2021, 2022, 2023 and the six months ended June 30, 2023 and 2024, respectively. For
details, see “— Non-IFRS Measures.”
QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT FINANCIAL RISKS
We are exposed to a variety of financial risks, including market risks (such as foreign
exchange risk, price risk and interest rate risk), credit risk and liquidity risk, as set out below.
We manage and monitor these exposures to ensure appropriate measures are implemented on
a timely and effective manner. For details, see Note 3.1 to the Accountant’s Report in Appendix
I to this prospectus.
Market Risks
Foreign Exchange Risk
Our major operational activities are carried out in mainland China and a majority of the
transactions are denominated in RMB. Some of our operational activities are carried out in
regions and countries including Hong Kong and United States, and the relevant transactions are
settled in HKD and USD, respectively. Foreign exchange risk arises when future commercial
transactions or recognized assets and liabilities are denominated in a currency that is not the
respective functional currency of our subsidiaries. Our overseas operations (namely, operations
outside of mainland China) recorded revenue denominated in foreign currencies of RMB18.2
billion, RMB58.9 billion, RMB34.9 billion, RMB17.0 billion and RMB18.4 billion for the
years ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023 and
2024, respectively, accounting for 8.8%, 22.0%, 13.5%, 13.7% and 13.7% of our total revenue
for the same year/period, respectively. Foreign currency-denominated income from the
principal businesses of our overseas operations primarily consisted of freight charges. Such
income is denominated primarily in HKD and USD. In managing the foreign exchange risks,
FINANCIAL INFORMATION
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we preferentially deploy natural hedges, and may also deploy a netting pool to net-off the
foreign exchange risk exposures of account receivables and account payables in the same
currencies. Moreover, foreign exchange risks also arise from foreign currency-denominated
debts undertaken by our overseas operations. These debts are mainly denominated in USD.
Based on the foregoing, and considering that USD is pegged against HKD at a rate ranging
from 7.75 to 7.85, we believe our foreign exchange risk exposure is manageable.
During the Track Record Period, we maintained certain hedging policies in an effort to
reduce our exposure to foreign exchange risks, which we believe were proven to be reasonably
effective in managing our exposures to foreign exchange risks. Such hedging policies include,
but are not limited to, the following:
Principles
 In principle, we shall conduct hedging transactions only based on actual underlying
business transactions, and such transactions shall not be for any speculative
purposes.
 We shall preferentially utilize natural hedges to reduce our foreign exchange risk
exposures. Where natural hedges cannot sufficiently cover our risk exposures, we
may utilize other hedging instruments, depending on the relevant circumstances.
 In terms of hedging instruments, we in principle shall use plain vanilla and common
hedging instruments, and shall not use structural hedging instruments.
Approval Mechanisms
 Each of our subsidiaries shall, as of the end of each fiscal year, submit their foreign
exchange requirements that may occur in the upcoming fiscal year to the treasury
center of our Group’s finance department. The treasury center shall accordingly
assess and propose the relevant hedging limit for the upcoming fiscal year.
 Our annual hedging limit shall be approved by our Board of Directors or
Shareholders, as appropriate, at the beginning of each fiscal year.
 We shall perform risk assessment before we conduct any hedging transaction, and
shall only deal with reputable and well-established banks with a global presence.
We also manage our foreign exchange risk by performing regular reviews of our net
foreign exchange risk exposures. For further details of our foreign exchange risk exposures, see
Note 3 to the Accountant’s Report in Appendix I to this prospectus.
FINANCIAL INFORMATION
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Price Risk
We are exposed to equity price risk mainly arising from investments held by us that are
classified either as FVPL or FVOCI that will not be sold within one year.
Interest Rate Risk
Our interest rate risk primarily arises from long-term interest-bearing borrowings and
bonds. Long-term borrowings issued at variable rates expose our Group to cash flow interest
rate risk. Bonds issued at fixed rates expose us to fair value interest rate risk. We determine
the proportion of borrowings and bonds issued at variable rates and fixed rates based on the
market environment. We have been monitoring the level of interest rates. The increase in the
interest rates will increase the interest costs of borrowings and finance leases issued at variable
rates, which will further impact our performance. To hedge against the variability in the cash
flows arising from a change in market interest rates, we have entered into certain interest rate
swaps to swap variable rates into fixed rates.
The sensitivity analysis below has been determined based on the exposure to interest rates
at the end of each year/period during the Track Record Period. The analysis is prepared
assuming the financial instruments outstanding at the end of each year/period during the Track
Record Period were outstanding for the whole year.
If the interest rate had been 50 basis points higher or lower, with all other variables held
constant, the profit before tax would have been lower or higher RMB17.6 million, RMB37.4
million, RMB56.8 million and RMB53.3 million, as of December 31, 2021, 2022 and 2023 and
June 30, 2024, respectively.
Credit Risk
Our carrying amounts of cash and cash equivalents, restricted cash, trade receivables,
contract assets, and other receivables represent our major exposure to credit risk in relation to
financial assets.
Credit Risk of Trade Receivables and Contract Assets
There is no concentration of credit risk with respect to trade receivables from third party
customers, as we have an extensive and diverse customer base. In order to minimize the credit
risk, our management has delegated a team in each business unit responsible for determination
of credit limits, credit approvals and other monitoring procedures to ensure that follow-up
action is taken to recover overdue debts. In addition, we closely monitor the credit qualities and
the collectability of these receivables at the end of each reporting period to ensure that
adequate impairment losses are made. In this regard, our Directors consider that the expected
credit risks are adequately covered.
FINANCIAL INFORMATION
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Our Group has applied the IFRS 9 simplified approach to measuring expected credit
losses, which uses lifetime expected credit losses for all trade receivables and contract assets.
In calculating the expected credit loss rates, our Group considers historical loss rates, and
adjusts for forward looking macroeconomic data. At the end of each reporting period, the
historical observed default rates are updated and changes in the forward-looking estimates are
analyzed.
Credit Risk of Other Receivables
Over the term of other receivables, our Group accounts for our credit risk by
appropriately providing for expected credit losses on a timely basis. To assess whether there
is a significant increase in credit risk in other receivables, our Group compares the risk of a
default occurring on the assets at the end of each reporting period with the risk of default at
the date of initial recognition.
Liquidity Risk
We aim to maintain sufficient cash and cash equivalents. Due to the dynamic nature of our
businesses, we maintain flexibility in funding by maintaining adequate balances.
DIVIDENDS AND DIVIDEND POLICY
Our Company declared dividends of RMB874.5 million, RMB1.2 billion and RMB2.9
billion in respect of the financial years ended December 31, 2021, 2022 and 2023, respectively,
representing dividend payout ratios of 20%, 20% and 35%, respectively. As of the Latest
Practicable Date, we have paid the dividends declared in respect of the financial years ended
December 31, 2021, 2022 and 2023 in full. See Note 12 to the Accountant’s Report in Appendix
I to this prospectus. To further increase the investment return for our Shareholders, the
resolution of an interim dividend of approximately RMB1.9 billion, representing a dividend
payout ratio of approximately 40% in respect of the six months ended June 30, 2024, and a
special dividend of approximately RMB4.8 billion was passed at the Shareholders’ general
meeting on October 29, 2024. These dividends have been paid in full on November 7, 2024.
After completion of the Global Offering, our Shareholders will be entitled to receive any
dividends we declare. We may distribute dividends by way of shares or cash, or a combination
of both shares and cash. Pursuant to our Articles of Association, our Board may declare
dividends in the future after taking into account our results of operations, financial condition,
cash requirements and availability and other factors as it may deem relevant at such time. Any
declaration and payment as well as the amount of dividends will be subject to our constitutional
documents, applicable PRC Law and approval by our Shareholders.
We intend to distribute cash dividends to our Shareholders at least on an annual basis,
subject to the discretion of our Directors in accordance with our Articles of Association and the
applicable laws and regulations in the PRC and Hong Kong.
FINANCIAL INFORMATION
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Our dividend payout ratio increased from 20% (from 2017 to 2022) to 35% in 2023, and
we aim to steadily increase this over the next five years. Decisions to declare or to pay any
dividends in the future will depend on, among other things, our Company’s profitability,
operations and development plans, external financing environment, costs of capital, our
Company’s cash flows and other factors that our Directors may consider relevant.
Our future declarations of dividends may not be in line with our historical declaration of
dividends and will be subject to the approval of our Shareholders. See “Risk Factors — Risks
Relating to the Global Offering — Our historical dividends may not be indicative of our future
dividend policy, and there can be no assurance that we will declare and distribute any amount
of dividends in the future” in this prospectus.
WORKING CAPITAL CONFIRMATION
Taking into account the financial resources available to us, including our cash and cash
equivalents on hand, operating cash flows, available financing facilities, and the estimated net
proceeds from the Global Offering, our Directors are of the view that we have sufficient
working capital to meet our present requirements and for at least the next 12 months from the
date of this prospectus.
DISTRIBUTABLE RESERVES
As of June 30, 2024, our Company had retained earnings of RMB40.7 billion. Our
retained earnings represented the distributable reserves available for distribution to our
Shareholders.
LISTING EXPENSES
We expect to incur a total of approximately RMB155.9 million of listing expenses in
connection with the Global Offering, representing approximately 2.9% of our gross proceeds
from the Global Offering (assuming an Offer Price of HK$34.30 per Offer Share, being the
mid-point of the indicative Offer Price range between HK$32.30 and HK$36.30, and assuming
that the Over-allotment Option is not exercised). Listing expenses include (1) underwriting-
related expense (including sponsor fees and underwriting commissions, SFC transaction levy,
AFRC transaction levy, and Stock Exchange trading fees for all Offer Shares) of approximately
RMB80.8 million, and (2) non-underwriting related expenses of approximately RMB75.1
million, which consist of (i) fees for legal advisors and the reporting accountants of
approximately RMB55.2 million, and (ii) other fees unrelated to the underwriting of RMB19.9
million.
FINANCIAL INFORMATION
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During the Track Record Period, listing expenses in an aggregate of RMB0.6 million were
incurred as of June 30, 2024 and charged to our consolidated statement of profit or loss. We
estimate that RMB13.0 million of listing expenses will be charged to our consolidated
statement of profit or loss for the year ended December 31, 2024. The remaining RMB142.3
million is directly attributable to the issue of our H Shares to the public and is expected to be
deducted from equity.
The listing expenses above are the best estimate as of the Latest Practicable Date and for
reference only. The actual amount may differ from this estimate.
UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS
The following unaudited pro forma statement of our adjusted net tangible assets prepared
in accordance with Rule 4.29 of the Listing Rules is to illustrate the effect of the Global
Offering on our consolidated net tangible assets attributable to the shareholders as of June 30,
2024 as the Global Offering had taken place on that date.
The unaudited pro forma statement of adjusted net tangible assets has been prepared for
illustrative only and, because of its hypothetical nature, it may not give a true picture of our
consolidated net tangible assets had the Global Offering been completed as of June 30, 2024
or any future dates.
Audited
consolidated net
tangible assets of
our Group
attributable to
owners of our
Company as of
June 30, 2024
Estimated net
proceeds from
the Global
Offering
Unaudited pro
forma adjusted
consolidated net
tangible assets of
our Group
attributable to
owners of our
Company as of
June 30, 2024
Unaudited pro forma adjusted
consolidated net tangible assets of
our Group attributable to owners
of our Company per Share
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4)
Based on an Offer Price of
HK$32.30 per Offer
Share .............. 71,329,826 4,895,906 76,225,732 15.32 16.67
Based on an Offer Price of
HK$36.30 per Offer
Share .............. 71,329,826 5,511,439 76,841,265 15.44 16.80
Notes:
(1) The audited consolidated net tangible assets of our Group attributable to the owners of our Company as of June
30, 2024 is extracted from the Accountant’s Report set out in Appendix I to this prospectus, which is based
on the audited consolidated net assets of our Group attributable to the owners of our Company as of June 30,
2024 of RMB88,571,197,000 after deducting our Group’s intangible assets attributable to the owners of our
Company of RMB17,241,371,000 as of June 30, 2024.
FINANCIAL INFORMATION
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(2) The estimated net proceeds from the Global Offering are based on 170,000,000 Offer Shares and the indicative
Offer Price of HK$32.30 per Offer Share and HK$36.30 per Offer Share, being low and high end of the
indicative Offer Price range, after deduction of the underwriting fees and other related expenses (excluding
listing expenses of RMB579,000 which were incurred up to June 30, 2024 and charged to consolidated
statement of profit or loss for the period ended December 31, 2023 and six months ended June 30, 2024).
(3) The unaudited pro forma adjusted consolidated net tangible assets per Share is arrived at after the adjustments
referred to in the preceding paragraphs and on the basis that 4,975,711,636 Shares (representing 4,815,911,220
Shares in issue as of June 30, 2024, excluding 10,199,584 treasury shares as of June 30, 2024, adding
170,000,000 Offer Shares) were in issue, assuming that the Global Offering had been completed on June 30,
2024 but does not take into account of any Shares which may be allotted and issued by our Company pursuant
to the exercise of the Over-allotment Option or may be issued by our Company pursuant to the exercise of any
options may be granted under the 2022 Stock Option Incentive Plan.
(4) For the purpose of the unaudited pro forma statement of adjusted consolidated net tangible assets, the
translation of Renminbi amounts into Hong Kong dollars was of rate of RMB0.91906 to HK$1.00. No
representation is made that Renminbi amounts have been, could have been or may be converted to Hong Kong
dollars, or vice versa, at that rate.
(5) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to reflect
any trading results or other transactions of our Group entered into subsequent to June 30, 2024. In particular,
the unaudited pro forma adjusted net tangible assets of the Group has not taken into account payment of a
dividend of RMB6.7 billion which was approved by the Shareholders at the first extraordinary general meeting
on October 29, 2024. The unaudited pro forma net tangible assets per Share would have been HK$15.20 and
HK$15.34 per Share based on the Offer Price of HK$32.30 and HK$36.30 respectively if the dividend had
been accounted for as at June 30, 2024.
For further details, see Unaudited Pro Forma Financial Information in Appendix II to this
prospectus.
NO MATERIAL ADVERSE CHANGE
Our Directors confirm that, as of the date of this prospectus, there has been no material
adverse change in our financial or trading position, indebtedness, mortgages, contingent
liabilities, guarantees or prospects since June 30, 2024, the end of the period reported on the
Accountant’s Report in Appendix I to this prospectus.
DISCLOSURE REQUIRED UNDER THE LISTING RULES
We confirm that, as of the Latest Practicable Date, there were no circumstances that
would give rise to disclosure required under Rules 13.13 to 13.19 of the Listing Rules.
FINANCIAL INFORMATION
– 427 –


--- page 437 ---
THE CORNERSTONE PLACING
We have entered into cornerstone investment agreements (each a “ Cornerstone
Investment Agreement ”, and together the “ Cornerstone Investment Agreements ”) with the
cornerstone investors set out below (each a “ Cornerstone Investor ”, and together the
“Cornerstone Investors ”), pursuant to which the Cornerstone Investors have agreed to,
subject to certain conditions, subscribe, or cause their designated entities to subscribe, at the
Offer Price for such number of Offer Shares (rounded down to the nearest whole board lot of
200 H Shares) that may be purchased for an aggregate amount of approximately US$204.8
million (or approximately HK$1,591.8 million, calculated based on an exchange rate of
US$1.00 to HK$7.77240) and exclusive of brokerage fee, the SFC transaction levy, the AFRC
transaction levy and the Stock Exchange trading fee) (the “ Cornerstone Placing ”).
Based on the Offer Price of HK$36.30 per Offer Share, being the high-end of the
indicative Offer Price range set out in this prospectus, the total number of Offer Shares to be
subscribed for by the Cornerstone Investors would be 43,849,800. The table below reflects the
shareholding percentage immediately after the completion of the Global Offering:
Assuming the Over-allotment Option is not exercised
Assuming the Over-allotment Option is
exercised in full
Approx. % of
the Offer Shares
Approx. % of the total
issued capital of our
Company immediately
upon the Global Offering
Approx. % of the
Offer Shares
Approx. % of the total
issued capital of our
Company immediately
upon the Global Offering
25.79% 0.88% 22.43% 0.87%
Based on the Offer Price of HK$34.30 per Offer Share, being the mid-point of the
indicative Offer Price range set out in this prospectus, the total number of Offer Shares to be
subscribed for by the Cornerstone Investors would be 46,407,600. The table below reflects the
shareholding percentage immediately after the completion of the Global Offering:
Assuming the Over-allotment Option is not exercised
Assuming the Over-allotment Option is
exercised in full
Approx. % of
the Offer Shares
Approx. % of the total
issued capital of our
Company immediately
upon the Global Offering
Approx. % of the
Offer Shares
Approx. % of the total
issued capital of our
Company immediately
upon the Global Offering
27.30% 0.93% 23.74% 0.93%
CORNERSTONE INVESTMENTS
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--- page 438 ---
Based on the Offer Price of HK$32.30 per Offer Share, being the low-end of the
indicative Offer Price range set out in this prospectus, the total number of Offer Shares to be
subscribed for by the Cornerstone Investors would be 49,280,400. The table below reflects the
shareholding percentage immediately after the completion of the Global Offering:
Assuming the Over-allotment Option is not exercised
Assuming the Over-allotment Option is
exercised in full
Approx. % of
the Offer Shares
Approx. % of the total
issued capital of our
Company immediately
upon the Global Offering
Approx. % of
the Offer Shares
Approx. % of the total
issued capital of our
Company immediately
upon the Global Offering
28.99% 0.99% 25.21% 0.98%
We believe that the Cornerstone Placing signifies our Cornerstone Investors’ confidence
in our Company and its business prospect, and that the Cornerstone Placing will help to raise
the profile of our Company. Our Company became acquainted with each of the Cornerstone
Investors in its ordinary course of operation through the Group’s business network, or through
introduction by the Company’s business partners or the Overall Coordinators of the Global
Offering.
The Cornerstone Placing will form part of the International Offering, and save as
otherwise obtained consent from the Stock Exchange, the Cornerstone Investors (and, for such
Cornerstone Investor who will subscribe for our Offer Shares through qualified domestic
institutional investor (“ QDII ”), the QDII) and their respective close associates will not
subscribe for any Offer Shares under the Global Offering (other than pursuant to the
Cornerstone Investment Agreements). The Offer Shares to be subscribed by the Cornerstone
Investors (and, for such Cornerstone Investor who will subscribe for our Offer Shares through
QDII, the QDII) will rank pari passu in all respects with the fully paid H Shares in issue
following the Global Offering of the Company and will be counted towards the public float of
our Company under Rule 8.08 of the Listing Rules. Immediately following the completion of
the Global Offering, the Cornerstone Investors or their close associates will not, by virtue of
their cornerstone investments, have any Board representation in our Company; and none of the
Cornerstone Investors and their close associates will become a substantial Shareholder of our
Company. Other than a guaranteed allocation of the relevant Offer Shares at the final Offer
Price, the Cornerstone Investors do not have any preferential rights under each of their
respective Cornerstone Investment Agreements, as compared with other public Shareholders.
There are no side arrangements or agreements between our Company and the Cornerstone
Investors or any benefit, direct or indirect, conferred on the Cornerstone Investors by virtue of
or in relation to the Listing, other than a guaranteed allocation of the relevant Offer Shares at
the final Offer Price, following the principles as set out in Chapter 4.15 of the Guide.
CORNERSTONE INVESTMENTS
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--- page 439 ---
Among the Cornerstone Investors, CPIC, Morgan Stanley International and Wisdomshire
AM are existing minority Shareholders or close associates of existing minority Shareholders of
the Company. The Stock Exchange has granted a waiver from strict compliance with the
requirements under Rule 10.04 and consent under Paragraph 5(2) of Appendix F1 to the Listing
Rules to permit H Shares in the International Offering to be placed to certain existing minority
Shareholders. For further details, please refer to the section headed “Waivers and Exemptions
— Allocation of H Shares to Existing Minority Shareholders and Their Close Associates”. Save
as otherwise disclosed, to the best knowledge of our Company, (i) each of the Cornerstone
Investors (and, for such Cornerstone Investor who will subscribe for our Offer Shares through
QDII, the QDII) is an Independent Third Party; (ii) none of the Cornerstone Investors (or, for
such Cornerstone Investor who will subscribe for our Offer Shares through QDII, the QDII) is
accustomed to taking instructions from our Company, the Directors, the Supervisors, chief
executive, our Controlling Shareholders, substantial Shareholders, existing Shareholders or
any of their respective subsidiaries or their respective close associates in relation to the
acquisition, disposal, voting or other disposition of the Offer Shares; (iii) none of the
subscription of the relevant Offer Shares by any of the Cornerstone Investors (or, for such
Cornerstone Investor who will subscribe for our Offer Shares through QDII, the QDII) is
financed by our Company, the Directors, the Supervisors, chief executive, our Controlling
Shareholders, substantial Shareholders, existing Shareholders or any of their respective
subsidiaries or their respective close associates; (iv) each Cornerstone Investor will be utilizing
its internal financial resources, financial resources of its shareholders or (in the case of
Cornerstone Investors which are funds or investment managers) the assets managed for its
investors as its source of funding for the subscription of the Offer Shares, and it has sufficient
funds to settle its respective investment under the Cornerstone Placing; and (v) no specific
approval from any stock exchange (if relevant) is required for the investment by each
Cornerstone Investor in our Company as described in this section. Furthermore, we further
confirm that (i) none of the Cornerstone Investors has the right to nominate any Director nor
has any representative on our Board; and (ii) none of the Cornerstone Investors is expected to
be involved in the management of the business of our Company. In addition, to the best
knowledge of our Company, each of the Cornerstone Investors is independent from each other
and makes independent investment decisions.
The Cornerstone Investors have agreed to pay for the relevant Offer Shares that they have
subscribed before dealings in the Company’s H Shares commence on the Stock Exchange.
Where delayed delivery takes place, each Cornerstone Investor that may be affected by such
delayed delivery has agreed that it shall nevertheless pay for the relevant Offer Shares in full
before the Listing.
To the best knowledge of the Company and the Overall Coordinators, and based on the
indicative interest of investment of the Cornerstone Investors and/or their close associates as
of the date of this prospectus, certain Cornerstone Investors and/or their close associates may
participate in the International Offering as placees and subscribe for further Offer Shares in the
Global Offering. The Company will seek the Stock Exchange’s consent and/or waiver to allow
the Cornerstone Investors and/or their close associates to participate in the International
Offering as placees pursuant to Chapter 4.15 of the Guide for New Listing Applicants. Whether
such Cornerstone Investors and/or their close associates will place orders in the International
Offering are uncertain and will be subject to the final investment decisions of such investors
and the terms and conditions of the Global Offering.
CORNERSTONE INVESTMENTS
– 430 –


--- page 440 ---
The total number of Offer Shares to be subscribed by the Cornerstone Investors (and, for
such Cornerstone Investor who will subscribe for our Offer Shares through QDII, the QDII)
may be affected by reallocation of the Offer Shares between the International Offering and the
Hong Kong Public Offering. If the total demand for H shares in the Hong Kong Public Offering
falls within the circumstance as set out in the section headed “Structure of the Global Offering
— The Hong Kong Public Offering — Reallocation”. Details of the actual number of Offer
Shares to be allocated to the Cornerstone Investors will be disclosed in the allotment results
announcement of our Company to be published on or around Tuesday, November 26, 2024.
THE CORNERSTONE INVESTORS
The table below sets forth details of the Cornerstone Placing:
Assuming an Offer Price of HK$36.30 per H Share
(being the high-end of the indicative Offer Price range)
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Cornerstone Investor
Subscription
Amount (US$)
(in million)
Subscription
Amount (HK$)
(in million) (1)
Number of
Offer Shares (2)
Approx. % of
the Offer
Shares
Approx. % of
the total issued
capital of our
Company
immediately
upon the
Global Offering
Approx. % of
the Offer
Shares
Approx. % of
the total issued
capital of our
Company
immediately
upon the
Global Offering
Oaktree Capital Management, L.P . (“ Oaktree ”) . 25.0 194.3 5,352,800 3.15% 0.11% 2.74% 0.11%
Wise Honest Limited (“ Wise Honest ” )..... 25.0 194.3 5,352,800 3.15% 0.11% 2.74% 0.11%
WT Asset Management Limited (“ WT Asset
Management ” ) ............... 25.0 194.3 5,352,800 3.15% 0.11% 2.74% 0.11%
China Pacific Insurance (Group) Co., Ltd.
(“CPIC ” ).................. 20.0 155.4 4,282,200 2.52% 0.09% 2.19% 0.09%
Green Better Limited (“ Green Better ” ) ..... 20.0 155.4 4,282,200 2.52% 0.09% 2.19% 0.09%
Infini Global Master Fund (“ Infini ” )...... 20.0 155.4 4,282,200 2.52% 0.09% 2.19% 0.09%
Wind Sabre Fund SPC on behalf of Wind Sabre
Opportunities Fund SP (“ Wind Sabre ” ) .... 20.0 155.4 4,282,200 2.52% 0.09% 2.19% 0.09%
Morgan Stanley & Co. International plc
(“Morgan Stanley International ” ) ...... 19.8 153.9 4,239,400 2.49% 0.09% 2.17% 0.08%
Ghisallo Fund Master Ltd (“ Ghisallo ” ) ..... 15.0 116.6 3,211,600 1.89% 0.06% 1.64% 0.06%
Wisdomshire Asset Management Co., Ltd* ( ɪऎ
ʮ̡)( “ Wisdomshire
AM” ) .................... 15.0 116.6 3,211,600 1.89% 0.06% 1.64% 0.06%
Total ..................... 204.8 1,591.8 43,849,800 25.79% 0.88% 22.43% 0.87%
CORNERSTONE INVESTMENTS
– 431 –


--- page 441 ---
Assuming an Offer Price of HK$34.30 per H Share
(being the mid-point of the indicative Offer Price range)
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Cornerstone Investor
Subscription
Amount (US$)
(in million)
Subscription
Amount (HK$)
(in million) (1)
Number of
Offer Shares (2)
Approx. % of
the Offer
Shares
Approx. % of
the total issued
capital of our
Company
immediately
upon the
Global Offering
Approx. % of
the Offer
Shares
Approx. % of
the total issued
capital of our
Company
immediately
upon the
Global Offering
Oaktree .................... 25.0 194.3 5,665,000 3.33% 0.11% 2.90% 0.11%
Wise Honest .................. 25.0 194.3 5,665,000 3.33% 0.11% 2.90% 0.11%
WT Asset Management ............. 25.0 194.3 5,665,000 3.33% 0.11% 2.90% 0.11%
CPIC ..................... 20.0 155.4 4,532,000 2.67% 0.09% 2.32% 0.09%
Green Better .................. 20.0 155.4 4,532,000 2.67% 0.09% 2.32% 0.09%
Infini ..................... 20.0 155.4 4,532,000 2.67% 0.09% 2.32% 0.09%
Wind Sabre .................. 20.0 155.4 4,532,000 2.67% 0.09% 2.32% 0.09%
Morgan Stanley International .......... 19.8 153.9 4,486,600 2.64% 0.09% 2.29% 0.09%
Ghisallo .................... 15.0 116.6 3,399,000 2.00% 0.07% 1.74% 0.07%
Wisdomshire AM ............... 15.0 116.6 3,399,000 2.00% 0.07% 1.74% 0.07%
Total ..................... 204.8 1,591.8 46,407,600 27.30% 0.93% 23.74% 0.93%
CORNERSTONE INVESTMENTS
– 432 –


--- page 442 ---
Assuming an Offer Price of HK$32.30 per H Share
(being the low-end of the indicative Offer Price range)
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Cornerstone Investor
Subscription
Amount (US$)
(in million)
Subscription
Amount (HK$)
(in million) (1)
Number of
Offer Shares (2)
Approx. % of
the Offer
Shares
Approx. % of
the total issued
capital of our
Company
immediately
upon the
Global Offering
Approx. % of
the Offer
Shares
Approx. % of
the total issued
capital of our
Company
immediately
upon the
Global Offering
Oaktree .................... 25.0 194.3 6,015,600 3.54% 0.12% 3.08% 0.12%
Wise Honest .................. 25.0 194.3 6,015,600 3.54% 0.12% 3.08% 0.12%
WT Asset Management ............. 25.0 194.3 6,015,600 3.54% 0.12% 3.08% 0.12%
CPIC ..................... 20.0 155.4 4,812,600 2.83% 0.10% 2.46% 0.10%
Green Better .................. 20.0 155.4 4,812,600 2.83% 0.10% 2.46% 0.10%
Infini ..................... 20.0 155.4 4,812,600 2.83% 0.10% 2.46% 0.10%
Wind Sabre .................. 20.0 155.4 4,812,600 2.83% 0.10% 2.46% 0.10%
Morgan Stanley International .......... 19.8 153.9 4,764,400 2.80% 0.10% 2.44% 0.10%
Ghisallo .................... 15.0 116.6 3,609,400 2.12% 0.07% 1.85% 0.07%
Wisdomshire AM ............... 15.0 116.6 3,609,400 2.12% 0.07% 1.85% 0.07%
Total ..................... 204.8 1,591.8 49,280,400 28.99% 0.99% 25.21% 0.98%
Notes:
(1) Calculated based on an exchange rate of HK$7.77240 to US$1.00. The actual investment amount is
denominated in U.S. dollars.
(2) Subject to rounding down to the nearest whole board lot of 200 Offer Shares. Calculated based on the exchange
rate set out in the section headed “Information about this Prospectus and the Global Offering — Exchange Rate
Conversion”.
The information about our Cornerstone Investors set forth below has been provided by the
Cornerstone Investors in connection with the Cornerstone Placing.
CORNERSTONE INVESTMENTS
– 433 –


--- page 443 ---
Oaktree
Oaktree is the investment manager of Oaktree Emerging Markets Equity Fund, L.P . and
certain separately managed accounts within its Emerging Markets Equity strategy (severally
and not jointly) (each, an “ Oaktree Fund ”, and collectively the “ Oaktree Funds ”). Oaktree
Emerging Markets Equity Fund, L.P . had more than 60 limited partners as of October 31, 2024,
and no limited partner of Oaktree Emerging Markets Equity Fund, L.P . holds 30% or more
interests in Oaktree Emerging Markets Equity Fund, L.P . as of October 31, 2024, while the
other Oaktree Funds are separately managed accounts of Oaktree. Oaktree is a Delaware
limited partnership and is registered as an investment adviser with the United States Securities
and Exchange Commission. Oaktree is a global investment management firm managing a broad
array of complementary strategies in four asset classes: credit, private equity, real assets and
listed equities, and maintains a contrarian, value-oriented investment philosophy. Oaktree’s
investor base includes institutional investors such as pension plans, insurance companies,
endowments, foundations and sovereign wealth funds.
Wise Honest
Wise Honest is a company incorporated in Hong Kong which is wholly-owned by Sino
Land Company Limited, a company listed on the Main Board of the Stock Exchange (stock
code: 0083.HK, “ Sino Land ”). Sino Land is an investment holding company and its principal
businesses include property development and investment, investment in securities, financing,
hotel and building management and services.
WT Asset Management
WT Asset Management is a company incorporated in Hong Kong with limited liability
and licensed by the SFC to carry on type 9 (asset management) regulated activity. WT Asset
Management is beneficially owned as to 100% by Mr. Tongshu Wang, who is the founder and
chief investment officer of WT Asset Management with over 15 years of experience in
investment management and an Independent Third Party. WT Asset Management has agreed to
procure certain investors, namely WT China Fund Limited and/or WT China Focus Fund (the
“Funds ”o rt h e“ WT Funds ”), that WT Asset Management has discretionary investment
management power over, to subscribe for such number of the Investor Shares. The WT Funds
are managed by WT Asset Management as investment manager. The WT Funds pursue to
achieve absolute return and long-term capital appreciation by investing primarily in the listed
securities of companies which have great exposure or material impact by the PRC. Investors
of the Funds include but are not limited to pension funds, fund of funds, family offices and
other sophisticated institutional investors. Save for Mr. Tongshu Wang and a pension fund
based in North America who hold over 30% interests in WT China Fund Limited and WT China
Focus Fund, respectively, no other single ultimate beneficial owner holds 30% or more
interests in the Funds. As of September 30, 2024, the total AUM of the Funds is approximately
US$1.84 billion.
CORNERSTONE INVESTMENTS
– 434 –


--- page 444 ---
CPIC
Pacific Asset Management Co., Limited (“ Pacific Asset Management ”) was incorporated
in the PRC and is the major external investment entity of CPIC, a company listed on Shanghai
Stock Exchange (stock code: 601601.SH), the Hong Kong Stock Exchange (stock code:
2601.HK) and its GDR listed under the code CPIC. Pacific Asset Management’s principal
businesses include the management and deployment of internal funds and insurance funds,
entrusted funds management business, relevant consulting services related to funds
management and other asset management businesses as permitted under PRC laws and
regulations. CPIC, being a composite insurance company in the PRC based in Shanghai holds
approximately (including both direct and indirect interest) 99.7% of equity interest in Pacific
Asset Management.
CPIC Investment Management (H.K.) Company Limited (“ CPIC (HK) ”) was established
in Hong Kong, and is principally engaged in asset management and provision of investment
advisory services, including the management of the investment accounts of qualified domestic
institutional investors of China Pacific Property Insurance Co., Ltd. (“ China Pacific
Property ”), a company engaging in the business of property insurance. Both CPIC (HK) and
China Pacific Property are part of a group of CPIC, and CPIC holds approximately (including
both direct and indirect interest) 100% of equity interest in CPIC (HK) and 98.5% of equity
interest in China Pacific Property.
Green Better
Green Better is an investment company incorporated in the British Virgin Islands. Green
Better is a wholly-owned subsidiary of Xiaomi Corporation, a company listed on the Stock
Exchange (stock code: 1810.HK). Xiaomi Corporation is a China-based investment holding
company principally engaged in the research, development and sales of smartphones, Internet
of things and lifestyle products, the provision of Internet services, and investment business.
Xiaomi Corporation is a strategic customer of our Group and has been collaborating with us
continuously in the areas of express, freight delivery, warehousing, supply chain and
international segment.
Infini
Infini is an exempted company incorporated in the Cayman Islands in 2023 and save for
Mr. Chin To, Tony, an Independent Third Party, there is no other participating shareholder that
ultimately holds 30% or more shares in Infini. Infini is managed by Infini Capital Management
Limited (“ Infini Capital ”). Infini Capital is a Hong Kong-based alternative investment
manager that uses a multi manager platform to pursue a variety of investment strategies,
primarily on public markets in Pan Asia. Licensed by the SFC in 2019, Infini Capital is
wholly-owned by Infini Capital Global, a Cayman Islands holding company whose ultimate
beneficial owner is Mr. Chin To, Tony, the founder, CEO & CIO of Infini Capital.
CORNERSTONE INVESTMENTS
– 435 –


--- page 445 ---
Wind Sabre
Wind Sabre Fund SPC on behalf of Wind Sabre Opportunities Fund SP (“ Wind Sabre ”)
is a fund established in the Cayman Islands. Wind Sabre Fund SPC is a Segregated Portfolio
Company incorporated in the Cayman Islands with limited liabilities and is an independent
third party, and Wind Sabre Opportunities Fund SP is a segregated portfolio of Wind Sabre
Fund SPC. Wind Sabre Fund SPC is controlled by Wind Sabre Capital Limited as the
investment manager, which is a company incorporated in Hong Kong and licensed to carry out
type 9 (asset management) regulated activities under the SFO in Hong Kong by the SFC. The
participating shareholders of Wind Sabre are Wun Sheung Alison May Chan, Kenneth Lau and
Well Smart Developments Limited, which is wholly-owned by Chow Tai Fook (Nominee)
Limited, all being independent third parties.
Wind Sabre may obtain external financing from a prime broker (the “ Prime Broker ”) to
finance its subscription of H Shares. The loan(s), if obtained, will be on normal commercial
terms after arm’s length negotiations. The H Shares to be subscribed for by Wind Sabre will
not be charged to the Prime Broker as security for such loan(s).
Morgan Stanley International
Morgan Stanley International is a company incorporated in the United Kingdom. The
ultimate parent undertaking and controlling entity is Morgan Stanley. Morgan Stanley together
with its subsidiary undertakings forms the “Morgan Stanley Group”. Morgan Stanley is a
global financial services firm authorized as a Financial Holding Company and regulated by the
Board of Governors of the Federal Reserve System in the United States of America. The
Morgan Stanley Group operates within the financial services industry and is subject to
extensive supervision and regulation.
The principal activity of the Morgan Stanley Group is the provision of financial services
to a global client base consisting of corporations, governments and financial institutions.
Financial services includes investment banking, sales and trading, and other services to clients.
Ghisallo
Ghisallo is wholly-owned by Ghisallo Master Fund LP (the “ Fund ”) which is a fund
domiciled in the Cayman Islands. The general partner of the Fund is Ghisallo Master Fund
General Partner LP (the “ Fund GP ”), of which the general partner is Ghisallo MGP LLC
(“MGP”). There is no ultimate beneficial owner or general partner that owns more than 30%
of interests in the Fund and Michael Germino, who is an Independent Third Party, controls, and
is the only beneficial owner that owns more than 30% of interests in the Fund GP and MGP .
The Fund’s discretionary investment manager is Ghisallo Capital Management LLC, a US
registered investment advisor.
CORNERSTONE INVESTMENTS
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--- page 446 ---
Wisdomshire AM
Wisdomshire AM was established in 2015 in the PRC. The main business activities of
Wisdomshire AM is asset management, with an AUM of more than RMB25 billion, and whose
key investment strategy is placing emphasis on evaluating the match degree between risk and
return, and continuously selecting asset classes with risk-return ratios. Wisdomshire AM
focuses on the sectors of high-end manufacturing, new energy, new materials, health and
consumption in its investment portfolios. As of October 31, 2024, there are 144 portfolios
under management by Wisdomshire AM, which are categorized into three strategies, namely
equity strategy, equity-bond balanced strategy, and convertible bond strategy. Mr. Du
Changyong is the executive director and interested in 31.48% shareholding in Wisdomshire
AM, and no other shareholder of Wisdomshire AM controls more than 30% shareholding in
Wisdomshire AM.
Wisdomshire AM’s investment into the Company would be completed through QDII
programs in the PRC, of which it has engaged GF Securities Asset Management (Guangdong)
Co., Ltd. ( ᄿ೯ᗇՎ༟ପ၍ଣ(؇)ʮ̡), an asset manager that is a QDII, to subscribe for
such Offer Shares at the Offer Price on behalf of Wisdomshire AM.
CLOSING CONDITIONS
The obligation of each Cornerstone Investor to subscribe for the Offer Shares under the
respective Cornerstone Investment Agreement is subject to, among other things, the following
closing conditions:
(a) the Underwriting Agreements for the Hong Kong Public Offering and the
International Offering being entered into and having become effective and
unconditional (in accordance with their respective original terms or as subsequently
waived or varied by agreement of the parties thereto) by no later than the time and
date as specified in the Underwriting Agreements, and neither of the aforesaid
Underwriting Agreements having been terminated;
(b) the Offer Price having been agreed upon between our Company and the Overall
Coordinators (for themselves and on behalf of the underwriters of the Global
Offering);
(c) the Listing Committee of the Stock Exchange having granted the approval for the
listing of, and permission to deal in, the H Shares (including the H Shares subscribed
for by the Cornerstone Investors) as well as other applicable waivers and approvals,
and such approval, permission or waiver having not been revoked prior to the
commencement of dealings in the H Shares on the Stock Exchange;
CORNERSTONE INVESTMENTS
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--- page 447 ---
(d) no laws shall have been enacted or promulgated by any governmental authority
which prohibits the consummation of the transactions contemplated in the Global
Offering or in the respective Cornerstone Investment Agreements and there shall be
no orders or injunctions from a court of competent jurisdiction in effect precluding
or prohibiting consummation of such transactions; and
(e) the respective acknowledgements, representations, warranties, undertakings and
confirmations of relevant Cornerstone Investor under the respective Cornerstone
Investment Agreement are accurate and true in all respects and not misleading and
that there is no material breach of the Cornerstone Investment Agreement on the part
of the relevant Cornerstone Investor.
RESTRICTIONS ON THE CORNERSTONE INVESTORS
Each of the Cornerstone Investors has agreed that it will not, whether directly or
indirectly, at any time during the period of six months from (and inclusive of) the Listing Date
(the “ Lock-up Period ”), dispose of, in any way, any of the Offer Shares or any interest in any
company or entity holding such Offer Shares that they have purchased pursuant to the relevant
Cornerstone Investment Agreement, save for certain limited circumstances, such as transfers to
any of its wholly-owned subsidiaries who will be bound by the same obligations of such
Cornerstone Investor, including the Lock-up Period restriction.
CORNERSTONE INVESTMENTS
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--- page 448 ---
FUTURE PLANS
See “Business — Strategies” in this prospectus for a detailed description of our future
plans.
USE OF PROCEEDS
Assuming an Offer Price of HK$34.30 per H Share (being the mid-point of the Offer Price
Range of between HK$32.30 and HK$36.30 per H Share), we estimate that we will receive net
proceeds of approximately HK$5,661.3 million from the Global Offering after deducting the
underwriting commissions and other estimated expenses paid and payable by us in connection
with the Global Offering and assuming that the Over-allotment Option is not exercised. In line
with our strategies, we intend to use our proceeds from the Global Offering for the purposes
and in the amounts set forth below:
 Approximately 45.0% of the net proceeds, or HK$2,547.6 million, will be used for
strengthening our international and cross-border logistics capabilities. In particular:
(i) approximately 20.0% of the net proceeds, or HK$1,132.3 million, will be used
to enhance and upgrade our logistics services and network coverage in Asia,
particularly in Southeast Asia. Specific measures include (a) continuing
investing in overseas resources and capabilities; (b) expanding our talent pool
in Southeast Asia; (c) strengthening customs clearance capabilities to ensure
local compliance of more complex cross-border trade scenarios; and (d)
establishing partnerships with local logistics players to strengthen our end-to-
end international logistics services for our customers.
(ii) approximately 20.0% of the net proceeds, or HK$1,132.3 million, will be used
to selectively pursue strategic initiatives through mergers and acquisitions,
strategic alliances, joint ventures or other minority investments that will
further enhance our international and cross-border logistics capabilities, in line
with our core strategy to expand our capabilities to become the global
integrated logistics leader. The global logistics industry is highly fragmented
in nature with a large number of small-scale players focusing on a particular
sub-sector or a particular region or country while only a few integrated
logistics service providers of large scale. According to Frost & Sullivan, more
than 70 mergers and acquisitions have been completed or announced by the
global top ten integrated logistics service providers over the past ten years,
which shows that it is a common business strategy for global integrated players
to drive the industry consolidation through various forms of strategic
investments in order to strengthen market positioning, service offerings,
product differentiation, and geographical presence. As of the Latest Practicable
Date, we had not identified any investment target or enter into any definitive
investment agreement.
FUTURE PLANS AND USE OF PROCEEDS
– 439 –


--- page 449 ---
(iii) approximately 5.0% of the net proceeds, or HK$283.1 million, will be used to
upgrade our inter-continental logistics network and infrastructure. We plan to
expand our global network through selectively adding new routes and
increasing air cargo flight frequencies. We also plan to maintain and upgrade
our overseas warehouses and logistics industrial parks in key growth regions,
including North America, Europe, and Southeast Asia. Specific measures
include implementing more advanced sorting systems, and upgrading
warehouse management systems with enhanced inventory visualization and
tracking capabilities.
 Approximately 35.0% of the net proceeds, or HK$1,981.5 million, will be used for
strengthening and optimizing our logistics network and service offerings in China.
In particular:
(i) approximately 15.0% of the net proceeds, or HK$849.2 million, will be used
to enhance our logistics networks and infrastructure. Specifically, (a)
approximately 10.0%, or HK$566.1 million, will be used to expand our
geographical coverage, through establishing more service outlets, sorting
centers, warehouses and logistics industrial parks; and (b) approximately 5.0%,
or HK$283.1 million, will be used to expand our aviation and ground delivery
capacities, including acquiring additional line-haul and short-haul trucks and
last-mile delivery vehicles to expand the capacity of our ground fleet,
acquiring additional all-cargo aircraft, and maintaining and upgrading our
existing aircraft through acquiring aircraft components including advanced
cargo loading systems, avionics, auxiliary power units, and cargo pods.
(ii) approximately 10.0% of the net proceeds, or HK$566.1 million, will be used
to implement efficiency enhancement initiatives: (a) reducing and disposing of
redundant and low-efficiency service outlets; (b) further promoting the
automation of our sorting centers through increasing application of automation
equipment and devices; (c) optimizing transportation routes to increase loading
capacity and reduce transit times; and (d) further refining forecasting and data
analytics technologies to lower labor costs.
(iii) approximately 5.0% of the net proceeds, or HK$283.1 million, will be used to
integrate pertinent resources across our networks to achieve greater network
synergies, including (a) enhancing direct dispatch capabilities of sorting
centers through expanding the implementation of real-time tracking and
monitoring systems, increasing automation, cross- training our employees and
utilizing data analysis; (b) upgrading our existing service outlets, into
multi-purpose service outlets equipped with regional sorting and dispatching
capabilities; and (c) streamlining the service process in connection with small
and large-size parcels and our courier team arrangements through further
integrating barcoding scanning and automated sorting.
FUTURE PLANS AND USE OF PROCEEDS
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--- page 450 ---
(iv) approximately 5.0% of the net proceeds, or HK$283.1 million, will be used for
expanding the breadth and depth of our service offerings and further improving
our service quality to solidify our leading position in the industry. Specific
measures include (a) further enhancing and customizing our existing logistics
services and supply chain solutions to address evolving industry-specific pain
points; and (b) developing more customized solutions to serve customers in
emerging and fast-evolving sectors, such as technology, media and
telecommunications, optics, consumer electronics, biotechnology, new
consumer, renewable energy, and financial services.
 Approximately 10.0% of the net proceeds, or HK$566.1 million, will be used for the
research and development of advanced technologies and digital solutions to upgrade
our supply chain and logistics services and implement ESG-related initiatives. In
particular:
(i) approximately 8.0% of the net proceeds, or HK$452.9 million, will be used to
further drive digitalization of our logistics network, including (a) the further
upgrade of our global technology infrastructure and construction of our data
ecosystems through purchases of servers and fundamental operating systems;
(b) developing data analytics technologies to further digitalize our end-to-end
operations, including collection and distribution, transit, transportation, and
delivery; and (c) upgrading our integrated intelligent cost management and
control platform to empower overall resource management and planning
capabilities to improve operational and cost efficiency.
(ii) approximately 2.0% of the net proceeds, or HK$113.2 million, will be used to
invest in ESG-related initiatives, which will (a) enhance our fuel efficiency
through the deployment of technologies, including route optimization for our
road transportation and air freight, (b) contribute to building a differentiated
green logistics services, including increasing renewable energy vehicles in our
fleet, and research and development for green packaging (with goals to reduce
and recycle packaging materials, and to pursue innovations in biodegradable
packaging), (c) support our 2030 climate commitment, including the potential
purchase of sustainable aviation fuels and obtaining the green electricity
certificate, investment in solar generation or energy efficiency projects in our
industrial parks, and in nature-based carbon sink solutions.
 Approximately 10.0% of the net proceeds, or HK$566.1 million, will be used for
working capital and general corporate purposes.
In the event that the Offer Price is set at the maximum Offer Price or the minimum Offer
Price of the indicative Offer Price range, the net proceeds of the Global Offering will increase
or decrease by approximately HK$334.9 million, respectively.
FUTURE PLANS AND USE OF PROCEEDS
– 441 –


--- page 451 ---
The additional net proceeds that we would receive if the Over-allotment Option is
exercised in full would be (i) HK$911.7 million (assuming an Offer Price of HK$36.30 per H
Share, being the maximum Offer Price), (ii) HK$861.5 million (assuming an Offer Price of
HK$34.30 per H Share, being the mid-point of the Offer Price range) and (iii) HK$811.2
million (assuming an Offer Price of HK$32.30 per H Share, being the minimum Offer Price).
To the extent that the net proceeds from the Global Offering (including the net proceeds
from the exercise of the Over-allotment Option) are either more or less than expected, we may
adjust our allocation of the net proceeds for the above purposes on a pro rata basis.
To the extent that the net proceeds of the Global Offering are not immediately used for
the above purposes or if we are unable to put into effect any part of our plan as intended, and
to the extent permitted by the relevant laws and regulations, we may hold such funds in
short-term interest-bearing accounts at licensed commercial banks and/or other authorized
financial institutions (as defined under the Securities and Futures Ordinance or the applicable
laws and regulations in other jurisdictions) so long as it is deemed to be in the best interests
of our Company. In such event, we will comply with the appropriate disclosure requirements
under the Listing Rules.
FUTURE PLANS AND USE OF PROCEEDS
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--- page 452 ---
HONG KONG UNDERWRITERS
Goldman Sachs (Asia) L.L.C.
Huatai Financial Holdings (Hong Kong) Limited
J.P . Morgan Securities (Asia Pacific) Limited
(in alphabetical order)
China International Capital Corporation Hong Kong Securities Limited
UBS AG Hong Kong Branch
(in alphabetical order)
ABCI Securities Company Limited
BOCI Asia Limited
CMB International Capital Limited
DBS Asia Capital Limited
GF Securities (Hong Kong) Brokerage Limited
ICBC International Securities Limited
(in alphabetical order)
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
The Hong Kong Underwriting Agreement was entered into on November 18, 2024. As
described in the Hong Kong Underwriting Agreement, we are offering the Hong Kong Offer
Shares for subscription on and subject to the terms and conditions of this prospectus and the
Hong Kong Underwriting Agreement at the Offer Price. Subject to the Listing Committee
granting the listing of, and permission to deal in, our H Shares in issue and to be issued
pursuant to the Global Offering as mentioned herein (including any additional H Shares which
may be issued pursuant to the exercise of the Over-allotment Option) and the listing and
permission not having been revoked and to certain other conditions set out in the Hong Kong
Underwriting Agreement, the Hong Kong Underwriters have agreed severally (but not jointly)
to subscribe or procure subscribers for their applicable proportion of the Hong Kong Offer
Shares which are now being offered but are not taken up under the Hong Kong Public Offering
on and subject to the terms and conditions of this prospectus and the Hong Kong Underwriting
Agreement.
The Hong Kong Underwriting Agreement is conditional upon and subject to, among other
things, the International Underwriting Agreement having been signed and becoming
unconditional and not having been terminated in accordance with its terms.
UNDERWRITING
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--- page 453 ---
Grounds for Termination
The Joint Sponsors and the Overall Coordinators (for themselves and on behalf of the
Hong Kong Underwriters), in their sole and absolute discretion, shall have the right by giving
a written notice to the Company to terminate the Hong Kong Underwriting Agreement with
immediate effect if, any of the following events shall occur prior to 8:00 a.m. on the Listing
Date:
(a) there shall develop, occur, exist or come into force:
(i) any new law or regulation or any change or development involving a
prospective change in existing law or regulation, or any change or development
involving a prospective change in the interpretation or application thereof by
any court or other competent authority in or affecting Hong Kong, the PRC,
Singapore, the United States, the United Kingdom, the European Union (or any
member thereof) or any other jurisdictions relevant to the Group (each a
“Relevant Jurisdiction ”);
(ii) any change or development involving a prospective change or development, or
any event or series of events likely to result in or representing a change or
development, in national or international financial, political, military,
industrial, economic, currency market, fiscal, legal, credit or regulatory or
market conditions, taxation, equity securities or exchange controls or any
monetary or trading settlement system in or affecting any Relevant Jurisdiction
or affecting an investment in the Offer Shares;
(iii) any event or series of events in the nature of force majeure (including, without
limitation, acts of government, declaration of a national or international
emergency, large-scale labour disputes, strikes, lock-outs, fire, explosion,
earthquake, volcanic eruption, flooding, tsunami, civil commotion, riots,
rebellion, public disorder, acts of war, acts of terrorism, outbreak or escalation
of hostilities, paralysis of government operations (whether or not responsibility
has been claimed), acts of God, major accident or interruption in
transportation, destruction of power plant, outbreak of diseases or epidemics
including, but not limited to, SARS, swine or avian flu, H5N1, H1N1, H1N7,
H7N9, Ebola virus, Middle East respiratory syndrome (MERS), COVID-19
and such related/mutated forms, economic sanction, in whatever form) in or
directly or indirectly affecting any Relevant Jurisdiction;
UNDERWRITING
– 444 –


--- page 454 ---
(iv) any moratorium, suspension or restriction (including, without limitation, any
imposition of or requirement for any minimum or maximum price limit or price
range) in or on trading in any securities of any other member of the Group
listed or quoted on a stock exchange or an over-the-counter market, or trading
in securities generally on the Stock Exchange, the New Y ork Stock Exchange,
the NASDAQ Global Market, the London Stock Exchange, the Singapore
Stock Exchange, the Shanghai Stock Exchange, or the Shenzhen Stock
Exchange;
(v) any general moratorium on commercial banking activities in Hong Kong
(imposed by the Financial Secretary or the Hong Kong Monetary Authority or
other competent Governmental Authority), New Y ork (imposed at Federal or
New Y ork State level or other competent Governmental Authority), London,
Singapore, the PRC, the European Union (or any member thereof), or any
Relevant Jurisdiction or any disruption in commercial banking or foreign
exchange trading or securities settlement or clearance services, procedures or
matters in any Relevant Jurisdiction;
(vi) any change or prospective change in exchange controls, currency exchange
rates or foreign investment regulations (including, without limitation, a
devaluation of the Hong Kong dollars or RMB against U.S. dollars, a change
in the system under which the value of the Hong Kong dollars is linked to that
of the United States dollars or RMB is linked to any foreign currency or
currencies), or any change or prospective change in Taxation in any Relevant
Jurisdiction adversely affecting an investment in the H Shares;
(vii) other than with the prior written consent of the Overall Coordinators, the issue
or requirement to issue by the Company of a supplemental or amendment to the
prospectus or offering circular or other documents in connection with the offer
and sale of the H Shares pursuant to the Companies Ordinance or the Listing
Rules or upon any requirement or request of the Stock Exchange, the SFC or
the CSRC;
(viii) any Directors, Supervisors or senior management of the Company named in the
prospectus vacating his or her office;
(ix) any valid demand by creditors for repayment or payment of indebtedness of
any member of the Group or in respect of which any member of the Group is
liable prior to its stated maturity;
UNDERWRITING
– 445 –


--- page 455 ---
(x) any contravention by the Company, any member of the Group, any Directors
or any Supervisors of any applicable laws;
(xi) any order or petition for, or a petition being presented for the winding-up or
liquidation of any member of the Group, or any member of the Group making
any composition or arrangement with its creditors or entering into a scheme of
arrangement or any resolution being passed for the winding-up of any member
of the Group or a provisional liquidator, receiver or manager being appointed
over all or part of the assets or undertaking of any member of the Group or
anything analogous thereto occurs in respect of any member of the Group;
(xii) any actions, suits, claims (whether or not any such claim involves or results in
any action, suit or proceeding), demands, investigations, judgments, awards or
proceedings of any third party being threatened or instigated against any
member of the Group, or any Director, any Supervisor or senior management
of the Company named in the prospectus (which in the case of an independent
non-executive Director with respect to his action as independent non-executive
Director of the Company), or any of the Director, any Supervisor or senior
management of the Company named in the Prospectus being charged with an
indictable offence or prohibited by operation of laws or otherwise disqualified
from taking on his/her role in the Company;
(xiii) any non-compliance of the prospectus, the CSRC filings or any other
documents used in connection with the contemplated subscription and sale of
the Offer Shares or any aspect of the Global Offering with the Listing Rules,
the Overseas Listing Trial Measures, the Provisions on Strengthening the
Confidentiality and Archives Administration Related to the Overseas Securities
Offering and Listing by Domestic Enterprises (together with Overseas Listing
Trial Measures, the “ CSRC Rules ”) or any other applicable laws; or
(xiv) the imposition of economic sanctions or export controls, or the withdrawal of
trading privileges which existed on the date of the Hong Kong Underwriting
Agreement, in whatever form, directly or indirectly, by, or for, any Relevant
Jurisdiction on the Company or any member of the Group,
which, in any such case individually or in the aggregate, in the sole opinion of the Overall
Coordinators (for themselves and on behalf of the Hong Kong Underwriters: (i) is or will
be or may be materially adverse to, or materially and prejudicially affects, the assets,
liabilities, business, general affairs, management, shareholder’s equity, profit, losses,
results of operations, position or condition (financial or otherwise), or prospects of the
Company or the Group as a whole; (ii) has or will have or may have a material adverse
effect on the success of the Global Offering or the level of Offer Shares being applied for
or accepted or subscribed for or purchased or the distribution of Offer Shares and/or has
made or is likely to make or may make it impracticable or inadvisable or incapable for
any material part of this Agreement, the Hong Kong Public Offering or the Global
UNDERWRITING
– 446 –


--- page 456 ---
Offering to be performed or implemented as envisaged; (iii) makes or will make it or may
make it impracticable or inadvisable or incapable to proceed with the Hong Kong Public
Offering and/or the Global Offering or the delivery of the Offer Shares on the terms and
in the manner contemplated by the prospectus, the formal notice, the preliminary offering
circular or the offering circular; or (iv) would have or may have the effect of making a
part of the Hong Kong Underwriting Agreement (including underwriting) incapable of
performance in accordance with its terms or which prevents the processing of applications
and/or payments pursuant to the Global Offering or pursuant to the underwriting thereof;
or
(b) there has come to the notice of the Joint Sponsors and the Overall Coordinators (for
themselves and on behalf of the Hong Kong Underwriters) that:
(i) a prohibition on the Company by any governmental authority for whatever
reason from allotting, issuing or selling the H Shares pursuant to the terms of
the Global Offering (including the shares to be issued pursuant to the exercise
of Over-allotment Option);
(ii) that any statement contained in the Offering Documents (as defined in the
Hong Kong Underwriting Agreement), the CSRC filings and/or any notices,
announcements, advertisements, communications issued or used by or on
behalf of the Company in connection with the Hong Kong Public Offering
(including any supplement or amendment thereto) was or has become untrue,
incomplete, incorrect (in each case, in material respect) or misleading or any
forecasts, estimate, expressions of opinion, intention or expectation expressed
in the Hong Kong Public Offering Documents (as defined in the Hong Kong
Underwriting Agreement) and/or any notices, announcements, advertisements,
communications so issued or used are not fair and honest and made on
reasonable grounds or, where appropriate, based on reasonable assumptions,
when taken as a whole (in each case, in material respect);
(iii) the notice of acceptance of the CSRC filings issued by the CSRC is rejected,
withdrawn, revoked or invalidated; or other than with the prior written consent
of the Joint Sponsors, the issue or requirement to issue by the Company of a
supplement or amendment to the CSRC filings pursuant to the CSRC Rules or
upon any requirement or request of the CSRC;
(iv) any matter has arisen or has been discovered which would, had it arisen or been
discovered immediately before the date of the Prospectus, not having been
disclosed in the Offering Documents, constitutes a material omission
therefrom;
UNDERWRITING
– 447 –


--- page 457 ---
(v) any experts (other than the Joint Sponsors) has withdrawn its respective
consent to the issue of the prospectus with the inclusion of its reports, letters,
summaries of valuations and/or legal opinions (as the case may be) and
references to its name included in the form and context in which it respectively
appears;
(vi) any event, act or omission which gives or is likely to give rise to any material
liability of the Company pursuant to the indemnities given by the Company
under the Hong Kong Underwriting Agreement;
(vii) any material breach of any of the obligations, undertakings imposed upon the
Company to the Hong Kong Underwriting Agreement the International
Underwriting Agreement or the cornerstone investment agreements;
(viii) any material breach of, or any event rendering any of the representations,
warranties and undertakings given by the Company in the Hong Kong
Underwriting Agreement the untrue or incorrect (in any material respect) or
misleading;
(ix) any material adverse change or prospective material adverse change in the
earnings, results of operations, business, business prospects, financial or
trading position, conditions (financial or otherwise) or prospects of any
member of the Group;
(x) the grant or agreement to grant by the Listing Committee of the listing of, and
permission to deal in, the Offer Shares (the “ Admission ”) is refused or is not
granted, other than subject to customary conditions, on or before the Listing
Date, or if granted, the Admission is subsequently withdrawn, cancelled,
qualified (other than by customary conditions), revoked or withheld; or
(xi) the Company has withdrawn the Offering Documents or the Global Offering,
then, in each case, the Overall Coordinators may (for themselves and on behalf of the
Hong Kong Underwriters), in their sole discretion and upon giving notice in writing to the
Company, terminate the Hong Kong Underwriting Agreement with immediate effect.
UNDERWRITING
– 448 –


--- page 458 ---
Undertakings to the Stock Exchange Pursuant to the Listing Rules
Undertakings by our Company
Pursuant to Rule 10.08 of the Listing Rules, we have undertaken to the Stock Exchange
that, no further Shares or securities convertible into equity securities of our Company (whether
or not of a class already listed) may be issued or form the subject of any agreement to such an
issue within six months from the Listing Date (whether or not such issue of H Shares or
securities will be completed within six months from the Listing Date), except for the issuance
of H Shares or securities pursuant to the Global Offering (including the exercise of the
Over-allotment Option) or the 2022 Stock Option Incentive Plan, or for circumstances
permitted under Rule 10.08 of the Listing Rules.
Undertakings by the Controlling Shareholders
Pursuant to Rule 10.07(1) of the Listing Rules, each of the Controlling Shareholders has
undertaken to the Stock Exchange, the Joint Sponsors and to our Company that, save as
disclosed in this Prospectus and except pursuant to the Global Offering, the Over-allotment
Option, except pursuant to the 2021 Mingde Exchangeable Bonds and the 2024 Mingde
Exchangeable Bonds, he/it will not, and will procure the registered holder(s) will not:
(a) in the period commencing on the date of the Prospectus and ending on the date
which is six months from the Listing Date, dispose of, nor enter into any agreement
to dispose of or otherwise create any options, rights, interests or encumbrances in
respect of, any of the Shares of the Company in respect of which he/it is shown in
the Prospectus to be the beneficial owner.
(b) in the period of six months commencing on the date on which the period referred to
in paragraph (a) above expires, dispose of, nor enter into any agreement to dispose
of or otherwise create any options, rights, interests, or encumbrances in respect of,
any of the Shares referred to in paragraph (a) above if, immediately following such
disposal or upon the exercise or enforcement of such options, rights, interests or
encumbrances, he/it would cease to be a controlling shareholder of our Company (as
defined in the Listing Rules).
Note 2 to Rule 10.07(2) of the Listing Rules provides that the foregoing shall not prevent
the Controlling Shareholders from using securities of the Company beneficially owned by them
as security (including a charge or a pledge) in favor of an authorized institution (as defined in
the Banking Ordinance (Chapter 155 of the Laws of Hong Kong)) for a bona fide commercial
loan.
UNDERWRITING
– 449 –


--- page 459 ---
Each of our Controlling Shareholders has further undertaken to the Stock Exchange and
to our Company that, within the period commencing on the date by reference to which
disclosure of the shareholding of them is made in this prospectus and ending on the date which
is 12 months from the date on which dealings in the H Shares commence on the Stock
Exchange, he/it will:
(a) when he/it pledges or charges (i) any Shares beneficially owned by him/it in favour
of an authorized institution (as defined in the Banking Ordinance (Chapter 155 of
the Laws of Hong Kong) pursuant to Note 2 to Rule 10.07(2) of the Listing Rules;
or (ii) any additional A Shares beneficially owned by him/it in favour of the EB
Pledge Agent pursuant to terms of the 2021 Mingde Exchangeable Bonds or 2024
Mingde Exchangeable Bonds, it shall immediately inform our Company of such
pledge/charge together with the number of Shares so pledged/charged; and
(b) when he/it receives indications, either verbal or written, from the pledgee/chargee
that any of the pledged/charged Shares will be disposed of (including A Shares
pledged to the EB Pledge Agent pursuant to terms of the 2021 Mingde Exchangeable
Bonds or 2024 Mingde Exchangeable Bonds), immediately inform our Company of
such indications.
Undertakings pursuant to the Hong Kong Underwriting Agreement
Undertakings by our Company in respect of our Company
Pursuant to the Hong Kong Underwriting Agreement, save and except for any issuance
and allotment of A Shares by the Company pursuant to the 2022 Stock Option Incentive Plan,
the Company has undertaken to each of the Joint Sponsors, the Overall Coordinators, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Capital Market
Intermediaries and the Hong Kong Underwriters that except pursuant to the Global Offering
(including pursuant to the Over-allotment Option), at any time after the date of the Hong Kong
Underwriting Agreement up to and including the date falling six months after the Listing Date
(the “ First Six Month Period ”), it will not, without the prior written consent of the Joint
Sponsors and the Overall Coordinators (for themselves and on behalf of the Hong Kong
Underwriters) and unless in compliance with the requirements of the Listing Rules:
(a) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree
to allot, issue or sell, assign, mortgage, charge, pledge, hypothecate, lend, grant or
sell any option, warrant, contract or right to subscribe for or purchase, grant or
purchase any option, warrant, contract or right to allot, issue or sell, or otherwise
transfer or dispose of or create any mortgage, charge, pledge, lien, option,
restriction, right of first refusal, right of pre-emption or other third party claim,
defect, right, interest or preference granted to any third party, or any other
encumbrance or security interest of any kind, or an agreement, arrangement or
obligation to create any of the foregoing (the “ Encumbrance ”) over, or agree to
transfer or dispose of or create an Encumbrance over, either directly or indirectly,
UNDERWRITING
– 450 –


--- page 460 ---
conditionally or unconditionally, any legal or beneficial interest in the share capital
or any other equity securities of the Company, or any interest in any of the foregoing
(including, without limitation, any securities convertible into or exchangeable or
exercisable for or that represents the right to receive, or any warrants or other rights
to purchase any share capital or other equity securities of the Company, as
applicable), or deposit any share capital or other equity securities of the Company,
as applicable, with a depositary in connection with the issue of depositary receipts;
(b) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership (legal or beneficial) of Shares
or any other equity securities of the Company or any interest in any of the foregoing
(including, without limitation, any equity securities convertible into or
exchangeable or exercisable for or that represent the right to receive, or any warrants
or other rights to purchase, any Shares);
(c) enter into any transaction with the same economic effect as any transaction
described in (a) or (b) above;
(d) offer to or agree to do any of the foregoing or announce any intention to do so,
in each case, whether any of the foregoing transactions is to be settled by delivery of share
capital or such other equity securities, in cash or otherwise (whether or not the issue of such
share capital or other equity securities will be completed within the First Six Month Period).
The Company further agreed that, in the event the Company is allowed to enter into any of the
transactions described in (a), (b) or (c) above or offers to or agrees to or announces any
intention to effect any such transaction during the period of six months commencing on the
date on which the First Six Month Period expires (the “ Second Six Month Period ”), it will
take all reasonable steps to ensure that such an issue or disposal will not, and no other act of
the Company will, create a disorderly or false market for any H Shares or other equity
securities of the Company.
The Company has agreed and undertaken to each of the Joint Sponsors, the Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers,
the Capital Market Intermediaries and the Hong Kong Underwriters that it will comply with the
minimum public float requirements specified in the Listing Rules or any waiver granted and
not revoked by the Stock Exchange (the “ Minimum Public Float Requirement ”), and it will
not effect any purchase of the H Shares, or agree to do so, which may reduce the holdings of
the H Shares held by the public (as defined in Rule 8.24 of the Listing Rules) to below the
Minimum Public Float Requirement on or before the date falling six months after the Listing
Date without first having obtained the prior written consent of the Overall Coordinators (for
themselves and on behalf of the Hong Kong Underwriters) (which consents shall not be
unreasonably withheld, delayed or rejected).
UNDERWRITING
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The International Offering
In connection with the International Offering, it is expected that the Company will enter
into the International Underwriting Agreement with the Overall Coordinators and the
International Underwriters. Under the International Underwriting Agreement, the International
Underwriters would, subject to certain conditions set out therein, severally and not jointly,
agree to purchase the International Offer Shares being offered pursuant to the International
Offering or procure subscribers or purchasers for such International Offer Shares.
It is expected that the International Underwriting Agreement may be terminated on
similar ground as the Hong Kong Underwriting Agreement. Potential investors shall be
reminded that in the event that the International Underwriting Agreement is not entered into,
the Global Offering will not proceed.
Over-allotment Option
The Company is expected to grant the Over-allotment Option to the International
Underwriters, exercisable by the Overall Coordinators (for themselves and on behalf of the
International Underwriters) at any time from the date of the International Underwriting
Agreement until Sunday, December 22, 2024, being the 30th day from the last day for lodging
applications under the Hong Kong Public Offering, to require the Company to issue up to an
aggregate of 25,500,000 additional Offer Shares, representing approximately 15% of the
number of Offer Shares initially being offered under the Global Offering, at the Offer Price to
solely cover over-allocations in the International Offering, if any. We will delay delivery of the
Offer Shares allocated to certain investors under the International Offering in order to cover
over-allocation of the Offer Shares before exercise of the Over-allotment Option. See
“Structure of the Global Offering — Over-allotment Option.”
Commission and Expenses
The Capital Market Intermediaries will receive an underwriting commission of 0.8% of
the aggregate Offer Price of all the Offer Shares (including any Offer Shares to be issued
pursuant to the exercise of the Over-allotment Option), out of which they will pay any
sub-underwriting commissions and other fees.
The Capital Market Intermediaries may receive a discretionary incentive fee of up to
0.7% of the aggregate Offer Price of all the Offer Shares to be issued by our Company under
the Global Offering (including any Offer Shares to be issued pursuant to the exercise of the
Over-allotment Option).
Assuming full payment of the discretionary incentive fee, the fixed fees and the
discretionary fees payable to the Underwriters represent approximately 37.9% and 62.1%,
respectively, of the aggregate fees payable to the Capital Market Intermediaries in total in
connection with the Global Offering.
UNDERWRITING
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For any unsubscribed Hong Kong Offer Shares reallocated to the International Offering,
the underwriting commission will not be paid to the Hong Kong Underwriters but will instead
be paid, at the rate applicable to the International Offering, to the relevant International
Underwriters.
The aggregate underwriting commissions payable to the Capital Market Intermediaries in
relation to the Global Offering (assuming (i) an indicative offer price of HK$34.30 per Offer
Share (which is the mid-point of the Offer Price range), (ii) the full payment of the
discretionary incentive fee, and (iii) the exercise of the Over-allotment Option in full) will be
approximately HK$100.6 million.
The aggregate underwriting commissions and fees together with the Stock Exchange
listing fees, the SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction
levy, legal and other professional fees and printing and all other expenses relating to the Global
Offering are estimated to be approximately HK$182.9 million (assuming (i) an indicative offer
price of HK$34.30 per Offer Share (which is the mid-point of the Offer Price range), (ii) the
full payment of the discretionary incentive fee, and (iii) the exercise of the Over-allotment
Option in full) and will be paid by our Company.
Indemnity
The Company has agreed to indemnify the Joint Sponsors, the Overall Coordinators, the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Hong Kong
Underwriters and the Capital Market Intermediaries for certain losses which they may suffer,
including losses incurred from its performance of its obligations under the Hong Kong
Underwriting Agreement and any breach by us of the Hong Kong Underwriting Agreement.
Hong Kong Underwriters’ Interests in the Company
Save for its obligations under the Hong Kong Underwriting Agreement or as otherwise
disclosed in this prospectus, none of the Hong Kong Underwriters is interested legally or
beneficially in any shares of the Company or has any right or option (whether legally
enforceable or not) to subscribe for or purchase or nominate persons to subscribe for or
purchase securities of the Company in the Global Offering.
Following the completion of the Global Offering, the Hong Kong Underwriters and their
affiliated companies may hold a certain portion of the Shares as a result of fulfilling their
obligations under the Hong Kong Underwriting Agreement.
Joint Sponsors’ Fee
A fee of HK$3,200,000 is payable by the Company as sponsor fees to each of the Joint
Sponsors.
UNDERWRITING
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JOINT SPONSORS’ INDEPENDENCE
Each of the Joint Sponsors satisfies the independence criteria set out in Rule 3A.07 of the
Listing Rules.
ACTIVITIES BY SYNDICATE MEMBERS
The underwriters of the Hong Kong Public Offering and the International Offering
(together, the “ Syndicate Members ”) and their affiliates may each individually undertake a
variety of activities (as further described below) which do not form part of the underwriting or
stabilizing process.
The Syndicate Members and their affiliates are diversified financial institutions with
relationships in countries around the world. These entities engage in a wide range of
commercial and investment banking, brokerage, fund management, trading, hedging, investing
and other activities for their own account and for the account of others. In relation to the H
Shares, those activities could include acting as agent for buyers and sellers of the H Shares,
entering into transactions with those buyers and sellers in a principal capacity, securities
investment and trading in the H Shares, and entering into over the counter or listed derivative
transactions or listed and unlisted securities transactions (including issuing securities such as
derivative warrants listed on a stock exchange) which have as their underlying assets, assets
including the H Shares. Those activities may require hedging activity by those entities
involving, directly or indirectly, the buying and selling of the H Shares. All such activity could
occur in Hong Kong and elsewhere in the world and may result in the Syndicate Members and
their affiliates holding long and/or short positions in the H Shares, in baskets of securities or
indices including the H Shares, in units of funds that may purchase the H Shares, or in
derivatives related to any of the foregoing.
In relation to issues by Syndicate Members or their affiliates of any listed securities
having the H Shares as their underlying securities, whether on the Stock Exchange or on any
other stock exchange, the rules of the Stock Exchange may require the issuer of those securities
(or one of its affiliates or agents) to act as a market maker or liquidity provider in the security,
and this will also result in hedging activity in the H Shares in most cases.
All such activities may occur both during and after the end of the stabilizing period
described in the section headed “Structure of the Global Offering” in this prospectus. Such
activities may affect the market price or value of the H Shares, the liquidity or trading volume
in the H Shares and the volatility of the price of the H Shares, and the extent to which this
occurs from day to day cannot be estimated.
UNDERWRITING
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It should be noted that when engaging in any of these activities, the Syndicate Members
will be subject to certain restrictions, including the followings:
(a) the Syndicate Members and their respective affiliates (other than the Stabilizing
Manager or any person acting for it) must not, in connection with the distribution of
the Offer Shares, effect any transactions (including issuing or entering into any
option or other derivative transactions relating to the Offer Shares), whether in the
open market or otherwise, with a view to stabilizing or maintaining the market price
of any of the Offer Shares at levels other than those which might otherwise prevail
in the open market; and
(b) the Syndicate Members and their respective affiliates must comply with all
applicable laws and regulations, including the market misconduct provisions of the
SFO, including the provisions prohibiting insider dealing, false trading, price
rigging and stock market manipulation.
Certain of the Syndicate Members or their respective affiliates have provided from time
to time, and expect to provide in the future, investment banking and other services to the
Company and each of their affiliates for which such Syndicate Members or their respective
affiliates have received or will receive customary fees and commissions.
In addition, the Syndicate Members or their respective affiliates may provide financing to
investors to finance their subscriptions of Offer Shares in the Global Offering.
UNDERWRITING
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THE GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part
of the Global Offering. The Global Offering comprises:
(a) the Hong Kong Public Offering of 16,150,000 H Shares (subject to adjustment as
mentioned below) in Hong Kong as described below in the section headed “The
Hong Kong Public Offering”; and
(b) the International Offering of an aggregate of 153,850,000 H Shares (subject to
adjustment and the Over-allotment Option as mentioned below) in the United States
to QIBs in reliance on Rule 144A or another available exemption from the
registration requirements of the U.S. Securities Act and outside the United States in
offshore transactions in accordance with Regulation S.
Goldman Sachs (Asia) L.L.C., Huatai Financial Holdings (Hong Kong) Limited, J.P .
Morgan Securities (Asia Pacific) Limited (in alphabetical order) , China International Capital
Corporation Hong Kong Securities Limited and UBS AG Hong Kong Branch (in alphabetical
order) are the Overall Coordinators of the Global Offering.
Investors may apply for Hong Kong Offer Shares under the Hong Kong Public Offering
or apply for or indicate an interest for International Offer Shares under the International
Offering, but may not do both.
The Offer Shares will represent approximately 3.41% of the enlarged issued share capital
of the Company immediately after completion of the Global Offering, assuming the
Over-allotment Option is not exercised. If the Over-allotment Option is exercised in full, the
Offer Shares will represent approximately 3.90% of the enlarged issued share capital of the
Company immediately after the completion of the Global Offering.
References in this prospectus to applications, application monies or the procedure for
application relate solely to the Hong Kong Public Offering.
THE HONG KONG PUBLIC OFFERING
Number of Offer Shares Initially Offered
We are initially offering 16,150,000 H Shares for subscription by the public in Hong
Kong at the Offer Price, representing 9.5% of the total number of Offer Shares initially
available under the Global Offering. Subject to the reallocation of Offer Shares between the
International Offering and the Hong Kong Public Offering, the Hong Kong Offer Shares will
represent approximately 0.32% of the Company’s enlarged issued share capital immediately
after completion of the Global Offering (assuming that the Over-allotment Option is not
exercised).
STRUCTURE OF THE GLOBAL OFFERING
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The Hong Kong Public Offering is open to members of the public in Hong Kong as well
as to institutional and professional investors. Professional investors generally include brokers,
dealers, companies (including fund managers) whose ordinary business involves dealing in
shares and other securities and corporate entities which regularly invest in shares and other
securities.
Completion of the Hong Kong Public Offering is subject to the conditions as set out in
“— Conditions of the Global Offering.”
Applications
Each applicant under the Hong Kong Public Offering will also be required to give an
undertaking and confirmation in the application submitted by him that he and any person(s) for
whose benefit he is making the application has not applied for or taken up, or indicated an
interest for, and will not apply for or take up, or indicate an interest for, any International Offer
Shares under the International Offering, and such applicant’s application is liable to be rejected
if the said undertaking and/or confirmation is breached and/or untrue (as the case may be) or
it has been or will be placed or allocated Offer Shares under the International Offering.
The listing of the H Shares on the Stock Exchange is sponsored by the Joint Sponsors.
Applicants under the Hong Kong Public Offering may be required to pay, on application
(subject to application channels), the maximum Offer Price of HK$36.30 per Hong Kong Offer
Share in addition to the brokerage, the SFC transaction levy, the AFRC transaction levy and the
Stock Exchange trading fee payable on each Hong Kong Offer Share. If the Offer Price, as
finally determined in the manner described in “— Pricing and Allocation” below, is less than
the maximum Offer Price of HK$36.30 per Offer Share, appropriate refund payments
(including the brokerage, the SFC transaction levy, the AFRC transaction levy and the Stock
Exchange trading fee attributable to the surplus application monies) will be made to successful
applicants, without interest. For further details, see “How to Apply for Hong Kong Offer
Shares” in this prospectus.
Conditions of the Global Offering
Acceptance of all applications for Offer Shares will be conditional on:
(a) the Listing Committee granting approval for the listing of, and permission to deal in,
the H Shares to be issued pursuant to the Global Offering (including H Shares that
may be issued pursuant to the exercise of the Over-allotment Option) and the
approval for such listing and permission not subsequently having been revoked prior
to the Listing Date;
(b) the Offer Price being duly agreed between the Overall Coordinators (for themselves
and on behalf of the Hong Kong Underwriters) and the Company on or before the
Price Determination Date;
STRUCTURE OF THE GLOBAL OFFERING
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(c) the execution and delivery of the International Underwriting Agreement on or before
the Price Determination Date; and
(d) the obligations of the Hong Kong Underwriters under the Hong Kong Underwriting
Agreement and the obligations of the International Underwriters under the
International Underwriting Agreement becoming and remaining unconditional and
not having been terminated in accordance with the terms of the respective
agreements,
in each case on or before the dates and times specified in the Hong Kong Underwriting
Agreement or the International Underwriting Agreement (unless and to the extent such
conditions are validly waived on or before such dates and times) and in any event not later than
8:00 a.m. on Wednesday, November 27, 2024.
If, for any reason, the Offer Price is not agreed between the Overall Coordinators (for
themselves and on behalf of the Hong Kong Underwriters) and the Company on or before the
12:00 noon on Price Determination Date, the Global Offering will not proceed and will lapse.
The consummation of each of the Hong Kong Public Offering and the International
Offering is conditional upon, among other things, the other offering becoming unconditional
and not having been terminated in accordance with their respective terms.
If the above conditions are not fulfilled or waived prior to the times and dates specified,
the Global Offering will lapse and the Stock Exchange will be notified immediately. Notice of
the lapse of the Hong Kong Public Offering will be published on the website of the Company
(www.sf-express.com ) and the website of the Stock Exchange ( www.hkexnews.hk )o nt h e
next day following such lapse. In such eventuality, all application monies will be returned,
without interest, on the terms set out in the section headed “How to Apply for Hong Kong Offer
Shares — D. Despatch/Collection of H Share Certificates and Refund of Application Monies”
in this prospectus. In the meantime, all application monies will be held in separate bank
account(s) with the receiving banks or other bank(s) in Hong Kong licensed under the Banking
Ordinance (Chapter 155 of the Laws of Hong Kong) (as amended).
THE INTERNATIONAL OFFERING
The International Offering will consist of an initial offering of 153,850,000 Offer Shares,
representing 90.5% of the total number of Offer Shares initially available under the Global
Offering and approximately 3.09% of the Company’s enlarged issued share capital immediately
after completion of the Global Offering (assuming that the Over-allotment Option is not
exercised).
STRUCTURE OF THE GLOBAL OFFERING
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The Stabilizing Manager or its affiliates or any person acting for it may over-allocate up
to and not more than an aggregate of 25,500,000 additional Offer Shares, which is 15% of the
Offer Shares initially available under the Global Offering, and cover such over-allocations by
(among other methods) exercising the Over-allotment Option in full or in part or by using
Shares purchased by the Stabilizing Manager, its affiliates or any person acting for it in the
secondary market at prices that do not exceed the Offer Price or a combination of these means.
The Overall Coordinators (for themselves and on behalf of the Underwriters) may require
any investor who has been offered Offer Shares under the International Offering and who has
made an application under the Hong Kong Public Offering, to provide sufficient information
to the Overall Coordinators so as to allow it to identify the relevant applications under the
Hong Kong Public Offering and to ensure that they are excluded from any application of Offer
Shares under the Hong Kong Public Offering.
Any investor who has been offered Offer Shares and has made an application under the
Hong Kong Public Offering shall provide sufficient information to the Overall Coordinators so
as to allow it to identify the relevant applications under the Hong Kong Public Offering and
to ensure that such investor will not apply for any Offer Shares under the Hong Kong Public
Offering.
OVER-ALLOTMENT OPTION
In connection with the Global Offering, the Company is expected to grant the
Over-allotment Option to the International Underwriters, exercisable by the Overall
Coordinators on behalf of the International Underwriters.
Pursuant to the Over-allotment Option, the International Underwriters have the right,
exercisable by the Overall Coordinators (for themselves and on behalf of the International
Underwriters) at any time from the date of the International Underwriting Agreement until 30
days after the last day for lodging applications under the Hong Kong Public Offering, to require
the Company to issue up to an aggregate of 25,500,000 additional Offer Shares, representing
15% of the Offer Shares initially available under the Global Offering, at the Offer Price under
the International Offering, to solely cover over-allocations in the International Offering, if any.
If the Over-allotment Option is exercised in full, the additional Offer Shares will
represent approximately 0.51% of our enlarged issued share capital immediately following the
completion of the Global Offering and the exercise of the Over-allotment Option. In the event
that the Over-allotment Option is exercised, an announcement will be made.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 469 ---
STABILIZATION
Stabilization is a practice used by underwriters in some markets to facilitate the
distribution of securities. To stabilize, the underwriters may bid for, or purchase, the newly
issued securities in the secondary market, during a specified period of time, to retard and, if
possible, prevent a decline in the market price of the securities below the offer price. Such
transactions may be effected in all jurisdictions where it is permissible to do so, in each case
in compliance with all applicable laws and regulatory requirements, including those of Hong
Kong. In Hong Kong, the price at which stabilization is effected is not permitted to exceed the
offer price.
In connection with the Global Offering, the Stabilizing Manager, its affiliates or any
person acting for it, on behalf of the Underwriters, may over-allocate or effect transactions with
a view to stabilizing or supporting the market price of our H Shares at a level higher than that
which might otherwise prevail for a limited period after the Listing Date. Any market
purchases of our H Shares will be effected in compliance with all applicable laws and
regulatory requirements. However, the Stabilizing Manager has been or will be appointed as
Stabilizing Manager for the purposes of the Global Offering in accordance with the Securities
and Futures (Price Stabilizing) Rules, as amended, under the SFO and hence, there is no
obligation on the Stabilizing Manager, its affiliates or any persons acting for it, to conduct any
such stabilizing action. Such stabilizing action, if commenced, will be conducted at the
absolute discretion of the Stabilizing Manager, its affiliates or any person acting for it and may
be discontinued at any time, and is required to be brought to an end after a limited period.
Stabilization actions permitted in Hong Kong pursuant to the Securities and Futures
(Price Stabilizing) Rules, as amended, include (i) over-allocating for the purpose of preventing
or minimizing any reduction in the market price of our H Shares, (ii) selling or agreeing to sell
our H Shares so as to establish a short position in them for the purpose of preventing or
minimizing any reduction in the market price of our H Shares, (iii) purchasing or subscribing
for, or agreeing to purchase or subscribe for, our H Shares pursuant to the Over-allotment
Option in order to close out any position established under (i) or (ii) above, (iv) purchasing,
or agreeing to purchase, any of our Offer Shares for the sole purpose of preventing or
minimizing any reduction in the market price of our H Shares, (v) selling or agreeing to sell
any H Shares in order to liquidate any position established as a result of those purchases and
(vi) offering or attempting to do anything as described in (ii), (iii), (iv) or (v).
Specifically, prospective applicants for and investors in the Offer Shares should note that:
 the Stabilizing Manager, its affiliates or any person acting for it, may, in connection
with the stabilizing action, maintain a long position in our H Shares;
 there is no certainty as to the extent to which and the time or period for which the
Stabilizing Manager, its affiliates or any person acting for it, will maintain such a
long position;
STRUCTURE OF THE GLOBAL OFFERING
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--- page 470 ---
 liquidation of any such long position by the Stabilizing Manager, its affiliates or any
person acting for it and selling in the open market, may have an adverse impact on
the market price of our H Shares;
 no stabilizing action can be taken to support the price of our H Shares for longer
than the stabilization period which will begin on the Listing Date, and is expected
to expire on Sunday, December 22, 2024, being the 30th day after the last date for
lodging applications under the Hong Kong Public Offering. After this date, when no
further stabilizing action may be taken, demand for our H Shares, and therefore the
price of our H Shares, could fall;
 the price of our H Shares cannot be assured to stay at or above the Offer Price by
the taking of any stabilizing action; and
 stabilizing bids or transactions effected in the course of the stabilizing action may
be made at any price at or below the Offer Price and can, therefore, be done at a
price below the price paid by applicants for, or investors in, acquiring the Offer
Shares.
The Company will ensure or procure that an announcement in compliance with the
Securities and Futures (Price Stabilizing) Rules will be made within seven days of the
expiration of the stabilization period. Following any over-allocation of Offer Shares in
connection with the Global Offering, the Overall Coordinators, their respective affiliates or any
person acting on their behalves may cover such over-allocation by, among other methods, using
H Shares purchased by Stabilizing Manager, its affiliates or any person acting for it in the
secondary market, exercising the Over-allotment Option in full or in part, or by a combination
of these means. Any such purchases will be made in accordance with the laws, rules and
regulations in relation to stabilization in place in Hong Kong, including the Securities and
Futures (Price Stabilizing) Rules, as amended, made under the SFO. The number of Offer
Shares which can be over-allocated will not exceed the number of Offer Shares which may be
sold pursuant to the exercise in full of the Over-allotment Option, being 25,500,000 Offer
Shares, representing no more than 15% of the Offer Shares initially available under the Global
Offering.
PRICING AND ALLOCATION
Pricing
The International Underwriters will be soliciting from prospective investors indications
of interest in acquiring Offer Shares in the International Offering. Prospective professional and
institutional investors will be required to specify the number of Offer Shares under the
International Offering they would be prepared to acquire either at different prices or at a
particular price. This process, known as “book-building”, is expected to continue up to, and to
cease on or around, the last day for lodging applications under the Hong Kong Public Offering.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 471 ---
Pricing for the Offer Shares for the purpose of the various offerings under the Global
Offering will be fixed on the Price Determination Date, which is expected to be on or around
Monday, November 25, 2024 (Hong Kong time) and in any event on or before 12:00 noon on
Monday, November 25, 2024 (Hong Kong time), by agreement between the Overall
Coordinators (for themselves and on behalf of the Underwriters) and the Company and the
number of Offer Shares to be allocated under the various offerings will be determined shortly
thereafter.
The Offer Price per Hong Kong Offer Share under the Hong Kong Public Offering will
be identical to the Offer Price per International Offer Share under the International Offering
based on the Hong Kong dollar price per International Offer Share under the International
Offering, as determined by the Overall Coordinators (for themselves and on behalf of the Hong
Kong Underwriters) and the Company. The Offer Price per Hong Kong Offer Share under the
Hong Kong Public Offering will be fixed at the Hong Kong dollar amount which, when
increased by the brokerage fee of 1.0%, SFC transaction levy of 0.0027%, AFRC transaction
levy of 0.00015%, and Stock Exchange trading fee of 0.00565% payable thereon, is (subject
to any necessary rounding) effectively equivalent to the Hong Kong dollar price per
International Offer Share under the International Offering. The SFC transaction levy, the AFRC
transaction levy and the Stock Exchange trading fee otherwise payable by investors in the
International Offering on International Offer Shares purchased by them will be paid by us.
The Offer Price will not be more than HK$36.30 per Offer Share and is expected to be
not less than HK$32.30 per Offer Share unless otherwise announced, as further explained
below, on the morning of the last day for lodging applications under the Hong Kong Public
Offering. Prospective investors should be aware that the Offer Price to be determined on the
Price Determination Date may be, but is not expected to be, lower than the indicative Offer
Price range stated in this prospectus.
The Overall Coordinators (for themselves and on behalf of the Underwriters) may, where
considered appropriate, based on the level of interest expressed by prospective professional,
institutional and other investors during the book-building process, and with the consent of the
Company, reduce the number of Offer Shares or the indicative Offer Price range below that
stated in this prospectus at any time on or prior to the morning of the last day for lodging
applications under the Hong Kong Public Offering. In such a case, the Company will, as soon
as practicable following the decision to make such reduction, and in any event not later than
the morning of the last day for lodging applications under the Hong Kong Public Offering,
cause there to be published on the website of the Company ( www.sf-express.com ) and the
website of the Stock Exchange ( www.hkexnews.hk ) notices of the reduction in the number of
Offer Shares or the indicative Offer Price range. Upon issue of such a notice, the revised Offer
Price range will be final and conclusive and the Offer Price, if agreed upon by the Overall
Coordinators (for themselves and on behalf of the Underwriters) and the Company, will be
fixed within such revised Offer Price range.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 472 ---
Supplemental listing documents will also be issued by the Company in the event of a
reduction in the number of Offer Shares or the Offer Price. Such supplemental listing
documents will also include confirmation or revision, as appropriate, of the working capital
statement and the Global Offering statistics as currently set out in this prospectus, and any
other financial information which may change as a result of any such reduction. In the absence
of any such notice so published, the number of Offer Shares and/or the Offer Price will not be
reduced.
The Global Offering must first be canceled and subsequently relaunched on FINI pursuant
to the supplemental listing documents. Upon the issue of such a notice and supplemental listing
documents, the revised number of Offer Shares and/or the Offer Price range will be final and
conclusive and the Offer Price, if agreed upon by the Overall Coordinators (for themselves and
on behalf of the Underwriters) and our Company, will be fixed within such revised Offer Price
range.
If the number of Offer Shares being offered under the Global Offering or the indicative
Offer Price range is so reduced, applicants who have already submitted an application will be
notified that they are required to confirm their applications. All applicants who have already
submitted an application need to confirm their applications in accordance with the procedures
set out in the announcement and all unconfirmed applications will not be valid.
Before submitting applications for the Hong Kong Offer Shares, applicants should have
regard to the possibility that any announcement of a reduction in the number of Offer Shares
or the indicative Offer Price range may not be made until the day which is the last day for
lodging applications under the Hong Kong Public Offering. Such notice will also include such
information as agreed with the Stock Exchange which may change materially as a result of any
such reduction. In the absence of any such notice of reduction published as described in this
paragraph, the number of Offer Shares will not be reduced and/or the Offer Price, if agreed
upon with the Company and the Overall Coordinators (for themselves and on behalf of the
Underwriters), will under no circumstances be set outside the Offer Price range as stated in this
prospectus.
In the event of a reduction in the number of Offer Shares, the Overall Coordinators may,
at their discretion, reallocate the number of Offer Shares to be offered in the Hong Kong Public
Offering and the International Offering, provided that the number of Hong Kong Offer Shares
comprised in the Hong Kong Public Offering shall not be less than 9.5% of the total number
of Offer Shares available under the Global Offering (assuming the Over-allotment Option is not
exercised).
The Offer Price for H Shares under the Global Offering is expected to be announced on
Tuesday, November 26, 2024. The level of indications of interest in the Global Offering, the
level of applications and the basis of allotment of Hong Kong Offer Shares available under the
Hong Kong Public Offering, are expected to be announced on Tuesday, November 26, 2024 on
the website of the Company ( www.sf-express.com ) and the website of the Stock Exchange
(www.hkexnews.hk ).
STRUCTURE OF THE GLOBAL OFFERING
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--- page 473 ---
Allocation
Allocation Under the Hong Kong Public Offering
Allocation of Hong Kong Offer Shares to investors under the Hong Kong Public Offering
will be based solely on the level of valid applications received under the Hong Kong Public
Offering. The basis of allocation may vary, depending on the number of Hong Kong Offer
Shares validly applied for by applicants. Such allocation could, where appropriate, consist of
balloting, which would mean that some applicants may receive a higher allocation than others
who have applied for the same number of Hong Kong Offer Shares, and those applicants who
are not successful in the ballot may not receive any Hong Kong Offer Shares.
The total number of Hong Kong Offer Shares available under the Hong Kong Public
Offering (subject to the reallocation of the Offer Shares between the Hong Kong Public
Offering and the International Offering referred to below) is to be divided equally into two
pools (to the nearest board lot) for allocation purposes (with any odd board lots being allocated
to pool A): pool A and pool B. The Hong Kong Offer Shares in pool A will be allocated on an
equitable basis to applicants who have applied for Hong Kong Offer Shares with an aggregate
subscription price of HK$5 million (excluding the brokerage, the SFC transaction levy, the
AFRC transaction levy and the Stock Exchange trading fee payable) or less. The Hong Kong
Offer Shares in pool B will be allocated on an equitable basis to applicants who have applied
for Hong Kong Offer Shares with an aggregate subscription price of more than HK$5 million
(excluding the brokerage, the SFC transaction levy, the AFRC transaction levy and the Stock
Exchange trading fee payable) and up to the total value of pool B.
Investors should be aware that applications in pool A and applications in pool B may
receive different allocation ratios. If Hong Kong Offer Shares in one (but not both) of the pools
are under-subscribed, the surplus Hong Kong Offer Shares will be transferred to the other pool
to satisfy demand in that other pool and be allocated accordingly. For the purpose of this
paragraph only, the “price” for Hong Kong Offer Shares means the price payable on application
therefor (without regard to the Offer Price as finally determined). Applicants can only receive
an allocation of Hong Kong Offer Shares from either pool A or pool B but not from both pools.
Multiple or suspected multiple applications and any application for more than 8,075,000 Offer
Shares, being the number of Hong Kong Offer Shares initially allocated to each pool and
representing 50% of the 16,150,000 Hong Kong Offer Shares initially available under the Hong
Kong Public Offering, are to be rejected.
Allocation Under the International Offering
The International Offering will include selective marketing of International Offer Shares
to institutional and professional investors and other investors anticipated to have a sizeable
demand for such International Offer Shares in the United States to QIBs in reliance on Rule
144A or another available exemption from the registration requirements of the U.S. Securities
Act and in Hong Kong and other jurisdictions outside the United States in offshore transactions
in reliance on Regulation S. Professional investors generally include brokers, dealers,
STRUCTURE OF THE GLOBAL OFFERING
– 464 –


--- page 474 ---
companies (including fund managers) whose ordinary business involves dealing in shares and
other securities and corporate entities which regularly invest in shares and other securities.
Allocation of International Offer Shares pursuant to the International Offering will be effected
in accordance with the “book-building” process described in “— Pricing and Allocation” above
and based on a number of factors, including the level and timing of demand, the total size of
the relevant investor’s invested assets or equity assets in the relevant sector and whether or not
it is expected that the relevant investor is likely to hold or sell its H Shares, after the Listing.
Such allocation is intended to result in a distribution of our H Shares on a basis which would
lead to the establishment of a solid professional and institutional shareholder base for the
benefit of the Company and its Shareholders as a whole.
The Overall Coordinators (for themselves and on behalf of the Underwriters) may require
any investor who has been offered International Offer Shares under the International Offering,
and who has made an application under the Hong Kong Public Offering to provide sufficient
information to the Overall Coordinators so as to allow it to identify the relevant application
under the Hong Kong Public Offering and to ensure that it is excluded from any application of
Hong Kong Offer Shares under the Hong Kong Public Offering.
Reallocation
The allocation of the Offer Shares between the Hong Kong Public Offering and the
International Offering is subject to adjustment. Paragraph 4.2 of Practice Note 18 of the Listing
Rules requires a clawback mechanism to be put in place which would have the effect of
increasing the number of Hong Kong Offer Shares to certain percentages of the total number
of Offer Shares offered in the Global Offering under certain circumstances.
We have applied for, and the Stock Exchange has granted us, a waiver from stock
compliance with paragraph 4.2 of Practice Note 18 of the Hong Kong Listing Rules to the
effect as further described below.
16,150,000 Offer Shares are initially available in the Hong Kong Public Offering,
representing 9.5% of the Offer Shares initially available for subscription under the Global
Offering. If the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents (a) 14 times or more but less than 47 times, (b) 47 times or more but less
than 95 times and (c) 95 times or more of the total number of Offer Shares initially available
under the Hong Kong Public Offering, then Offer Shares will be reallocated to the Hong Kong
Public Offering from the International Offering. As a result of such reallocation, the total
number of Offer Shares available under the Hong Kong Public Offering will be increased to
23,800,000 Offer Shares (in the case of (a)), 31,450,000 Offer Shares (in the case of (b)) and
62,050,000 Offer Shares (in the case of (c)), representing 14.0%, 18.5% and 36.5% of the total
number of Offer Shares initially available under the Global Offering, respectively (before any
exercise of the Over-allotment Option).
STRUCTURE OF THE GLOBAL OFFERING
– 465 –


--- page 475 ---
The Overall Coordinators may in their sole discretion reallocate Offer Shares from the
International Offering to the Hong Kong Public Offering to satisfy valid applications under the
Hong Kong Public Offering. In particular, if (i) the International Offering is not fully
subscribed and the Hong Kong Public Offering is fully subscribed or oversubscribed
irrespective of the number of times; or (ii) the International Offering is fully subscribed or
oversubscribed and the Hong Kong Public Offering is fully subscribed or oversubscribed with
the number of Offer Shares validly applied for in the Hong Kong Public Offering representing
less than 14 times of the number of Shares initially available for subscription under the Hong
Kong Public Offering, the Overall Coordinators have the authority to reallocate International
Offer Shares originally included in the International Offering to the Hong Kong Public
Offering in such number as they deem appropriate, provided that in accordance with Chapter
4.14 of the Guide, the number of International Offer Shares reallocated to the Hong Kong
Public Offering should not exceed 16,150,000 Shares, representing approximately number of
the Offer Shares initially available under the Hong Kong Public Offering, increasing the total
number of Offer Shares available under the Hong Kong Public Offering to 32,300,000 Shares,
representing twice the number of the Offer Shares initially available under the Hong Kong
Public Offering and the final Offer Price shall be fixed at the bottom end of the indicative price
range (i.e. HK$32.30 per Offer Share).
In each case, the additional Offer Shares reallocated to the Hong Kong Public Offering
will be allocated between pool A and pool B and the number of Offer Shares allocated to the
International Offering will be correspondingly reduced in such manner as the Overall
Coordinators deems appropriate.
If the Hong Kong Public Offering is not fully subscribed, the Overall Coordinators have
the authority to reallocate all or any unsubscribed Hong Kong Offer Shares to the International
Offering, in such proportions as the Overall Coordinators deem appropriate.
However, if neither the Hong Kong Public Offering nor the International Offering is fully
subscribed, the Global Offering will not proceed unless the Underwriters would subscribe for
or procure subscribers to subscribe for respective applicable proportions of the Offer Shares
being offered which are not taken up under the Global Offering on the terms and conditions of
this prospectus and the Underwriting Agreements.
DEALING ARRANGEMENT
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00
a.m. in Hong Kong on Wednesday, November 27, 2024, it is expected that dealings in our H
Shares on the Stock Exchange will commence at 9:00 a.m. on Wednesday, November 27, 2024.
Our H Shares will be traded in board lots of 200 H Shares each. The stock code of the H Shares
is 6936.
H Share certificates issued in respect of the Offer Shares will only become valid evidence
of title at 8:00 a.m. on Wednesday, November 27, 2024 provided that (i) the Global Offering
has become unconditional in all respects and (ii) the right of termination as described in the
section headed “Underwriting — Underwriting Arrangements and Expenses — Hong Kong
Public Offering — Grounds for Termination” in this prospectus has not been exercised.
Investors who trade H Shares prior to the receipt of H Share certificates or prior to the H Share
certificates becoming valid evidence of title do so entirely at their own risk.
STRUCTURE OF THE GLOBAL OFFERING
– 466 –


--- page 476 ---
IMPORTANT NOTICE TO INVESTORS
OF HONG KONG OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering and below are the procedures for application.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “HKEXnews > New Listings > New Listing
Information” section, and our website at www.sf-express.com.
The contents of this prospectus are identical to the prospectus as registered with the
Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance.
A. APPLICATION FOR HONG KONG OFFER SHARES
1. Who Can Apply
Y ou can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit you
are applying for:
 are 18 years of age or older;
 are not in the United States; and
 have a Hong Kong address (for the HK eIPO White Form service only) .
Unless permitted by the Listing Rules or a waiver and/or consent has been granted by the
Stock Exchange to our Company, you cannot apply for any Hong Kong Offer Shares if you or
the person(s) for whose benefit you are applying for:
 are an existing Shareholder of our Company;
 are a Director, Supervisor or chief executive of our Company and/or a director,
supervisor or chief executive of any of its subsidiaries;
 are a close associate (as defined in the Listing Rules) of any of the above persons;
 are a connected person (as defined in the Listing Rules) of our Company or will
become a connected person of our Company immediately upon the completion of the
Global Offering; or
 have been allocated or have applied for or indicated an interest in any International
Offer Shares or otherwise participate in the International Offering.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 477 ---
2. Application Channels
The Hong Kong Public Offering period will begin at 9:00 a.m. on Tuesday, November 19,
2024 and end at 12:00 noon on Friday, November 22, 2024 (Hong Kong time).
To apply for Hong Kong Offer Shares, you may use one of the following application
channels:
Application
Channel Platform Target Investors Application Time
HK eIPO
White Form
service ......
www.hkeipo.hk
Investors who would
like to receive a
physical H Share
certificate. Hong Kong
Offer Shares
successfully applied for
will be allotted and
issued in your own
name.
From 9:00 a.m.
on Tuesday, November
19, 2024
to 11:30 a.m. on Friday,
November 22, 2024,
Hong Kong time.
The latest time for
completing full payment
of application monies
will be 12:00 noon
on Friday, November
22, 2024, Hong Kong
time.
HKSCC EIPO
channel .....
Y our broker or custodian who is
a HKSCC Participant will submit
an EIPO application on your
behalf through HKSCC’s FINI
system in accordance with your
instruction.
Investors who would
not like to receive a
physical H Share
certificate. Hong Kong
Offer Shares
successfully applied for
will be allotted and
issued in the name of
HKSCC Nominees,
deposited directly into
CCASS and credited to
your designated
HKSCC Participant’s
stock account.
Contact your broker or
custodian for the
earliest and latest time
for giving such
instructions, as this may
vary by broker or
custodian.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 468 –


--- page 478 ---
The HK eIPO White Form service and the HKSCC EIPO channel are facilities subject
to capacity limitations and potential service interruptions and you are advised not to wait until
the last day of the application period to apply for Hong Kong Offer Shares.
For those applying through the HK eIPO White Form service, once you complete
payment in respect of any application instructions given by you or for your benefit through the
HK eIPO White Form service to make an application for Hong Kong Offer Shares, an actual
application shall be deemed to have been made. If you are a person for whose benefit the
electronic application instructions are given, you shall be deemed to have declared that only
one set of electronic application instructions has been given for your benefit. If you are an
agent for another person, you shall be deemed to have declared that you have only given one
set of electronic application instructions for the benefit of the person for whom you are an
agent and that you are duly authorized to give those instructions as an agent.
For the avoidance of doubt, giving an application instruction under the HK eIPO White
Form service more than once and obtaining different payment reference numbers without
effecting full payment in respect of a particular reference number will not constitute an actual
application.
If you apply through the HK eIPO White Form service, you are deemed to have
authorized the HK eIPO White Form Service Provider to apply on the terms and conditions
in this prospectus, as supplemented and amended by the terms and conditions of the HK eIPO
White Form service.
By instructing your broker or custodian to apply for the Hong Kong Offer Shares on your
behalf through the HKSCC EIPO Channel, you (and, if you are joint applicants, each of you
jointly and severally) are deemed to have instructed and authorized HKSCC to cause HKSCC
Nominees (acting as nominee for the relevant HKSCC Participants) to apply for Hong Kong
Offer Shares on your behalf and to do on your behalf all the things stated in this prospectus
and any supplement to it.
For those applying through HKSCC EIPO channel, an actual application will be deemed
to have been made for any application instructions given by you or for your benefit to HKSCC
(in which case an application will be made by HKSCC Nominees on your behalf) provided such
application instruction has not been withdrawn or otherwise invalidated before the closing time
of the Hong Kong Public Offering.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor
HKSCC Nominees shall be liable to you or any other person in respect of any actions taken by
HKSCC or HKSCC Nominees on your behalf to apply for Hong Kong Offer Shares or for any
breach of the terms and conditions of this prospectus.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 469 –


--- page 479 ---
3. Information Required to Apply
Y ou must provide the following information with your application:
For Individual Applicants For Corporate Applicants
▪ Full name(s) 2 as shown on your
identity document
▪ Identity document’s issuing country
or jurisdiction
▪ Identity document type, with order
of priority:
i. HKID card; or
ii. National identification
document; or
iii. Passport; and
▪ Identity document number
▪ Full name(s)
2 as shown on your
identity document
▪ Identity document’s issuing country
or jurisdiction
▪ Identity document type, with order
of priority:
i. LEI registration document; or
ii. Certificate of incorporation; or
iii. Business registration
certificate; or
iv. Other equivalent document; and
▪ Identity document number
Notes:
1. If you are applying through the HK eIPO White Form service, you are required to provide a valid
e-mail address, a contact telephone number and a Hong Kong address. Y ou are also required to declare
that the identity information provided by you follows the requirements as described in Note 2 below. In
particular, where you cannot provide a HKID number, you must confirm that you do not hold a HKID
card. The number of joint applicants may not exceed four. If you are a firm, the applicant must be in
the individual members’ names.
2. The applicant’s full name as shown on their identity document must be used. If an applicant’s identity
document contains both an English and Chinese name, both English and Chinese names must be used.
Otherwise, either English or Chinese names will be accepted. The order of priority of the applicant’s
identity document type must be strictly followed and where an individual applicant has a valid HKID
card, the HKID number must be used when making an application to subscribe for shares in a public
offer. Similarly for corporate applicants, a LEI number must be used if an entity has a LEI certificate.
3. If the applicant is a trustee, the client identification data (“CID”) of the trustee, as set out above, will
be required. If the applicant is an investment fund (i.e. a collective investment scheme, or CIS), the CID
of the asset management company or the individual fund, as appropriate, which has opened a trading
account with the broker will be required, as above.
4. The maximum number of joint account holders on FINI is capped at 4
1 in accordance with market
practice.
5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity
document), the identity document’s issuing country or jurisdiction, the identity document type; and (ii),
the identity document number, for each of the beneficial owners or, in the case(s) of joint beneficial
owners, for each joint beneficial owner. If you do not include this information, the application will be
treated as being made for your benefit.
1 Subject to change, if the Company’s Articles of Incorporation and applicable company law prescribe a lower
cap.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 470 –


--- page 480 ---
6. If you are applying as an unlisted company and (i) the principal business of that company is dealing in
securities; and (ii) you exercise statutory control over that company, then the application will be treated
as being for your benefit and you should provide the required information in your application as stated
above.
“Unlisted company” means a company with no equity securities listed on the Stock Exchange or any
other stock exchange.
“Statutory control” means you:
 control the composition of the board of directors of the company;
 control more than half of the voting power of the company; or
 hold more than half of the issued share capital of the company (not counting any part of it which
carries no right to participate beyond a specified amount in a distribution of either profits or
capital).
For those applying through HKSCC EIPO channel, and making an application under a
power of attorney, we and the Overall Coordinators, as our agent, have discretion to consider
whether to accept it on any conditions we think fit, including evidence of the attorney’s
authority.
Failing to provide any required information may result in your application being rejected.
4. Permitted Number of Hong Kong Offer Shares for Application
Board lot size : 200
Permitted number of Hong Kong Offer
Shares for application and amount
payable on application/successful
allotment
: Hong Kong Offer Shares are available for
application in specified board lot sizes
only. Please refer to the amount payable
associated with each specified board lot
size in the table below.
The maximum Offer Price is HK$36.30
per H Share.
If you are applying through the HKSCC
EIPO channel, you are required to
prefund your application based on the
amount specified by your broker or
custodian, as determined based on the
applicable laws and regulations in Hong
Kong.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 471 –


--- page 481 ---
By instructing your broker or custodian to
apply for the Hong Kong Offer Shares on
your behalf through the HKSCC EIPO
channel, you (and, if you are joint
applicants, each of you jointly and
severally) are deemed to have instructed
and authorized HKSCC to cause HKSCC
Nominees (acting as nominee for the
relevant HKSCC Participants) to arrange
payment of the final Offer Price,
brokerage, SFC transaction levy, the
Stock Exchange trading fee and the
AFRC transaction levy by debiting the
relevant nominee bank account at the
Designated Bank for your broker or
custodian.
If you are applying through the HK eIPO
White Form service, you may refer to
the table below for the amount payable
for the number of H Shares you have
selected. Y ou must pay the respective
maximum amount payable on application
in full upon application for Hong Kong
Offer Shares.
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
200 7,333.22 4,000 146,664.34 60,000 2,199,965.14 800,000 29,332,868.40
400 14,666.43 5,000 183,330.42 70,000 2,566,625.99 900,000 32,999,476.96
600 21,999.65 6,000 219,996.52 80,000 2,933,286.85 1,000,000 36,666,085.50
800 29,332.86 7,000 256,662.60 90,000 3,299,947.70 2,000,000 73,332,171.00
1,000 36,666.08 8,000 293,328.69 100,000 3,666,608.56 3,000,000 109,998,256.50
1,200 43,999.31 9,000 329,994.77 200,000 7,333,217.10 4,000,000 146,664,342.00
1,400 51,332.52 10,000 366,660.85 300,000 10,999,825.66 5,000,000 183,330,427.50
1,600 58,665.74 20,000 733,321.71 400,000 14,666,434.20 6,000,000 219,996,513.00
1,800 65,998.95 30,000 1,099,982.56 500,000 18,333,042.76 7,000,000 256,662,598.50
2,000 73,332.17 40,000 1,466,643.42 600,000 21,999,651.30 8,075,000
(1) 296,078,640.41
3,000 109,998.25 50,000 1,833,304.28 700,000 25,666,259.86
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 472 –


--- page 482 ---
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is 50% of the Hong Kong Offer
Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy. If your application is successful, brokerage will be paid to the Exchange Participants (as
defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for applications made through
the application channel of the HK eIPO White Form Service Provider) while the SFC transaction levy, the
Stock Exchange trading fee and the AFRC transaction levy will be paid to the SFC, the Stock Exchange and
the AFRC, respectively.
5. Multiple Applications Prohibited
Y ou or your joint applicant(s) shall not make more than one application for your own
benefit, except where you are a nominee and provide the information of the underlying investor
in your application as required under the paragraph headed “ — A. Application for Hong Kong
Offer Shares — 3. Information Required to Apply .” If you are suspected of submitting or cause
to submit more than one application, all of your applications will be rejected.
Multiple applications made either through (i) the HK eIPO White Form service, (ii)
HKSCC EIPO channel, or (iii) both channels concurrently are prohibited and will be rejected.
If you have made an application through the HK eIPO White Form service or HKSCC EIPO
channel, you or the person(s) for whose benefit you have made the application shall not apply
further for any Offer Shares in the Global Offering.
The H Share Registrar would record all applications into its system and identify suspected
multiple applications with identical names and identification document numbers according to
the Best Practice Note on Treatment of Multiple/Suspected Multiple Applications (“ Best
Practice Note ”) issued by the Federation of Share Registrars Limited.
Since applications are subject to personal information collection statements,
identification document numbers displayed are redacted.
6. Terms and Conditions of An Application
By applying for Hong Kong Offer Shares through the HK eIPO White Form service or
HKSCC EIPO channel, you (or as the case may be, HKSCC Nominees will do the following
things on your behalf):
(i) undertake to execute all relevant documents and instruct and authorise us and/or the
Overall Coordinators, as our agents, to execute any documents for you and to do on
your behalf all things necessary to register any Hong Kong Offer Shares allocated
to you in your name or in the name of HKSCC Nominees as required by the Articles
of Association, and (if you are applying through the HKSCC EIPO channel) to
deposit the allotted Hong Kong Offer Shares directly into CCASS for the credit of
your designated HKSCC Participant’s stock account on your behalf;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 473 –


--- page 483 ---
(ii) confirm that you have read and understand the terms and conditions and application
procedures set out in this prospectus and the designated website of the HK eIPO
White Form service (or as the case may be, the agreement you entered into with
your broker or custodian), and agree to be bound by them;
(iii) (if you are applying through the HKSCC EIPO channel) agree to the arrangements,
undertakings and warranties under the participant agreement between your broker or
custodian and HKSCC and observe the General Rules of HKSCC and the HKSCC
Operational Procedures for giving application instructions to apply for Hong Kong
Offer Shares;
(iv) confirm that you are aware of the restrictions on offers and sales of shares set out
in this prospectus and they do not apply to you, or the person(s) for whose benefit
you have made the application;
(v) confirm that you have read this prospectus and any supplement to it and have relied
only on the information and representations contained therein in making your
application (or as the case may be, causing your application to be made) and will not
rely on any other information or representations;
(vi) agree that the Relevant Persons, the H Share Registrar and HKSCC will not be liable for
any information and representations not in this prospectus and any supplement to it;
(vii) agree to disclose the details of your application and your personal data and any other
personal data which may be required about you and the person(s) for whose benefit
you have made the application to us, the Relevant Persons, the H Share Registrar,
HKSCC, HKSCC Nominees, the Stock Exchange, the SFC and any other statutory
regulatory or governmental bodies or otherwise as required by laws, rules or
regulations, for the purposes under the paragraph headed “— G. Personal Data —
3. Purposes” and “— G. Personal Data — 4. Transfer of personal data”;
(viii) agree (without prejudice to any other rights which you may have once your
application (or as the case may be, HKSCC Nominees’ application) has been
accepted) that you will not rescind it because of an innocent misrepresentation;
(ix) agree that subject to Section 44A(6) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, any application made by you or HKSCC
Nominees on your behalf cannot be revoked once it is accepted, which will be
evidenced by the notification of the result of the ballot by the H Share Registrar by
way of publication of the results at the time and in the manner as specified in the
paragraph headed “— B. Publication of Results”;
(x) confirm that you are aware of the situations specified in the paragraph headed “— C.
Circumstances In Which Y ou Will Not Be Allocated Hong Kong Offer Shares”;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 474 –


--- page 484 ---
(xi) agree that your application or HKSCC Nominees’ application, any acceptance of it
and the resulting contract will be governed by and construed in accordance with the
laws of Hong Kong;
(xii) agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Articles of Association and laws of any
place outside Hong Kong that apply to your application and that neither we nor the
Relevant Persons will breach any law inside and/or outside Hong Kong as a result
of the acceptance of your offer to purchase, or any action arising from your rights
and obligations under the terms and conditions contained in this prospectus;
(xiii) confirm that (a) your application or HKSCC Nominees’ application on your behalf
is not financed directly or indirectly by the Company, any of the directors,
supervisors, chief executives, substantial Shareholder(s) or existing shareholder(s)
of the Company or any of its subsidiaries or any of their respective close associates;
and (b) you are not accustomed or will not be accustomed to taking instructions from
the Company, any of the directors, supervisors, chief executives, substantial
shareholder(s) or existing shareholder(s) of the Company or any of its subsidiaries
or any of their respective close associates in relation to the acquisition, disposal,
voting or other disposition of the Shares registered in your name or otherwise held
by you;
(xiv) warrant that the information you have provided is true and accurate;
(xv) confirm that you understand that we and the Overall Coordinators will rely on your
declarations and representations in deciding whether or not to allocate any Hong Kong
Offer Shares to you and that you may be prosecuted for making a false declaration;
(xvi) agree to accept Hong Kong Offer Shares applied for or any lesser number allocated
to you under the application;
(xvii) declare and represent that this is the only application made and the only application
intended by you to be made to benefit you or the person for whose benefit you are
applying;
(xviii) (if the application is made for your own benefit) warrant that no other application
has been or will be made for your benefit by giving electronic application
instructions to HKSCC directly or indirectly or through the application channel of
the HK eIPO White Form Service Provider or by any one as your agent or by any
other person; and
(xix) (if you are making the application as an agent for the benefit of another person)
warrant that (1) no other application has been or will be made by you as agent for
or for the benefit of that person or by that person or by any other person as agent
for that person by giving electronic application instructions to HKSCC and the HK
eIPO White Form Service Provider and (2) you have due authority to give
electronic application instructions on behalf of that other person as its agent.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 475 –


--- page 485 ---
B. PUBLICATION OF RESULTS
Results of Allocation
Y ou can check whether you are successfully allocated any Hong Kong Offer Shares
through:
Platform Date/Time
Applying through the HK eIPO White Form service or HKSCC EIPO channel:
Website From the “Allotment Results” page
at www.hkeipo.hk/IPOResult (or
www.tricor.com.hk/ipo/result )
with a “search by ID” function
The full list of (i) wholly
or partially successful
applicants using the HK eIPO
White Form service and HKSCC
EIPO channel, and (ii) the number
of Hong Kong Offer Shares
conditionally allotted
to them, among other things,
will be displayed at
www.hkeipo.hk/IPOResult or
www.tricor.com.hk/ipo/result
24 hours, from 11:00 p.m. on
Tuesday, November 26, 2024 to
12:00 midnight on Monday,
December 2, 2024 (Hong Kong
time)
The Stock Exchange’s website at
www.hkexnews.hk and our
website at www.sf-express.com
which will provide links to the
above mentioned websites of the H
Share Registrar
No later than 11:00 p.m. on
Tuesday, November 26, 2024
(Hong Kong time)
Telephone +852 3691 8488 — the allocation
results telephone enquiry line
provided by the H Share Registrar
between 9:00 a.m. and 6:00 p.m.,
from Wednesday, November 27,
2024 to Monday, December 2,
2024 (Hong Kong time) on a
business day
For those applying through HKSCC EIPO channel, you may also check with your
broker or custodian from 6:00 p.m. on Monday, November 25, 2024 (Hong Kong
time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 476 –


--- page 486 ---
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m. on
Monday, November 25, 2024 (Hong Kong time) on a 24-hour basis and should report any
discrepancies on allotments to HKSCC as soon as practicable.
Allocation Announcement
We expect to announce the results of the final Offer Price, the level of indications of
interest in the Global Offering, the level of applications in the Hong Kong Public Offering and
the basis of allocations of Hong Kong Offer Shares on the Stock Exchange’s website at
www.hkexnews.hk and our website at www.sf-express.com by no later than 11:00 p.m. on
Tuesday, November 26, 2024 (Hong Kong time).
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
Y ou should note the following situations in which Hong Kong Offer Shares will not be
allocated to you or the person(s) for whose benefit you are applying for:
1. If your application is revoked:
Y our application or the application made by HKSCC Nominees on your behalf may be
revoked pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
2. If we or our agents exercise our discretion to reject your application:
We, the Overall Coordinators, the H Share Registrar and their respective agents and
nominees have full discretion to reject or accept any application, or to accept only part of any
application, without giving any reasons.
3. If the allocation of Hong Kong Offer Shares is void:
The allocation of Hong Kong Offer Shares will be void if the Stock Exchange does not
grant permission to list the Shares either:
 within three weeks from the closing date of the application lists; or
 within a longer period of up to six weeks if the Stock Exchange notifies us of that
longer period within three weeks of the closing date of the application lists.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 477 –


--- page 487 ---
4. If:
 you make multiple applications or suspected multiple applications. Y ou may refer to
the paragraph headed “— A. Application for Hong Kong Offer Shares — 5. Multiple
Applications Prohibited” on what constitutes multiple applications;
 your application instruction is incomplete;
 your payment (or confirmation of funds, as the case may be) is not made correctly;
 the Underwriting Agreements do not become unconditional or are terminated;
 we or the Overall Coordinators believe that by accepting your application, it or we
would violate applicable securities or other laws, rules or regulations.
5. If there is money settlement failure for allotted Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC
Participants will be required to hold sufficient application funds on deposit with their
Designated Bank before balloting. After balloting of Hong Kong Offer Shares, the Receiving
Bank will collect the portion of these funds required to settle each HKSCC Participant’s actual
Hong Kong Offer Share allotment from their Designated Bank.
There is a risk of money settlement failure. In the extreme event of money settlement
failure by a HKSCC Participant (or its Designated Bank), who is acting on your behalf in
settling payment for your allotted shares, HKSCC will contact the defaulting HKSCC
Participant and its Designated Bank to determine the cause of failure and request such
defaulting HKSCC Participant to rectify or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the affected
Hong Kong Offer Shares will be reallocated to the Global Offering. Hong Kong Offer Shares
applied for by you through the broker or custodian may be affected to the extent of the
settlement failure. In the extreme case, you will not be allocated any Hong Kong Offer Shares
due to the money settlement failure by such HKSCC Participant. None of us, the Relevant
Persons, the H Share Registrar and HKSCC is or will be liable if Hong Kong Offer Shares are
not allocated to you due to the money settlement failure.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 478 –


--- page 488 ---
D. DESPATCH/COLLECTION OF H SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
Y ou will receive one H Share certificate for all Hong Kong Offer Shares allotted to you
under the Hong Kong Public Offering (except pursuant to applications made through the
HKSCC EIPO channel where the H Share certificates will be deposited into CCASS as
described below).
No temporary document of title will be issued in respect of the H Shares. No receipt will
be issued for sums paid on application.
H Share certificates will only become valid at 8:00 a.m. on Wednesday, November 27,
2024 (Hong Kong time), provided that the Global Offering has become unconditional and the
right of termination described in the section headed “Underwriting” in this prospectus has not
been exercised. Investors who trade H Shares prior to the receipt of H Share certificates or the
H Share certificates becoming valid do so entirely at their own risk.
The right is reserved to retain any H Share certificate(s) and (if applicable) any surplus
application monies pending clearance of application monies.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 479 –


--- page 489 ---
The following sets out the relevant procedures and time:
HK eIPO White Form service HKSCC EIPO channel
Despatch/collection of H Share certificate 3
For application of
1,000,000 Hong Kong
Offer Shares or more
Collection in person at the H
Share Registrar, Tricor Investor
Services Limited, at 17/F, Far
East Finance Centre, 16
Harcourt Road, Hong Kong
Time: 9:00 a.m. to 1:00 p.m. on
Wednesday, November 27, 2024
(Hong Kong time)
If you are an individual, you must
not authorise any other person to
collect for you. If you are a
corporate applicant, your authorised
representative must bear a letter of
authorization from your corporation
stamped with your corporation’s
chop
Both individuals and authorised
representatives must produce, at the
time of collection, evidence of
identity acceptable to the H Share
Registrar
Note: If you do not collect your H
Share certificate(s) personally
within the time above, it/they will
be sent to the address specified in
your application instructions by
ordinary post at your own risk
H Share certificate(s)
will be issued in the
name of HKSCC
Nominees, deposited into
CCASS and credited to
your designated HKSCC
Participant’s stock
account
No action by you is
required
For application of less
than 1,000,000 Hong
Kong Offer Shares
Y our H Share certificate(s) will be
sent to the address specified in your
application instructions by ordinary
post at your own risk
Date: Tuesday, November 26, 2024
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 480 –


--- page 490 ---
HK eIPO White Form service HKSCC EIPO channel
Refund mechanism for surplus application monies paid by you
Date Wednesday, November 27, 2024 Subject to the
arrangement between
you and your broker or
custodian
Responsible party H Share Registrar Y our broker or custodian
Application monies
paid through single
bank account
HK eIPO White Form e-Auto
Refund payment instructions to
your designated bank account
Y our broker or custodian
will arrange refund to
your designated bank
account subject to the
arrangement between
you and it
Application monies
paid through multiple
bank accounts
Refund cheque(s) will be
despatched to the address as
specified in your application
instructions by ordinary post at
your own risk
3 Except in the event of a tropical cyclone warning signal number 8 or above, a black rainstorm warning and/or
an “extreme conditions” announcement issued after a super typhoon in force in Hong Kong in the morning on
Tuesday, November 26, 2024 rendering it impossible for the relevant H Share certificates to be dispatched to
HKSCC in a timely manner, the Company shall procure the H Share Registrar to arrange for delivery of the
supporting documents and H Share certificates in accordance with the contingency arrangements as agreed
between them. See “— E. Bad Weather Arrangements.”
E. BAD WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Friday, November 22, 2024 if, there is:
 a tropical cyclone warning signal number 8 or above;
 a black rainstorm warning; and/or
 Extreme Conditions, (collectively, “ Bad Weather Signals ”),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Friday,
November 22, 2024.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 481 –


--- page 491 ---
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon on
the next business day which does not have Bad Weather Signals in force at any time between
9:00 a.m. and 12:00 noon.
Prospective investors should be aware that a postponement of the opening/closing of the
application lists may result in a delay in the listing date. Should there be any changes to the
dates mentioned in the section headed “Expected Timetable” in this prospectus, an
announcement will be made and published on the Stock Exchange’s website at
www.hkexnews.hk and our website at www.sf-express.com of the revised timetable.
If a Bad Weather Signal is hoisted on Tuesday, November 26, 2024, the H Share Registrar
will make appropriate arrangements for the delivery of the H Share certificates to the CCASS
Depository’s service counter so that they would be available for trading on Wednesday,
November 27, 2024.
If a Bad Weather Signal is hoisted on Tuesday, November 26, 2024, for the application
of less than 1,000,000 Offer Shares, the despatch of physical H Share certificates will be made
by ordinary post when the post office re-opens after the Bad Weather Signal is lowered or
cancelled (e.g. in the afternoon of Tuesday, November 26, 2024 or on Wednesday, November
27, 2024).
If a Bad Weather Signal is hoisted on Wednesday, November 27, 2024, for the application
of 1,000,000 Offer Shares or more, physical H Share certificates will be available for collection
in person at the H Share Registrar’s office after the Bad Weather Signal is lowered or cancelled
(e.g. in the afternoon of Wednesday, November 27, 2024 or on Thursday, November 28, 2024).
Prospective investors should be aware that if they choose to receive physical H Share
certificates issued in their own name, there may be a delay in receiving the H Share
certificates.
F. ADMISSION OF THE H SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the H Shares on the
Stock Exchange and we comply with the stock admission requirements of HKSCC, the H
Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement
in CCASS with effect from the date of commencement of dealings in the H Shares or any other
date HKSCC chooses. Settlement of transactions between Exchange Participants is required to
take place in CCASS on the second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 482 –


--- page 492 ---
Y ou should seek the advice of your broker or other professional advisor for details of the
settlement arrangement as such arrangements may affect your rights and interests.
G. PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data
collected and held by the Company, the H Share Registrar, the receiving banks and the
Relevant Persons about you in the same way as it applies to personal data about applicants
other than HKSCC Nominees. This personal data may include client identifier(s) and your
identification information. By giving application instructions to HKSCC, you acknowledge
that you have read, understood and agree to all of the terms of the Personal Information
Collection Statement below.
1. Personal Information Collection Statement
This Personal Information Collection Statement informs the applicant for, and holder of,
Hong Kong Offer Shares, of the policies and practices of the Company and the H Share
Registrar in relation to personal data and the Personal Data (Privacy) Ordinance (Chapter 486
of the Laws of Hong Kong).
2. Reasons for the collection of your personal data
It is necessary for applicants and registered holders of Hong Kong Offer Shares to ensure
that personal data supplied to the Company or its agents and the H Share Registrar is accurate
and up-to-date when applying for Hong Kong Offer Shares or transferring Hong Kong Offer
Shares into or out of their names or in procuring the services of the H Share Registrar.
Failure to supply the requested data or supplying inaccurate data may result in your
application for Hong Kong Offer Shares being rejected, or in the delay or the inability of the
Company or the H Share Registrar to effect transfers or otherwise render their services. It may
also prevent or delay registration or transfers of Hong Kong Offer Shares which you have
successfully applied for and/or the despatch of H Share certificate(s) to which you are entitled.
It is important that applicants for and holders of Hong Kong Offer Shares inform the
Company and the H Share Registrar immediately of any inaccuracies in the personal data supplied.
3. Purposes
Y our personal data may be used, held, processed, and/or stored (by whatever means) for
the following purposes:
 processing your application and refund cheque and HK eIPO White Form e-Auto
Refund payment instruction(s), where applicable, verification of compliance with
the terms and application procedures set out in this prospectus and announcing
results of allocation of Hong Kong Offer Shares;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 483 –


--- page 493 ---
 compliance with applicable laws and regulations in Hong Kong and elsewhere;
 registering new issues or transfers into or out of the names of the holders of the H
Shares including, where applicable, HKSCC Nominees;
 maintaining or updating the register of members of the Company;
 verifying identities of applicants for and holders of the Shares and identifying any
duplicate applications for the Shares;
 facilitating Hong Kong Offer Shares balloting;
 establishing benefit entitlements of holders of the Shares, such as dividends, rights
issues, bonus issues, etc.;
 distributing communications from the Company and its subsidiaries;
 compiling statistical information and profiles of the holder of the H Shares;
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to enable the
Company and the H Share Registrar to discharge their obligations to applicants and
holders of the H Shares and/or regulators and/or any other purposes to which
applicants and holders of the H Shares may from time to time agree.
4. Transfer of personal data
Personal data held by the Company and the H Share Registrar relating to the applicants
for and holders of Hong Kong Offer Shares will be kept confidential but the Company and the
H Share Registrar may, to the extent necessary for achieving any of the above purposes,
disclose, obtain or transfer (whether within or outside Hong Kong) the personal data to, from
or with any of the following:
 the Company’s appointed agents such as financial advisers, receiving banks and
overseas principal share registrar;
 HKSCC or HKSCC Nominees, who will use the personal data and may transfer the
personal data to the H Share Registrar, in each case for the purposes of providing its
services or facilities or performing its functions in accordance with its rules or
procedures and operating FINI and CCASS (including where applicants for the
Hong Kong Offer Shares request a deposit into CCASS);
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 484 –


--- page 494 ---
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to the Company or the H
Share Registrar in connection with their respective business operation;
 the Stock Exchange, the SFC and any other statutory regulatory or governmental
bodies or otherwise as required by laws, rules or regulations, including for the
purpose of the Stock Exchange’s administration of the Listing Rules and the SFC’s
performance of its statutory functions; and
 any persons or institutions with which the holders of Hong Kong Offer Shares have
or propose to have dealings, such as their bankers, solicitors, accountants or brokers
etc.
5. Retention of personal data
The Company and the H Share Registrar will keep the personal data of the applicants and
holders of Hong Kong Offer Shares for as long as necessary to fulfil the purposes for which
the personal data were collected. Personal data which is no longer required will be destroyed
or dealt with in accordance with the Personal Data (Privacy) Ordinance (Chapter 486 of the
Laws of Hong Kong).
6. Access to and correction of personal data
Applicants for and holders of Hong Kong Offer Shares have the right to ascertain whether
the Company or the H Share Registrar hold their personal data, to obtain a copy of that data,
and to correct any data that is inaccurate. The Company and the H Share Registrar have the
right to charge a reasonable fee for the processing of such requests. All requests for access to
data or correction of data should be addressed to the Company and the H Share Registrar, at
their registered address disclosed in the section headed “Corporate information” in this
prospectus or as notified from time to time, for the attention of the company secretary, or the
H Share Registrar for the attention of the privacy compliance officer.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 485 –


--- page 495 ---
The following is the text of a report set out on pages I-1 to I-3, received from the
Company’ s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants,
Hong Kong, for the purpose of incorporation in this prospectus. It is prepared and addressed
to the directors of the Company and to the Joint Sponsors pursuant to the requirements of
HKSIR 200 Accountants’ Reports on Historical Financial Information in Investment Circulars
issued by the Hong Kong Institute of Certified Public Accountants.
ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF S.F. HOLDING CO., LTD. (ʮ̡) AND GOLDMAN
SACHS (ASIA) L.L.C., HUATAI FINANCIAL HOLDINGS (HONG KONG) LIMITED
AND J.P. MORGAN SECURITIES (FAR EAST) LIMITED
Introduction
We report on the historical financial information of S.F. Holding Co., Ltd. (ٰٰ
ʮ̡) (the “Company”) and its subsidiaries (together, the “Group”) set out on pages I-4
to I-116, which comprises the consolidated statements of financial position as at December 31,
2021, 2022 and 2023 and June 30, 2024, the Company statements of financial position as at
December 31, 2021, 2022 and 2023 and June 30, 2024, and the consolidated statements of
profit or loss, the consolidated statements of other comprehensive income, the consolidated
statements of changes in equity and the consolidated statements of cash flows for each of the
years ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2024 (the
“Track Record Period”) and material accounting policy information and other explanatory
information (together, the “Historical Financial Information”). The Historical Financial
Information set out on pages I-4 to I-116 forms an integral part of this report, which has been
prepared for inclusion in the prospectus of the Company dated November 19, 2024 (the
“Prospectus”) in connection with the initial listing of H Shares of the Company on the Main
Board of The Stock Exchange of Hong Kong Limited.
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of Historical Financial
Information that gives a true and fair view in accordance with the basis of preparation set out
in Note 2.1 to the Historical Financial Information, and for such internal control as the
directors determine is necessary to enable the preparation of Historical Financial Information
that is free from material misstatement, whether due to fraud or error.
APPENDIX I ACCOUNTANT’S REPORT
– I-1 –


--- page 496 ---
Reporting accountant’s responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to
report our opinion to you. We conducted our work in accordance with Hong Kong Standard on
Investment Circular Reporting Engagements 200, Accountants’ Reports on Historical
Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified
Public Accountants (“HKICPA”). This standard requires that we comply with ethical standards
and plan and perform our work to obtain reasonable assurance about whether the Historical
Financial Information is free from material misstatement.
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountant’s judgement, including the assessment of risks of material misstatement
of the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountant considers internal control relevant to the entity’s
preparation of Historical Financial Information that gives a true and fair view in accordance
with the basis of preparation set out in Note 2.1 to the Historical Financial Information in order
to design procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. Our work also
included evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the directors, as well as evaluating the overall presentation of
the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the
accountant’s report, a true and fair view of the financial position of the Company as at
December 31, 2021, 2022 and 2023 and June 30, 2024 and the consolidated financial position
of the Group as at December 31, 2021, 2022 and 2023 and June 30, 2024 and of its consolidated
financial performance and its consolidated cash flows for the Track Record Period in
accordance with the basis of preparation set out in Note 2.1 to the Historical Financial
Information.
APPENDIX I ACCOUNTANT’S REPORT
– I-2 –


--- page 497 ---
Review of stub period comparative financial information
We have reviewed the stub period comparative financial information of the Group which
comprises the consolidated statement of profit or loss, the consolidated statement of other
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the six months ended June 30, 2023 and other explanatory
information (the “Stub Period Comparative Financial Information”). The directors of the
Company are responsible for the presentation and preparation of the Stub Period Comparative
Financial Information in accordance with the basis of preparation set out in Note 2.1 to the
Historical Financial Information. Our responsibility is to express a conclusion on the Stub
Period Comparative Financial Information based on our review. We conducted our review in
accordance with International Standard on Review Engagements 2410, Review of Interim
Financial Information Performed by the Independent Auditor of the Entity issued by the
International Auditing and Assurance Standards Board (“IAASB”). A review consists of
making inquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in scope than
an audit conducted in accordance with International Standards on Auditing and consequently
does not enable us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on
our review, nothing has come to our attention that causes us to believe that the Stub Period
Comparative Financial Information, for the purposes of the accountant’s report, is not
prepared, in all material respects, in accordance with the basis of preparation set out in Note
2.1 to the Historical Financial Information.
Report on matters under the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “Listing Rules”) and the Companies (Winding Up
and Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-4 have been made.
Dividends
We refer to Note 12 to the Historical Financial Information which contains information
about the dividends paid by the Company in respect of the Track Record Period.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
November 19, 2024
APPENDIX I ACCOUNTANT’S REPORT
– I-3 –


--- page 498 ---
I. HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Preparation of Historical Financial Information
Set out below is the Historical Financial Information which forms an integral part of this
accountant’s report.
The consolidated financial statements of the Group for the Track Record Period, on which
the Historical Financial Information is based, were audited by PricewaterhouseCoopers in
accordance with International Standards on Auditing issued by the IAASB (“Underlying
Financial Statements”).
The Historical Financial Information is presented in Renminbi (“RMB”) and all values
are rounded to the nearest thousand (RMB’000) except when otherwise indicated.
APPENDIX I ACCOUNTANT’S REPORT
– I-4 –


--- page 499 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
Y ear ended December 31, Six months ended June 30,
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue ..................... 5 207,186,647 267,490,414 258,409,403 124,365,598 134,409,720
Cost of revenue ................ 8 (181,409,103) (234,478,008) (225,775,678) (107,767,733) (116,096,281)
Gross profit .................. 25,777,544 33,012,406 32,633,725 16,597,865 18,313,439
Selling and marketing expenses ...... 8 (2,837,899) (2,784,114) (2,991,589) (1,392,755) (1,470,892)
General and administrative expenses . . . 8 (15,115,275) (17,694,719) (17,766,049) (8,999,978) (9,049,272)
Research and development expenses .... 8 (2,154,839) (2,222,865) (2,285,314) (1,174,970) (1,301,455)
Net (impairment losses)/reversal of
impairment losses on financial assets
and contract assets ............. 3 (579,851) (825,170) 33,480 66,022 (159,872)
Other income ................. 6 2,089,534 2,494,659 2,281,202 880,404 572,750
Other gains, net ................ 7 1,956,535 831,262 408,474 257,072 293,793
Operating profit ............... 9,135,749 12,811,459 12,313,929 6,233,660 7,198,491
Finance income ................ 10 187,794 345,662 633,373 292,849 415,064
Finance costs .................. 10 (1,562,963) (2,054,360) (2,269,700) (1,092,673) (1,230,918)
Finance costs, net ............... (1,375,169) (1,708,698) (1,636,327) (799,824) (815,854)
Share of profit/(loss) of associates and
joint ventures, net ............. 20 42,660 7,549 (67,190) (13,486) (62,580)
Impairment provision for investments in
associates and joint ventures ....... 20 (52,384) (72,474) (123,907) – –
Profit before income tax .......... 7,750,856 11,037,836 10,486,505 5,420,350 6,320,057
Income tax expense .............. 11 (3,368,762) (3,980,922) (2,574,896) (1,526,110) (1,559,135)
Profit for the year/period ......... 4,382,094 7,056,914 7,911,609 3,894,240 4,760,922
Attributable to:
Owners of the Company ......... 4,731,979 6,227,058 8,234,493 4,176,282 4,806,714
Non-controlling interests ......... (349,885) 829,856 (322,884) (282,042) (45,792)
4,382,094 7,056,914 7,911,609 3,894,240 4,760,922
Earnings per share for profit attributable
to the owners of the Company: 13
– Basic ..................... 1.03 1.28 1.70 0.86 1.00
– Diluted .................... 1.03 1.28 1.70 0.86 1.00
APPENDIX I ACCOUNTANT’S REPORT
– I-5 –


--- page 500 ---
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Profit for the year/period ........... 4,382,094 7,056,914 7,911,609 3,894,240 4,760,922
Other comprehensive income:
Items that may be reclassified to
profit or loss
– Effective portion of changes in fair
value of hedging instruments arising
during the year/period ............. (4,536) 15,392 12,002 8,740 (1,012)
– Share of other comprehensive income of
associates and joint ventures accounted
for using the equity method ......... – (18,740) (5,254) 9,171 (10,370)
– Currency translation differences of
foreign operations ................ (133,261) 1,336,071 334,708 464,631 (88,599)
Items that will not be reclassified to
profit or loss
– Fair value changes of equity investments
designated at fair value through other
comprehensive income ............. 1,870,952 (57,876) 484,100 (53,984) (1,362,163)
– Share of other comprehensive income of
associates and joint ventures accounted
for using the equity method ......... (91) (1,486) (329) – –
– Income tax effect ................. 9,857 (307) 2,749 1,244 2,467
Other comprehensive income/(loss) for
the year/period, net of tax ......... 1,742,921 1,273,054 827,976 429,802 (1,459,677)
Total comprehensive income for the
year/period .................... 6,125,015 8,329,968 8,739,585 4,324,042 3,301,245
Attributable to:
Owners of the Company ............ 6,317,897 8,109,083 9,107,526 4,815,831 3,746,395
Non-controlling interests ........... (192,882) 220,885 (367,941) (491,789) (445,150)
6,125,015 8,329,968 8,739,585 4,324,042 3,301,245
APPENDIX I ACCOUNTANT’S REPORT
– I-6 –


--- page 501 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31,
As at
June 30,
Note 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment . .... 14 47,650,309 56,903,667 60,104,416 59,577,127
Right-of-use assets .............. 15 23,779,667 22,179,348 20,890,047 19,972,478
Investment properties . . . . . . . . . . . . 16 4,850,233 4,875,366 6,418,720 6,658,540
Intangible assets ................ 17 19,485,614 22,084,612 21,030,998 20,582,712
Deferred tax assets .............. 18 1,584,478 1,632,964 2,263,870 2,053,570
Prepayments, other receivables and
other assets . ................. 19 3,435,382 2,257,364 2,333,562 2,229,314
Investments in associates and
joint ventures ................ 20 7,260,087 7,858,000 7,378,831 6,859,813
Financial assets at fair value
through other comprehensive
income ..................... 21 6,810,771 7,365,684 9,489,535 8,344,293
Financial assets at fair value
through profit or loss . . . . . . . . . . 21 878,023 1,012,209 589,996 508,313
Total non-current assets ......... 115,734,564 126,169,214 130,499,975 126,786,160
Current assets
Inventories . . . ................. 22 1,546,821 1,948,354 2,440,425 2,559,211
Contract assets ................. 23 1,038,247 1,522,996 1,632,592 2,039,379
Trade and note receivables. . . . . . . . 24 30,759,013 25,796,677 25,360,433 26,095,410
Prepayments, other receivables and
other assets . ................. 19 14,992,856 12,801,911 12,622,706 10,667,582
Financial assets at fair value
through other comprehensive
income ..................... 21 – 63,310 99,978 125,633
Financial assets at fair value
through profit or loss . . . . . . . . . . 21 10,384,493 7,385,379 6,809,742 18,047,323
Restricted cash ................. 25 576,926 874,919 1,576,496 1,029,244
Cash and cash equivalents ........ 25 34,813,768 40,279,947 40,448,308 32,515,989
Total current assets ............ 94,112,124 90,673,493 90,990,680 93,079,771
Total assets ................... 209,846,688 216,842,707 221,490,655 219,865,931
APPENDIX I ACCOUNTANT’S REPORT
– I-7 –


--- page 502 ---
As at December 31,
As at
June 30,
Note 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
LIABILITIES
Non-current liabilities
Borrowings .................... 26 19,384,466 26,586,761 30,396,912 30,600,682
Lease liabilities ................ 15 10,941,938 8,582,372 8,038,495 7,472,393
Deferred tax liabilities . . . . ....... 18 4,402,160 4,657,954 4,550,974 4,536,857
Other payables and accruals ....... 29 544,300 191,871 140,329 144,477
Deferred income ................ 30 690,242 860,791 1,090,644 1,210,871
Total non-current liabilities ...... 35,963,106 40,879,749 44,217,354 43,965,280
Current liabilities
Trade and note payables. ......... 27 23,467,675 24,748,051 24,914,300 23,810,332
Contract liabilities .............. 28 1,675,836 1,244,418 1,832,018 1,802,509
Borrowings .................... 26 25,715,952 23,281,547 22,309,103 29,034,420
Lease liabilities ................ 15 5,989,616 6,596,956 5,769,965 5,540,079
Financial liabilities at fair value
through profit or loss . . . . . . . . . . 7,658 96,647 92,120 94,614
Income tax payable ............. 2,066,730 1,630,863 1,394,250 1,221,636
Other payables and accruals ....... 29 17,070,777 20,029,392 17,637,171 15,444,502
Advances from customers . . . . . . . . 27,385 49,035 40,714 41,209
Total current liabilities ......... 76,021,629 77,676,909 73,989,641 76,989,301
Total liabilities ................ 111,984,735 118,556,658 118,206,995 120,954,581
Net assets .................... 97,861,953 98,286,049 103,283,660 98,911,350
EQUITY
Share capital .................. 31 4,906,213 4,895,202 4,895,202 4,815,911
Less: Treasury shares . . . . ........ 31 (394,993) (2,040,377) (2,575,532) (378,490)
Reserves ...................... 32 50,186,242 50,037,565 51,634,675 43,385,333
Retained earnings ............... 28,192,470 33,371,351 38,835,999 40,748,443
Equity attributable to owners of the
Company. . . ................. 82,889,932 86,263,741 92,790,344 88,571,197
Non-controlling interests . ........ 14,972,021 12,022,308 10,493,316 10,340,153
Total equity ................... 97,861,953 98,286,049 103,283,660 98,911,350
APPENDIX I ACCOUNTANT’S REPORT
– I-8 –


--- page 503 ---
STATEMENTS OF FINANCIAL POSITION OF THE COMPANY
As at December 31,
As at
June 30,
Note 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment . .... 25,180 144,726 210,661 253,138
Right-of-use assets .............. 15 383,348 368,022 354,760 348,129
Intangible assets ................ 1,047 359 168 72
Deferred tax assets .............. – – 1 0 0 6 9 6
Investments in a subsidiary . ...... 41 50,997,088 58,217,914 66,933,038 66,962,282
Prepayments, other receivables and
other assets . ................. 19 111 459 – –
Total non-current assets ......... 51,406,774 58,731,480 67,498,727 67,564,317
Current assets
Financial assets at fair value
through profit or loss . . . . . . . . . . 21 9,200,219 2,335,319 – –
Prepayments, other receivables and
other assets . ................. 19 18,282,567 15,191,585 21,850,383 17,673,036
Cash and cash equivalents ........ 25 226,112 812,181 138,046 29,017
Total current assets ............ 27,708,898 18,339,085 21,988,429 17,702,053
Total assets ................... 79,115,672 77,070,565 89,487,156 85,266,370
LIABILITIES
Non-current liabilities
Lease liabilities ................ 1,67 3–––
Deferred tax liabilities . . . . . . . . . . . 7,290 1,253 – –
Total non-current liabilities ...... 8,963 1,253 – –
Current liabilities
Income tax payable ............. 6 6 2 10,316 3,188 –
Other payables and accruals . . . . . . . 7,153 29,906 21,623 21,957
Lease liabilities ................ 5 1 9–––
Total current liabilities ......... 8,334 40,222 24,811 21,957
Total liabilities ................ 17,297 41,475 24,811 21,957
Net assets .................... 79,098,375 77,029,090 89,462,345 85,244,413
EQUITY
Share capital .................. 31 4,906,213 4,895,202 4,895,202 4,815,911
Less: Treasury shares . . . . ........ 31 (394,993) (2,040,377) (2,575,532) (378,490)
Reserves ...................... 32 72,701,834 72,601,156 74,151,381 70,707,023
Retained earnings ............... 32 1,885,321 1,573,109 12,991,294 10,099,969
Total equity ................... 79,098,375 77,029,090 89,462,345 85,244,413
APPENDIX I ACCOUNTANT’S REPORT
– I-9 –


--- page 504 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to owners of the Company
Share
capital
Less:
Treasury
shares
Reserves
(Note 32)
Retained
earnings Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2021 .... 4,556,440 (394,993) 26,573,371 25,192,055 55,926,873 316,651 56,243,524
Comprehensive income:
Profit for the year ....... – – – 4,731,979 4,731,979 (349,885) 4,382,094
Other comprehensive
income ............. – – 1,585,918 – 1,585,918 157,003 1,742,921
Total comprehensive
income ............. – – 1,585,918 4,731,979 6,317,897 (192,882) 6,125,015
Transfer of gain on disposal
of equity investments at
fair value through other
comprehensive income to
retained earnings ....... – – ( 1 12,656) 112,65 6–––
Transactions with owners
Capital contribution of
non-public placement . . . 349,773 – 19,562,789 – 19,912,562 – 19,912,562
Capital contribution of
non-controlling interests . – – 2,029,503 – 2,029,503 1,849,237 3,878,740
Share-based payment ..... – – 287,553 – 287,553 61,755 349,308
Transaction with
non-controlling interests
and others ........... – – (75,317) – (75,317) (142,626) (217,943)
Non-controlling interests on
acquisition of
subsidiaries .......... – – – – – 13,126,493 13,126,493
Appropriation to general
and regulatory reserves . . – – 141,496 (141,496) – – –
Profit appropriations to
statutory reserve ....... – – 202,732 (202,732) – – –
Dividends ............. – – – (1,499,992) (1,499,992) (46,607) (1,546,599)
Safety reserve
appropriation ......... – – 28,370 – 28,370 – 28,370
Safety reserve utilisation. . . – – (28,370) – (28,370) – (28,370)
Others ............... – – (9,147) – (9,147) – (9,147)
As at December 31, 2021. . 4,906,213 (394,993) 50,186,242 28,192,470 82,889,932 14,972,021 97,861,953
APPENDIX I ACCOUNTANT’S REPORT
– I-10 –


--- page 505 ---
Attributable to owners of the Company
Share
capital
Less:
Treasury
shares
Reserves
(Note 32)
Retained
earnings Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2022 .... 4,906,213 (394,993) 50,186,242 28,192,470 82,889,932 14,972,021 97,861,953
Comprehensive income:
Profit for the year ....... – – – 6,227,058 6,227,058 829,856 7,056,914
Other comprehensive
income ............. – – 1,882,025 – 1,882,025 (608,971) 1,273,054
Total comprehensive
income ............. – – 1,882,025 6,227,058 8,109,083 220,885 8,329,968
Transfer of loss on disposal
of equity investments at
fair value through other
comprehensive income to
retained earnings ....... – – 38,771 (38,771) – – –
Transactions with owners
Capital contribution of
non-controlling interests . – – 825 – 825 161,848 162,673
Repurchase of shares ..... – (2,040,377) – – (2,040,377) – (2,040,377)
Cancellation of shares .... ( 1 1,011) 394,993 (383,982) ––––
Share-based payment ..... – – 122,999 – 122,999 (13,426) 109,573
Transaction with non-
controlling interests and
others .............. – – (2,055,007) – (2,055,007) (1,856,492) (3,911,499)
Non-controlling interests on
acquisition of
subsidiaries .......... – – – – – 57,555 57,555
Appropriation to general
and regulatory reserves . . – – 72,410 (72,410) – – –
Profit appropriations to
statutory reserve ....... – – 62,478 (62,478) – – –
Dividends ............. – – – (874,518) (874,518) (1,524,826) (2,399,344)
Safety reserve
appropriation ......... – – 32,214 – 32,214 – 32,214
Safety reserve utilisation. . . – – (32,214) – (32,214) – (32,214)
Others ............... – – 1 10,804 – 110,804 4,743 115,547
As at December 31, 2022 .. 4,895,202 (2,040,377) 50,037,565 33,371,351 86,263,741 12,022,308 98,286,049
APPENDIX I ACCOUNTANT’S REPORT
– I-11 –


--- page 506 ---
Attributable to owners of the Company
Share
capital
Less:
Treasury
shares
Reserves
(Note 32)
Retained
earnings Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2023 .... 4,895,202 (2,040,377) 50,037,565 33,371,351 86,263,741 12,022,308 98,286,049
Comprehensive income:
Profit for the year ........ – – – 8,234,493 8,234,493 (322,884) 7,911,609
Other comprehensive
income .............. – – 873,033 – 873,033 (45,057) 827,976
Total comprehensive
income ............. – – 873,033 8,234,493 9,107,526 (367,941) 8,739,585
Transfer of gain on disposal
of equity investments at
fair value through other
comprehensive income to
retained earnings ....... – – 121,368 (121,368) – – –
Transactions with owners
Capital contribution of
non-controlling interests. . – – 1,207 – 1,207 146,845 148,052
Repurchase of shares ..... – (959,956) – – (959,956) – (959,956)
Exercise of share options. . . – 424,801 (69,612) – 355,189 – 355,189
Share-based payment ..... – – 271,510 – 271,510 37,828 309,338
Transaction with
non-controlling interests
and others ........... – – (1,037,241) – (1,037,241) (799,597) (1,836,838)
Non-controlling interests on
acquisition of
subsidiaries ........... – – – – – 47,904 47,904
Appropriation to general
and regulatory reserves . . – – 31,328 (31,328) – – –
Profit appropriations to
statutory reserve ....... – – 1,403,533 (1,403,533) – – –
Dividends ............. – – – (1,213,616) (1,213,616) (596,065) (1,809,681)
Safety reserve appropriation. – – 389,332 – 389,332 – 389,332
Safety reserve utilisation . . . – – (389,332) – (389,332) – (389,332)
Others ................ – – 1,984 – 1,984 2,034 4,018
As at December 31, 2023 .. 4,895,202 (2,575,532) 51,634,675 38,835,999 92,790,344 10,493,316 103,283,660
APPENDIX I ACCOUNTANT’S REPORT
– I-12 –


--- page 507 ---
Attributable to owners of the Company
Share
capital
Less:
Treasury
shares
Reserves
(Note 32)
Retained
earnings Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
As at January 1, 2023 .. 4,895,202 (2,040,377) 50,037,565 33,371,351 86,263,741 12,022,308 98,286,049
Comprehensive income:
Profit for the period .... – – – 4,176,282 4,176,282 (282,042) 3,894,240
Other comprehensive
income ............ – – 639,549 – 639,549 (209,747) 429,802
Total comprehensive
income ........... – – 639,549 4,176,282 4,815,831 (491,789) 4,324,042
Transfer of loss on
disposal of equity
investments at fair
value through other
comprehensive income
to retained earnings . . . – – (18) 18 – – –
Transactions with
owners
Capital contribution of
non-controlling
interests ........... – – 8 9 0 – 8 9 0 59,056 59,946
Repurchase of shares . . . – (59,936) – – (59,936) – (59,936)
Share-based payment . . . – – 151,413 – 151,413 2,048 153,461
Transaction with non-
controlling interests
and others ......... – – ( 1 1,444) – (11,444) (3,728) (15,172)
Non-controlling interests
on acquisition of
subsidiaries ........ – – – – – 52,226 52,226
Dividends ........... – – – (1,213,616) (1,213,616) (377,890) (1,591,506)
Safety reserve
appropriation ....... – – 18,568 – 18,568 – 18,568
Safety reserve utilisation . – – (18,568) – (18,568) – (18,568)
Others .............. – – (3,041) – (3,041) – (3,041)
As at June 30, 2023 ... 4,895,202 (2,100,313) 50,814,914 36,334,035 89,943,838 11,262,231 101,206,069
APPENDIX I ACCOUNTANT’S REPORT
– I-13 –


--- page 508 ---
Attributable to owners of the Company
Share
capital
Less:
Treasury
shares
Reserves
(Note 32)
Retained
earnings Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2024 .. 4,895,202 (2,575,532) 51,634,675 38,835,999 92,790,344 10,493,316 103,283,660
Comprehensive income:
Profit/(loss) for the
period ............. – – – 4,806,714 4,806,714 (45,792) 4,760,922
Other comprehensive loss . – – (1,060,319) – (1,060,319) (399,358) (1,459,677)
Total comprehensive
(loss)/income ........ – – (1,060,319) 4,806,714 3,746,395 (445,150) 3,301,245
Transfer of gain on
disposal of equity
investments at fair
value through other
comprehensive income
to retained earnings . . . – – 5,060 (5,060) – – –
Transactions with
owners
Capital contribution of
non-controlling
interests ........... – – 1 2 7 – 1 2 7 28,447 28,574
Repurchase of shares .... – (1,378,503) – – (1,378,503) – (1,378,503)
Cancellation of shares . . . (79,291) 3,575,545 (3,496,254) – – – –
Share-based payment .... – – 62,186 – 62,186 7,754 69,940
Transaction with non-
controlling interests and
others ............. – – (3,760,142) – (3,760,142) 420,549 (3,339,593)
Non-controlling interests
on acquisition of
subsidiaries ......... – – – – – 17,333 17,333
Dividends ............ – – – (2,889,210) (2,889,210) (182,096) (3,071,306)
Safety reserve
appropriation ........ – – 272,081 – 272,081 – 272,081
Safety reserve utilisation . – – (272,081) – (272,081) – (272,081)
As at June 30, 2024 .... 4,815,911 (378,490) 43,385,333 40,748,443 88,571,197 10,340,153 98,911,350
APPENDIX I ACCOUNTANT’S REPORT
– I-14 –


--- page 509 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Y ear ended December 31, Six months ended June 30,
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cash flows from operating activities
Cash generated from operations ...... 34(a) 18,632,501 37,781,002 29,796,205 15,731,404 15,214,009
Income tax paid ................ (2,553,546) (5,078,055) (3,226,386) (1,906,577) (1,491,740)
Net cash generated from operating
activities ................... 16,078,955 32,702,947 26,569,819 13,824,827 13,722,269
Cash flows from investing activities
Redemption of financial assets at fair
value through profit or loss ....... 1 14,774,608 154,858,457 93,433,282 48,987,381 28,382,311
Disposal of financial assets at fair value
through other comprehensive income . . 592,087 698,674 162,780 130,152 8,440
Proceeds from sales of associates and
joint ventures ................ 24,418 841,595 468,039 3,000 341,706
Repayment from former subsidiaries . . . 342,792 – – – 316,655
Investment gains or dividend income
from financial assets at fair value
through profit or loss ........... 465,949 738,296 604,161 284,733 230,534
Dividends received from associates and
joint ventures ................ 7,684 171,633 192,475 146,754 137,225
Investment gains or dividend income
from financial assets at fair value
through other comprehensive income . . 16,770 3,170 1,998 1,998 19,581
Proceeds from disposal of property, plant
and equipment and other
non-current assets ............. 147,398 176,331 335,828 119,817 179,381
Proceeds of considerations receivable for
disposal of subsidiaries before
acquisition .................. 35(a) 10,989,923 – – – –
Disposal of subsidiaries, net of cash and
cash equivalents held by subsidiaries
at the disposal dates ............ 36(a) 2,337,552 313,719 384,332 358,587 153,596
Purchase of property, plant and
equipment and other non-current
assets ..................... (19,195,560) (14,183,777) (12,471,899) (5,454,090) (5,075,259)
Acquisition of financial assets at fair
value through other comprehensive
income .................... (78,442) (499,939) (275,165) (35,814) (49,750)
Acquisition of financial assets at fair
value through profit or loss ....... ( 1 18,178,290) (151,870,104) (93,974,775) (57,231,623) (39,460,448)
Acquisition of associates and joint
ventures ................... (334,538) (1,122,032) (169,265) (15,930) (14,141)
Acquisition of subsidiaries, net of cash
and cash equivalents held by
subsidiaries at the acquisition dates. . . 35 (9,043,578) (2,217,481) (2,197,408) (928,555) (614,384)
Net cash used in investing activities ... (17,131,227) (12,091,458) (13,505,617) (13,633,590) (15,444,553)
APPENDIX I ACCOUNTANT’S REPORT
– I-15 –


--- page 510 ---
Y ear ended December 31, Six months ended June 30,
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cash flows from financing activities
Capital injection from owners of
the Company ................ 19,910,00 0––––
Capital injection from non-controlling
interests ................... 3,884,887 162,673 157,080 56,892 27,968
Exercise of share options .......... – – 355,189 – –
Drawdown of bank borrowings ....... 31,405,608 27,676,978 32,543,231 15,611,960 19,578,781
Drawdown of loans from
non-controlling interests ......... – 10,814 44,287 5,064 5,542
Proceeds from corporate bonds and
short-term debentures ........... 13,062,445 11,880,297 1,499,553 1,499,553 3,297,638
Deposits received from lessors after the
expiry of lease contracts ......... 7,577 5,187 6,703 7,639 9,978
Repayment of bank borrowings ....... (23,760,852) (31,204,435) (22,365,788) (10,595,828) (15,680,047)
Repayment of corporate bonds and short-
term debentures ............... (2,800,000) (6,660,000) (10,110,178) (5,000,000) (957,181)
Repayment of loans from holders of
asset-backed securities scheme ...... (666,000) (391,000) (899,360) – –
Repayment of loans from
non-controlling interests ......... (21,417) (34,115) (31,478) (12,405) –
Dividend paid to non-controlling
interests ................... (46,607) (1,361,769) (599,379) (385,779) (182,096)
Dividend paid by subsidiaries
(announced prior to acquisition) ..... 35(a) (10,819,033) ––––
Dividend paid ................. 12 (1,499,992) (874,518) (1,213,616) (1,213,616) (2,889,210)
Interests paid .................. (832,979) (1,451,895) (1,820,066) (851,714) (952,574)
Net cash consideration paid to
non-controlling interests without
change of control .............. 34(b) (109,576) (3,914,671) (1,833,285) (132,490) (3,353,487)
Payments for repurchase of shares ..... 31 – (2,040,377) (959,956) (59,936) (1,378,503)
Payments of lease liabilities ......... 34(c) (6,987,589) (7,813,330) (7,765,246) (3,891,543) (3,704,784)
Payment of transaction costs related to
financing activities ............. (92,093) – (2,376) (1,435) (3,890)
Payment for deposits of lease contracts . . (135,803) (6,789) – – –
Net cash generated from/(used in)
financing activities ............ 20,498,576 (16,016,950) (12,994,685) (4,963,638) (6,181,865)
APPENDIX I ACCOUNTANT’S REPORT
– I-16 –


--- page 511 ---
Y ear ended December 31, Six months ended June 30,
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Net increase/(decrease) in cash and
cash equivalents .............. 19,446,304 4,594,539 69,517 (4,772,401) (7,904,149)
Cash and cash equivalents at beginning
of the year/period ............. 15,466,484 34,813,768 40,279,947 40,279,947 40,448,308
Exchange (losses)/gains on cash and cash
equivalents .................. (99,020) 871,640 98,844 127,046 (28,170)
Cash and cash equivalents at end of
the year/period .............. 34,813,768 40,279,947 40,448,308 35,634,592 32,515,989
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II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. GENERAL INFORMATION OF THE GROUP
S.F. Holding Co., Ltd. (ʮ̡) (formerly “Ma’anshan Dingtai Rare Earth & New Materials
Co., Ltd.”, hereinafter “S.F. Holding” or “the Company”), formerly known as Ma’anshan Dingtai Science &
Technology Co., Ltd., was established by 11 natural persons including Liu Jilu and the Labour Union of Ma’anshan
Dingtai Metallic Products Co., Ltd. by cash contribution on May 22, 2003. On October 22, 2007, the Company
officially changed to Ma’anshan Dingtai Rare Earth and New Materials Co., Ltd., and issued additional 19.5 million
shares to the public and listed with trading on Shenzhen Stock Exchange on February 5, 2010.
In December 2016, approved by China Securities Regulatory Commission, the Company conducted a series of
material asset restructuring arrangements, including entering into a material asset swap and share subscription
agreement. Upon the completion of material asset restructuring, Shenzhen Mingde Holding Development Co., Ltd.
(“Mingde Holding”) became the parent company and ultimate controlling company of the Company, and Mr. Wang
Wei was the ultimate controlling shareholder.
The address of the Company’s registered office is 3/F, Complex Building, SF South China Transit Center, No.
1111, Hangzhan 4th Road, Shenzhen Airport, Caowei Community, Hangcheng Subdistrict, Bao’an District, Shenzhen.
The Company is an investment holding company. The Company and its subsidiaries (collectively, the “Group”) are
principally engaged in the development of logistics ecosystem including express delivery, freight delivery, cold chain
and pharmaceutical logistics, intra-city on-demand delivery, international logistics service and supply chain solutions
in the People’s Republic of China (the “PRC”).
2. SUMMARY OF ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the Historical Financial Information are set out
below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
2.1 Summary of material accounting policies
(a) Basis of preparation
The principal accounting policies applied in the preparation of Historical Financial Information are in
accordance with International Financial Reporting Standards issued by the International Accounting Standards Board
(“IFRS Accounting Standards”). The Historical Financial Information has been prepared on a historical cost basis,
except for financial assets at fair value through other comprehensive income and financial assets and financial
liability at fair value through profit or loss, which are carried at fair value.
The preparation of Historical Financial Information in conformity with IFRS Accounting Standards requires
the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process
of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the Historical Financial Information are disclosed in Note 4.
(b) New standards and interpretations
(i) New standards and interpretations not yet adopted
Standards, amendments and interpretations that have been issued but not yet effective and have not been early
adopted by the Group during the Track Record Period, are as follows:
Effective for annual
periods beginning on
or after
Amendments to IAS 21 ...... Lack of Exchangeability January 1, 2025
Amendments to IFRS 9 and
IFRS 7 ................
Classification and Measurement of Financial
Instruments
January 1, 2026
Annual Improvements ........ Annual Improvements to IFRS Accounting
Standards – V olume 11
January 1, 2026
IFRS 18 ................. Presentation and Disclosure in Financial
Statements
January 1, 2027
IFRS 19 ................. Subsidiaries without Public Accountability:
Disclosures
January 1, 2027
Amendments to IFRS 10 and
I A S2 8 ................
Sale or Contribution of Assets between an Investor
and its Associate or Joint V enture
To be determined
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The Group has already commenced an assessment of the impact of these new or revised standards and
amendments, certain of which are relevant to the Group’s operations. According to the preliminary assessment made
by the directors, no significant impact on the financial performance and positions of the Group is expected when they
become effective.
(ii) New standard and amendments to standards adopted and changes in accounting policy
The following new standard and amendments to standards have been adopted by the Group for the financial
year beginning on January 1, 2024:
Amendments to IAS 1 ...................... Classification of Liabilities as Current or Non-
current
Amendments to IAS 1 ...................... Non-current liabilities with Covenants
Amendments to IAS 7 and IFRS 7 ............. Supplier Finance Arrangements
Amendments to IFRS 16 ..................... Lease Liability in a sales and leaseback
The adoption of these new and amended standards does not have significant impact during the Track Record
Period.
(c) Associates
Associates are all entities over which the Group has significant influence but not control or joint control. This
is generally the case where the Group holds between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting (Note 2.2(c)), after initially
being recognized at cost.
(d) Joint arrangements
Under IFRS 11, investments in joint arrangements are classified as either joint operations or joint ventures
depending on the contractual rights and obligations of each investor.
Joint ventures
Interests in joint ventures are accounted for using the equity method (Note 2.2(c)), after initially being
recognized at cost in the consolidated statement of financial position.
(e) Business combinations
Business combination is accounted for under the acquisition method except for business combination under
common control.
The Group chooses to perform concentration test to determine whether an acquired asset of activities and assets
is a business or not. If the concentration test is met, when substantially all of the fair value of the gross assets acquired
is concentrated in a single identifiable asset or group of similar identifiable assets, the set of activities and assets is
determined not to be a business and the Group would treat such transaction as purchasing a set of assets.
Business combination arising from transfer of interests in entities that are under the control of the controlling
shareholder that controls the Group is accounted for as if the acquisition had occurred at the beginning of the Track
Record Period or, if later, at the date that common control was established. The assets acquired and liabilities assumed
are recognized at the carrying amounts recognized previously in the Group’s controlling shareholder’s perspective.
The components of equity of the acquired entities are added to the same components within the Group’s equity and
any difference between the net assets acquired and the consideration paid is recognized directly in equity.
The acquisition method of accounting is used to account for all business combinations, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises the:
 fair values of the assets transferred
 liabilities incurred to the former owners of the acquired business
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 equity interests issued by the Group
 fair value of any asset or liability resulting from a contingent consideration arrangement, and
 fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are,
with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognizes any
non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred, amount of any non-controlling interest in the acquired entity, and
acquisition date fair value of any previous equity interest in the acquired entity over the fair value of the net
identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable
assets of the business acquired, the difference is recognized directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental
borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under
comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value, with changes in fair value recognized in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses
arising from such remeasurement are recognized in profit or loss.
(f) Intangible assets
(i) Goodwill
Goodwill is measured as described in Note 2.1(e). Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill is not amortized but it is tested for impairment annually, or more frequently if events or
changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made
to those cash-generating units or groups of cash-generating units that are expected to benefit from the business
combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which
goodwill is monitored for internal management purposes, being the operating segments.
(ii) Software
Software is stated at cost less any impairment losses and is amortized on the straight-line basis over its
estimated useful life of two to ten years which is the shorter of expected economic benefit life and their
contractual/legally protected period.
(iii) Research and development
All research costs are charged to the statement of profit or loss as incurred.
Development costs are capitalized only when all the following conditions are met:
 the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be
available for use or sale; and
 its intention to complete and its ability to use or sell the asset; and
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 how the asset will generate economic benefits (including demonstration that the product derived from
the intangible asset or the intangible asset itself will be marketable or, in the case of internal use, the
usefulness of the intangible asset as such); and
 the availability of technical and financial resources to complete the project and procure the use or sale
of the intangible asset; and
 the ability to measure reliably the expenditure during the development.
Self-developed systems and software, when the development is done and ready for use, are stated at cost less
any impairment losses. The development costs are amortized using the straight-line basis over the commercial lives
of the underlying products not exceeding ten years.
(iv) Customer relationships
Customer relationships acquired in a business combination are recognized at fair value at the acquisition date.
The customer relationships have a finite useful life and are carried at cost less accumulated amortization.
Amortization is calculated using the straight-line method to allocate its cost over the expected life of the customer
relationships, which range from fifteen to twenty years. The expected useful life is determined with reference to the
past experience of the customer churn rate and the projected period of future economic benefits from customer
relationships.
(v) Trademarks
Separately acquired trademarks are shown at historical cost. Trademarks acquired in a business combination
are recognized at fair value at the acquisition date. Trademarks have a finite useful life and are carried at cost less
accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost of trademarks
over their estimated useful lives of five to twenty years which are the shorter of expected economic benefit life and
their contractual/legally protected period.
(g) Impairment of non-financial assets
Assets that have an indefinite useful life or are not yet available for use are not subject to amortization and
are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might
be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be fully recoverable. An impairment loss is recognized for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs of disposal and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than
goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
(h) Financial assets
(i) Classification
The Group classifies its financial assets in the following measurement categories:
 those to be measured subsequently at fair value (either through other comprehensive income, or through
profit or loss), and
 those to be measured at amortized cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual
terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in equity instruments that are not held for trading, this will depend on
whether the Group has made an irrevocable election at the time of initial recognition to account for the equity
investment at fair value through other comprehensive income (“FVOCI”).
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(ii) Recognition and derecognition
Regular way purchases and sales of financial assets are recognized on trade-date, the date on which the Group
commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from
the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and
rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss (“FVPL”), transaction costs that are directly attributable to the acquisition of
the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their
cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the
asset and the cash flow characteristics of the asset. There are three measurement categories into which the
Group classifies its debt instruments:
 Amortized cost: Assets that are held for collection of contractual cash flows, where those cash
flows represent solely payments of principal and interest, are measured at amortized cost. Interest
income from these financial assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognized directly in profit or loss and
presented in other gains/(losses) together with foreign exchange gains and losses. Impairment
losses are presented as separate line item in the statement of profit or loss.
 FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely payments of principal and interest, are
measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest income and foreign exchange gains and losses,
which are recognized in profit or loss. When the financial asset is derecognized, the cumulative
gain or loss previously recognized in OCI is reclassified from equity to profit or loss and
recognized in other gains/(losses). Interest income from these financial assets is included in
finance income using the effective interest rate method. Foreign exchange gains and losses are
presented in other gains/(losses), and impairment expenses are presented as separate line item in
the statement of profit or loss.
 FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL.
A gain or loss on a debt investment that is subsequently measured at FVPL is recognized in profit
or loss and presented net within other gains/(losses) in the period in which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management
has elected to present fair value gains and losses on equity investments in other comprehensive income, there
is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of
the investment. Dividends from such investments continue to be recognized in profit or loss as other income
when the Group’s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognized in ‘other
(losses)/gains, net’ in profit or loss as applicable. Impairment losses (and reversal of impairment losses) on
equity investments measured at FVOCI are not reported separately from other changes in fair value.
APPENDIX I ACCOUNTANT’S REPORT
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(iv) Impairment of financial assets
The Group recognizes an allowance for expected credit losses (“ECLs”) for all debt instruments not held at
fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation
of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual terms.
General approach
Impairment under general approach is measured as either 12-month expected losses or lifetime expected
credit loss, depending on whether there has been a significant increase in credit risk since initial recognition.
For credit exposures for which there has not been a significant increase in credit risk since initial recognition,
ECLs are provided for credit losses that result from default events that are possible within the next 12 months
(a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk
since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the
exposure, irrespective of the timing of the default (a lifetime ECL).
At each reporting date, the Group assesses whether the credit risk on a financial instrument has
increased significantly since initial recognition. When making the assessment, the Group compares the risk of
a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on
the financial instrument as at the date of initial recognition and considers reasonable and supportable
information that is available without undue cost or effort, including historical and forward-looking
information.
The Group considers a financial asset in default when contractual payments are past due. However, in
certain cases, the Group may also consider a financial asset to be in default when internal or external
information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before
taking into account any credit enhancements held by the Group. A financial asset is written off when there is
no reasonable expectation of recovering the contractual cash flows.
Debt investments at fair value through other comprehensive income and financial assets at amortized
cost are subject to impairment under the general approach and they are classified within the following stages
for measurement of ECLs except for accounts apply the simplified approach as detailed below.
Stage 1 – Financial instruments for which credit risk has not increased significantly since initial
recognition and for which the loss allowance is measured at an amount equal to 12-month
ECLs
Stage 2 – Financial instruments for which credit risk has increased significantly since initial
recognition but that are not credit-impaired financial assets and for which the loss
allowance is measured at an amount equal to lifetime ECLs
Stage 3 – Financial assets that are credit-impaired at the reporting date (but that are not purchased
or originated credit impaired) and for which the loss allowance is measured at an amount
equal to lifetime ECLs
Simplified approach
For trade and other receivables and financial assets at fair value through other comprehensive income
from providing operating services, lease receivables and contract assets that do not contain a significant
financing component or when the Group applies the practical expedient of not adjusting the effect of a
significant financing component, the Group applies the simplified approach in calculating ECLs. The Group
has established a provision matrix that is based on its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic environment. The credit risk of related parties
is relatively low, as the management is of the view that it is very likely the Group could collect receivables
from related parties. Management makes periodic assessments on these receivables from related parties.
APPENDIX I ACCOUNTANT’S REPORT
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(i) Financial liabilities
(i) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or
loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as
appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables, derivative financial instruments, lease
liabilities, interest-bearing borrowings and bonds.
(ii) Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial liabilities at amortized cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized
cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which
case they are stated at cost. Gains and losses are recognized in the statement of profit or loss when the
liabilities are derecognized as well as through the effective interest rate amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or
costs that are an integral part of the effective interest rate. The effective interest rate amortization is included
in finance costs in the statement of profit or loss.
(iii) Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or
expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as
a derecognition of the original liability and a recognition of a new liability, and the difference between the respective
carrying amounts is recognized in the statement of profit or loss.
(j) Current and deferred income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income, based
on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
(i) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the end of the reporting period in the countries where the Company and its subsidiaries operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will
accept an uncertain tax treatment. The Group measures its tax balances either based on the most likely amount or the
expected value, depending on which method provides a better prediction of the resolution of the uncertainty.
(ii) Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax
is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a
APPENDIX I ACCOUNTANT’S REPORT
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business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the
reporting period and are expected to apply when the related deferred income tax asset is realized, or the deferred
income tax liability is settled.
Deferred tax assets are recognized only if it is probable that future taxable amounts will be available to utilize
those temporary differences and losses.
Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount
and tax bases of investments in foreign operations where the Group is able to control the timing of the reversal of
the temporary differences and it is probable that the differences will not reverse in the foreseeable future (Note 18).
(iii) Offsetting
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets
and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis,
or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized
in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive
income or directly in equity, respectively.
(k) Revenue recognition
Revenue is recognized when or as the control of the goods or services is transferred to a customer. Depending
on the terms of the contract and the laws that apply to the contract, control of the goods and services may be
transferred over time or at a point in time. Control of the goods and services is transferred over time if the Group’s
performance:
 provides all of the benefits received and consumed simultaneously by the customer;
 creates or enhances an asset that the customer controls as the Group performs; or
 does not create an asset with an alternative use to the Group and the Group has an enforceable right to
payment for performance completed to date.
If control of the asset transfers over time, revenue is recognized over the period of the contract by reference
to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognized at a
point in time when the customer obtains control of the asset.
The progress towards complete satisfaction of the performance obligation is measured based on one of the
following methods that best depict the Group’s performance in satisfying the performance obligation:
 direct measurements of the value transferred by the Group to the customer; or
 the Group’s efforts or inputs to the satisfaction of the performance obligation relative to the total
expected efforts or inputs.
Incremental costs incurred to obtain a contract, if recoverable, are capitalized as contract assets and
subsequently amortized when the related revenue is recognized.
(i) Revenue from logistics and freight forwarding services
The Group derives revenue from provision of logistics and freight forwarding services, including express and
freight delivery services (comprising time-definite express services, economy express services, freight delivery
services, and cold chain and pharmaceuticals logistics services), intra-city on-demand delivery services, and supply
chain and international services.
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The Group recognizes revenue based on the progress of the service performed within period, which is
determined based on proportion of costs incurred to date to the estimated total costs or days spent to the estimated
total days. As at the date of the end of the reporting period, the Group re-estimates the progress of the service
performed to reflect the actual status of contract performance.
When the Group recognizes revenue based on the progress of the service performed, the amount with
unconditional right to consideration obtained by the Group is recognized as trade receivables, and the rest is
recognized as contract assets. Meanwhile, provision for trade receivables and contract assets is recognized on the
basis of expected credit losses (Note 2.1(h)(iv)). If the contract consideration received or receivable exceeds the
progress of the service performed, the excess portion will be recognized as contract liabilities. Contract assets and
contract liabilities under the same contract are presented on a net basis.
Contract costs include costs to fulfil a contract and costs to obtain a contract. Costs incurred for provision of
the aforesaid services are recognized as costs to fulfil a contract, which is carried forward to the cost of revenue when
revenue recognized based on the progress of the service performed. Incremental costs incurred by the Group for the
acquisition of the aforesaid service contract are recognized as the costs to obtain a contract. For the costs to obtain
a contract with the amortization period within one year, the costs are charged to profit or loss when incurred. For the
costs to obtain a contract with the amortization period beyond one year, the costs are charged in the profit or loss
on the same basis as aforesaid revenue of rendering of services recognized under the relevant contract. If the carrying
amount of the contract costs is higher than the remaining consideration expected to be obtained by rendering of the
service net of the estimated cost to be incurred, the Group makes provision for impairment on the excess portion and
recognizes it as asset impairment losses. As at the date of the end of the reporting period, based on whether the
amortization period of the costs to fulfil a contract is more than one year when initially recognized, the amount of
the Group’s costs to fulfil a contract net of related provision for asset impairment is presented as inventories or other
non-current assets. For costs to obtain a contract with amortization period beyond one year at the initial recognition,
the amount net of related provision for asset impairment is presented as other non-current assets.
(ii) Sales of goods
Sales are recognized when control of the products has transferred, being when the products are delivered to
the customer, the customer has full discretion over the channel and there is no unfulfilled obligation that could affect
the customer’s acceptance of the products.
Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and
loss have been transferred to the customer, and either the customer has accepted the products in accordance with the
sales contract or the Group has objective evidence that all criteria for acceptance have been satisfied.
Revenue from these sales is recognized based on the price specified in the contract. No element of financing
is deemed present as the sales are made with the credit policies, which is consistent with market practice.
A receivable is recognized when the goods are delivered as this is the point in time that the consideration is
unconditional because only the passage of time is required before the payment is due.
(iii) Other services
The Group’s services also include telecommunication service, repairment service, research and development
and technical services and other services.
With regard to certain maintenance service, research and development and technical services, the Group
recognizes revenue at a point in time when the services are delivered to customers. For other services, the Group
recognizes revenue based on the progress of the service performed within period, which is determined based on
proportion of costs incurred to date to the estimated total costs as at the date of end of the reporting period.
2.2 Summary of other accounting policies
(a) Subsidiaries
A subsidiary is an entity (including a structured entity) over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date
on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
APPENDIX I ACCOUNTANT’S REPORT
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The acquisition method of accounting is used to account for business combinations by the Group. Refer to
Note 2.1(e) for further accounting policy information.
Inter-company transactions, balances and unrealized gains on transactions between group companies are
eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the
transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of profit or loss, consolidated statement of other comprehensive income, consolidated statement of changes
in equity and consolidated statement of financial position respectively.
(b) Equity method
Under the equity method of accounting, the investments are initially recognized at cost and adjusted thereafter
to recognize the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the
Group’s share of movements in other comprehensive income of the investee in other comprehensive income.
Dividends received or receivable from associates and joint ventures are recognized as a reduction in the carrying
amount of the investment.
Where the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the Group does not recognize further losses, unless it has
incurred obligations or made payments on behalf of the other entity.
The gain or loss resulting from a downstream transaction involving assets that constitute a business between
the Group and the associate or joint ventures is recognized in full in the Group’s financial statements.
Unrealized gains on transactions between the Group and its associates and joint ventures are eliminated to the
extent of the Group’s interest in these entities. Unrealized losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been
changed where necessary to ensure consistency with the policies adopted by the Group.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy
described in Note 2.1(g).
(c) Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as
transactions with owners of the Group. A change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any
difference between the amount of the adjustment to non-controlling interests and any consideration paid or received
is recognized in a separate reserve within equity attributable to owners of the Company.
When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint
control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in
carrying amount recognized in profit or loss. This fair value becomes the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any
amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the
Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized
in other comprehensive income are reclassified to profit or loss or transferred to another category of equity as
specified/permitted by applicable IFRS Accounting Standards.
If the ownership interest in a joint venture or an associate is reduced but joint control or significant influence
is retained, only a proportionate share of the amounts previously recognized in other comprehensive income are
reclassified to profit or loss where appropriate.
(d) Separate financial statements
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs
of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received and
receivable.
APPENDIX I ACCOUNTANT’S REPORT
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Impairment test of the investments in subsidiaries is required upon receiving a dividend from these investments
if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or
if the carrying amount of the investment in the separate financial statements exceeds the carrying amount of the
investee’s net assets including goodwill.
(e) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (“the functional currency”). Since the majority of the
assets and operations of the Group are located in the PRC, the Historical Financial Information are presented in RMB,
which is also the Company’s functional and the Group’s presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognized in profit or loss.
Non-monetary items that are measured at fair value in foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on non-monetary assets and liabilities carried
at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary
financial assets and liabilities such as equity instruments held at fair value through profit or loss are recognized in
the consolidated statement of profit or loss as part of the fair value gain or loss and translation differences on
non-monetary financial assets, such as equity investment at fair value through other comprehensive income, are
included in other comprehensive income.
(iii) Group companies
The results and financial position of all the Group’s entities (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are translated
into the presentation currency as follows:
 assets and liabilities for each statement of financial position of the Group’s entities are translated at the
closing rate at the end of the Track Record Period;
 income and expenses for each statement of profit or loss of the Group’s entities are translated at average
exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and expenses are translated at the dates
of the transactions); and
 all resulting exchange differences are recognized in other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations
are taken to other comprehensive income. When a foreign operation is partially disposed of or sold, exchange
differences that were recorded in equity are recognized in the consolidated statement of profit or loss and other
comprehensive income as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate.
(f) Leases
(i) The Group as the lessee
Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 523 ---
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
 fixed payments (including in-substance fixed payments), less any lease incentives receivable,
 variable lease payment that are based on an index or a rate, initially measured using the index or rate
as at the commencement date,
 amounts expected to be payable by the Group under residual value guarantees,
 the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
 payments of penalties for terminating the lease, if the lease term reflects the Group exercising that
option.
Lease payments to be made under reasonably certain extension options are also included in the measurement
of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being
the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value
to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group:
 where possible, uses recent third-party financing received by the individual lessee as a starting point,
adjusted to reflect changes in financing conditions since third party financing was received; and
 makes adjustments specific to the lease, e.g. term, country, currency and security.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which
are not included in the lease liability until they take effect. When adjustments to lease payments based on an index
or rate take effect, the lease liability is reassessed and adjusted against the right-of use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability
for each period.
Right-of-use assets are measured at cost comprising the following:
 the amount of the initial measurement of lease liability,
 any lease payments made at or before the commencement date less any lease incentives received,
 any initial direct costs, and
 restoration costs.
The Group also has interests in leasehold land and land use rights for use in its operations. Lump sum payments
were made upfront to acquire these land interests from their previous registered owners or governments in the
jurisdictions where the land is located. There are no ongoing payments to be made under the term of the land leases,
other than insignificant lease renewal costs or payments based on rateables value set by the relevant government
authorities. These payments are stated at cost and are amortized over the term of the lease which includes the renewal
period if the lease can be renewed by the Group without significant cost.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on
a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Payments associated with short-term leases and all leases of low-value assets are recognized as expenses in
profit or loss. Short-term leases are leases with a lease term of 12 months or less.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 524 ---
(ii) The Group as the lessor
When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each
of its leases as either an operating lease or a finance lease.
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of
an asset are classified as operating leases. When a contract contains lease and non-lease components, the Group
allocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rental
income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of
profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease
are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental
income. Contingent rents are recognized as revenue in the period in which they are earned.
Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying asset to
the lessee are accounted for as finance leases.
(g) Property, plant and equipment
All property, plant and equipment are stated at historical costs less accumulated depreciation and accumulated
impairment charges. Historical costs include expenditures that are directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the asset will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and
maintenance are charged to the consolidated statement of comprehensive income during the periods in which they are
incurred.
Replacement parts of aircraft engine repairment/maintenance are depreciated using the units-of-production
method. Except for the replacement parts of aircraft engine repairment/maintenance and freehold land, depreciation
of other property, plant and equipment is calculated using the straight-line method to allocate their cost, net of their
residual values, over their estimated useful lives as follows:
Freehold land ................................. N o t depreciated
Buildings .................................... 1 0–5 0 years
Machinery and equipment ....................... 2–4 0 years
Aircraft, aircraft engines, rotables and other flight
equipment ................................. 1 . 5–1 0 years
Other property, plant and equipment ................ 2–2 0 years
Leasehold improvements ........................ Shorter of their useful lives and the lease term
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount (Note 2.1(g)).
Gains and losses on disposal are determined by comparing the proceeds with the carrying amounts. These are
included in the consolidated statement of comprehensive income.
In relation to the aircraft fuselage within the properties, plants and equipment, the Group originally provided
for depreciation over a period of 10 years. Based on the assessment conducted by the technical department of the
Group with reference to the actual useful lives and utilization of aircraft, the Group was of the view that current
estimated useful lives of aircraft can no longer reflect the actual usage of the aircraft.
In order to more truly and accurately reflect the status and operating results of the Company’s aircraft fuselage,
and to better align the expected useful life of the aircraft fuselage with its actual service life, the Group has made
an accounting estimate change to the expected useful lives of the aircraft fuselage.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 525 ---
This change in accounting estimate was implemented using the prospective method from January 1, 2024. The
comparison of the changes in depreciation of the aircraft fuselage is as follows:
Estimated
useful lives
Estimated
residual value
Depreciation
rate
Before 10 years 5.00% 9.50%
After 10-20 years 5.00% 9.50%-4.75%
Construction in progress represents logistics centers and warehouses under construction and is stated at cost
less impairment losses. It will be reclassified to the relevant property, plant and equipment category upon completion
and depreciation begins when the relevant assets are available for use.
(h) Investment properties
Investment properties are interests in land and buildings held to earn rental income and/or for capital
appreciation, including properties under construction for such purpose, rather than for use in the production or supply
of goods or services or for administrative purposes, or for sale in the ordinary course of business. Such properties
are measured initially at cost, including related transaction costs. After initial recognition, the Group chooses the cost
model to measure all of its investment properties.
Depreciation is calculated on the straight-line basis to its residual value over its estimated useful life. The
estimated useful lives are as follows:
Buildings ......................................................... 1 0–5 0 years
Land use rights .................................................... 2 0–5 0 years
The carrying amounts of investment properties measured using the cost method are reviewed for impairment
when events or changes in circumstances indicate that the carrying amounts may not be recoverable.
Any gains or losses on the retirement or disposal of an investment property are recognized in profit or loss in
the year of the retirement or disposal.
(i) Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted
average method. Net realizable value is the estimated selling price in the ordinary course of business, less applicable
variable selling expenses.
(j) Trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course
of business. Majority of other receivables are advances to employees, deposit from suppliers and value-added tax
recoverable. If collection of trade and other receivables is expected in one year or less (or in the normal operating
cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade and other receivables are recognized initially at the amount of consideration that is unconditional unless
they contain significant financing components, when they are recognized at fair value. The Group holds the trade
receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at
amortized cost using the effective interest method, less provision for impairment. See Note 24 and Note 19 for further
information about the Group’s accounting for Trade and other receivables and Note 2.1(h) for a description of the
Group’s impairment policies.
(k) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown as a
separate current liability in the consolidated statement of financial position.
Restricted and pledged bank deposits are not included in cash and cash equivalents.
APPENDIX I ACCOUNTANT’S REPORT
– I-31 –


--- page 526 ---
(l) Share capital and capital reserve
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are
shown in equity as a deduction, net of tax, from the proceeds.
Where any group company purchases its equity instruments, for example as the result of an employee share
scheme, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted
from equity attributable to owners of the Company as treasury shares until the shares are cancelled or reissued. Where
such shares are subsequently reissued, any consideration received, net of any directly attributable incremental
transaction costs and the related income tax effects, is included in equity attributable to owners of the Company.
(m) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial
period which are unpaid. Trade payables are presented as current liabilities unless payment is not due within 12
months after the reporting. They are recognized initially at fair value and subsequently measured at amortized cost
using the effective interest method.
(n) Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the
redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest
method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent
that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the
draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn
down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to
which it relates.
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor
to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognized in profit or loss, which
is measured as the difference between the carrying amount of the financial liability and the fair value of the equity
instruments issued.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting period.
(o) Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for
its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready
for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalization.
Other borrowing costs are expensed in the period in which they are incurred.
(p) Provisions
Provisions for legal claims, service warranties and make good obligations are recognized when the Group has
a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will
be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognized for future
operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of
an outflow with respect to any one item included in the same class of obligations may be small.
APPENDIX I ACCOUNTANT’S REPORT
– I-32 –


--- page 527 ---
Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at the end of the reporting period. The discount rate used to determine the present value
is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
liability. The increase in the provision due to the passage of time is recognized as interest expense.
(q) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave
that are expected to be settled wholly within 12 months after the end of the period in which the employees render
the related service are recognized in respect of employees’ services up to the end of the reporting period and are
measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current
employee benefit obligations in the consolidated statement of financial position.
(ii) Employment obligations
Housing funds, medical insurances and other social insurances
Employees of the Group in the PRC are entitled to participate in various government-supervised housing
funds, medical insurance and other employee social insurance plan. The Group contributes on a monthly basis
to these funds based on certain percentages of the salaries of the employees, subject to certain ceiling. The
Group’s liability in respect of these funds is limited to the contributions payable in each year. Contributions
to the housing funds, medical insurances and other social insurances are expensed as incurred.
Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal
retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The
Group recognizes termination benefits at the earlier of the following dates: (a) when the Group can no longer
withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that is within
the scope of IAS 37 and involves the payment of termination benefits. In the case of an offer made to
encourage voluntary redundancy, the termination benefits are measured based on the number of employees
expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period
are discounted to their present value.
(r) Share-based payments
Share-based payments can be distinguished into equity-settled share-based payments and cash-settled
share-based payments. Equity-settled share-based payments are transactions of the Group settled through the payment
of shares or other equity instruments in consideration for receiving services.
Equity-settled share-based payments made in exchange for services rendered by employees are measured at the
fair value of equity instruments granted to employees. Instruments which are vested immediately upon the grant are
charged to relevant costs or expenses at the fair value on the date of grant and the capital reserve is credited
accordingly. Instruments of which vesting is conditional upon completion of services or fulfillment of performance
conditions are measured by recognizing services rendered during the period in relevant costs or expenses and
crediting the capital reserve accordingly at the fair value on the date of grant according to the best estimates
conducted by the Group at each date of the end of the reporting period during the pending period. The fair value of
equity instruments is determined using the binomial option pricing model. For details see Note 33. Share-based
payment.
No expense is recognized for awards that do not ultimately vest due to non-fulfillment of non-market
conditions and/or vesting conditions. For the market or non-vesting condition under the share-based payments
agreement, it should be treated as vesting irrespective of whether or not the market or non-vesting condition is
satisfied, provided that other performance condition and/or vesting conditions are satisfied.
Where the terms of an equity-settled share-based payment are modified, as a minimum, services obtained are
recognized as if the terms had not been modified. In addition, an expense is recognized for any modification which
increases the total fair value of the instrument ranted or is otherwise beneficial to the employee as measured at the
date of modification.
APPENDIX I ACCOUNTANT’S REPORT
– I-33 –


--- page 528 ---
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognized for the award is recognized immediately. Where employees or other parties are permitted
to choose to fulfill non-vesting conditions but have not fulfilled during the pending period, equity-settled share-based
payments are deemed cancelled. However, if a new award is substituted for the cancelled award, and designated as
a replacement award on the date that it is granted, the new awards are treated as if they were a modification of the
original award.
Cash-settled share-based payments are those arrangements with employees where terms provide the Group to
settle the transaction in cash. For cash-settled share-based payments, a liability equal to the portion of the services
received is recognized at the current fair value determined at the end of the reporting period until the date of
settlement, with any changes in fair value recognized in profit or loss.
(s) Dividend distribution
Dividend distributed to the shareholders is recognized as a liability in the Historical Financial Information in
the period when the dividends are approved by the entities’ shareholders or directors, where appropriate.
(t) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
 the profit attributable to owners of the Company, excluding any costs of servicing equity other than
ordinary shares
 by the weighted average number of ordinary shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the year and excluding treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account:
 the after-income tax effect of interests and other financing costs associated with dilutive potential
ordinary shares, and
 the weighted average number of additional ordinary shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
(u) Government grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the
grant will be received, and the Group will comply with all attached conditions.
Government grants relating to costs are deferred and recognized in the consolidated statement of profit or loss
over the period necessary to match them with the costs that they are intended to compensate. Government grants
relating to property and equipment, and other non-current assets are included in the non-current liabilities and are
credited to the consolidated statement of profit or loss on a straight- line basis over the expected lives of the related
assets.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 529 ---
3. FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk,
price risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses
on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial
performance. Risk management is carried out by the directors and senior management of the Group.
(a) Market risk
(i) Foreign exchange risk
The Group’s major operational activities are carried out in mainland China and most of the transactions are
denominated in RMB. Some operational activities are carried out in regions/countries including Hong Kong Special
Administrative Region (“Hong Kong”) and United States and relevant transactions are settled in Hong Kong Dollar
(“HKD”) and United States Dollar (“USD”). Foreign exchange risk arises when future commercial transactions or
recognized assets and liabilities are denominated in a currency that is not the respective functional currency of the
Group’s subsidiaries. The Group manages its foreign exchange risk by performing regular reviews of the Group’s net
foreign exchange exposures.
As at December 31, 2021, 2022 and 2023 and June 30, 2024, for the Group’s subsidiaries with RMB as the
functional currency, major monetary assets and liabilities exposed to foreign exchange risk are listed below:
USD
denominated
HKD
denominated
Others
denominated
RMB’000 RMB’000 RMB’000
At December 31, 2021
Cash and cash equivalents ................... 381,815 5,889 720
Trade and other receivables .................. 644,070 38,046 3,408
Trade payables, accruals and other payables ....... (170,486) (8,393) (7,443)
855,399 35,542 (3,315)
At December 31, 2022
Cash and cash equivalents ................... 570,178 31,722 1,210
Trade and other receivables .................. 1,901,329 86,034 48,575
Trade payables, accruals and other payables ....... (981,361) (65,840) (116,583)
1,490,146 51,916 (66,798)
At December 31, 2023
Cash and cash equivalents ................... 254,389 45,245 6,177
Trade and other receivables .................. 649,073 27,900 17,133
Trade payables, accruals and other payables ....... (391,029) (56,703) (62,492)
512,433 16,442 (39,182)
At June 30, 2024
Cash and cash equivalents ................... 288,657 43,908 13,745
Trade and other receivables .................. 622,248 3,544 21,935
Trade payables, accruals and other payables ....... (372,069) (11,346) (99,510)
538,836 36,106 (63,830)
As at December 31, 2021, 2022 and 2023 and June 30, 2024, for the above various US dollar financial assets
and US dollar financial liabilities, if the RMB appreciates or depreciates by 5% against the US dollar and other
factors remain unchanged, the Group will reduce or increase its profit before taxation by approximately
RMB35,628,000, RMB74,507,000, RMB25,622,000 and RMB26,942,000, respectively. Other foreign currencies of
changes have no significant impact on foreign exchange risk.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 530 ---
As at December 31, 2021, 2022 and 2023 and June 30, 2024, for the Group’s subsidiaries with HKD as the
functional currency, major monetary assets and liabilities exposed to foreign exchange risk are listed below:
USD
denominated
RMB
denominated
Other
denominated
RMB’000 RMB’000 RMB’000
At December 31, 2021
Cash and cash equivalents ................... 72,858 13,958 8,444
Trade and other receivables .................. 44,711 5,452 –
Trade payables, accruals and other payables ....... (53,820) (14,745) (14,541)
63,749 4,665 (6,097)
At December 31, 2022
Cash and cash equivalents ................... 692,008 59,509 35,142
Trade and other receivables .................. 1,612,858 251,686 –
Trade payables, accruals and other payables ....... (1,418,533) (32,985) (14,327)
886,333 278,210 20,815
At December 31, 2023
Cash and cash equivalents ................... 384,796 98,862 34,738
Trade and other receivables .................. 95,029 5,846 –
Trade payables, accruals and other payables ....... (97,982) (8,046) (5,148)
381,843 96,662 29,590
At June 30, 2024
Cash and cash equivalents ................... 318,290 78,149 50,306
Trade and other receivables .................. 109,582 7,559 –
Trade payables, accruals and other payables ....... (13,555) (9,819) (22,357)
414,317 75,889 27,949
For the Group’s subsidiaries with HKD as the functional currency, the foreign exchange exposure of their
non-functional currency denominated financial assets and liabilities was mainly derived from the USD. As USD is
pegged against HKD, the foreign exchange exposure of the above-mentioned subsidiaries is not significant.
(ii) Price risk
The Group is exposed to price risk mainly arising from equity investments held by the Group that are classified
either as FVPL or FVOCI that will not be sold within one year.
Sensitivity analysis is performed by management to assess the exposure of the Group’s financial results to
equity price risk of FVPL and FVOCI at the end of each reporting period. If prices of the respective instruments held
by the Group had been 10% higher/lower as at December 31, 2021, 2022 and 2023 and June 30, 2024, profit before
income tax for the Track Record Period would have been approximately RMB87,802,000, RMB101,221,000,
RMB59,000,000 and RMB50,831,000 higher/lower, respectively, as a result of gains/losses on financial instruments
classified as at FVPL, other comprehensive income would have been approximately RMB681,077,000,
RMB736,568,000, RMB948,954,000 and RMB834,429,000 higher/lower as a result of gains/losses on financial
instruments classified as at FVOCI, respectively.
(iii) Interest rate risk
The Group’s interest rate risk primarily arises from long-term interest-bearing borrowings and bonds.
Long-term borrowings issued at variable rates expose the Group to cash flow interest rate risk. Bonds issued at fixed
rates expose the Group to fair value interest rate risk. The Group determines the proportion of borrowings and bonds
issued at variable rates and fixed rates based on the market environment.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 531 ---
The Group has been monitoring the level of interest rates. The increase in the interest rates will increase the
interest costs of borrowings at variable rates, which will further impact the performance of the Group. To hedge
against the variability in the cash flows arising from a change in market interest rates, the Group may enter into
certain interest rate swap contracts to swap variable rates into fixed rates.
The following tables list out the interest rate profiles of the Group’s interest-bearing financial instruments as
at December 31, 2021, 2022 and 2023 and June 30, 2024:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Floating rate instruments
Long-term borrowings ........................ 3,510,829 7,472,010 11,355,241 10,661,466
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Fixed rate instruments
Bonds
– USD denominated ........................ 15,301,680 18,107,960 18,415,020 18,380,414
– RMB denominated ........................ 500,000 1,000,000 500,000 1,500,000
If interest rates of floating rate instruments had been 50 basis points higher or lower with all other variables
held constant, the profit before taxation would be lower or higher approximately RMB17,554,000, RMB37,360,000,
RMB56,776,000 and RMB53,307,000, as at December 31, 2021, 2022 and 2023 and June 30, 2024, respectively.
(b) Credit risk
The carrying amounts of cash and cash equivalents, restricted cash, trade and other receivables and contract
assets, represent the Group’s major exposure to credit risk in relation to financial assets.
(i) Credit risk of cash and bank balances, restricted and pledged bank deposits
To manage this risk arising from cash and cash equivalents and restricted cash, the Group mainly transacts with
banks with high credit rating. There has been no recent history of default in relation to these financial institutions.
The expected credit loss is minimal.
(ii) Credit risk of trade receivables and contract assets
There is no concentration of credit risk with respect to trade receivables from third party customers as the
Group has wide-ranging customers in different industries. In respect of customers with a poor credit history, sending
written payment reminders, shortening or cancellation of credit periods and other follow-up actions are taken to
ensure the overall credit risk of the Group is limited to a controllable extent. In addition, the Group has closely
monitored the credit qualities and the collectability of these receivables at the end of each reporting period to ensure
that adequate impairment losses are made. In this regard, the Directors of the Company consider that the expected
credit risks of them are adequately covered.
The Group has applied the IFRS 9 simplified approach to measuring ECLs which uses a lifetime ECLs for all
trade receivables and contract assets. In calculating the expected credit loss rates, the Group considers historical loss
rates, and adjusts for forward looking macroeconomic data. At the end of each reporting period, the historical
observed default rates are updated and changes in the forward-looking estimates are analyzed.
For trade receivables from related parties, the Group considers the counterparties with relatively good credit
worthiness based on past experience and satisfactory settlement history. The Group assessed the ECLs for trade
receivables from related parties was insignificant during the reporting period.
APPENDIX I ACCOUNTANT’S REPORT
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A default on trade receivables and contract assets is when the counterparty fails to make contractual payments
when they fall due.
Trade receivables and contract assets are written off when there is no reasonable expectation of recovery.
On that basis, the loss allowance as at 31 December 2021, 2022 and 2023 and June 30, 2024 was determined
as follows for both trade receivables and contract assets:
As at December 31, 2021
Gross amount
Loss
allowance
Expected
loss rate
Trade and
note
receivables
Contract
assets
RMB’000 RMB’000 RMB’000 %
Assessed based on grouping
– The third parties ....................... 31,164,003 1,041,152 478,183 1.48%
– The related parties ..................... 70,288 – – –
Assessed individual ........................ 559,591 – 559,591 100.00%
31,793,882 1,041,152 1,037,774
As at December 31, 2022
Gross amount
Loss
allowance
Expected
loss rate
Trade and
note
receivables
Contract
assets
RMB’000 RMB’000 RMB’000 %
Assessed based on grouping
– The third parties ....................... 26,577,105 1,526,396 844,056 3.00%
– The related parties ..................... 60,228 – – –
Assessed individual ........................ 719,588 – 719,588 100.00%
27,356,921 1,526,396 1,563,644
APPENDIX I ACCOUNTANT’S REPORT
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As at December 31, 2023
Gross amount
Loss
allowance
Expected
loss rate
Trade and
note
receivables
Contract
assets
RMB’000 RMB’000 RMB’000 %
Assessed based on grouping
– The third parties ....................... 25,957,399 1,636,144 700,939 2.54%
– The related parties ..................... 124,211 – 23,790 19.15%
Assessed individual ........................ 657,488 – 657,488 100.00%
26,739,098 1,636,144 1,382,217
As at June 30, 2024
Gross amount
Loss
allowance
Expected
loss rate
Trade and
note
receivables
Contract
assets
RMB’000 RMB’000 RMB’000 %
Assessed based on grouping
– The third parties ....................... 26,398,002 2,043,192 820,157 2.88%
– The related parties ..................... 553,681 – 39,929 7.21%
Assessed individual ........................ 482,863 – 482,863 100.00%
27,434,546 2,043,192 1,342,949
(iii) Credit risk of other receivables
Over the term of other receivables, the Group accounts for its credit risk by appropriately providing for
expected credit losses on a timely basis. To assess whether there is a significant increase in credit risk in other
receivables, the Group compares the risk of a default occurring on the assets at the end of each reporting period with
the risk of default at the date of initial recognition. It considers available, reasonable, supportive forward-looking
information. Especially, the following indicators are incorporated:
 external credit rating of the counterparty (as far as available);
 actual or expected significant adverse changes in business, financial or economic conditions that are
expected to cause a significant change to the counterparty’s ability to meet its obligations;
 actual or expected significant changes in the operating results of the counterparty; and
 significant expected changes in the performance and behavior of the counterparty, including changes in
the payment status of the counterparty.
Based on historical experiences, other receivables from related parties were settled within 12 months after
upon maturity hence the expected credit loss is minimal.
APPENDIX I ACCOUNTANT’S REPORT
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As stated in note 2.1(h), impairment on other receivables accounted as amortized cost is measured as either
12-month ECL or lifetime ECL. On such basis, the following table sets forth the loss allowance for other receivables
as at December 31, 2021, 2022 and 2023 and June 30, 2024:
Stage 1 Stage 2 Stage 3
12-month
ECL
Lifetime
ECL
Lifetime
ECL Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2021
Expected credit loss rate ......................... 0.67% N/A 96.33% 5.60%
Gross carrying amounts .......................... 5,413,868 – 293,951 5,707,819
Allowance for impairment ........................ (36,505) – (283,151) (319,656)
As at December 31, 2022
Expected credit loss rate ......................... 0.73% N/A 94.56% 8.82%
Gross carrying amounts .......................... 4,341,791 – 409,803 4,751,594
Allowance for impairment ........................ (31,486) – (387,516) (419,002)
As at December 31, 2023
Expected credit loss rate ......................... 0.76% N/A 96.71% 7.66%
Gross carrying amounts .......................... 4,502,235 – 348,803 4,851,038
Allowance for impairment ........................ (34,101) – (337,315) (371,416)
As at June 30, 2024
Expected credit loss rate ......................... 0.57% N/A 96.76% 8.63%
Gross carrying amounts .......................... 3,880,791 – 354,733 4,235,524
Allowance for impairment ........................ (22,089) – (343,245) (365,334)
(iv) Credit risk of loans and advances
Loans and advances are presented in prepayments, other receivables and other assets in the consolidated
statements of financial position and subject to the expected credit loss model. The Group developed credit policies
and operational implementation rules for loans and advances in accordance with the requirements of relevant state
regulatory authorities, and implemented standardized management over the entire process of credit granting. In
addition, the Group further improved the systems for credit risk monitoring and early warning and defective credit
extension management. The Group actively responded to the changes in the credit environment, regularly analyzed
the situation and dynamic of credit risks and took risk control measures on a forward-looking basis. The Group also
established an optimization management mechanism for defective credit and accelerated the optimization progress of
defective credit to avoid non-performing loans.
APPENDIX I ACCOUNTANT’S REPORT
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(c) Liquidity risk
The Group aims to maintain sufficient cash and cash equivalents. Due to the dynamic nature of the underlying
businesses, the Group maintains flexibility in funding by maintaining adequate balances of such.
The table below analyzes the Group’s financial liabilities by relevant maturity groupings based on the
remaining period since the end of the reporting period to the contractual maturity date. The amounts disclosed in the
table are the contractual undiscounted cash flows or the carrying amount of the financial liabilities to be delivered.
Less than
1 year
Between
1 and
2 years
Between
2 and
5 years
Over
5 years Total
Carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At December 31, 2021
Trade and other payables
(excluding salaries, wages
and benefits payables,
tax payables and other
non-financial liabilities) ..... 34,026,664 24,950 85,412 31,890 34,168,916 34,168,916
Borrowings ............... 26,740,909 5,095,365 6,622,652 10,644,714 49,103,640 45,100,418
Lease liabilities ............ 6,645,721 4,374,170 5,158,881 2,590,999 18,769,771 16,931,554
67,413,294 9,494,485 11,866,945 13,267,603 102,042,327 96,200,888
At December 31, 2022
Trade and other payables
(excluding salaries, wages
and benefits payables,
tax payables and other
non-financial liabilities) ..... 37,013,988 22,431 – – 37,036,419 37,036,419
Borrowings ............... 24,272,047 4,358,007 12,033,720 13,264,559 53,928,333 49,868,308
Lease liabilities ............ 7,101,902 4,179,191 3,797,852 1,976,864 17,055,809 15,179,328
68,387,937 8,559,629 15,831,572 15,241,423 108,020,561 102,084,055
At December 31, 2023
Trade and other payables
(excluding salaries, wages
and benefits payables,
tax payables and other
non-financial liabilities) ..... 35,775,997 563 – – 35,776,560 35,776,560
Borrowings ............... 23,358,218 4,426,187 16,910,274 11,972,971 56,667,650 52,706,015
Lease liabilities ............ 6,102,697 4,569,459 2,529,679 1,784,760 14,986,595 13,808,460
65,236,912 8,996,209 19,439,953 13,757,731 107,430,805 102,291,035
At June 30, 2024
Trade and other payables
(excluding salaries, wages
and benefits payables, tax
payables and other non-
financial liabilities) ........ 33,847,555 – – – 33,847,555 33,847,555
Borrowings ............... 30,448,474 6,658,584 15,090,476 12,922,886 65,120,420 59,635,102
Lease liabilities ............ 6,018,563 4,059,170 2,697,029 1,727,398 14,502,160 13,012,472
70,314,592 10,717,754 17,787,505 14,650,284 113,470,135 106,495,129
APPENDIX I ACCOUNTANT’S REPORT
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3.2 Capital management
The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as
a going concern and to maintain healthy capital ratios in order to support its business and maximize shareholders’
value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions
and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group is not subject
to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for
managing capital during the years ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023
and 2024.
The Group monitors capital on the basis of the asset-liability ratio and the asset-liability ratio as at December
31, 2021, 2022 and 2023 and June 30, 2024 were as follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Total assets ........................ 209,846,688 216,842,707 221,490,655 219,865,931
Total liabilities ...................... 1 1 1,984,735 118,556,658 118,206,995 120,954,581
Asset-liability ratio ................... 53.37% 54.67% 53.37% 55.01%
3.3 Fair value estimation
The table below analyzes the Group’s financial instruments carried at fair value as at December 31, 2021, 2022
and 2023 and June 30, 2024 by level of the inputs to valuation techniques used to measure fair value. Such inputs
are categorized into three levels within a fair value hierarchy as follows:
 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and
 Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (level 3).
As at December 31, 2021, 2022 and 2023 and June 30, 2024, the financial assets measured at fair value on a
recurring basis by the above three levels were analyzed below:
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2021
Financial assets at FVPL ......................... 7 6 653,752 10,608,688 11,262,516
Financial assets at FVOCI ........................ 241,936 401,726 6,167,109 6,810,771
Financial liability at FVPL ....................... – (7,658) – (7,658)
As at December 31, 2022
Financial assets at FVPL ......................... 7 7 34,144 8,363,367 8,397,588
Financial assets at FVOCI ........................ 158,936 190,874 7,079,184 7,428,994
Financial liability at FVPL ....................... – (96,647) – (96,647)
As at December 31, 2023
Financial assets at FVPL ......................... 7 8 3 5 4 7,399,306 7,399,738
Financial assets at FVOCI ........................ 2,418,842 99,978 7,070,693 9,589,513
Financial liability at FVPL ....................... – (92,120) – (92,120)
As at June 30, 2024
Financial assets at FVPL ......................... 7 9 3 6 1 18,555,196 18,555,636
Financial assets at FVOCI ........................ 1,120,309 125,633 7,223,984 8,469,926
Financial liability at FVPL ....................... – (94,614) – (94,614)
APPENDIX I ACCOUNTANT’S REPORT
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The fair value of financial instruments traded in an active market is determined at the quoted market price; and
the fair value of those not traded in an active market is determined by the Group using valuation technique. The
valuation models used mainly comprise discounted cash flow model and market comparable company model. The
major inputs of the valuation models include expected rate of return and discount of lack of market liquidity.
The changes in Level 3 assets are analyzed below:
Financial assets at FVOCI Financial assets at FVPL
Y ear ended December 31,
Six months ended
June 30, Y ear ended December 31,
Six months ended
June 30,
2021 2022 2023 2023 2024 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited) (Unaudited)
Opening balance ......... 4,136,330 6,167,109 7,079,184 7,079,184 7,070,693 7,108,374 10,608,688 8,363,367 8,363,367 7,399,306
Additions ............ 244,045 345,378 54,174 36,411 49,785 118,054,239 151,670,310 94,261,361 57,214,184 41,922,732
Transfer to Level 1 ........ – – (139,189) – – – – (1,466,275) – –
Disposals/settlements ....... (208,230) – – – (2,741) (115,098,767) (154,583,061) (94,296,231) (49,203,659) (30,926,271)
Changes in fair value recognized in
other comprehensive income . . . 2,101,185 (32,291) (32,059) (11,090) (53,867) – – – – –
Changes in fair value recognized in
profit or loss .......... ––––– 545,877 644,337 446,569 277,288 150,447
Currency translation differences . . (106,221) 598,988 108,583 233,060 160,114 (1,035) 23,093 90,515 84,068 8,982
Closing balance .......... 6,167,109 7,079,184 7,070,693 7,337,565 7,223,984 10,608,688 8,363,367 7,399,306 16,735,248 18,555,196
The Group has assessed that the fair values of cash and cash equivalents, restricted bank deposits, trade
receivables, trade and note payables, financial assets included in prepayments and other receivables, financial
liabilities included in other payables and accruals, short-term bank borrowings and short-term debentures
approximate to their carrying amounts largely due to the short-term maturities of these instruments. For the years
ended December 31, 2021 and 2022, and the six months ended June 30, 2023 and 2024, there were no significant
transfers among Level 1, 2 and 3 of fair value measurements. During the year ended December 31, 2023, the Group
transferred a share investment from Level 3 to Level 1 as the underlying investment, initial public offering was
completed during the year.
The following table summarizes the quantitative information about the significant unobservable inputs used in
level 3 fair value measurements and the sensitivity analysis of fair value to the inputs:
Description
Fair value
Valuation
technique(s)
Significant
unobservable
input(s)
Range of inputs
(probability-weighted
average)
Sensitivity of fair
value to
the input(s)
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets at
FVPL
- Structured
deposits and
others ......
9,730,665 7,353,162 6,543,851 17,771,963 Discounted cash flow Expected rate of
return
1.91%-4.33% 10%
increase/decrease
in expected rate
of return would
result in
increase/decrease
in fair value by
0.03%-0.04%
- Equity investment
in unlisted
entities .....
85,243 118,324 135,359 202,874 Recent transaction price N/A N/A N/A
APPENDIX I ACCOUNTANT’S REPORT
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--- page 538 ---
Description
Fair value
Valuation
technique(s)
Significant
unobservable
input(s)
Range of inputs
(probability-weighted
average)
Sensitivity of fair
value to
the input(s)
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
- Investments in
funds and equity-
class securities . .
792,780 891,881 720,096 580,359 Adjusted net assets
value
Adjusted net assets
value
N/A 10%
increase/decrease
in adjusted net
assets value
would result in
increase/decrease
in fair value by
10%
Financial assets at
FVOCI
- Equity investment
in unlisted
entities .....
4,275,449 471,988 4,960,693 5,066,450 Recent transaction price N/A N/A N/A
1,891,660 6,607,196 2,110,000 2,157,534 A combination of
observable and
unobservable inputs
Discount for lack of
marketability
17%-21% 10%
increase/decrease
in discount for
lack of
marketability
would result in
decrease/increase
in fair value by
2.11%-2.49%
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes estimates and judgements that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities in these financial statements. Estimates and judgements are
continually assessed based on historical experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
In the process of applying the Group’s accounting policies, management has made the following judgements
and accounting estimation, which have the significant effect on the amounts recognized in the financial statements.
4.1 Critical accounting estimate and its key assumption
(a) Measurement of the expected credit losses
For financial assets and contract assets at amortized cost, the Group calculates expected credit losses based on
exposure at default and expected credit loss rates.
The Group refers to internal historical information, such as credit losses, and considers the impact of historical
credit loss experience according to current situation and forward-looking information to determine expected credit
loss rates. And management takes the customer’s credit status, credit history, operating status as well as collaterals,
the guarantee ability of the guarantor and other information into consideration.
The Group monitors and reviews relevant assumptions about expected credit losses regularly. Where there is
a difference between the actual bad debts and the original estimate, such difference will affect the Group’s provision
for bad debts of the above assets in the future period.
(b) Estimated impairment of long-term assets (other than goodwill)
The Group tests whether property, plant and equipment, right-of-use assets, investment properties, intangible
assets (other than goodwill) and other non-current assets have been impaired in accordance with the accounting
policy stated in Note 2.1(g) to the consolidated financial statements. The recoverable amount of the cash-generating
unit has been determined based on the higher of its value in use and its fair value less costs of disposal. The cash
flow projections used to determine the value in use of a cash-generating unit is based on significant assumptions, such
as revenue growth rate, long term growth rate, gross margin rate, and discount rate applied to the projected cash
flows. These assumptions may be affected by unexpected changes in future market or economic conditions.
APPENDIX I ACCOUNTANT’S REPORT
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(c) Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. The recoverable amount of
goodwill is determined at higher of fair value less costs of disposal and value in use amount. The calculations of value
in use amount require use of estimates. The cash flow projections used to determine the value in use of a
cash-generating unit is based on significant assumptions, such as revenue growth rate, net profit margins before tax
and interests, and pre-tax discount rate applied to the projected cash flows. These assumptions may be affected by
unexpected changes in future market or economic conditions.
(d) Fair value of financial instruments determined using valuation techniques
Fair value, in the absence of an active market, is estimated by using valuation techniques, applying currently
applicable and sufficiently available data, and the valuation techniques supported by other information, mainly
include market approach and income approach, reference to the recent arm’s length transactions, current market value
of another instrument which is substantially the same, and by using the discounted cash flow analysis and option
pricing models.
When using valuation techniques to determine the fair value of financial instruments, the Group would choose
the input value in consistent with market participants, considering the transactions of related assets and liabilities.
All related observable market parameters are considered in priority, including interest rate, foreign exchange rate,
commodity prices and share prices or index. When related observable parameters are unavailable or inaccessible, the
Group uses unobservable parameters and makes estimates for credit risk, market volatility and liquidity adjustments.
Using different valuation techniques and parameter assumptions may lead to significant difference of fair value
estimation.
(e) Uncertain tax position and recognition of current and deferred income tax assets
The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in
determining the worldwide provision for income taxes. Where the final tax outcome of these matters is different from
the amounts that were initially recorded, such differences will impact current income tax and deferred income tax in
the period in which such determination is made.
Deferred tax assets are recognized for unused tax losses and deductible temporary difference to the extent that
it is probable that taxable profit will be available against which the losses and deductible temporary difference, and
the carry forward of unused tax credits and unused tax losses can be utilized. Significant management judgement is
required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level
of future taxable profits together with future tax planning strategies. To determine the future taxable profits, reference
was made to the latest available profit forecast. The key assumptions adopted in the future taxable profit forecast
include revenue growth rates and gross margin rates.
(f) Assessment of the fair value of identifiable net assets in acquisition transactions and goodwill recognition
As stated in Note 2.1(e), identifiable net assets acquired in a business combinations involving enterprises not
under common control are recognized at the fair value at the acquisition date, and if the combination cost exceeds
the Group’s interest in the fair value of the acquiree’s identifiable net assets, the difference is recognized as goodwill.
The assessment of the fair value of identifiable assets and liabilities involves critical estimates and judgements
from management, in particular, the identification of intangible assets and the evaluation of their fair values, thereby
affecting the recognition of goodwill. The assessment of the fair value of identifiable net assets on the acquisition
date includes the identification of various kinds of assets, the selection of valuation methods, and the forecast of
future cash flows, which involves critical estimates and judgements about the key assumptions including revenue
growth rate, gross profit rate and discount rate. Different inputs used in the key assumptions may lead to significant
differences between fair value estimates.
Significant merger and acquisition transactions for the Track Record Period are discussed in Note 35.
APPENDIX I ACCOUNTANT’S REPORT
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4.2 Critical accounting judgements
(a) Judgements on whether the Group can exercise significant influence on invested entity
The Group adopts equity method to those entities that the Group has significant influence over. In assessing
if the Group has such a kind of influence, management would normally consider one or more of the following facts
and circumstances: (i) share rights of the investee entity; (ii) representation on the board of directors or equivalent
governing body of the investee; (iii) participation in policy-making processes, including participation in decisions
about dividends or other distributions; (iv) material transactions between the entity and its investee; (v) interchange
of managerial personnel; or (vi) provision of essential technical information.
(b) Scope of consolidation
Consolidation is required only if control exists. The Group controls an investee when it has all the following:
(i) power over the investee; (ii) exposure, or rights, to variable returns from its involvement with the investee; and
(iii) the ability to use its power over the investee to affect the amount of the Group’s returns. These three factors
cannot be considered in isolation by the Group in its assessment of control over an investee. Where the factors of
control are not apparent, significant judgement is applied in the assessment, which is based on an overall analysis
of all of the relevant facts and circumstances.
The Group is required to reassess whether it controls the investee if facts and circumstances indicate a change
to one or more of the three factors of control.
5. REVENUE AND SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker (“CODM”). The CODM, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the executive management team that makes strategic
decisions.
(a) CODM reviews the Group’s internal reporting in order to assess performance and allocate resources:
The CODM identifies operating segments based on the internal organization structure, management
requirements and internal reporting system, and discloses segment information of reportable segments which is
determined on the basis of operating segments. An operating segment is a component of the Group that satisfies all
of the following conditions: (1) the component is able to earn revenues and incur expenses from its ordinary
activities; (2) whose operating results are regularly reviewed by the Group’s management to make decisions about
resources to be allocated to the segment and to assess its performance, and (3) for which the information on financial
position, operating results and cash flows is available to the Group. If two or more operating segments have similar
economic characteristics and satisfy certain conditions, they are aggregated into one single operating segment.
The segment businesses are separately presented as the express and freight delivery segment, the intra-city
on-demand delivery segment, and supply chain and international segment. The types of services from which
reportable segments derive revenue are listed below:
 Express and freight delivery segment, which provides time-define express, economy express, cold chain
and pharmaceuticals logistics service, as well as freight service;
 Intra-city on-demand delivery segment, which provides intra-city delivery for merchants and
consumers, and last-mile delivery services;
 Supply chain and international segment, which provides supply chain services, international express
service and international freight forwarding service.
Except for the above business segments, the other segments did not have a material impact on the Group’s
operating outcome, and as such are not separately presented. Management monitors the operating results of the
Group’s business units separately for the purpose of making decisions regarding resource allocation and performance
assessment.
Segment performance is assessed based on key performance indicators. Transfer prices between operating
segments are based on the amount stated in the contracts agreed by both sides.
During the Track Record Period, no revenue from a single customer exceeded 10% or more of the total
revenue.
APPENDIX I ACCOUNTANT’S REPORT
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Due to the merger of the delivery business and the adjustment of organizational structure, the reportable
segments of the Group have changed in 2023. The express delivery segment and the freight delivery segment are
merged as the express and freight delivery segment. The segment information for the years ended December 31, 2021
and 2022 has been restated.
Segment information for the year ended December 31, 2021 is as follows:
Express
and freight
delivery
segment
Intra-city
on-demand
delivery
segment
Supply
chain and
international
segment
Undistributed
units
Inter-
segment
elimination Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Revenue from external customers ..... 160,675,510 5,117,905 39,979,632 1,413,600 – 207,186,647
Inter-segment revenue ............ 4,469,180 3,056,509 474,522 9,465,837 (17,466,048) –
Cost of revenue ............... 142,949,707 8,084,231 36,206,076 9,445,563 (15,276,474) 181,409,103
Profit/(loss) before income tax ...... 6,158,308 (902,586) 1,075,252 1,435,765 (15,883) 7,750,856
Income tax expenses/(credits) ....... 2,453,678 (3,735) 459,978 463,838 (4,997) 3,368,762
Net profit/(loss) ............... 3,704,630 (898,851) 615,274 971,927 (10,886) 4,382,094
Total assets .................. 86,084,379 4,064,825 60,901,366 135,950,893 (77,154,775) 209,846,688
Total liabilities ................ 61,031,675 899,472 34,391,955 67,699,240 (52,037,607) 111,984,735
Depreciation of right-of-use assets
(Note 8) ................... 4,895,430 16,013 761,724 298,510 (194,999) 5,776,678
Depreciation and amortization
(excluding right-of-use assets)
(Note 8) ................... 5,433,844 55,420 753,735 646,469 (11,244) 6,878,224
Net impairment losses/(reversal of
impairment losses) on financial assets
and contract assets ............ 422,004 4,477 190,763 (24,457) (12,936) 579,851
Segment information for the year ended December 31, 2022 is as follows:
Express
and freight
delivery
segment
Intra-city
on-demand
delivery
segment
Supply
chain and
international
segment
Undistributed
units
Inter-
segment
elimination Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Revenue from external customers ..... 169,764,860 6,567,057 89,916,599 1,241,898 – 267,490,414
Inter-segment revenue ............ 7,074,141 3,698,616 700,298 12,070,206 (23,543,261) –
Cost of revenue ............... 152,057,092 9,853,707 82,247,056 11,801,763 (21,481,610) 234,478,008
Profit/(loss) before income tax ...... 8,434,175 (288,847) 2,938,917 (46,779) 370 11,037,836
Income tax expenses/(credits) ....... 2,914,825 (1,944) 993,055 75,290 (304) 3,980,922
Net profit/(loss) ............... 5,519,350 (286,903) 1,945,862 (122,069) 674 7,056,914
Total assets .................. 94,676,009 3,956,639 66,235,754 148,072,567 (96,098,262) 216,842,707
Total liabilities ................ 66,504,698 1,086,136 53,540,703 79,713,800 (82,288,679) 118,556,658
Depreciation of right-of-use assets
(Note 8) ................... 5,800,435 21,799 1,597,267 291,696 (419,837) 7,291,360
Depreciation and amortization
(excluding right-of-use assets)
(Note 8) ................... 6,831,767 78,662 1,551,214 500,387 (11,958) 8,950,072
Net impairment losses/(reversal of
impairment losses) on financial assets
and contract assets ............ 331,656 1,968 384,491 107,231 (176) 825,170
APPENDIX I ACCOUNTANT’S REPORT
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--- page 542 ---
Segment information for the year ended December 31, 2023 is as follows:
Express
and freight
delivery
segment
Intra-city
on-demand
delivery
segment
Supply
chain and
international
segment
Undistributed
units
Inter-
segment
elimination Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Revenue from external customers ..... 186,890,137 7,371,250 62,859,302 1,288,714 – 258,409,403
Inter-segment revenue ............ 12,231,353 5,029,453 733,174 4,430,069 (22,424,049) –
Cost of revenue ............... 171,457,160 11,606,756 58,474,528 4,372,537 (20,135,303) 225,775,678
Profit/(loss) before income tax ...... 10,602,204 48,327 (328,849) 143,788 21,035 10,486,505
Income tax expenses/(credits) ....... 2,149,342 (2,268) 205,652 229,825 (7,655) 2,574,896
Net profit/(loss) ............... 8,452,862 50,595 (534,501) (86,037) 28,690 7,911,609
Total assets .................. 103,171,690 4,038,844 64,308,117 186,550,844 (136,578,840) 221,490,655
Total liabilities ................ 72,928,079 1,218,597 53,658,452 84,432,442 (94,030,575) 118,206,995
Depreciation of right-of-use assets
(Note 8) ................... 5,891,828 27,188 1,707,837 258,621 (672,411) 7,213,063
Depreciation and amortization
(excluding right-of-use assets)
(Note 8) ................... 7,741,137 52,445 1,651,130 683,365 (22,033) 10,106,044
Net (reversal of impairment
losses)/impairment losses on financial
assets and contract assets ........ ( 1 1 1,509) 3,668 82,879 67,481 (75,999) (33,480)
Segment information for the six months ended June 30, 2023 is as follows:
Express
and freight
delivery
segment
Intra-city
on-demand
delivery
segment
Supply
chain and
international
segment
Undistributed
units
Inter-
segment
elimination Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue from external customers ..... 90,058,986 3,406,837 30,283,063 616,712 – 124,365,598
Inter-segment revenue ............ 5,283,237 2,355,281 314,393 7,209,639 (15,162,550) –
Cost of revenue ............... 81,461,676 5,378,602 28,088,020 6,766,077 (13,926,642) 107,767,733
Profit/(loss) before income tax ...... 5,412,546 31,344 (221,230) 146,029 51,661 5,420,350
Income tax expenses ............ 1,292,805 1,030 86,845 130,843 14,587 1,526,110
Net profit/(loss) ............... 4 , 1 19,741 30,314 (308,075) 15,186 37,074 3,894,240
Total assets .................. 100,203,287 3,888,569 64,443,045 152,920,781 (103,415,251) 218,040,431
Total liabilities ................ 68,606,705 986,574 51,662,519 84,017,974 (88,439,410) 116,834,362
Depreciation of right-of-use assets
(Note 8) ................... 2,993,058 13,137 872,028 101,324 (293,265) 3,686,282
Depreciation and amortization
(excluding right-of-use assets)
(Note 8) ................... 3,587,688 30,545 801,513 405,049 (12,970) 4,811,825
Net (reversal of impairment
losses)/impairment losses on financial
assets and contract assets ........ (83,592) 3,921 34,806 40,848 (62,005) (66,022)
APPENDIX I ACCOUNTANT’S REPORT
– I-48 –


--- page 543 ---
Segment information for the six months ended June 30, 2024 is as follows:
Express
and freight
delivery
segment
Intra-city
on-demand
delivery
segment
Supply
chain and
international
segment
Undistributed
units
Inter-
segment
elimination Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Revenue from external customers ..... 96,820,175 4,022,952 32,914,104 652,489 – 134,409,720
Inter-segment revenue ............ 6,340,531 2,855,518 447,518 2,545,639 (12,189,206) –
Cost of revenue ............... 87,693,668 6,407,319 30,636,136 2,472,311 (11,113,153) 116,096,281
Profit/(loss) before income tax ...... 5,842,143 80,572 (236,145) 606,498 26,989 6,320,057
Income tax expenses/(credits) ....... 1,046,410 18,398 338,068 156,427 (168) 1,559,135
Net profit/(loss) ............... 4,795,733 62,174 (574,213) 450,071 27,157 4,760,922
Total assets .................. 106,075,703 4,117,315 64,294,283 162,056,001 (116,677,371) 219,865,931
Total liabilities ................ 71,306,112 1,355,096 56,051,461 91,319,878 (99,077,966) 120,954,581
Depreciation of right-of-use assets
(Note 8) ................... 2,885,910 8,252 836,623 141,397 (443,266) 3,428,916
Depreciation and amortization
(excluding right-of-use assets)
(Note 8) ................... 3,279,143 24,862 808,175 1,250,722 (2,168) 5,360,734
Net (reversal of impairment
losses)/impairment losses on financial
assets and contract assets ........ 41,848 3,835 122,046 19,289 (27,146) 159,872
(b) The Group’s business operates in three main geographical areas, even though they are managed on a
worldwide basis.
The Group’s revenue by geographical areas is analyzed based on the following criteria:
Revenue from operations within the PRC excluding Hong Kong, Macau and Taiwan is classified as within
mainland China operations. Revenue from operations within Hong Kong, Macau and Taiwan regions is classified as
Hong Kong, Macau, Taiwan operations while revenue from operations in other overseas markets is classified as other
international operations.
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Within mainland China .... 189,029,359 208,562,879 223,510,607 107,339,757 115,996,449
Hong Kong, Macau, Taiwan . 5,080,415 10,389,782 9,134,850 4,334,903 4,512,024
Other international ....... 13,076,873 48,537,753 25,763,946 12,690,938 13,901,247
207,186,647 267,490,414 258,409,403 124,365,598 134,409,720
The non-current assets information below is based on the locations of the assets and exclude financial
instruments and deferred tax assets.
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within mainland China ................ 85,441,357 93,479,838 95,919,000 93,823,901
Hong Kong, Macau, Taiwan ............. 5,973,014 5,686,663 5,293,887 5,206,336
Other international ................... 14,170,557 16,360,578 16,575,617 16,528,093
105,584,928 115,527,079 117,788,504 115,558,330
APPENDIX I ACCOUNTANT’S REPORT
– I-49 –


--- page 544 ---
(c) Disaggregation of revenue
In the following table, revenue of the Group from contracts with customers is disaggregated by timing of
satisfaction of performance obligations. The table also includes a reconciliation to the segment information in respect
of revenue of the Group that is disclosed in the operating segment Note 5(a).
Y ear ended December 31, 2021
Logistics
and freight
forwarding
services
Sales of
goods Others Total
RMB’000 RMB’000 RMB’000 RMB’000
Revenue from main operations
Including: At a point in time ................. – 1,764,253 363,090 2,127,343
Over time ...................... 203,690,237 – 887,645 204,577,882
Lease income and others ............ – – 123,143 123,143
203,690,237 1,764,253 1,373,878 206,828,368
Revenue from other operations
Including: At a point in time ................. – – 62,830 62,830
Over time ...................... – – 130,881 130,881
Lease income and others ............ – – 164,568 164,568
– – 358,279 358,279
203,690,237 1,764,253 1,732,157 207,186,647
Y ear ended December 31, 2022
Logistics
and freight
forwarding
services
Sales of
goods Others Total
RMB’000 RMB’000 RMB’000 RMB’000
Revenue from main operations
Including: At a point in time ................. – 3,899,692 351,610 4,251,302
Over time ...................... 262,079,740 – 561,990 262,641,730
Lease income and others ............ – – 229,734 229,734
262,079,740 3,899,692 1,143,334 267,122,766
Revenue from other operations
Including: At a point in time ................. – – 69,014 69,014
Over time ...................... – – 83,124 83,124
Lease income and others ............ – – 215,510 215,510
– – 367,648 367,648
262,079,740 3,899,692 1,510,982 267,490,414
APPENDIX I ACCOUNTANT’S REPORT
– I-50 –


--- page 545 ---
Y ear ended December 31, 2023
Logistics
and freight
forwarding
services
Sales of
goods Others Total
RMB’000 RMB’000 RMB’000 RMB’000
Revenue from main operations
Including: At a point in time .............. – 5,626,072 306,401 5,932,473
Over time ................... 251,127,665 – 619,037 251,746,702
Lease income and others ......... – – 307,405 307,405
251,127,665 5,626,072 1,232,843 257,986,580
Revenue from other operations
Including: At a point in time .............. – – 100,907 100,907
Over time ................... – – 136,465 136,465
Lease income and others ......... – – 185,451 185,451
– – 422,823 422,823
251,127,665 5,626,072 1,655,666 258,409,403
Six months ended June 30, 2023
Logistics
and freight
forwarding
services
Sales of
goods Others Total
RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue from main operations
Including: At a point in time .............. – 2,754,076 198,951 2,953,027
Over time ................... 120,855,099 – 188,156 121,043,255
Lease income and others ......... – – 152,156 152,156
120,855,099 2,754,076 539,263 124,148,438
Revenue from other operations
Including: At a point in time .............. – – 33,265 33,265
Over time ................... – – 75,201 75,201
Lease income and others ......... – – 108,694 108,694
– – 217,160 217,160
120,855,099 2,754,076 756,423 124,365,598
Six months ended June 30, 2024
Logistics
and freight
forwarding
services
Sales of
goods Others Total
RMB’000 RMB’000 RMB’000 RMB’000
Revenue from main operations
Including: At a point in time .............. – 3,216,236 208,598 3,424,834
Over time ................... 130,207,965 – 413,658 130,621,623
Lease income and others ......... – – 174,027 174,027
130,207,965 3,216,236 796,283 134,220,484
APPENDIX I ACCOUNTANT’S REPORT
– I-51 –


--- page 546 ---
Six months ended June 30, 2024
Logistics
and freight
forwarding
services
Sales of
goods Others Total
RMB’000 RMB’000 RMB’000 RMB’000
Revenue from other operations
Including: At a point in time .............. – – 34,616 34,616
Over time ................... – – 72,947 72,947
Lease income and others ......... – – 81,673 81,673
– – 189,236 189,236
130,207,965 3,216,236 985,519 134,409,720
6. OTHER INCOME
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Government grants
(Note (a)) ............ 1,787,501 2,255,563 1,983,551 752,237 404,911
Dividend income ......... 31,853 13,811 2,438 2,535 426
Others ................ 270,180 225,285 295,213 125,632 167,413
2,089,534 2,494,659 2,281,202 880,404 572,750
(a) The government grants were mainly incentives provided by local government authorities in the PRC,
including various forms of government financial incentives and tax preferences, to reward the Group’s
support and contribution to the development of local economies. As at December 31, 2021, 2022 and
2023 and June 30, 2024, there were no unfulfilled conditions or contingencies relating to these
government grants.
7. OTHER GAINS, NET
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Gains/(losses) on disposal of
investments in associates
and joint ventures ...... 68,695 282,906 21,441 (1,941) 45,307
Gains on disposal of
investments in subsidiaries
(Note 36(b)) .......... 1,808,638 32,314 268,204 244,982 91,950
Fair value changes in
financial assets at FVPL . 553,638 660,867 529,513 290,377 294,669
(Losses)/gains on disposal of
property, plant and
equipment, right-of-use
assets and other non-
current assets ......... (195,841) (52,305) (53,891) (64,740) 39,097
Impairment of inventories,
property, plant and
equipment and other non-
current assets ......... (7,106) (55,212) (62,390) (2,026) (1,309)
Net exchange (losses)/gains . (103,533) 117,314 (96,381) (133,258) 4,703
Others ................ (167,956) (154,622) (198,022) (76,322) (180,624)
1,956,535 831,262 408,474 257,072 293,793
APPENDIX I ACCOUNTANT’S REPORT
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--- page 547 ---
8. EXPENSES BY NATURE
Expenses included in cost of revenue, selling and marketing expenses, general and administrative expenses and
research and development expenses are analyzed as follows:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Labour outsourcing cost .... 71,489,843 77,832,877 88,615,879 41,999,886 46,426,202
Transportation expenses .... 34,888,921 68,640,219 44,578,173 21,120,397 24,040,343
Transportation outsourcing
cost ................ 35,965,273 38,204,742 38,352,035 18,187,306 18,725,511
Employee benefit expenses
(Note 9) ............. 27,830,922 31,445,636 31,776,779 16,270,441 16,170,240
Depreciation of right-of-use
assets (Note 15) ....... 5,776,678 7,291,360 7,213,063 3,686,282 3,428,916
Depreciation and
amortization (excluding
right-of-use assets) ...... 6,878,224 8,950,072 10,106,044 4,811,825 5,360,734
Rent and venue usage
expenses ............. 4,473,486 6,481,654 7,100,757 3,381,074 3,599,946
Auditor’s remuneration .... 47,147 66,148 64,508 26,959 18,899
Listing expenses ........ – – 5 7 9 – –
Others ................ 14,166,622 18,266,998 21,010,813 9,851,266 10,147,109
201,517,116 257,179,706 248,818,630 119,335,436 127,917,900
(a) Government grants amounting to approximately RMB401,821,000, RMB214,306,000,
RMB164,944,000, RMB97,625,000 and RMB511,053,000, respectively, had been recognized as
deduction in the cost of revenue for the years ended December 31, 2021, 2022 and 2023 and the six
months ended June 30, 2023 and 2024.
9. EMPLOYEE BENEFIT EXPENSES
(a) Employee benefit expenses are analyzed as follows:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Salaries, wages and bonuses . 22,787,118 26,185,228 26,127,739 13,338,273 13,461,623
Share-based compensation
expenses (Note 33) ...... 548,329 157,684 543,046 344,053 59,037
Contributions to pension
plans ............... 1,093,173 1,288,190 1,301,124 646,349 699,571
Other employee benefits . . . 3,402,302 3,814,534 3,804,870 1,941,766 1,950,009
27,830,922 31,445,636 31,776,779 16,270,441 16,170,240
APPENDIX I ACCOUNTANT’S REPORT
– I-53 –


--- page 548 ---
(b) Directors’ and supervisors’ remuneration
Fees
Salaries, wages,
bonuses and
benefits in kind
(including
contributions to
pension plans)
Share-based
compensation
expense Total
RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended December 31, 2021
Executive Directors
M r .W a n gW e i.................... – 1,122 – 1,122
Mr. Ho Chit (i) ................... 8 4 1,667 – 1,751
Mr. Lin Zheying (vi) ................ – – – –
Mr. Zhang Yichen (vi) .............. – – – –
Mr. Deng Weidong (vi) .............. – – – –
Mr. Liu Chengwei (vi) .............. – – – –
Mr. Chan Fei (vi) .................. 5 8 6,278 – 6,336
Mr. Lo Sai Lai (vi) ................. –– – –
Ms. NG Wai Ting (ii) ............... – 2,953 – 2,953
Independent non-executive Directors
Mr. Zhou Zhonghui (viii) ............ – 680 – 680
Mr. Jin Li (viii) ................... – 680 – 680
Mr. Dicky Perter Yip (viii) ........... – 680 – 680
Mr. Chow Wing Kin Anthony (viii) ..... – 680 – 680
Supervisors
Mr. Shum Tze Leung (xi) ............ – 1,244 – 1,244
Ms. Wang Jia (iii) ................. – 5 3 9 – 5 3 9
Mr. Liu Jilu ...................... – – – –
Ms. Li Juhua ..................... – 1,282 – 1,282
Ms. Chu Y an (iii) .................. – 7 0 8 – 7 0 8
Mr. Sun Xun (iv) .................. – 1 4 7 – 1 4 7
Ms. Li Li (iv) .................... – 8 5 8 – 8 5 8
Total .......................... 142 19,518 – 19,660
Fees
Salaries, wages,
bonuses and
benefits in kind
(including
contributions to
pension plans)
Share-based
compensation
expense Total
RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended December 31, 2022
Executive Directors
M r .W a n gW e i.................... – 7 0 2 – 7 0 2
Mr. Ho Chit (i) ................... 4 0 4 6,986 2,287 9,677
Ms. Wang Xin (v) ................. – 8 4 2,287 2,371
Mr. Zhang Dong (xii) ............... – 6 5 2,287 2,352
Mr. Lin Zheying (vi) ................ – – – –
Mr. Zhang Yichen (vi) .............. – – – –
Mr. Deng Weidong (vi) .............. – – – –
Mr. Liu Chengwei (vi) .............. – – – –
Mr. Chan Fei (vi) .................. 2 8 4 3,683 2,287 6,254
Mr. Lo Sai Lai (vi) ................. – – – –
Independent non-executive Directors
Mr. CHAN Charles Sheung Wai (vii) .... – 2 2 – 2 2
Mr. Lee Carmelo Ka Sze (vii) ......... – 2 2 – 2 2
APPENDIX I ACCOUNTANT’S REPORT
– I-54 –


--- page 549 ---
Fees
Salaries, wages,
bonuses and
benefits in kind
(including
contributions to
pension plans)
Share-based
compensation
expense Total
RMB’000 RMB’000 RMB’000 RMB’000
Dr. Ding Yi (vii) .................. – 2 2 – 2 2
Mr. Zhou Zhonghui (viii) ............ – 6 8 0 – 6 8 0
Mr. Jin Li (viii) ................... – 6 8 0 – 6 8 0
Mr. Dicky Perter Yip (viii) ........... – 6 8 0 – 6 8 0
Mr. Chow Wing Kin Anthony (viii) ..... – 6 8 0 – 6 8 0
Supervisors
Mr. Shum Tze Leung (xi) ............ – 6 3 4 – 6 3 4
M s .W a n gJ i a ..................... – 8 9 0 – 8 9 0
Mr. Liu Jilu ...................... – – – –
Ms. Li Juhua ..................... – 1,380 – 1,380
Mr. Zhang Shun (ix) ................ – 1 6 3 5 6 3 7 2
Ms. Chu Y an (x) .................. – 1,862 – 1,862
Total .......................... 688 19,088 9,504 29,280
Fees
Salaries, wages,
bonuses and
benefits in kind
(including
contributions to
pension plans)
Share-based
compensation
expense Total
RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended December 31, 2023
Executive Directors
M r .W a n gW e i.................... – 1,161 – 1,161
Mr. Ho Chit (i) ................... 4 2 6 6,240 2,945 9,611
Ms. Wang Xin (v) ................. – 3,120 2,945 6,065
Mr. Zhang Dong (xii) ............... – 2,626 2,945 5,571
Independent non-executive Directors
Mr. CHAN Charles Sheung Wai (vii) .... – 6 8 0 – 6 8 0
Mr. Lee Carmelo Ka Sze (vii) ......... – 6 8 0 – 6 8 0
Dr. Ding Yi (vii) .................. – 6 8 0 – 6 8 0
Supervisors
Mr. Shum Tze Leung (xi) ............ – 6 4 1 – 6 4 1
Ms. Wang Jia (iii) ................. – 1,148 – 1,148
Ms. Li Juhua ..................... – 1,692 – 1,692
Mr. Zhang Shun (ix) ................ – 7 6 6 – 7 6 6
Mr. Liu Jilu ...................... – – – –
Total .......................... 426 19,434 8,835 28,695
APPENDIX I ACCOUNTANT’S REPORT
– I-55 –


--- page 550 ---
Fees
Salaries, wages,
bonuses and
benefits in kind
(including
contributions to
pension plans)
Share-based
compensation
expense Total
RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Six months ended June 30, 2023
Executive Directors
M r .W a n gW e i.................... – 5 8 1 – 5 8 1
Mr. Ho Chit (i) ................... – 3,160 1,918 5,078
Ms. Wang Xin (v) ................. – 1,591 1,918 3,509
Mr. Zhang Dong (xii) ............... – 1,339 1,918 3,257
Independent non-executive Directors
Mr. CHAN Charles Sheung Wai (vii) .... – 3 4 0 – 3 4 0
Mr. Lee Carmelo Ka Sze (vii) ......... – 3 4 0 – 3 4 0
Dr. Ding Yi (vii) .................. – 3 4 0 – 3 4 0
Supervisors
Mr. Shum Tze Leung (xi) ............ – 320 – 320
M s .W a n gJ i a ..................... – 5 7 4 – 5 7 4
Ms. Li Juhua ..................... – 8 3 2 – 8 3 2
Mr. Zhang Shun (ix) ................ – 383 – 383
Mr. Liu Jilu ...................... – – – –
Total .......................... – 9,800 5,754 15,554
Fees
Salaries, wages,
bonuses and
benefits in kind
(including
contributions to
pension plans)
Share-based
compensation
expense Total
RMB’000 RMB’000 RMB’000 RMB’000
Six months ended June 30, 2024
Executive Directors
M r .W a n gW e i.................... – 5 8 1 – 5 8 1
Mr. Ho Chit (i) ................... – 3,979 1,153 5,132
Ms. Wang Xin (v) ................. – 1,655 168 1,823
Mr. Zhang Dong (xii) ............... – 1,685 1,153 2,838
Independent non-executive Directors
Mr. CHAN Charles Sheung Wai (vii) .... – 3 4 0 – 3 4 0
Mr. Lee Carmelo Ka Sze (vii) ......... – 3 4 0 – 3 4 0
Dr. Ding Yi (vii) .................. – 3 4 0 – 3 4 0
Supervisors
Mr. Shum Tze Leung (xi) ............ – 315 – 315
Ms. Wang Jia (iii) ................. – 6 4 7 – 6 4 7
Ms. Li Juhua ..................... – 9 5 0 – 9 5 0
Mr. Zhang Shun (ix) ................ – 3 1 4 – 3 1 4
Mr. Liu Jilu ...................... – – – –
Total .......................... – 11,146 2,474 13,620
(i) Mr. Ho Chit was appointed as the executive director of the Company on November 15, 2021.
(ii) Ms. Ng Wai Ting resigned as the executive director of the Company on September 28, 2021.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 551 ---
(iii) Ms. Chu Y an and Ms. Wang Jia were appointed as supervisors of the Company on April 8, 2021 and
April 9, 2021, respectively.
(iv) Mr. Sun Xun and Ms. Li Li resigned as supervisors of the Company on March 16, 2021.
(v) Ms. Wang Xin was appointed as an executive director on December 20, 2022.
(vi) Mr. Lin Zheying, Mr. Zhang Yichen, Mr. Deng Weidong, Mr. Liu Chengwei, Mr. Chan Fei, and Mr. Lo
Sai Lai retired as executive directors on December 20, 2022.
(vii) Mr. CHAN Charles Sheung Wai, Mr. Lee Carmelo Ka Sze and Dr. Ding Yi were appointed as
independent non-executive directors on December 20, 2022.
(viii) Mr. Zhou Zhonghui, Mr. Jin Li, Mr. Dicky Perter Yip and Mr. Chow Wing Kin Anthony retired as
independent non-executive directors on December 20, 2022.
(ix) Mr. Zhang Shun was appointed as supervisor on December 20, 2022.
(x) Ms. Chu Y an retired as supervisor on December 20, 2022.
(xi) Mr. Shum Tze Leung resigned as supervisor on May 7, 2024.
(xii) Mr. Zhang Dong was appointed as an executive director on December 20, 2022 and resigned as an
executive director on June 26, 2024.
(c) Five highest paid individuals
The five individuals whose emoluments were the highest in the Group for the years ended December 31, 2021,
2022 and 2023 and the six months ended June 30, 2023 and 2024 include 1, 2, 3, 3 and 2 directors respectively whose
emoluments are reflected in the analysis shown in Note 9(b), respectively. The emoluments paid to the remaining 4,
3, 2, 2 and 3 individuals during the years ended December 31, 2021, 2022 and 2023 and the six months ended June
30, 2023 and 2024, respectively are as follows:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Salaries, wages, bonuses and
benefits in kind (including
contributions to pension
plans) ............... 15,916 16,833 6,142 3,688 6,137
Share-based compensation
expenses ............. – 6,860 5,890 1,368 2,439
15,916 23,693 12,032 5,056 8,576
The emoluments of the above individuals fell within the following bands:
Number of individuals
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
(Unaudited)
HK$2,000,001 to
HK$2,500,000 ........ ––––2
HK$3,000,001 to
HK$3,500,000 ........ ––––1
HK$3,500,001 to
HK$4,000,000 ......... –––1–
APPENDIX I ACCOUNTANT’S REPORT
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--- page 552 ---
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
(Unaudited)
HK$4,000,001 to
HK$4,500,000 ......... –––1–
HK$4,500,001 to
HK$5,000,000 ......... 3––––
HK$5,000,001 to
HK$5,500,000 ......... 1––––
HK$6,000,001 to
HK$6,500,000 ......... ––1––
HK$7,000,001 to
HK$7,500,000 ......... ––1––
HK$8,000,001 to
HK$8,500,000 ......... –2–––
HK$11,000,001 to
HK$11,500,000 ........ –1–––
10. FINANCE INCOME AND COSTS
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Finance income:
Interest income on deposits
in financial institutions . . . 187,794 345,662 633,373 292,849 415,064
Finance costs:
Interest expenses on
borrowings ........... 1,015,357 1,570,293 1,808,850 866,130 997,654
Interest expenses on lease
liabilities (Note 15(b)) . . . 553,613 609,652 564,374 289,013 262,301
Less: Interest capitalized . . . (6,007) (125,585) (103,524) (62,470) (29,037)
1,562,963 2,054,360 2,269,700 1,092,673 1,230,918
Finance costs, net ....... 1,375,169 1,708,698 1,636,327 799,824 815,854
The average capitalization rates for the years ended December 31, 2021, 2022 and 2023 and the six months
ended June 30, 2023 and 2024 used to determine the amount of borrowing costs eligible for capitalization were
4.61%, 2.24%, 2.75%, 2.75% and 2.37%, respectively.
11. INCOME TAX EXPENSE
The following table sets forth the component of income tax expense of the Group for the years ended December
31, 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024, respectively:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current income tax ....... 2,848,895 3,948,002 3,340,596 1,606,404 1,421,021
Deferred income tax
(Note 18) ............ 519,867 32,920 (765,700) (80,294) 138,114
3,368,762 3,980,922 2,574,896 1,526,110 1,559,135
APPENDIX I ACCOUNTANT’S REPORT
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Reconciliation between income tax expenses and profit before income tax at applicable tax rates for the years
ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Profit before income tax . . . 7,750,856 11,037,836 10,486,505 5,420,350 6,320,057
Tax at the statutory tax rate
of 25% (Note (a)) ...... 1,937,714 2,759,459 2,621,626 1,355,088 1,580,014
Effect of different tax rates
available to different
jurisdictions (Note (b)) . . . (161,640) (190,484) (211,891) (139,095) (83,097)
Tax effect of non-taxable
income .............. (228,428) (215,471) (109,495) (105,771) (42,290)
Adjustments of prior years . . (28,965) (38,780) (32,451) (20,207) (19,336)
Tax effect of non-deductible
expenses ............. 217,891 246,471 296,602 82,601 136,854
Tax effect of preferential tax
rate (Note (a)) ......... (185,747) (322,841) (364,417) (78,994) (77,079)
Tax losses and temporary
differences not
recognized ........... 1,472,000 1,353,001 879,651 571,816 348,380
Reversal of previously
recognized tax losses and
temporary differences .... 429,211 518,108 30,752 – 27,527
Utilization of previously
unrecognized tax losses
and temporary differences . (60,088) (85,016) (378,149) (139,328) (213,421)
Recognition of tax losses
and temporary differences
not recognized in prior
years ............... (23,186) (43,525) (157,332) – (98,417)
3,368,762 3,980,922 2,574,896 1,526,110 1,559,135
(a) PRC corporate income tax (“PRC CIT”)
The income tax rate applicable to the principal subsidiaries in Mainland China is 25%, except for certain
subsidiaries which enjoy a preferential income tax rate.
For the years ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024,
several subsidiaries in PRC were qualified as small and micro-sized enterprises, which enjoyed a corporate income
tax rate of 2.5%-10%.
Besides, certain Group’s subsidiaries benefit from a preferential tax rate of 15% under the CIT Law if they are
qualified as high and new technology enterprises under relevant regulations or located in applicable PRC regions,
such as certain western regions and special economic zone, as specified in the relevant catalogue of encouraged
industries, subject to certain general restrictions described in the CIT Law and the related regulations.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 554 ---
(b) Corporate income tax in Hong Kong and other jurisdictions
(i) Hong Kong profits tax
Hong Kong profits tax has been provided for at the rate of 8.25% on assessable profits up to HK$2,000,000
and 16.5% on any assessable profits over HK$2,000,000 for the Track Record Period.
(ii) Corporate income tax in other jurisdictions
Income tax on profit arising from other jurisdictions, including Macau, Singapore, Japan, South Korea, the
United States and Thailand, has been calculated on the estimated assessable profit for the year at the respective rates
prevailing in the relevant jurisdictions, ranging from 12% to 24% for the Track Record Period.
(c) OECD Pillar Two model rules
The Group is within the scope of the Pillar Two model rules released by the Organization for Economic
Co-operation and Development (“OECD”). The Pillar Two legislation had become effective in certain jurisdictions
on January 1, 2024 during the Track Record Period. The Group applies the exception to recognizing and disclosing
information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the
amendments to IAS 12. Under the Pillar Two legislation, the Group is liable to pay a top-up tax for difference
between its Global Anti-Base Erosion (“GloBE”) effective tax rate in each jurisdiction and the 15% minimum rate.
The Group management’s assessment indicates that the quantitative impact of the Pillar Two legislation is
insignificant to the Group.
12. DIVIDENDS
Dividends declared and paid to the equity shareholders of the Company for the years ended December 31,
2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024 are as follows:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Final dividend in respect of
the previous year, declared
and paid during the
following year
(tax inclusive) ........ 1,499,992 874,518 1,213,616 1,213,616 2,889,210
Dividend per share (RMB
cents) ............... 3 3 1 8 2 5 2 5 6 0
In addition to the above dividends, an interim dividend for the six months ended June 30, 2024 of RMB40 cents
per ordinary share (tax inclusive) and a special dividend of RMB1 per ordinary share (tax inclusive) were approved
by the shareholders at the first extraordinary general meeting on October 29, 2024. The dividends were not
recognized as liabilities as at June 30, 2024.
13. EARNINGS PER SHARE
(a) Basic
Basic earnings per share (“EPS”) is calculated by dividing the profit attributable to owners of the Company
by the weighted average number of ordinary shares in issue during the Track Record Period.
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
(Unaudited)
Profit attributable to owners
of the Company
(RMB’000) ........... 4,731,979 6,227,058 8,234,493 4,176,282 4,806,714
Weighted average number of
shares in issue ......... 4,603,725,167 4,868,676,530 4,850,497,640 4,854,831,499 4,829,672,799
Basic EPS (RMB per share) . 1.03 1.28 1.70 0.86 1.00
APPENDIX I ACCOUNTANT’S REPORT
– I-60 –


--- page 555 ---
(b) Diluted
The share options granted by the Company have potential dilutive effect on the EPS. Diluted EPS is calculated
by adjusting the weighted average number of ordinary shares outstanding by the assumption of the conversion of all
potential dilutive ordinary shares arising from share options. For the six months ended June 30, 2024, the share
options granted by the Company had anti-dilutive effect on the EPS.
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
(Unaudited)
Profit attributable to
owners of the
Company
(RMB’000) ...... 4,731,979 6,227,058 8,234,493 4,176,282 4,806,714
Profit attributable to
owners of the
Company for the
calculation of
Diluted EPS
(RMB’000) ...... 4,731,979 6,227,058 8,234,493 4,176,282 4,806,714
Weighted average
number of shares
in issue ......... 4,603,725,167 4,868,676,530 4,850,497,640 4,854,831,499 4,829,672,799
Adjustment for share
options ......... – 5,063,256 4,484,314 10,249,816 –
Weighted average
number of shares
for the calculation
of Diluted EPS . . . 4,603,725,167 4,873,739,786 4,854,981,954 4,865,081,315 4,829,672,799
Diluted EPS
(RMB per share) . . 1.03 1.28 1.70 0.86 1.00
APPENDIX I ACCOUNTANT’S REPORT
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--- page 556 ---
14. PROPERTY, PLANT AND EQUIPMENT
Freehold
land and
buildings
Aircraft,
aircraft
engines,
rotables and
high-value
maintenance
Machinery and
equipment
Transportation
vehicles
Computers and
electronic
equipment
Office and
other
equipment
Leasehold
improvements
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost
At January 1, 2021 ........... 7,705,662 9,171,985 4,456,899 5,475,630 3,615,717 6,171,337 3,891,525 5,379,854 45,868,609
Additions (Note (c)) ........... 1,554,841 182,844 442,803 1,203,826 847,928 411,226 103,976 15,239,042 19,986,486
Business combinations .......... 5,854,286 – 2,299,823 1,000,553 783,226 1,018,850 509,851 468,618 11,935,207
Disposals ................... (12,881) (152,030) (149,073) (844,015) (336,997) (372,241) (234,588) (11,553) (2,113,378)
Disposal of subsidiaries ......... (1,663,999) – (5,412) – (24,081) (2,103) (8,085) (288,613) (1,992,293)
Transfer/reclassification ......... 1,726,748 1,991,236 1,884,117 195,491 46,036 3,005,293 1,309,940 (12,216,145) (2,057,284)
Currency translation differences . . . (78,260) – (20,279) (20,292) (13,615) (14,587) (7,802) – (154,835)
At December 31, 2021 ......... 15,086,397 11,194,035 8,908,878 7,011,193 4,918,214 10,217,775 5,564,817 8,571,203 71,472,512
Accumulated depreciation
At January 1, 2021 ........... 870,501 3,504,465 1,178,125 3,680,986 2,331,366 2,705,472 2,594,327 – 16,865,242
Charge for the year (Note (b)) .... 269,946 1,065,352 474,482 996,388 730,260 1,094,167 790,229 – 5,420,824
Business combinations .......... 693,882 – 919,449 543,972 524,446 631,638 216,261 – 3,529,648
Disposals ................... (25,727) (130,542) (81,166) (781,147) (281,262) (283,357) (179,519) – (1,762,720)
Disposal of subsidiaries ......... (181,862) – (384) – (12,176) (316) (5,914) – (200,652)
Transfer/reclassification ......... 7,149 – (76,627) 2,088 103 74,436 – – 7,149
Currency translation differences . . . (6,063) – (1,200) (7,695) (7,402) (11,245) (3,683) – (37,288)
At December 31, 2021 ......... 1,627,826 4,439,275 2,412,679 4,434,592 3,285,335 4,210,795 3,411,701 – 23,822,203
Net book value
At December 31, 2021 (Note (a)) .. 13,458,571 6,754,760 6,496,199 2,576,601 1,632,879 6,006,980 2,153,116 8,571,203 47,650,309
APPENDIX I ACCOUNTANT’S REPORT
– I-62 –


--- page 557 ---
Freehold
land and
buildings
Aircraft,
aircraft
engines,
rotables and
high-value
maintenance
Machinery and
equipment
Transportation
vehicles
Computers and
electronic
equipment
Office and
other
equipment
Leasehold
improvements
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost
As at January 1, 2022 ......... 15,086,397 11,194,035 8,908,878 7,011,193 4,918,214 10,217,775 5,564,817 8,571,203 71,472,512
Additions (Note (c)) ........... 1,127,848 140,452 482,359 1,050,894 805,552 397,571 145,557 12,409,834 16,560,067
Business combinations .......... 1 1,082 – 6,134 2,230 8,200 8,764 4,848 – 41,258
Disposals ................... (13) (70,253) (245,140) (797,371) (638,286) (529,045) (116,079) (45,782) (2,441,969)
Disposal of subsidiaries ......... (279,448) – (883) (172) (339) (2,561) (2,328) – (285,731)
Transfer/reclassification ......... 4,425,032 2,079,544 1,746,892 16,253 12,538 816,237 785,575 (9,784,250) 97,821
Currency translation differences . . . 366,757 – 152,266 77,786 39,939 56,137 32,637 – 725,522
As at December 31, 2022 ....... 20,737,655 13,343,778 11,050,506 7,360,813 5,145,818 10,964,878 6,415,027 11,151,005 86,169,480
Accumulated depreciation
As at January 1, 2022 ......... 1,627,826 4,439,275 2,412,679 4,434,592 3,285,335 4,210,795 3,411,701 – 23,822,203
Charge for the year (Note (b)) .... 505,898 1,170,795 850,448 1,074,432 705,541 1,637,702 994,873 – 6,939,689
Business combinations .......... – – 6,067 663 4,895 7,525 1,589 – 20,739
Disposals ................... (13) (33,028) (141,927) (708,837) (428,779) (411,367) (97,891) – (1,821,842)
Disposal of subsidiaries ......... (14,313) – (196) (146) (157) (916) (637) – (16,365)
Transfer/reclassification ......... 34,242 – – – – – – – 34,242
Currency translation differences . . . 54,818 – 83,407 43,274 28,836 36,311 8,989 – 255,635
As at December 31, 2022 ....... 2,208,458 5,577,042 3,210,478 4,843,978 3,595,671 5,480,050 4,318,624 – 29,234,301
Accumulated impairment
As at January 1, 2022 ......... – – – – – – – – –
Charge for the year ............ – – 1,633 – – 28,734 – 1,145 31,512
As at December 31, 2022 ....... – – 1,633 – – 28,734 – 1,145 31,512
Net book value
As at December 31, 2022
(Note (a)) ................. 18,529,197 7,766,736 7,838,395 2,516,835 1,550,147 5,456,094 2,096,403 11,149,860 56,903,667
APPENDIX I ACCOUNTANT’S REPORT
– I-63 –


--- page 558 ---
Freehold
land and
buildings
Aircraft,
aircraft
engines,
rotables and
high-value
maintenance
(Note (d))
Machinery and
equipment
Transportation
vehicles
Computers and
electronic
equipment
Office and
other
equipment
Leasehold
improvements
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost
As at January 1, 2023 ......... 20,737,655 13,343,778 11,050,506 7,360,813 5,145,818 10,964,878 6,415,027 11,151,005 86,169,480
Additions (Note (c)) ........... 1,272,496 343,764 346,663 1,189,776 425,863 381,899 135,955 8,109,500 12,205,916
Business combinations .......... 84,384 – 15,557 3,884 2,924 5,204 – – 111,953
Disposals ................... (22,595) (385,452) (304,089) (1,144,248) (588,257) (530,076) (114,085) (94,900) (3,183,702)
Disposal of subsidiaries ......... (44,337) – (18,218) (2,652) (8,462) (39,382) (49,432) – (162,483)
Transfer/reclassification ......... 7,096,850 2,194,943 3,838,146 399 134,166 69,534 938,141 (15,115,397) (843,218)
Currency translation differences . . . 60,886 – 70,881 26,979 13,971 (12,604) 10,214 – 170,327
As at December 31, 2023 ....... 29,185,339 15,497,033 14,999,446 7,434,951 5,126,023 10,839,453 7,335,820 4,050,208 94,468,273
Accumulated depreciation
As at January 1, 2023 ......... 2,208,458 5,577,042 3,210,478 4,843,978 3,595,671 5,480,050 4,318,624 – 29,234,301
Charge for the year (Note (b)) .... 695,828 1,361,913 1,253,916 1,011,297 725,963 1,588,891 974,378 – 7,612,186
Business combinations .......... 17,726 – 10,726 3,479 2,749 4,380 – – 39,060
Disposals ................... (12,780) (295,085) (145,085) (1,061,855) (549,407) (415,938) (66,885) – (2,547,035)
Disposal of subsidiaries ......... (6,677) – (4,888) (2,046) (6,592) (11,066) (36,657) – (67,926)
Transfer/reclassification ......... 23,923 – – – – – – – 23,923
Currency translation differences . . . (8,155) – 38,454 11,488 11,529 (7,615) 4,682 – 50,383
As at December 31, 2023 ....... 2,918,323 6,643,870 4,363,601 4,806,341 3,779,913 6,638,702 5,194,142 – 34,344,892
Accumulated impairment
As at January 1, 2023 ......... – – 1,633 – – 28,734 – 1,145 31,512
Charge for the year ............ – – – – – – – 17,443 17,443
Disposals ................... – – – – – (28,726) – (1,264) (29,990)
As at December 31, 2023 ....... – – 1,633 – – 8 – 17,324 18,965
Net book value
As at December 31, 2023
(Note (a)) ................. 26,267,016 8,853,163 10,634,212 2,628,610 1,346,110 4,200,743 2,141,678 4,032,884 60,104,416
APPENDIX I ACCOUNTANT’S REPORT
– I-64 –


--- page 559 ---
Freehold
land and
buildings
Aircraft,
aircraft
engines,
rotables and
high-value
maintenance
(Note (d))
Machinery and
equipment
Transportation
vehicles
Computers and
electronic
equipment
Office and
other
equipment
Leasehold
improvements
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost
As at January 1, 2024 ......... 29,185,339 15,497,033 14,999,446 7,434,951 5,126,023 10,839,453 7,335,820 4,050,208 94,468,273
Additions (Note (c)) ........... 888,879 162,499 139,515 293,188 165,954 72,492 123,483 2,732,537 4,578,547
Business combinations .......... – – 6 3,936 3,739 2,113 – – 9,794
Disposals ................... (10,373) (34,354) (148,807) (528,198) (142,336) (404,656) (132,526) (28,906) (1,430,156)
Disposal of subsidiaries ......... (309,843) – – – – – (3,130) (18,209) (331,182)
Transfer/reclassification ......... 1,362,832 828,980 655,384 – 19,056 18,364 429,960 (3,796,514) (481,938)
Currency translation differences . . . 26,245 35 (88,827) (2,052) (22,979) (8,165) 89,782 – (5,961)
As at June 30, 2024 ........... 31,143,079 16,454,193 15,556,717 7,201,825 5,149,457 10,519,601 7,843,389 2,939,116 96,807,377
Accumulated depreciation
As at January 1, 2024 ......... 2,918,323 6,643,870 4,363,601 4,806,341 3,779,913 6,638,702 5,194,142 – 34,344,892
Charge for the period (Note (b)) . . . 430,708 681,070 829,503 562,419 336,799 646,211 535,193 – 4,021,903
Business combinations .......... – – 6 2,632 2,992 1,513 – – 7,143
Disposals ................... (25) (34,257) (68,139) (503,281) (141,933) (260,926) (85,715) – (1,094,276)
Disposal of subsidiaries ......... (8,731) – – – – – (2,312) – (11,043)
Transfer/reclassification ......... (36,935) – – – – – – – (36,935)
Currency translation differences . . . (8,650) 7 (36,312) (4,071) (20,018) (17,000) 82,969 – (3,075)
As at June 30, 2024 ........... 3,294,690 7,290,690 5,088,659 4,864,040 3,957,753 7,008,500 5,724,277 – 37,228,609
Accumulated impairment
As at January 1, 2024 ......... – – 1,633 – – 8 – 17,324 18,965
Charge for the period ........... – – – – – – – 8 8 5 8 8 5
Disposal of subsidiaries ......... – – – – – – – (18,209) (18,209)
As at June 30, 2024 ........... – – 1,633 – – 8 – – 1,641
Net book value
As at June 30, 2024 (Note (a)) ... 27,848,389 9,163,503 10,466,425 2,337,785 1,191,704 3,511,093 2,119,112 2,939,116 59,577,127
APPENDIX I ACCOUNTANT’S REPORT
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(a) Certain property, plant and equipment with a net carrying amount of approximately RMB1,688,091,000,
RMB486,847,000, RMB809,139,000 and RMB498,743,000, as at December 31, 2021, 2022 and 2023
and June 30, 2024 respectively, were pledged as securities for bank loan facilities and bank overdrafts
granted to the Group (Note 26).
(b) Depreciation amounting to approximately RMB5,378,748,000, RMB6,854,857,000, RMB7,586,164,000
and RMB4,016,667,000 respectively, had been recognized in consolidated statements of profit or loss,
for the years ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2024
respectively.
(c) The additions of buildings for the years ended December 31, 2021, 2022 and 2023 and the six months
ended June 30, 2024 mainly included the acquisition of assets through acquisition of subsidiaries (Note
35(b)).
15. LEASE
This note provides information for leases where the Group is a lessee.
(a) Amounts recognized in the consolidated statements of financial position
The Group
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Right-of-use assets
Buildings .......................... 16,575,376 14,974,570 13,692,555 12,849,813
Leasehold land and land use rights ........ 6,553,640 6,749,573 6,816,476 6,852,959
Motor vehicles ...................... 622,039 416,262 333,921 238,615
Equipment and others ................. 28,612 38,943 47,095 31,091
23,779,667 22,179,348 20,890,047 19,972,478
Lease liabilities
Current ........................... 5,989,616 6,596,956 5,769,965 5,540,079
Non-current ........................ 10,941,938 8,582,372 8,038,495 7,472,393
16,931,554 15,179,328 13,808,460 13,012,472
Additions to the right-of-use assets during 2021, 2022 and 2023 and the six months ended June 30, 2024
were approximately RMB16,418,758,000, RMB6,501,031,000, RMB6,804,625,000 and RMB3,050,180,000
respectively, out of which approximately RMB3,973,368,000 related to the acquisition of subsidiaries for the
year ended December 31, 2021.
Leasehold land and land use rights with a net carrying amount of approximately RMB232,730,000,
RMB247,556,000, RMB292,495,000 and RMB261,868,000, as at December 31, 2021, 2022 and 2023 and June
30, 2024 respectively, were pledged as securities for bank loan facilities and bank overdrafts granted to the
Group (Note 26).
The Company
As at December 31, 2021, 2022 and 2023 and June 30, 2024, the net carrying amounts of right-of-use
assets of the Company were approximately RMB383,348,000, RMB368,022,000, RMB354,760,000 and
RMB348,129,000 respectively. The balances mainly composed of land use rights.
APPENDIX I ACCOUNTANT’S REPORT
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(b) Amounts recognized in the consolidated statements of profit or loss
The consolidated statements of profit or loss show the following amounts relating to leases:
Y ear ended December 31,
Six months ended
June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Depreciation charge of
right-of-use assets
Buildings .............. 5,578,854 6,924,830 6,874,516 3,517,226 3,238,874
Leasehold land and land use
rights ............... 146,136 188,008 191,595 78,142 97,150
Motor vehicles .......... 45,481 165,813 126,643 84,600 79,772
Equipment and others ..... 6,207 12,709 20,309 6,314 13,120
5,776,678 7,291,360 7,213,063 3,686,282 3,428,916
Interest expenses ( Note 10 ) . 553,613 609,652 564,374 289,013 262,301
Expense relating to short-
term leases and low-value
assets (included in costs
and expenses) ......... 2,016,142 3,620,688 3,601,571 1,774,416 1,885,251
Total cash outflow for leases
(included in operating and
financing cash
outflow) ............. 9,124,700 11,687,763 11,582,911 5,645,946 5,703,150
The Group has various lease contracts that have not yet commenced as at December 31, 2021, 2022, and 2023
and June 30, 2024. The future lease payments for these non-cancellable lease contracts are as below:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year (including 1 year) .......... 888,382 986,197 1,344,393 901,267
Between 1 and 2 years (including 2 years) . . . 182,883 259,841 458,299 464,460
Between 2 and 3 years (including 3 years) . . . 131,357 200,248 560,409 489,738
Over 3 years ........................ 109,290 192,415 2,834,483 2,717,203
1,311,912 1,638,701 5,197,584 4,572,668
APPENDIX I ACCOUNTANT’S REPORT
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16. INVESTMENT PROPERTIES
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Cost
At the beginning of the year/period ...... 2,447,796 5,019,928 5,088,473 6,742,097
Additions (Note (a)) .................. – 349,430 709,420 1,952
Business combinations ................. 1,355,725 – – –
Disposal of subsidiaries ................ (1,293,030) (219,035) (1,548) (186,147)
Transfer/reclassification ................ 2,523,424 (97,880) 944,698 550,816
Exchange adjustment .................. (13,987) 36,030 1,054 (14,232)
At the end of the year/period ........... 5,019,928 5,088,473 6,742,097 7,094,486
Accumulated depreciation
At the beginning of the year/period ...... 228,391 169,695 213,107 323,377
Charge for the year/period .............. 60,382 92,568 125,712 77,093
Disposal of subsidiaries ................ (143,800) (10,027) (45) (10,498)
Transfer/reclassification ................ 25,830 (41,780) (16,471) 41,541
Exchange adjustment .................. (1,108) 2,651 1,074 4,433
At the end of the year/period ........... 169,695 213,107 323,377 435,946
Net book value
At the end of the year/period (Note (b)) ... 4,850,233 4,875,366 6,418,720 6,658,540
(a) The additions for the years ended December 31, 2022 and 2023 mainly included the acquisition of assets
through acquisition of subsidiaries (Note 35(b)).
(b) Certain investment properties with a net carrying amount of approximately RMB224,440,000,
RMB104,571,000, RMB111,124,000, and RMB110,919,000 as at December 31, 2021, 2022 and 2023
and June 30, 2024, respectively were pledged as securities for bank loan facilities and bank overdrafts
granted to the Group (Note 26).
(c) V aluation processes of the Group
The fair values of the investment properties were estimated by management or independent professional
property valuers as at December 31, 2021, 2022, and 2023 and June 30, 2024. The valuations are derived using direct
comparison method and income capitalization method respectively. Direct comparison method is based on comparing
the property to be valued directly with other comparable properties, which have recently been transacted. Income
capitalization method is based on the capitalization of the net rental income derived from the existing leases and/or
achievable in existing market with reversionary income potential by adopting appropriate capitalization rates.
Capitalization is estimated by valuer based on the risk profile of the properties being valued.
APPENDIX I ACCOUNTANT’S REPORT
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The fair values of the investment properties were set out as follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Investment properties at fair value ....... 5,716,845 6,119,056 7,937,199 8,111,995
(d) Leasing arrangements
The Group leases various offices and warehouses to lessees under non-cancellable operating lease agreements
with rentals receivable monthly. The lease terms are mainly between 1 year and 5 years, and the majority of lease
agreements are renewable at the end of the lease period at market rates. Minimum lease payments receivable on leases
of investment properties are as follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Land and buildings:
Within 1 year (including 1 year) .......... 206,427 228,038 371,269 411,962
Between 1 and 2 years (including 2 years) . . . 157,562 185,848 240,171 308,779
Between 2 and 3 years (including 3 years) . . . 104,871 134,539 146,234 194,476
Between 3 and 4 years (including 4 years) . . . 46,772 179,036 90,435 103,679
Between 4 and 5 years (including 5 years) . . . 32,972 60,581 56,615 64,969
Over 5 years ........................ 15,104 246,444 206,636 177,293
563,708 1,034,486 1,111,360 1,261,158
APPENDIX I ACCOUNTANT’S REPORT
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17. INTANGIBLE ASSETS
Development
expenditures Goodwill
Customer
relationships Software Trademarks Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost
As at January 1, 2021 ..... 5 4 0 ,903 3,379,576 2,590,205 4,554,340 224,021 104,359 11,393,404
Additions ............ 1,429,608 – – 44,913 2,381 70,704 1,547,606
Business combinations ..... – 4,146,684 2,493,495 31,843 4,314,215 130,730 11,116,967
Disposals ............ – – – (220,436) – – (220,436)
Disposal of subsidiaries .... (76,996) – – (102,591) (9) (979) (180,575)
Transfer/reclassification .... (1,550,279) – – 1,550,279 – – –
Currency translation
differences .......... – (151,995) (106,928) (1,540) (78,760) (2,720) (341,943)
As at December 31, 2021 ... 343,236 7,374,265 4,976,772 5,856,808 4,461,848 302,094 23,315,023
Accumulated amortization
As at January 1, 2021 ..... – – 2 80,861 1,965,003 28,191 31,111 2,305,166
C h a r g e f o r t h e y e a r ....... – – 1 76,897 1,053,768 220,924 18,598 1,470,187
Business combinations ..... – – – 22,539 65,803 93,577 181,919
Disposals ............ – – – ( 1 13,609) – – (113,609)
Disposal of subsidiaries .... – – – ( 5 2 ,770) (2) (224) (52,996)
Currency translation
differences .......... – – (10,727) (1,024) (4,520) (1,608) (17,879)
As at December 31, 2021 ... – – 447,031 2,873,907 310,396 141,454 3,772,788
Impairment
As at January 1, 2021 ..... – 2,435 – 54,186 – – 56,621
C h a r g e f o r t h e y e a r ....... – – – – – – –
As at December 31, 2021 ... – 2,435 – 54,186 – – 56,621
Net book value
As at December 31, 2021 ... 343,236 7,371,830 4,529,741 2,928,715 4,151,452 160,640 19,485,614
Development
expenditures Goodwill
Customer
relationships Software Trademarks Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost
As at January 1, 2022 ..... 3 4 3 ,236 7,374,265 4,976,772 5,856,808 4,461,848 302,094 23,315,023
Additions ............ 1,266,410 – – 329,427 934 5,607 1,602,378
Business combinations ..... – 1,232,279 422,854 219 – 23,414 1,678,766
Disposals ............ (40,985) – – (278,574) (224) (3,494) (323,277)
Disposal of subsidiaries .... – – – – – – –
Transfer/reclassification .... (1,256,904) – – 1,256,904 – – –
Currency translation
differences .......... – 741,635 455,441 17,557 424,792 9,534 1,648,959
As at December 31, 2022 ... 311,757 9,348,179 5,855,067 7,182,341 4,887,350 337,155 27,921,849
Accumulated amortization
As at January 1, 2022 ..... – – 4 47,031 2,873,907 310,396 141,454 3,772,788
C h a r g e f o r t h e y e a r ....... – – 3 07,767 1,472,238 235,963 31,139 2,047,107
Disposals ............ – – – (141,707) (22) (487) (142,216)
Currency translation
differences .......... – – 38,640 9,934 38,028 5,916 92,518
As at December 31, 2022 ... – – 793,438 4,214,372 584,365 178,022 5,770,197
Impairment
As at January 1, 2022 ..... – 2,435 – 54,186 – – 56,621
C h a r g e f o r t h e y e a r ....... – – – 10,409 4 6 10,419
As at December 31, 2022 ... – 2,435 – 64,595 4 6 67,040
Net book value
As at December 31, 2022 ... 311,757 9,345,744 5,061,629 2,903,374 4,302,981 159,127 22,084,612
APPENDIX I ACCOUNTANT’S REPORT
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Development
expenditures Goodwill
Customer
relationships Software Trademarks Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost
As at January 1, 2023 ..... 3 1 1 ,757 9,348,179 5,855,067 7,182,341 4,887,350 337,155 27,921,849
Additions ............ 1,077,980 – – 99,543 797 20,943 1,199,263
Business combinations ..... – 8 5 ,219 – 14 11 – 85,244
Disposals ............ (7,525) – – (210,858) (92) (2,284) (220,759)
Disposal of subsidiaries .... – (10,618) – (193,930) – – (204,548)
Transfer/reclassification .... (1,252,367) – – 1,252,367 – – –
Currency translation
differences .......... – 150,091 97,023 4,670 77,967 2,526 332,277
As at December 31, 2023 ... 129,845 9,572,871 5,952,090 8,134,147 4,966,033 358,340 29,113,326
Accumulated amortization
As at January 1, 2023 ..... – – 7 93,438 4,214,372 584,365 178,022 5,770,197
C h a r g e f o r t h e y e a r ....... – – 3 35,626 1,780,594 247,462 32,068 2,395,750
Business combinations ..... – – – 8 – – 8
Disposals ............ – – – (144,377) (22) (567) (144,966)
Disposal of subsidiaries .... – – – ( 7 5 ,249) – – (75,249)
Currency translation
differences .......... – – 21,276 2,709 10,526 2,204 36,715
As at December 31, 2023 ... – – 1,150,340 5,778,057 842,331 211,727 7,982,455
Impairment
As at January 1, 2023 ..... – 2,435 – 64,595 4 6 67,040
C h a r g e f o r t h e y e a r ....... – – – 38,853 – – 38,853
Disposals ............ – – – (6,020) – – (6,020)
As at December 31, 2023 ... – 2,435 – 97,428 4 6 99,873
Net book value
As at December 31, 2023 ... 129,845 9,570,436 4,801,750 2,258,662 4,123,698 146,607 21,030,998
Development
expenditures Goodwill
Customer
relationships Software Trademarks Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost
As at January 1, 2024 ..... 129,845 9,572,871 5,952,090 8,134,147 4,966,033 358,340 29,113,326
Additions ............ 300,011 – – 17,832 3,296 1,852 322,991
Business combinations ..... – 7 4 ,785 13,253 1,464 – 11,629 101,131
Disposals ............ (25,682) – – (97,292) (1,228) (421) (124,623)
Disposal of subsidiaries .... – – – – – – –
Transfer/reclassification .... (314,119) – – 314,119 – – –
Currency translation
differences .......... – 216,201 122,433 (3,476) 116,207 1,647 453,012
As at June 30, 2024 ...... 90,055 9,863,857 6,087,776 8,366,794 5,084,308 373,047 29,865,837
Accumulated amortization
As at January 1, 2024 ..... – – 1,150,340 5,778,057 842,331 211,727 7,982,455
Charge for the period ...... – – 1 70,010 947,330 121,335 16,057 1,254,732
Business combinations ..... – – – 1,076 – – 1,076
Disposals ............ – – – ( 7 6 ,181) (601) (294) (77,076)
Disposal of subsidiaries .... – – – – – – –
Currency translation
differences .......... – – 17,679 (2,288) 19,237 1,216 35,844
As at June 30, 2024 ...... – – 1,338,029 6,647,994 982,302 228,706 9,197,031
Impairment
As at January 1, 2024 ..... – 2,435 – 97,428 4 6 99,873
Charge for the period ...... – – – – – – –
Disposals ............ – – – ( 1 3 ,779) – – (13,779)
As at June 30, 2024 ...... – 2,435 – 83,649 4 6 86,094
Net book value
As at June 30, 2024 ...... 90,055 9,861,422 4,749,747 1,635,151 4,102,002 144,335 20,582,712
APPENDIX I ACCOUNTANT’S REPORT
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(a) Recognition of goodwill
Goodwill is recognized in connection with business acquisitions. The balance of goodwill increased
significantly from approximately RMB3,377,141,000 as at January 1, 2021 to RMB7,371,830,000 as at December 31,
2021, mainly due to the acquisition of Kerry Logistics Network Ltd. (“KLN”), which is listed on the Main Board of
The Stock Exchange of Hong Kong Limited, in September 2021. The balance increased to approximately
RMB9,345,744,000 as at December 31, 2022 mainly due to the acquisition of Topocean and Pro-Med Technology
Limited (“Pro-Med”) by KLN.
The carrying amount of goodwill allocated to the groups of Cash-Generating Units (“CGU”) are as follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
K L NC G U......................... 4,071,759 5,708,450 5,889,255 6,031,214
Fenghao Supply Chain CGU ............. 2,768,759 3,033,680 3,082,119 3,154,175
K E XC G U ........................ – – – 63,889
HA VI Supply Chain CGU .............. 330,462 362,117 367,896 376,494
Others ............................ 200,850 241,497 231,166 235,650
7,371,830 9,345,744 9,570,436 9,861,422
As stated in Note 2.1(g), goodwill would be tested for impairment annually, at the end of the reporting period.
If the carrying amount exceeds its estimated recoverable amount, which is the higher of value in use and fair value
less costs of disposal, the difference of which would be recognized in profit and loss immediately.
For the years ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2024, the value
in use calculations of Fenghao Supply Chain CGU used cash flow projections based on financial budgets approved
by senior management covering a 7-to-8-year’s period, which was based on the contractual arrangements with
vendors.
As disclosed in Note 35(a), the Group acquired KLN in 2021. KLN acquired Topocean and Pro-Med in 2022
and other subsidiaries in 2023. During the six months ended June 30, 2024, the balance of goodwill increased mainly
due to the acquisition of 65% shares of Business By Air SAS (“BBA”). The management was of the view that the
synergies among the operations of KLN, Topocean, Pro-Med, BBA and other subsidiaries acquired by KLN had
gradually formed upon the completion of the abovementioned acquisitions. As a result, the Group regarded KLN,
Topocean, Pro-Med, BBA and other subsidiaries acquired by KLN as one CGU.
During the six months ended June 30,2024, KLN distributed a special interim dividend by way of a distribution
in specie of 907,200,000 shares of Kerry Express (Thailand) Public Company Limited (“KEX”) indirectly held by
KLN (representing approximately 52.1% of all issued KEX shares). After the distribution, the Group received an
aggregate of 467,373,855 KEX shares, representing approximately 26.8% of all issued KEX shares, triggering a
mandatory tender offer to acquire all KEX shares in accordance with the requirements of the Thai Code (Securities
and Exchange Act B.E. 2535 (1992) (as amended), Notification of Capital Market Supervisory Board Tor Jor. 12/2554
Re: Rules, Conditions and Procedures for the Acquisition of Securities for Business Takeover (as amended), and any
other relevant rules, regulations, and notifications issued thereunder). The Group made a tender offer to acquire KEX
shares with an offer price of THB5.50 per share. On March 26, 2024 (“the date of reorganization”), the
abovementioned interim dividend distribution and tender offer were completed, and the Group acquired in aggregate
1,091,818,327 KEX shares, representing 62.7% of all issued KEX shares.
Upon completion of the above transactions, since KEX was no longer directly held and managed by KLN, the
Group reclassified the KLN CGU into two separate CGUs, KEX and KLN (excluding KEX). The goodwill arising
from the acquisition of KLN in 2021 was reallocated by the Group on the basis of the relative values of the operation
of KLN CGU and KEX CGU as at the date of the reorganization, through which goodwill of approximately
RMB63,889,000 was reallocated to KEX CGU.
APPENDIX I ACCOUNTANT’S REPORT
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(b) Impairment tests
The following table sets out the key assumptions used for value in use calculations of KLN CGU and Fenghao
Supply Chain CGU:
Y ear ended December 31,
Six months
ended June 30,
2021 2022 2023 2024
Revenue growth rate over the
forecast period ............. -1.90%~14.20% -16.50%~17.00% 2.50%~16.64% 2.50%~29.69%
Terminal revenue growth rate ..... 3.00% 2.00%~3.00% 2.00%~2.50% 2.00%~2.50%
Net profit margin before tax and
interests .................. 2.00%~6.22% -0.47%~7.16% -0.20%~6.60% -0.83%~6.61%
Pre-tax discount rate ........... 13.37% 11.71%~14.10% 11.90%~14.00% 11.30%~13.45%
For the year ended December 31, 2021, the recoverable amount of KLN CGU was determined based on the
closing stock price of KLN. For the years ended December 31, 2022 and 2023 and the six months ended June 30,
2024, the recoverable amount of KLN CGU was determined based on discounted cash flow method.
V arious factors were taken into consideration when determine the appropriate terminal revenue growth rate
used over the forecast period, including the long-term inflation rates of mainland China, Hong Kong SAR, Thailand
and other southeast Asia areas, and US, etc. This growth rate does not exceed the long-term average growth rate for
the market in which the relative business operates.
Management determined budgeted profit margins and revenue growth rates based on historical performance
and its expectations of the market development.
The pre-tax discount rates reflected the current market assessment of the time value of money and the risks
specific to the business.
(c) Impact of possible changes in key assumptions
The recoverable amount of KLN CGU is estimated to exceed its carrying amount at December 31, 2022 and
2023 and June 30, 2024 by approximately RMB4,279 million, RMB1,375 million and RMB456 million, respectively.
The recoverable amount of Fenghao Supply Chain CGU is estimated to exceed its carrying amount at
December 31, 2021, 2022 and 2023 and June 30, 2024 by approximately RMB300 million, RMB267 million,
RMB411 million and RMB1,293 million, respectively.
The management has considered and assessed reasonably possible changes for key assumptions and has not
identified any instances that could cause the carrying amount of each CGU to exceed its respective recoverable
amount.
APPENDIX I ACCOUNTANT’S REPORT
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The recoverable amount of each CGU would equal to its carrying amount if each key assumption was to change
as follows with all other variables held constant:
KLN CGU
As at December 31,
As at
June 30,
2022 2023 2024
Revenue growth rate over the forecast period ...... -19.56%~8.97% 8.98%~12.05% 5.69%~29.08%
Terminal revenue growth rate ................. 0.34% 1.50% 1.86%
Net profit margin before tax and interests ........ 4.88%~5.03% 4.76%~5.41% 5.03~5.53%
Pre-tax discount rate ....................... 15.56% 14.48% 13.60%
Fenghao Supply Chain CGU
As at December 31, As at June 30,
2021 2022 2023 2024
Revenue growth rate over the
forecast period ............ -2.68%~13.36% 2.40%~16.57% 2.02%~16.19% -0.88%~11.88%
Terminal revenue growth rate . . . 2.49% 2.65% 1.89% 0.28%
Net profit margin before tax
and interests ............. 2.47%~5.98% -0.69%~6.93% -0.55%~6.25% -2.82%~5.58%
Pre-tax discount rate ......... 13.82% 11.99% 12.41% 12.99%
18. DEFERRED TAX
Deferred tax assets and liabilities are offset when there is a legally enforceable right of offsetting and when
the deferred income taxes relate to the same authority.
The net amounts of deferred tax assets and liabilities after offsetting are as follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Deferred tax assets ................... 5,505,511 5,323,542 5,599,191 5,305,178
Offsetting .......................... (3,921,033) (3,690,578) (3,335,321) (3,251,608)
Net deferred tax assets ................ 1,584,478 1,632,964 2,263,870 2,053,570
Deferred tax liabilities ................. 8,323,193 8,348,532 7,886,295 7,788,465
Offsetting .......................... (3,921,033) (3,690,578) (3,335,321) (3,251,608)
Net deferred tax liabilities ............. 4,402,160 4,657,954 4,550,974 4,536,857
APPENDIX I ACCOUNTANT’S REPORT
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--- page 569 ---
(a) Deferred tax assets
The movements in deferred tax assets before offsetting for the years ended December 31, 2021, 2022 and 2023
and the six months ended June 30, 2024 are as follows:
Amortization
and
depreciation
Tax
losses
Accrued
expenses
Lease
liabilities
Loss
allowances
for financial
assets and
non-current
assets
Unrealised
profits from
internal
transactions Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1,
2021 .......... 176,077 1,019,823 211,149 2,745,377 97,648 141,951 93,473 4,485,498
Acquisition and
disposal of
subsidiaries, net . . . 82,698 (33,423) (988) 677,563 – – 365 726,215
Credited/(charged) to
consolidated
statement of profit
or loss ......... 128,223 (80,827) 20,795 245,605 17,081 5,889 (27,269) 309,497
Currency translation
differences ...... 5 2 6 2,577 – (18,630) – – (172) (15,699)
As at December 31,
2021 .......... 387,524 908,150 230,956 3,649,915 114,729 147,840 66,397 5,505,511
As at January 1,
2022 .......... 387,524 908,150 230,956 3,649,915 114,729 147,840 66,397 5,505,511
Acquisition and
disposal of
subsidiaries, net . . . – – 186,774 – 202 – (1,024) 185,952
Credited/(charged) to
consolidated
statement of profit
or loss ......... 1 12,805 (228,736) 124,598 (490,206) 51,464 (2,959) 5,486 (427,548)
Currency translation
differences ...... 2,014 20,449 9,115 27,465 1,017 – (433) 59,627
As at December 31,
2022 .......... 502,343 699,863 551,443 3,187,174 167,412 144,881 70,426 5,323,542
As at January 1,
2023 .......... 502,343 699,863 551,443 3,187,174 167,412 144,881 70,426 5,323,542
Acquisition and
disposal of
subsidiaries, net . . . – (3,156) (276) – (24) – – (3,456)
Credited/(charged) to
consolidated
statement of profit
or loss ......... 293,712 197,626 (72,605) (188,653) 7,579 (32,507) 15,745 220,897
Charged to
consolidated
statement of other
comprehensive
income ......... – – – – – – (1,839) (1,839)
Currency translation
differences ...... 53,833 6,350 1,515 174 (154) – (1,671) 60,047
As at December 31,
2023 .......... 849,888 900,683 480,077 2,998,695 174,813 112,374 82,661 5,599,191
APPENDIX I ACCOUNTANT’S REPORT
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--- page 570 ---
Amortization
and
depreciation
Tax
losses
Accrued
expenses
Lease
liabilities
Loss
allowances
for financial
assets and
non-current
assets
Unrealised
profits from
internal
transactions Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1,
2024 .......... 849,888 900,683 480,077 2,998,695 174,813 112,374 82,661 5,599,191
Acquisition and
disposal of
subsidiaries, net . . . – – – – – – – –
Credited/(charged)
to consolidated
statement of
profit or loss ..... 41,421 1,841 (57,151) (212,491) 15,686 (18,272) (2,978) (231,944)
Charged to
consolidated
statement of other
comprehensive
income ......... – – – – – – – –
Currency translation
differences ...... (57,430) (16,594) (3,180) 11,788 1,810 – 1,537 (62,069)
As at June 30, 2024 . 833,879 885,930 419,746 2,797,992 192,309 94,102 81,220 5,305,178
APPENDIX I ACCOUNTANT’S REPORT
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--- page 571 ---
(b) Deferred tax liabilities
The movements in deferred tax liabilities before offsetting for the years ended December 31, 2021, 2022 and
2023 and the six months ended June 30, 2024 are as follows:
Appreciation
of assets
acquired in
business
combinations
Accelerated
tax
depreciation
Changes in
fair value
Income from
equity
restructuring
Right-of-
use assets Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2021 ...... 613,611 905,252 362,977 – 2,573,319 6,619 4,461,778
Acquisition and disposal of
subsidiaries, net ....... 2,294,078 42,127 – – 678,119 80,569 3,094,893
(Credited)/charged to
consolidated statement of
profit or loss ......... (102,009) 492,444 (3,287) 146,214 302,199 (6,197) 829,364
Credited to consolidated
statement of other
comprehensive income . . . – – (24,766) – – – (24,766)
Currency translation
differences .......... (15,878) (10,199) 8,454 – (19,186) (1,267) (38,076)
At December 31, 2021 .... 2,789,802 1,429,624 343,378 146,214 3,534,451 79,724 8,323,193
At January 1, 2022 ...... 2,789,802 1,429,624 343,378 146,214 3,534,451 79,724 8,323,193
Acquisition and disposal of
subsidiaries, net ....... 240,193 (116,460) – – – – 123,733
(Credited)/charged to
consolidated statement of
profit or loss ......... (150,878) 350,933 (4,381) (146,214) (509,495) 65,407 (394,628)
Charged to consolidated
statement of other
comprehensive income . . . – – 17,250 – – – 17,250
Currency translation
differences .......... 258,827 27,192 – – 27,279 (34,314) 278,984
At December 31, 2022 .... 3,137,944 1,691,289 356,247 – 3,052,235 110,817 8,348,532
At January 1, 2023 ...... 3,137,944 1,691,289 356,247 – 3,052,235 110,817 8,348,532
Acquisition and disposal of
subsidiaries, net ....... 7,090 (286) – – – – 6,804
(Credited)/charged to
consolidated statement of
profit or loss ......... (213,057) (113,859) 2,578 – (222,122) 1,657 (544,803)
Charged to consolidated
statement of other
comprehensive income . . . – – 353 – – – 353
Currency translation
differences .......... 39,566 29,458 – – 448 5,937 75,409
At December 31, 2023 .... 2,971,543 1,606,602 359,178 – 2,830,561 118,411 7,886,295
At January 1, 2024 ...... 2,971,543 1,606,602 359,178 – 2,830,561 118,411 7,886,295
Acquisition and disposal of
subsidiaries, net ....... 5,652 – – – – – 5,652
(Credited)/charged to
consolidated statement of
profit or loss ......... (87,194) 213,130 (11,734) – (218,712) 10,680 (93,830)
Charged to consolidated
statement of other
comprehensive income . . . – – (2,467) – – – (2,467)
Currency translation
differences .......... 80,489 (81,784) 174 – 15,106 (21,170) (7,185)
At June 30, 2024 ....... 2,970,490 1,737,948 345,151 – 2,626,955 107,921 7,788,465
APPENDIX I ACCOUNTANT’S REPORT
– I-77 –


--- page 572 ---
(c) Deferred tax assets not recognized
Deferred tax assets should be recognized when it is probable that taxable profits or taxable temporary
differences will be available against which the deferred tax asset can be utilised. Temporary differences will not be
recognized as deferred tax assets if the management estimates that they will not be recovered from taxable profits
generated from continuing operations in the foreseeable future. The following table sets forth the taxable temporary
differences which were not recognized as deferred tax assets during the Track Record Period:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Tax losses ......................... 14,124,575 20,086,770 18,873,618 18,770,064
Deductible temporary differences ......... 658,298 1,133,829 1,113,144 1,439,951
14,782,873 21,220,599 19,986,762 20,210,015
The expiry dates of the unrecognized tax losses as at December 31, 2021, 2022 and 2023 and June 30, 2024
are as follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
2022 ............................. 310,91 2–––
2023 ............................. 716,966 793,083 – –
2024 ............................. 1,847,817 1,568,941 1,270,206 1,035,858
2025 ............................. 3,696,061 4,764,110 3,954,921 3,527,250
2026 ............................. 5,364,397 5,702,895 4,468,234 4,246,723
2027 ............................. – 4,334,208 3,254,460 2,933,073
2028 ............................. – – 2,146,335 1,830,209
2029 ............................. – – – 1,000,445
No expiry date ...................... 2,188,422 2,923,533 3,779,462 4,196,506
14,124,575 20,086,770 18,873,618 18,770,064
19. PREPAYMENTS, OTHER RECEIV ABLES AND OTHER ASSETS
The Group
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
Amounts due from related parties (Note
38(d)) ........................... 59,725 70,794 1,363 71,751
Deferred pilot recruitment costs .......... 632,486 836,956 805,415 774,186
Prepayments (Note (a)) ................ 1,746,758 622,763 944,833 845,134
Loans to employees ................... 139,422 57,058 15,575 84
Finance lease receivables ............... 471,491 247,003 89,380 57,311
Others ............................ 407,484 442,403 492,174 494,494
3,457,366 2,276,977 2,348,740 2,242,960
Less: Allowance for expected credit losses
(Note (c)) ........................ (21,984) (19,613) (15,178) (13,646)
3,435,382 2,257,364 2,333,562 2,229,314
APPENDIX I ACCOUNTANT’S REPORT
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--- page 573 ---
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current:
Amounts due from related parties (Note
38(d)) ........................... 475,828 526,453 1,032,722 275,159
V alue-added tax recoverable ............. 7,454,169 5,048,940 4,641,173 3,862,436
Prepayments (Note (b)) ................ 2,933,129 3,474,471 3,248,665 2,793,230
Prepayments for listing expenses ......... – – 25,068 26,870
Deposits ........................... 1,413,769 1,532,034 1,523,589 1,535,427
Cash to collect on behalf of customers ..... 729,705 382,300 659,441 720,869
Loans to employees ................... 97,833 55,604 26,454 16,197
Prepaid corporate income tax ............ 236,852 768,131 551,327 367,288
Finance lease receivables .............. 249,416 376,512 226,652 207,982
Others ............................ 1,699,827 1,036,855 1,043,853 1,213,812
15,290,528 13,201,300 12,978,944 11,019,270
Less: Allowance for expected credit losses
(Note (c)) ........................ (297,672) (399,389) (356,238) (351,688)
14,992,856 12,801,911 12,622,706 10,667,582
(a) The balances of the Group mainly comprise prepaid construction equipment balances during the Track
Record Period.
(b) The balances of the Group mainly comprise prepaid freight and transportation costs during the Track
Record Period.
(c) Movements on the Group’s allowance for expected credit losses of other receivables are as follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period ........ 361,828 319,656 419,002 371,416
(Reversal of)/allowance for impairment ..... (26,914) 151,139 8,446 (6,431)
Written off as uncollectible ............. (12,154) (49,832) (57,009) (1,273)
Disposal of subsidiaries ................ (784) (8,207) – –
Exchange adjustment .................. (2,320) 6,246 977 1,622
At the end of the year/period ............ 319,656 419,002 371,416 365,334
The Company
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
Amounts due from subsidiaries ........... ––––
Prepayments ........................ 1 1 1 4 5 9 – –
111 459 – –
Current:
Amounts due from subsidiaries ........... 18,275,293 15,189,829 21,816,446 17,633,122
Prepayments for listing expenses ......... – – 25,068 26,870
V alue-added tax recoverable ............. 5,827 – 6,029 9,356
Prepayments ........................ 1,249 121 1,175 2,015
Others ............................ 1 9 9 1,643 1,673 1,681
18,282,568 15,191,593 21,850,391 17,673,044
Less: Provision for impairment ........... ( 1 ) ( 8 ) ( 8 ) ( 8 )
18,282,567 15,191,585 21,850,383 17,673,036
APPENDIX I ACCOUNTANT’S REPORT
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--- page 574 ---
20. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Movement of investments in associates is analyzed as follows:
Y ear ended December 31,
Six months
ended
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period ...... 1,212,265 4,666,155 4,209,624 4,120,128
Additions and disposals, net ............. 1,303,798 (543,165) 100,574 (28,284)
Business combination ................. 2,186,709 – – –
Share of profit, net ................... 61,792 49,128 78,524 28,041
Share of other comprehensive loss ........ (91) (19,592) (5,583) (10,370)
Share of other equity movement .......... (6,416) 118,798 13,902 3,286
Dividend declared during the year/period .... (2,250) (168,706) (188,104) (136,496)
Exchange differences .................. (37,268) 175,008 34,484 21,739
Less: Impairment loss provided for the
year/period ....................... (52,384) (68,002) (123,293) –
At the end of the year/period ........... 4,666,155 4,209,624 4,120,128 3,998,044
Movement of investments in joint ventures is analyzed as follows:
Y ear ended December 31,
Six months
ended
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period ...... 2,434,966 2,593,932 3,648,376 3,258,703
Additions and disposals, net ............. 183,425 1,088,841 (245,348) (309,443)
Share of loss, net .................... (19,132) (41,579) (145,714) (90,621)
Share of other equity movement .......... 2,085 490 40 (5)
Dividend declared during the year ......... (5,386) (254) (892) –
Exchange differences .................. (2,026) 11,418 2,855 3,135
Less: Impairment loss provided for the
year/period ....................... – (4,472) (614) –
At the end of the year/period ........... 2,593,932 3,648,376 3,258,703 2,861,769
The Group’s share of results of its associates and joint ventures are as follows:
Y ear ended December 31,
Six months
ended
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Aggregate attributable amounts of net loss . . . (9,724) (64,925) (191,097) (62,580)
Aggregate attributable amounts of other
comprehensive income ............... (91) (19,592) (5,583) (10,370)
Aggregate attributable amounts of total
comprehensive income ............... (9,815) (84,517) (196,680) (72,950)
There is no associate and joint venture that is individually significant to the Group.
APPENDIX I ACCOUNTANT’S REPORT
– I-80 –


--- page 575 ---
21. FINANCIAL ASSETS AT FVPL AND FVOCI
(a) Financial assets at FVPL
The Group
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
– Industry fund investments ............. 552,130 770,637 499,320 378,654
– Special scheme equity-class securities .... 235,821 116,286 – –
– Equity investment in unlisted entities at fair
value .......................... 85,243 118,324 84,401 123,504
– Others ........................... 4,829 6,962 6,275 6,155
878,023 1,012,209 589,996 508,313
Current:
– Structured deposits .................. 9,730,665 7,351,158 6,542,881 17,770,993
– Fund investment and others ............ 653,828 34,221 266,861 276,330
10,384,493 7,385,379 6,809,742 18,047,323
The Company
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current:
– Structured deposits .................. 9,200,219 2,335,319 – –
(b) Financial assets at FVOCI
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
– Listed equity investments, at fair value .... 241,936 158,936 2,418,842 1,120,309
– Unlisted equity investments, at fair value . . 6,568,835 7,206,748 7,070,693 7,223,984
6,810,771 7,365,684 9,489,535 8,344,293
Current:
– Notes held for sale .................. – 63,310 99,978 125,633
– 63,310 99,978 125,633
APPENDIX I ACCOUNTANT’S REPORT
– I-81 –


--- page 576 ---
22. INVENTORIES
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Raw materials ....................... 588,354 608,201 472,994 578,849
Finished goods ...................... 497,617 706,779 1,040,816 1,050,911
Aviation consumables ................. 268,985 353,119 499,062 596,241
Consumables and supplies .............. 166,153 227,620 365,165 243,282
Costs to fulfil a contract ............... 33,597 56,174 65,170 93,203
1,554,706 1,951,893 2,443,207 2,562,486
Less: Provision for impairment loss ....... (7,885) (3,539) (2,782) (3,275)
1,546,821 1,948,354 2,440,425 2,559,211
The cost of inventories recognized as cost and expenses for the years ended December 31, 2021, 2022 and 2023
and the six months ended June 30, 2023 and 2024 amounted to approximately RMB7,014,210,000,
RMB9,352,016,000, RMB10,570,417,000, RMB5,060,126,000 and RMB5,434,491,000, respectively.
23. CONTRACT ASSETS
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Contract assets ...................... 1,041,152 1,526,396 1,636,144 2,043,192
Less: Allowance for expected credit losses. . . (2,905) (3,400) (3,552) (3,813)
1,038,247 1,522,996 1,632,592 2,039,379
As discussed in Note 2.1(h), the Group applies simplified approach under IFRS 9 to measure the expected
credit loss, which uses a lifetime expected loss allowance, for contract assets.
Allowance of approximately RMB900,000, RMB4,070,000, RMB152,000 and RMB315,000 had been
provided for years ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2024, respectively.
24. TRADE AND NOTE RECEIV ABLES
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade and note receivables
– related parties (Note 38(d)) ............ 70,288 60,228 124,211 553,681
– third parties ....................... 31,723,594 27,296,693 26,614,887 26,880,865
31,793,882 27,356,921 26,739,098 27,434,546
Less: Allowance for expected credit losses. . . (1,034,869) (1,560,244) (1,378,665) (1,339,136)
30,759,013 25,796,677 25,360,433 26,095,410
APPENDIX I ACCOUNTANT’S REPORT
– I-82 –


--- page 577 ---
(a) The Group has various credit policies for different business operations depending on the requirements of the
markets and businesses. The ageing analysis of the trade and note receivables based on invoice date is as
follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year (including 1 year) .......... 31,344,858 26,399,022 25,719,098 26,325,967
Between 1 and 2 years (including 2 years) . . . 236,070 653,524 490,411 450,741
Over 2 years ........................ 212,954 304,375 529,589 657,838
31,793,882 27,356,921 26,739,098 27,434,546
There is no concentration of credit risk with respect to trade and note receivables, as the Group has a large
number of customers.
(b) The Group applies the simplified approach to provide for expected credit losses prescribed by IFRS 9. Details
are disclosed in Note 2.1(h).
As at December 31, 2021, 2022 and 2023 and June 30, 2024, trade receivables of approximately
RMB1,034,869,000, RMB1,560,244,000, RMB1,378,665,000 and RMB1,339,136,000 respectively were
impaired and provided for.
Movements on the provision for impairment of trade and note receivables are as follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period ........ 227,853 1,034,869 1,560,244 1,378,665
Allowance for/(reversal of) impairment
losses ........................... 605,865 669,961 (42,078) 165,988
Written off as uncollectible ............. (60,613) (169,984) (158,277) (209,411)
Acquisition of subsidiaries .............. 263,785 10,272 – 397
Disposal of subsidiaries ................ ( 4 ) – (3,505) –
Exchange adjustment .................. (2,017) 15,126 22,281 3,497
At the end of the year/period ............ 1,034,869 1,560,244 1,378,665 1,339,136
(c) The provision and reversal of provision for impairment of receivables have been included in impairment losses
on financial assets and contract assets in the consolidated statements of profit or loss. Amounts charged to the
allowance account are written off when there is no expectation of recovery.
(d) The carrying amount at the reporting date approximated the fair value of each class of receivables mentioned
above.
APPENDIX I ACCOUNTANT’S REPORT
– I-83 –


--- page 578 ---
25. CASH AND CASH EQUIV ALENTS AND RESTRICTED CASH
The Group
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Restricted cash
Statutory reserve deposits with the PBOC for
banking operations (Note (a)) .......... 540,300 837,242 1,476,938 917,644
Pledged bank deposits (Note (b)) ......... 36,626 37,677 52,830 64,761
Others ............................ – – 46,728 46,839
576,926 874,919 1,576,496 1,029,244
Cash and cash equivalents
Cash on hand and cash at banks (excluding
PBOC) .......................... 34,805,864 40,268,797 40,434,748 32,506,222
Surplus reserve deposits with the PBOC
(Note (a)) ........................ 7,904 11,150 13,560 9,767
34,813,768 40,279,947 40,448,308 32,515,989
(a) On September 18, 2016, the Group incorporated SF Holding Group Finance Co., Ltd., a licensed financial
institution, principally engaging in the provision of cash management services internally.
SF Holding Group Finance Co., Ltd. is required to deposit with the People’s Bank of China (the “PBOC”) an
amount that equals to 5% of qualified RMB deposits from corporates. The statutory reserve deposits are
restricted and not available for use in the daily business. Deposits with the PBOC in excess of the statutory
reserve deposits are surplus reserve deposits, which are maintained mainly for clearance purposes.
(b) The Group’s bank balances amounting to approximately RMB11,432,000, RMB12,918,000, RMB17,133,000
and RMB29,538,000, respectively, as at December 31, 2021, 2022 and 2023 and June 30, 2024, represented
deposits pledged to secure general banking or letter of guarantee facilities granted to the Group.
The Group’s bank balances amounting to approximately RMB25,194,000, RMB24,759,000, RMB35,697,000
and RMB35,223,000, respectively, as at December 31, 2021, 2022 and 2023 and June 30, 2024, represented
deposits of performance bonds that shall be repaid when the services were completed.
The Company
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Cash on hand and cash at banks
(excluding PBOC) .................. 226,112 812,181 138,046 29,017
APPENDIX I ACCOUNTANT’S REPORT
– I-84 –


--- page 579 ---
26. BORROWINGS
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
Long-term bank borrowings (Note (a))
– secured (Note (a)(i))) ................ 1,091,297 1,119,111 2,680,031 1,889,777
– unsecured and guaranteed (Note (a)(ii)) . . . 2,419,532 6,352,899 8,675,210 8,771,689
Corporate bonds (Note (c)) .............. 15,656,370 18,927,508 18,794,782 19,710,996
Loans from Non-controlling interests ....... 217,267 187,243 246,889 228,220
19,384,466 26,586,761 30,396,912 30,600,682
Current portion of non-current:
Long-term bank borrowings (Note (a))
– secured (Note (a)(i)) ................. 377,489 498,344 742,364 1,047,403
– unsecured and guaranteed (Note (a)(ii)) . . . 1,080,885 102,336 2,071,021 1,547,545
Corporate bonds (Note (c)) .............. 830,321 3,661,225 615,295 113,666
Loans from Non-controlling interests ....... 22,637 18,087 1,541 22,349
Short term:
Short-term bank borrowings (Note (b))
– secured (Note (b)(i)) ................. 197,015 100,569 105,969 70,428
– unsecured and guaranteed (Note (b)(ii)) . . . 19,068,519 13,729,479 18,659,397 23,813,009
Short-term debentures (Note (c)) .......... 4,029,936 5,062,357 – 2,310,195
Loans from Non-controlling interests ...... 109,150 109,150 113,516 109,825
25,715,952 23,281,547 22,309,103 29,034,420
(a) Long-term bank borrowings
(i) The Group’s non-current bank borrowings amounting to approximately RMB1,343,378,000,
RMB1,487,597,000, RMB2,150,466,000 and RMB1,669,853,000 had been secured by Shun Y uan
Financial Leasing (Tianjin) Co., Ltd.’s receivables under financial leasing contracts with a net carrying
amount of approximately RMB1,519,672,000, RMB1,670,516,000, RMB2,496,880,000 and
RMB2,797,164,000 as at December 31, 2021, 2022 and 2023 and June 30, 2024 respectively. Shun Y uan
Financial Leasing (Tianjin) Co., Ltd., a subsidiary of the Group, recognized the receivables as engaging
in aircraft financial lease business with SF Airlines Company Limited.
Certain non-current assets had been pledged as securities for long-term bank borrowings for the Track
Record Period. Refer to Note 14(a), Note 15(a) and Note 16(b).
(ii) Non-current bank borrowings of approximately RMB2,974,052,000, RMB5,901,392,000,
RMB5,633,173,000 and RMB5,731,171,000 as at December 31, 2021, 2022 and 2023 and June 30,
2024, respectively, had been guaranteed by the subsidiaries within the Group.
(iii) The range of interest rates of major non-current bank borrowings were 0.84% to 4.90%, 3.02% to 5.77%,
2.20% to 6.91% and 2.44% to 5.30% for the years ended December 31, 2021, 2022 and 2023 and the
six months ended June 30, 2024 respectively.
(b) Short-term bank borrowings
(i) The Group’s short-term bank borrowings amounting to approximately RMB37,417,000 and
RMB18,073,000 had been secured by time deposits of RMB9,600,000 and RMB11,086,000 as at
December 31, 2021 and 2022, respectively.
Certain non-current assets had been pledged as securities for short-term bank borrowings for the Track
Record Period. Refer to Note 14(a), Note 15(a) and Note 16(b).
APPENDIX I ACCOUNTANT’S REPORT
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--- page 580 ---
(ii) Short-term bank borrowings of approximately RMB8,388,798,000, RMB4,224,863,000,
RMB5,156,012,000 and RMB448,933,000 as at December 31, 2021, 2022 and 2023 and June 30, 2024,
respectively, had been guaranteed by the Company or its subsidiaries.
(iii) The range of interest rates of major short-term bank borrowings were 0.66% to 3.81%, 2.20% to 5.39%,
2.20% to 7.74% and 2.27% to 6.77% for the years ended December 31, 2021, 2022 and 2023 and the
six months ended June 30, 2024 respectively.
(c) Corporate bonds and short-term debentures
(i) Bonds and debentures amounting to RMB15,287,734,000, RMB21,572,790,000, RMB18,393,642,000
and RMB18,309,526,000 as at December 31, 2021, 2022 and 2023 and June 30, 2024, respectively, had
been guaranteed by the Company.
(ii) The range of interest rates of bonds and debentures were 2.38% to 4.60%, 2.38% to 4.13%, 2.38% to
3.79% and 2.38% to 3.13% for the years ended December 31, 2021, 2022 and 2023 and the six months
ended June 30, 2024 respectively.
27. TRADE AND NOTE PAYABLES
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade and note payables
– related parties (Note 38(d)) ............ 405,456 505,220 421,194 397,211
– third parties ....................... 23,062,219 24,242,831 24,493,106 23,413,121
23,467,675 24,748,051 24,914,300 23,810,332
An ageing analysis of the trade and note payables based on invoice date as at December 31, 2021, 2022 and
2023 and June 30, 2024 was as follows:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year (including 1 year) .......... 23,354,313 24,654,791 24,505,848 23,527,260
Over 1 year ........................ 1 13,362 93,260 408,452 283,072
23,467,675 24,748,051 24,914,300 23,810,332
28. CONTRACT LIABILITIES
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Contract liabilities
– related parties (Note 38(d)) ............ 3,581 4,708 48,147 47,135
– third parties ....................... 1,672,255 1,239,710 1,783,871 1,755,374
1,675,836 1,244,418 1,832,018 1,802,509
APPENDIX I ACCOUNTANT’S REPORT
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--- page 581 ---
The following table shows the amounts of revenue recognized in the Track Record Period relating to
carried-forward contract liabilities:
Y ear ended December 31,
Six months
ended
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Revenue recognized that was included in
contract liabilities at the beginning of the
year/period ....................... 1,537,441 1,675,836 1,244,418 1,832,018
29. OTHER PAYABLES AND ACCRUALS
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
Salaries, wages and benefits ............. 351,754 114,024 82,216 77,406
Consideration payable for business
combinations ...................... 144,447 21,573 – –
Others ............................ 48,099 56,274 58,113 67,071
544,300 191,871 140,329 144,477
Current:
Amounts due to related parties (Note 38(d)) . . 269,671 220,071 136,098 95,979
Salaries, wages and benefits ............. 5,610,318 6,573,254 5,872,341 4,505,260
Payable for purchase of property, plant and
equipment ........................ 5,352,716 5,557,664 4,345,119 3,209,908
Deposits ........................... 1,604,631 2,375,025 2,355,449 2,516,231
Other taxes payable ................... 806,821 1,130,283 735,465 756,972
Payables of cash collected on delivery
service .......................... 1,643,510 1,220,988 1,534,338 1,442,384
Consideration payable for business
combinations ...................... 83,002 1,045,334 289,306 281,790
Others ............................ 1,700,108 1,906,773 2,369,055 2,635,978
17,070,777 20,029,392 17,637,171 15,444,502
30. DEFERRED INCOME
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Government grants and subsidies ......... 690,242 860,791 1,090,644 1,210,871
The government grants were mainly incentives provided by local government authorities in the PRC, including
subsidies from a project in Huanggang City, government supporting funds for industry parks and aircraft engine
maintenance subsidies, etc. All of the government grants and subsidies recognized as deferred income are asset
related.
APPENDIX I ACCOUNTANT’S REPORT
– I-87 –


--- page 582 ---
31. SHARE CAPITAL AND TREASURY SHARES
Number of
registered,
issued and
fully paid
ordinary
shares Share capital
Treasury
shares Total
RMB’000 RMB’000 RMB’000
As at January 1, 2021 ............ 4,556,440,455 4,556,440 (394,993) 4,161,447
Private placement (Note (a)) ......... 349,772,647 349,773 – 349,773
As at December 31, 2021 .......... 4,906,213,102 4,906,213 (394,993) 4,511,220
As at January 1, 2022 ............ 4,906,213,102 4,906,213 (394,993) 4,511,220
Repurchase of shares (Note (b)) ...... – – (2,040,377) (2,040,377)
Cancellation of shares (Note (b)) ..... ( 1 1,010,729) (11,011) 394,993 383,982
As at December 31, 2022 .......... 4,895,202,373 4,895,202 (2,040,377) 2,854,825
As at January 1, 2023 ............ 4,895,202,373 4,895,202 (2,040,377) 2,854,825
Repurchase of shares (Note (b)) ...... – – (959,956) (959,956)
Exercise of share options (Note (c)) . . . – – 424,801 424,801
As at December 31, 2023 .......... 4,895,202,373 4,895,202 (2,575,532) 2,319,670
(Unaudited)
As at January 1, 2023 ............ 4,895,202,373 4,895,202 (2,040,377) 2,854,825
Repurchase of shares (Note (b)) ...... – – (59,936) (59,936)
As at June 30, 2023 .............. 4,895,202,373 4,895,202 (2,100,313) 2,794,889
As at January 1, 2024 ............ 4,895,202,373 4,895,202 (2,575,532) 2,319,670
Repurchase of shares (Note (b)) ...... – – (1,378,503) (1,378,503)
Cancellation of shares (Note (b)) ..... (79,291,153) (79,291) 3,575,545 3,496,254
As at June 30, 2024 .............. 4,815,911,220 4,815,911 (378,490) 4,437,421
(a) On October 20, 2021, as approved by the shareholders of the Company and CSRC, the Company
completed a non-public placement of new A shares under general mandate. The Company issued a total
of 349,772,647 new A-share to 22 subscribers and raised funding of approximately RMB20,000,000,000
through the issuance. Netting off the transaction cost, the Company received a total of
RMB19,910,000,000.
Per the non-public placement, the Group recognized share capital of RMB349,772,647 and capital
reserve of RMB19,562,788,600.
(b) For the years ended December 31, 2022 and 2023 and the six months ended June 30, 2023 and 2024,
a total of 39,632,255, 19,838,884, 1,107,928 and 38,439,791 A shares have been repurchased
respectively for future employee stock ownership plan or share-based incentive, and treasury stocks
amounting to approximately RMB2,040,377,000, RMB959,956,000, RMB59,936,000 and
RMB1,378,503,000 therefore were recognized respectively.
During the year ended December 31, 2022 and the six months ended June 30, 2024, the Company, under
the approval and authorization of the general meeting, cancelled a total of 11,010,729 and 79,291,153
shares, respectively. Hence treasury stocks amounting to approximately RMB394,993,000 and share
capital of approximately RMB11,011,000 were derecognized with a corresponding credit to capital
reserve of approximately RMB383,982,000 in the year ended December 31, 2022. Treasury stocks
amounting to approximately RMB3,575,545,000 and share capital of approximately RMB79,291,000
were derecognized with a corresponding debit to capital reserve of approximately RMB3,496,254,000
for the six months ended June 30, 2024.
(c) In 2023, one-fourth of the share options granted in 2022 were vested upon the first anniversary date of
the grants. On August 1, 2023, a total of 8,420,193 share options were exercised, as 1,328 participants
met the performance requirements. Therefore, contribution of approximately RMB355,189,000 was
received by the Company from the participants, treasury stock of RMB424,801,000 and capital reserve
of RMB69,612,000 were derecognized.
APPENDIX I ACCOUNTANT’S REPORT
– I-88 –


--- page 583 ---
32. RESERVES AND RETAINED EARNINGS
(a) Reserves
The Group
Capital
reserve
Other
comprehensive
income
General
and
regulatory
reserve
Special
reserve
Statutory
reserve Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2021 .............. 24,405,217 1,143,969 279,142 – 745,043 26,573,371
Other comprehensive income ......... – 1,585,918 – – – 1,585,918
Transfer of gain on disposal of equity
investments at fair value through other
comprehensive income to retained
earnings ..................... – ( 1 12,656) – – – (112,656)
Transactions with owners
Capital contribution of non-public
placement .................... 19,562,789 – – – – 19,562,789
Capital contribution of non-controlling
interests ..................... 2,029,503 – – – – 2,029,503
Share-based payment ............... 287,553 – – – – 287,553
Transaction with non-controlling interests
and others .................... (75,317) – – – – (75,317)
Appropriation to general and regulatory
reserves ...................... – – 141,496 – – 141,496
Profit appropriations to statutory reserve. . – – – – 202,732 202,732
Safety reserve appropriation .......... – – – 28,370 – 28,370
Safety reserve utilisation ............ – – – (28,370) – (28,370)
Others ........................ (9,147) – – – – (9,147)
As at December 31, 2021 ........... 46,200,598 2,617,231 420,638 – 947,775 50,186,242
Capital
reserve
Other
comprehensive
income
General
and
regulatory
reserve
Special
reserve
Statutory
reserve Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2022 .............. 46,200,598 2,617,231 420,638 – 947,775 50,186,242
Other comprehensive income ......... – 1,882,025 – – – 1,882,025
Transfer of loss on disposal of equity
investments at fair value through other
comprehensive income to retained
earnings ..................... – 38,771 – – – 38,771
Transactions with owners
Capital contribution of non-controlling
interests ..................... 8 2 5 – – – – 8 2 5
Cancellation of shares .............. (383,982) – – – – (383,982)
Share-based payment ............... 122,999 – – – – 122,999
Transaction with non-controlling interests
and others .................... (2,055,007) – – – – (2,055,007)
Appropriation to general and regulatory
reserves ...................... – – 72,410 – – 72,410
APPENDIX I ACCOUNTANT’S REPORT
– I-89 –


--- page 584 ---
Capital
reserve
Other
comprehensive
income
General
and
regulatory
reserve
Special
reserve
Statutory
reserve Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Profit appropriations to statutory reserve. . – – – – 62,478 62,478
Safety reserve appropriation .......... – – – 32,214 – 32,214
Safety reserve utilisation ............ – – – (32,214) – (32,214)
Others ........................ 1 10,804 – – – – 110,804
As at December 31, 2022 ........... 43,996,237 4,538,027 493,048 – 1,010,253 50,037,565
Capital
reserve
Other
comprehensive
income
General
and
regulatory
reserve
Special
reserve
Statutory
reserve Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2023 .......... 43,996,237 4,538,027 493,048 – 1,010,253 50,037,565
Other comprehensive income ..... – 873,033 – – – 873,033
Transfer of gain on disposal of
equity investments at fair value
through other comprehensive
income to retained earnings ..... – 121,368 – – – 121,368
Transactions with owners
Capital contribution of
non-controlling interests ....... 1,207 – – – – 1,207
Exercise of share options ........ (69,612) – – – – (69,612)
Share-based payment ........... 271,510 – – – – 271,510
Transaction with non-controlling
interests and others .......... (1,037,241) – – – – (1,037,241)
Appropriation to general and
regulatory reserves ........... – – 31,328 – – 31,328
Profit appropriations to statutory
reserve .................. – – – – 1,403,533 1,403,533
Safety reserve appropriation ...... – – – 389,332 – 389,332
Safety reserve utilisation ........ – – – (389,332) – (389,332)
Others .................... 1,984 – – – – 1,984
As at December 31, 2023 ....... 43,164,085 5,532,428 524,376 – 2,413,786 51,634,675
APPENDIX I ACCOUNTANT’S REPORT
– I-90 –


--- page 585 ---
Capital
reserve
Other
comprehensive
income
General
and
regulatory
reserve
Special
reserve
Statutory
reserve Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
As at January 1, 2023 .......... 43,996,237 4,538,027 493,048 – 1,010,253 50,037,565
Other comprehensive income ..... – 639,549 – – – 639,549
Transfer of loss on disposal of
equity investments at fair value
through other comprehensive
income to retained earnings ..... – (18) – – – (18)
Transactions with owners
Capital contribution of
non-controlling interests ....... 8 9 0 – – – – 8 9 0
Share-based payment ........... 151,413 – – – – 151,413
Transaction with non-controlling
interests and others .......... ( 1 1,444) – – – – (11,444)
Safety reserve appropriation ...... – – – 18,568 – 18,568
Safety reserve utilisation ........ – – – (18,568) – (18,568)
Others .................... (3,041) – – – – (3,041)
As at June 30, 2023 ........... 44,134,055 5,177,558 493,048 – 1,010,253 50,814,914
Capital
reserve
Other
comprehensive
income
General
and
regulatory
reserve
Special
reserve
Statutory
reserve Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2024 .......... 43,164,085 5,532,428 524,376 – 2,413,786 51,634,675
Other comprehensive loss ........ – (1,060,319) – – – (1,060,319)
Transfer of gain on disposal of
equity investments at fair value
through other comprehensive
income to retained earnings ..... – 5,060 – – – 5,060
Transactions with owners
Capital contribution of non-
controlling interests .......... 1 2 7 – – – – 1 2 7
Cancellation of shares .......... (3,496,254) – – – – (3,496,254)
Share-based payment ........... 62,186 – – – – 62,186
Transaction with non-controlling
interests and others .......... (3,760,142) – – – – (3,760,142)
Safety reserve appropriation ...... – – – 272,081 – 272,081
Safety reserve utilisation ........ – – – (272,081) – (272,081)
As at June 30, 2024 ........... 35,970,002 4,477,169 524,376 – 2,413,786 43,385,333
APPENDIX I ACCOUNTANT’S REPORT
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--- page 586 ---
The Company
Capital reserve
Statutory
reserve Total
RMB’000 RMB’000 RMB’000
As at January 1, 2021 ..................... 52,344,321 591,998 52,936,319
Capital contribution of non-public placement ...... 19,562,789 – 19,562,789
Share-based payment ....................... ( 6 ) – ( 6 )
Profit appropriations to statutory reserve ........ – 202,732 202,732
As at December 31, 2021 ................... 71,907,104 794,730 72,701,834
As at January 1, 2022 ..................... 71,907,104 794,730 72,701,834
Cancellation of shares ...................... (383,982) – (383,982)
Share-based payment ....................... 220,852 – 220,852
Others ................................. (26) – (26)
Profit appropriations to statutory reserve ......... – 62,478 62,478
As at December 31, 2022 ................... 71,743,948 857,208 72,601,156
As at January 1, 2023 ..................... 71,743,948 857,208 72,601,156
Share-based payment ....................... 216,304 – 216,304
Exercise of share options .................... (69,612) – (69,612)
Profit appropriations to statutory reserve ......... – 1,403,533 1,403,533
As at December 31, 2023 ................... 71,890,640 2,260,741 74,151,381
(Unaudited)
As at January 1, 2023 ..................... 71,743,948 857,208 72,601,156
Share-based payment ....................... 137,562 – 137,562
As at June 30, 2023 ....................... 71,881,510 857,208 72,738,718
As at January 1, 2024 ..................... 71,890,640 2,260,741 74,151,381
Cancellation of shares ...................... (3,496,254) – (3,496,254)
Share-based payment ....................... 51,896 – 51,896
As at June 30, 2024 ....................... 68,446,282 2,260,741 70,707,023
(b) Retained earnings
The Company
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of the
year/period .......... 1,560,724 1,885,321 1,573,109 1,573,109 12,991,294
Profit/(loss) for the
year/period ........... 2,027,321 624,784 14,035,334 19,253 (2,115)
Profit appropriations to
statutory reserve ....... (202,732) (62,478) (1,403,533) – –
Dividends (Note 12) ...... (1,499,992) (874,518) (1,213,616) (1,213,616) (2,889,210)
At the end of the
year/period .......... 1,885,321 1,573,109 12,991,294 378,746 10,099,969
APPENDIX I ACCOUNTANT’S REPORT
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--- page 587 ---
33. SHARE-BASED PAYMENT
(a) Share-based payment expenses during the Track Record Period were as follows:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Equity settled share-based
payment ............. 349,308 109,573 309,338 153,461 69,940
Cash settled share-based
payment ............. 199,021 48,111 233,708 190,592 (10,903)
548,329 157,684 543,046 344,053 59,037
(b) Equity settled share-based payment arrangement
(i) Share Option Plan of the Company
The share option plan, established in May 2022, is designed to award the eligible participants who contribute
to the success of the Group’s operations and provide long-term incentives for employees to deliver long-term
shareholder returns.
Under the plan, participants are granted options which only vest if certain performance standards are met and
the employees, officers and directors shall remain in service. Participation in the plan is at the board’s discretion and
no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.
On May 30, 2022 and October 28, 2022, the Company had granted 47,892,100 and 1,608,000 stock options,
respectively, with an exercise price of RMB42.61 and RMB42.431 per share, respectively, to certain employees,
officers and directors.
A summary of activities of the service-based share options is presented as follows:
Number of
share
options
Weighted
average
exercise
price
Weighted
average
remaining
contractual
term
RMB
Outstanding as at January 1, 2022 ..................... – –
Granted ......................................... 49,500,100 42.60
Outstanding as at December 31, 2022 ................... 49,500,100 42.60 3.4 years
Outstanding as at January 1, 2023 ..................... 49,500,100 42.60
Exercised ........................................ (8,420,193) 42.18
Forfeited ......................................... (6,676,212) 42.18
Outstanding as at December 31, 2023 ................... 34,403,695 42.18 2.4 years
(Unaudited)
Outstanding as at January 1, 2023 ..................... 49,500,100 42.60
Granted ......................................... – –
Outstanding as at June 30, 2023 ....................... 49,500,100 42.60 2.9 years
Outstanding as at January 1, 2024 ..................... 34,403,695 42.18
Granted ......................................... – –
Outstanding as at June 30, 2024 ....................... 34,403,695 42.18 1.9 years
Vested and exercisable as at June 30, 2024 ............... 544,570 42.18
APPENDIX I ACCOUNTANT’S REPORT
– I-93 –


--- page 588 ---
The stock option shall vest over a period of 4 years on the condition that the employees, officers and directors
remain in service and certain performance standards are met. One-fourth of the awards shall be vested upon the end
of the first, the second, the third and the fourth anniversary dates of the grants.
The fair value at grant date is independently determined using an adjusted form of the Black Scholes Model
which includes a Monte Carlo simulation model that takes into account the exercise price, the term of the option, the
impact of dilution (where material), the share price at grant date and expected price volatility of the underlying share,
the expected dividend yield, the risk free interest rate for the term of the option and the correlations and volatilities
of the peer group companies.
The fair value per option was estimated at the grant dates using the following assumptions:
Exercise price per share .......................... RMB42.61, RMB42.43
Expiry date ................................... Respective annual due dates
Share price at grant date per share .................. RMB51.57, RMB49.88
Expected volatility of the Company’s shares ........... 35.77% ~ 40.39%
Expected dividend yield .......................... 0.51% ~ 0.55%
Risk-free interest rate ........................... 1.50% ~ 2.75%
The expected price volatility is based on the historic volatility (based on the remaining life of the options),
adjusted for any expected changes to future volatility due to publicly available information.
The Group recognizes share-based payments in capital reserves and its consolidated statements of profit or loss
based on options ultimately expected to vest, after considering estimated forfeitures of the share options. Forfeitures
are estimated based on the historical experience and revised in the subsequent periods if actual forfeitures differ from
those estimates. The impact of the revision of the original estimates on non-market vesting conditions, if any, is
recognized in the profit and loss over the remaining vesting period, with a corresponding adjustment to capital
reserves.
As mentioned in Note 31(c), 1,328 participants of the plan met the performance requirements and a total of
8,420,193 share options were exercised during the year ended December 31, 2023.
Share-based payment expenses of RMB220,852,000, RMB216,304,000, RMB137,562,000 and
RMB51,896,000 related to the above share options were recognized in the consolidated statements of profit or loss
for the years ended December 31, 2022 and 2023 and the six months ended June 30, 2023 and 2024, respectively.
An accumulated amount of RMB23,633,000, RMB244,485,000, RMB460,789,000 and RMB512,685,000 has
been recognized as capital reserve as at December 31, 2021, 2022 and 2023 and June 30, 2024 respectively.
(ii) Share Option Plan of the subsidiary entities
Subsidiaries of the Group issued restricted share units (‘RSU’) or share options of their own shares to senior
executives and other employees.
The fair value at grant date is independently determined using an adjusted form of the Discounted Cash Flow
model or Black Scholes Model.
Share-based payment expenses of approximately RMB349,308,000, RMB93,034,000, RMB15,899,000 and
RMB18,044,000 related to the above share awards were recognized in the consolidated statements of profit or loss
for the years ended December 31, 2021 and 2023 and the six months ended June 30, 2023 and 2024, respectively.
Share-based payment expenses amounting to RMB111,279,000 previously recognized in the consolidated statement
of profit or loss were reversed in 2022.
An accumulated amount of RMB619,314,000, RMB508,035,000, RMB601,069,000 and RMB619,113,000,
respectively, as at December 31, 2021, 2022 and 2023 and June 30, 2024 has been recognized as capital reserve.
APPENDIX I ACCOUNTANT’S REPORT
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(c) Cash-settled share-based payment arrangement
Subsidiaries of the Group issued RSU or share options of their own shares to senior executives and other
employees, with a term that the subsidiaries had an obligation to repurchase under certain conditions, as their
remuneration package, hereby the employees will become entitled to a future cash payment.
The management measured the liability, initially and at the end of each reporting period until settled, at the
fair value of the RSU or share options, by applying an adjusted form of the Discounted Cash Flow model or Black
Scholes Model.
The management recognized the services received, and a liability to pay for those services, as the employees
render service during the period. A total of share-based payment expenses of approximately RMB199,021,000,
RMB48,111,000, RMB233,708,000 and RMB190,592,000 related to the above arrangement for the years ended
December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023 were recognized in the consolidated
statements of profit or loss, respectively. The above arrangement expenses amounting to RMB10,903,000 previously
recognized in the consolidated statement of profit or loss were reversed for the six months ended June 30, 2024.
An accumulated amount of approximately RMB328,607,000, RMB334,757,000 and RMB268,453,000 as at
December 31, 2021, 2022 and 2023 has been recognized as liabilities, respectively. There were no share-based
payments recognized as liabilities as at June 30, 2024.
34. NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
(a) Reconciliation of profit before income tax to net cash generated from operations:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Profit before income tax for the
year/period ................. 7,750,856 11,037,836 10,486,505 5,420,350 6,320,057
Adjustments for:
Depreciation of right-of-use assets
(Note 8) ................... 5,776,678 7,291,360 7,213,063 3,686,282 3,428,916
Depreciation and amortization
(excluding right-of-use assets)
(Note 8) ................... 6,878,224 8,950,072 10,106,044 4,811,825 5,360,734
Impairment provision for investments
in associates and
joint ventures ............... 52,384 72,474 123,907 – –
Net impairment losses on financial
assets and contract assets ....... 579,851 825,170 (33,480) (66,022) 159,872
Impairment of inventories, property,
plant and equipment and other
non-current assets (Note 7) ...... 7,106 55,212 62,390 2,026 1,309
Equity settled share-based
compensation expenses (Note 33). . 349,308 109,573 309,338 153,461 69,940
Losses on disposal of property, plant
and equipment,
right-of-use assets and other non-
current assets (Note 7) ......... 195,841 52,305 53,891 64,740 (39,097)
Fair value changes in financial assets
at FVPL (Note 7) ............. (553,638) (660,867) (529,513) (290,377) (294,669)
Gains on disposal of investments in
subsidiaries (Note 36(b)) ........ (1,808,638) (32,314) (268,204) (244,982) (91,950)
Share of (profit)/loss of associates
and joint ventures, net ......... (42,660) (7,549) 67,190 13,486 62,580
Gains on disposal of investments in
associates and
joint ventures (Note 7) ......... (68,695) (282,906) (21,441) 1,941 (45,307)
Dividend income (Note 6) ........ (31,853) (13,811) (2,438) (2,535) (426)
Amortization of deferred income .... (36,480) (37,415) (45,935) (27,515) (20,416)
APPENDIX I ACCOUNTANT’S REPORT
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Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Finance costs (Note 10) ......... 1,562,963 2,054,360 2,269,700 1,092,673 1,230,918
Operating cash flow before
working capital changes ....... 20,611,247 29,413,500 29,791,017 14,615,353 16,142,461
Changes in working capital:
Increase in inventories .......... (370,579) (397,187) (491,314) (87,948) (119,277)
(Increase)/decrease in trade
receivables, prepayment,
contract assets and other
receivable .................. (6,196,150) 8,816,879 (262,500) 3,737,276 896,436
Increase/(decrease) in trade payables,
contract liabilities, and
other payables ............... 4,587,983 (52,190) 759,002 (2,533,277) (1,705,611)
Cash generated from operations ... 18,632,501 37,781,002 29,796,205 15,731,404 15,214,009
(b) Transaction with non-controlling interests
During the Track Record Period, the Group changed its ownership interests in certain subsidiaries without
change of its control.
The impacts of the transactions with non-controlling interests for the years ended December 31, 2021, 2022
and 2023 and the six months ended June 30, 2023 and 2024 are summarized as follows:
Y ear ended December 31,
Six months ended
June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net cash consideration paid to
non-controlling interests without
change of control .............. 109,576 3,914,671 1,833,285 132,490 3,353,487
Outstanding and included in other
payables .................... – 106,132 – – –
Total consideration of transactions
with non-controlling interests .... 109,576 4,020,803 1,833,285 132,490 3,353,487
Recognized in the reserve within
equity ..................... 75,317 2,055,007 1,037,241 11,444 3,760,142
(i) Major transactions during the year ended December 31, 2022
In May 2022, the Group acquired the remaining equity interests of SXH China Logistics (formerly named as
SF\HA VI China Logistics) (“SXH”) and SXH became a wholly-owned subsidiary of the Group. The Group
recognized a decrease in other reserve of RMB456,837,000.
In June 2022, KLN acquired additional equity interests in K-Apex Logistics (HK) Co., Limited (“K-Apex
HK”), a non wholly-owned subsidiary of KLN. The Group recognized a decrease in other reserve of
RMB1,183,864,000.
APPENDIX I ACCOUNTANT’S REPORT
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(ii) Major transaction during the year ended December 31, 2023
In July 2023, KLN acquired the remaining equity interests of K-Apex HK. Upon the completion of the
acquisition, K-Apex HK became a wholly-owned subsidiary of KLN. The Group recognized a decrease in other
reserve of RMB797,838,000.
(iii) Major transactions during the six months ended June 30, 2024
During the six months ended June 30, 2024, the Group acquired the remaining equity interests of Shenzhen
SF Freight Corporation and Shenzhen Fengwang Holding Co., Ltd. Upon the completion of the transactions, the
aforementioned subsidiaries became wholly-owned subsidiaries of the Group. The Group recognized a decrease in
other reserve of RMB2,146,357,000 and RMB744,838,000, respectively.
As mentioned in Note 17(a), during the six months ended June 30, 2024, the Group acquired additional equity
interests of 35.8% of KEX. The Group recognized a decrease in other reserve of RMB540,151,000.
Except for the aforementioned non-controlling interests’ transactions, other transactions made no significant
impact on the Group’s Historical Financial Information.
(c) Non-cash operating, investing and financing activities
The main non-cash operating, investing and financing activities for the years ended December 31, 2021, 2022
and 2023 and the six months ended June 30, 2023 and 2024 are summarized as follows:
Y ear ended December 31,
Six months ended
June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Additions of right-of-use assets ..... 10,130,741 6,126,609 6,553,794 3,192,368 2,814,232
Settlement of acquisitions of long-term
assets through bank supply chain
financing or re-factoring ......... 868,330 992,178 543,389 409,201 57,753
10,999,071 7,118,787 7,097,183 3,601,569 2,871,985
(d) Reconciliation of liabilities arising from financing activities
Bank
borrowings
Corporate
bonds and
short-term
debentures
Loans
from non-
controlling
interest
Leases
liabilities
(Note (i))
Loans from
holders of
asset-backed
securities
scheme Total
At January 1, 2021 ................. 10,615,872 10,365,145 159,390 10,711,248 – 31,851,655
Cash flows ...................... 7,196,602 9,884,299 (28,096) (6,987,589) (666,000) 9,399,216
Acquisition and disposal of subsidiaries, net . . 5,985,174 – 210,874 2,710,251 666,000 9,572,299
Interest expenses ................... 552,547 457,160 5,650 553,613 – 1,568,970
Other non-cash movements ............ ( 1 15,458) (189,977) 1,236 9,944,031 – 9,639,832
At December 31, 2021 ............... 24,234,737 20,516,627 349,054 16,931,554 – 62,031,972
At January 1, 2022 ................. 24,234,737 20,516,627 349,054 16,931,554 – 62,031,972
Cash flows ...................... (4,432,588) 4,677,774 (27,542) (7,813,330) (391,000) (7,986,686)
Acquisition and disposal of subsidiaries, net . . – – (18,379) – 391,000 372,621
Interest expenses ................... 768,304 793,666 8,323 609,652 – 2,179,945
Other non-cash movements ............ 1,332,285 1,663,023 3,024 5,451,452 – 8,449,784
At December 31, 2022 ............... 21,902,738 27,651,090 314,480 15,179,328 – 65,047,636
APPENDIX I ACCOUNTANT’S REPORT
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Bank
borrowings
Corporate
bonds and
short-term
debentures
Loans
from non-
controlling
interest
Leases
liabilities
(Note (i))
Loans from
holders of
asset-backed
securities
scheme Total
At January 1, 2023 ................. 21,902,738 27,651,090 314,480 15,179,328 – 65,047,636
Cash flows ...................... 9,202,159 (9,447,697) 10,098 (7,765,246) (899,360) (8,900,046)
Acquisition and disposal of subsidiaries, net . . 206,227 – – (4,810) 899,360 1,100,777
Interest expenses ................... 1,071,956 732,349 4,545 564,374 – 2,373,224
Other non-cash movements ............ 550,912 474,335 32,823 5,834,814 – 6,892,884
At December 31, 2023 ............... 32,933,992 19,410,077 361,946 13,808,460 – 66,514,475
(Unaudited)
At January 1, 2023 ................. 21,902,738 27,651,090 314,480 15,179,328 – 65,047,636
Cash flows ...................... 4,605,863 (3,941,892) (7,341) (3,891,543) – (3,234,913)
Acquisition and disposal of subsidiaries, net . . – – – (4,810) – (4,810)
Interest expenses ................... 456,361 405,531 4,238 289,013 – 1,155,143
Other non-cash movements ............ 655,230 845,952 36,725 2,919,234 – 4,457,141
At June 30, 2023 .................. 27,620,192 24,960,681 348,102 14,491,222 – 67,420,197
At January 1, 2024 ................. 32,933,992 19,410,077 361,946 13,808,460 – 66,514,475
Cash flows ...................... 3,228,764 2,057,853 5,542 (3,704,784) – 1,587,375
Interest expenses ................... 685,341 311,638 675 262,301 – 1,259,955
Other non-cash movements ............ 291,754 355,289 (7,769) 2,646,495 – 3,285,769
At June 30, 2024 .................. 37,139,851 22,134,857 360,394 13,012,472 – 72,647,574
(i) The other non-cash movement about lease liabilities mainly resulted from the new lease contracts
entered during the years ended December 31, 2021, 2022 and 2023 and the six months ended June 30,
2023 and 2024.
35. ACQUISITION OF SUBSIDIARIES
The net cash flow impact of acquisition of subsidiaries during the Track Record Period are as below:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net cash paid in respect of the
business combinations
(Note (a)) ................ 7,735,241 1,190,625 972,456 928,555 115,585
Net cash paid in respect of the
acquisition of assets (Note (b)) . 1,308,337 1,026,856 1,224,952 – 498,799
Net cash paid in acquisition of
subsidiaries .............. 9,043,578 2,217,481 2,197,408 928,555 614,384
APPENDIX I ACCOUNTANT’S REPORT
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(a) Acquisition of subsidiaries through business combinations
Analysis of the net cash outflow in respect of the acquisition of subsidiaries treated as business combinations
during the Track Record Period are as below:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Total acquisition consideration
including: KLN (Note (i)) ...... 14,550,982 – – – –
Topocean and Pro-Med
(Note (ii)) ........ – 1,721,991 – – –
Other subsidiaries .... 224,423 230,924 141,702 141,000 104,706
14,775,405 1,952,915 141,702 141,000 104,706
Less: Cash and bank balances
acquired
including: KLN (Note (i)) ...... (7,022,260) – – – –
Topocean and Pro-Med
(Note (ii)) ........ – (120,261) – – –
Other subsidiaries .... (1,982) (5,108) (4,545) (2,898) (19,744)
(7,024,242) (125,369) (4,545) (2,898) (19,744)
Outstanding and included in other
payables ................. (10,100) (745,718) – (9,774) (10,271)
Cash paid in the current year for
acquisition of subsidiaries in
prior years (Note (ii)) ........ 30,299 108,797 835,299 800,227 40,894
Other settlement ............. (36,121) – – – –
Net cash paid in respect of the
business combinations ....... 7,735,241 1,190,625 972,456 928,555 115,585
The major Business Combinations acquisition for the Track Record Period were as follows:
(i) Kerry Logistics Network
On September 28, 2021, the Group acquired 51.52% of the issued capital of KLN, which is engaged in a broad
range of supply chain solutions from integrated logistics, international freight forwarding (air, ocean, road, rail and
multimodal), e-commerce and express to industrial project logistics and infrastructure investment. The acquisition
was made as part of the Group’s strategy to further develop its supply chain solution and expand its international
logistics and freight forwarding business.
The purchase consideration was in the form of cash. The Group had made a lump-sum payment of
approximately RMB14,550,982,000 for the transaction.
Besides, according to the agreement, KLN sold its Taiwan Business and Warehouse in Hong Kong before
becoming subsidiaries of the Group. A total of RMB10,989,923,000 consideration receivable due to the disposal
transaction was then collected after the merger and acquisition closed. KLN declared a special dividend and paid
RMB10,819,033,000 spending the profit earned from the disposal transaction mentioned above.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 594 ---
The fair values of the identifiable assets and liabilities of KLN as at the date of acquisition were as follows:
Fair value
RMB’000
Cash .................................................................. 7,025,678
Financial assets at fair value through profit or loss .................................. 1,197,012
Trade receivables, prepayments and deposits ...................................... 24,446,818
Inventories .............................................................. 325,524
Other current assets ....................................................... 23,443
Investments in associate .................................................... 2,186,709
Investment properties ...................................................... 1,355,725
Property, plant and equipment ................................................ 8,250,899
Right-of-use assets ........................................................ 3,927,795
Intangible assets .......................................................... 6,808,714
Financial assets at fair value through other comprehensive income ....................... 244,044
Investment in convertible Bonds and short-term debentures ............................ 4,854
Deferred taxation assets ..................................................... 1 10,917
Short-term Bank borrowing, bank overdrafts and current portion of long-term Bank borrowing . . . (5,985,174)
Trade payables, deposits received and accrued charges ............................... (6,300,534)
Lease liabilities .......................................................... (2,710,251)
Deferred taxation liabilities .................................................. (2,490,007)
Other liabilities .......................................................... (14,875,883)
Net identifiable assets acquired ............................................... 23,546,283
Less: non-controlling interests ................................................ (13,126,493)
Add: goodwill ........................................................... 4,131,192
Net assets acquired ........................................................ 14,550,982
 Acquired receivables
The fair value of acquired trade receivables, prepayments and deposits as at the date of acquisition were
approximately RMB24,446,818,000. The gross contractual amount for trade receivables, due was
approximately RMB24,709,645,000 with a loss allowance of RMB262,827,000 recognized on acquisition.
 Accounting policy choice for non-controlling interests
The Group recognizes non-controlling interests in an acquired entity either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. This decision is
made on an acquisition-by-acquisition basis. For the non-controlling interests in KLN, the Group elected to
recognize the non-controlling interests at its proportionate share of the acquired net identifiable assets. See
Note 2.1(e) for the Group’s accounting policies for business combinations.
 Revenue and profit contribution
The acquired business contributed revenues of approximately RMB20,260,964,000 and net profit of
RMB883,124,000 to the Group for the period from September 28, 2021 to December 31, 2021.
If the acquisition had occurred on January 1, 2021, consolidated pro-forma revenue and profit of the
Group for the year ended December 31, 2021 would have been approximately RMB255,189,851,000 and
RMB6,161,944,000, respectively. These amounts have been calculated using the subsidiary’s results and
adjusting them for:
 differences in the accounting policies between the Group and the subsidiary, and
 the additional depreciation and amortization that would have been charged assuming the fair
value adjustments to property, plant and equipment and intangible assets had been applied from
January 1, 2021, together with the consequential tax effects.
APPENDIX I ACCOUNTANT’S REPORT
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(ii) Topocean and Pro-Med
In January 2022, the Group acquired 51% interest in Pro-Med Technology Limited (“Pro-Med”), which is a
company operating trading business based in Hong Kong.
In April 2022, the Group entered into agreement to acquire 100% interest in Topocean Consolidation Service
(Los Angeles), Inc. and its subsidiaries (“Topocean”), which are engaged in international freight forwarding in United
States by four tranches. Topocean are consolidated as wholly owned subsidiaries of the Group accordingly. The
Group has completed the acquisitions of 100% interest during the year. 80% of the total consideration was paid in
2022 and the remaining 20% has been recognized as consideration payable, which was fully paid in 2023.
The purchase consideration was in the form of cash. The Group had made a lump-sum payment of
approximately RMB1,721,991,000 for the transaction.
The fair values of the identifiable assets and liabilities of Topocean and Pro-Med as at the date of acquisition
were as follows:
Fair value
RMB’000
Cash .................................................................. 120,261
Trade receivables ......................................................... 1,809,141
Intangible assets .......................................................... 375,533
Other assets ............................................................. 229,835
Trade payables ........................................................... (1,864,368)
Deferred taxation liabilities .................................................. (132,732)
Net identifiable assets acquired ............................................... 537,670
Less: non-controlling interests ................................................ (8,833)
Add: goodwill ........................................................... 1,193,154
Net assets acquired ........................................................ 1,721,991
 Accounting policy choice for non-controlling interests
The Group recognizes non-controlling interests in an acquired entity either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. This decision is
made on an acquisition-by-acquisition basis. For the non-controlling interests in Pro-Med, the Group elected
to recognize the non-controlling interests at its proportionate share of the acquired net identifiable assets. See
Note 2.1(e) for the Group’s accounting policies for business combinations.
 Revenue and profit contribution
The acquired business contributed revenues of approximately RMB6,413,070,000 and net profit of
RMB281,132,000, respectively, to the Group for the period from the respective acquisition dates to
December 31, 2022.
(b) Acquisition of assets through acquisition of subsidiaries
Analysis of the net cash outflow in respect of the acquisition of subsidiaries treated as acquisition of assets
during the Track Record Period are as below:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Total acquisition
consideration .......... 1,389,990 1,099,465 1,269,444 – 559,289
Less: Cash and bank
balances acquired ....... (81,653) (72,609) (44,492) – (56,644)
Outstanding and included in
other payables ........ – – – – (3,846)
Net cash paid in respect of
the acquisition of assets . 1,308,337 1,026,856 1,224,952 – 498,799
APPENDIX I ACCOUNTANT’S REPORT
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(i) Major acquisition during the year ended December 31, 2021
On November 30, 2021, the Company exercised the pre-emptive right, which concluded in the article of the
asset-backed security scheme of Huatai Jiayue-SF Industrial Park Phase I No. 1, to acquire 100% equity interests of
Shenzhen Shunze Industrial Park Management Co., Ltd. (“Shenzhen Shunze”) and Shenzhen Shuntai Industrial Park
Management Co., Ltd. (“Shenzhen Shuntai”).
The identifiable assets of Shenzhen Shunze and Shenzhen Shuntai were the logistics industrial parks located
in Shanghai and Wuxi respectively.
The total consideration of the aforementioned equity interests was approximately RMB1,330,720,000, which
comprised of the fair value of property assets amounting to RMB1,996,720,000 and the fair value of liabilities
acquired amounting to RMB666,000,000. The transaction was completed on December 8, 2021.
The transaction met the concentration test criteria, and the set of property assets acquired was determined not
to be a business. These buildings and land use rights acquired were initially recognized at their fair values of
approximately RMB1,494,993,000 and RMB467,320,000, respectively, on December 8, 2021.
(ii) Major acquisition during the year ended December 31, 2022
On August 30, 2022, the Company exercised the pre-emptive right, which concluded in the article of the
asset-backed security scheme of Huatai Jiayue-SF Industrial Park Phase I No. 2, to acquire 100% equity interests of
Shenzhen Jiafeng Industrial Park Management Co., Ltd. (“Shenzhen Jiafeng”), Shenzhen Shunjie Industrial Park
Management Co., Ltd. (“Shenzhen Shunjie”) and Shenzhen Runheng Industrial Park Management Co., Ltd.
(“Shenzhen Runheng”).
The identifiable assets of Shenzhen Jiafeng, Shenzhen Shunjie and Shenzhen Runheng were the logistics
industrial parks located in Shenzhen, Yiwu and Huai’an respectively.
The total consideration of the aforementioned equity interests was approximately RMB1,065,130,000, which
comprised of the fair value of property assets amounting to RMB1,456,130,000 and the fair value of liabilities
acquired amounting to RMB391,000,000. The transaction was completed on September 2, 2022.
The transaction met the concentration test criteria, and the set of property assets acquired was determined not
to be a business. These property assets were initially recognized at their fair values of approximately
RMB1,456,130,000 on September 2, 2022.
(iii) Major acquisition during the year ended December 31, 2023
On September 15, 2023, the Company exercised the pre-emptive right, which concluded in the article of the
asset-backed security scheme of Huatai Jiayue-SF Industrial Park Phase I No. 3, to acquire 100% equity interests of
Shenzhen Fengkai Industrial Park Management Co., Ltd., Shenzhen Runtai Industrial Park Management Co., Ltd.,
Shenzhen Y utai Industrial Park Management Co., Ltd., Shenzhen Xingtai Industrial Park Management Co., Ltd. and
Shenzhen Shengtai Industrial Park Management Co., Ltd. (collectively the “Property Operators”).
The identifiable assets of the above property operators of the scheme were the logistics industrial parks located
in Wuxi, Quanzhou, Jiaxing, Y ancheng and Ningbo, respectively.
The total consideration of the aforementioned equity interests was approximately RMB904,000,000, which
comprised of the fair value of property assets amounting to RMB1,477,000,000 and the fair value of liabilities
acquired amounting to RMB573,000,000. The transaction was completed on October 9, 2023.
On December 19, 2023, the Company acquired 100% equity interests of Zhengzhou Fengtai E-commerce
Industrial Park Management Co., Ltd. (“Zhengzhou Fengtai”).
The consideration of the acquisition transaction was approximately RMB335,443,000, which comprised of the
fair value of property assets amounting to RMB684,000,000, and the fair value of liabilities acquired amounting to
RMB348,557,000. The transaction was completed on December 28, 2023.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 597 ---
Both transactions met the concentration test criteria, and the set of property assets acquired was determined
not to be a business. These property assets were initially recognized at their fair values of approximately
RMB1,477,000,000 on October 9, 2023 and RMB684,000,000 on December 28, 2023, respectively.
(iv) Major acquisition during the six months ended June 30, 2024
On January 18, 2024, the Company acquired 100% equity interests of Beijing Jieyutai Enterprise Management
Co., Ltd. (“Beijing Jieyutai”). The identifiable assets were mainly logistics industrial parks located in Beijing.
The total consideration of the aforementioned equity interests was approximately RMB559,289,000. These
property assets acquired were initially recognized at their fair values of approximately RMB835,700,000.
The transaction met the concentration test criteria, and the set of property assets acquired was determined not
to be a business.
36. DISPOSAL OF SUBSIDIARIES
Transactions of disposal of subsidiaries during the Track Record Period are analyzed as follows:
(a) Net cash received from disposal of subsidiaries
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Non-cash consideration
Including: SF Real Estate
Investment Trust (Note (c)(i)) . . 1,152,527 ––––
1,152,527 ––––
Cash consideration
Including: SF Real Estate
Investment Trust (Note (c)(i)) . . 1,271,751 ––––
Guangdong Fengxing
Zhitu Technology
Co., Ltd
(Note (c)(ii)) ...... 1,025,042 ––––
Shenzhen Fengwang
Information Technology
Co., Ltd (Note
(c)(iii)) .......... – – 460,930 460,930 –
Other subsidiaries .... 686,161 233,639 146,798 87,050 273,345
2,982,954 233,639 607,728 547,980 273,345
Total disposal consideration .... 4,135,481 233,639 607,728 547,980 273,345
APPENDIX I ACCOUNTANT’S REPORT
– I-103 –


--- page 598 ---
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Total Cash consideration . . . 2,982,954 233,639 607,728 547,980 273,345
Add: Cash and cash
equivalents received from
disposal of subsidiaries in
the prior year ......... 15,000 99,751 – – –
Less: Outstanding and
included in other
receivables ........... (100,534) – – – (118,000)
Less: Cash and cash
equivalents held by the
subsidiaries at the dates
of disposal ........... (559,868) (19,671) (208,906) (189,393) (1,749)
Net cash flow impact from
disposal of subsidiaries .. 2,337,552 313,719 398,822 358,587 153,596
(b) Gains on disposal of investments in subsidiaries
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Total disposal consideration . 4,135,481 233,639 607,728 547,980 273,345
Carrying amount of net
assets sold ........... (2,332,240) (201,325) (339,524) (302,998) (181,395)
Gain on sale before income
tax and reclassification of
foreign currency
translation reserve ...... 1,803,241 32,314 268,204 244,982 91,950
Reclassification of other
comprehensive income . . . 5,397 ––––
Gains on disposal of
investments in
subsidiaries ........... 1,808,638 32,314 268,204 244,982 91,950
APPENDIX I ACCOUNTANT’S REPORT
– I-104 –


--- page 599 ---
(c) The major disposal of subsidiaries during the Track Record Period were as follows:
(i) SF Real Estate Investment Trust
In May 2021, the Group entered into an agreement with SF Real Estate Investment Trust (“SF REITs”), which
was a collective investment scheme set up by SF REITs Assets Management Ltd., (“the Manager”) and DB Trustees
(Hong Kong) Ltd., (“the Trustee”).
According to the transaction, the Group sold the whole shares of three subsidiaries which operated in logistics
properties, i.e., Foshan Runzhong Industrial Investment Ltd., Wuhu Fengtai E-Commerce Industrial Park
Management Ltd., and Gute Development Ltd., to SF REITs. The Group hence lost control of these three subsidiaries.
Aggregate consideration of the transaction was approximately HKD2,907,317,000 (RMB2,424,278,000),
composing of a total of approximately HKD1,513,317,000 (RMB1,271,751,000) of cash and 35% shares of SF REITs,
which amounting to approximately HKD1,394,400,000 (RMB1,152,527,000).
An investment gain amounting to approximately HKD1,082,557,000 (RMB895,512,000) was recognized for
the transaction.
SF REITs was then listed on the Main Board of HKEX (REITs code: 2191) on May 17, 2021. The Group held
35% of SF REITs as at December 31, 2021, 2022 and 2023 and June 30, 2024. Since the management of the Group
was of the view that the Group had significant influence on SF REITs, the Group recognized SF REITs as an
associate.
(ii) Guangdong Fengxing Zhitu Technology Co., Ltd (“Fengtu Technology”)
In October 2021, the Group disposed its equity interest of 59.36% and 9.9% in Fengtu Technology to Mingde
Holding and a third party respectively, with the total consideration of approximately RMB1,025,042,000 and
investment gains of approximately RMB829,948,000 was recognized.
(iii) Shenzhen Fengwang Holding Co., Ltd (“Fengwang Holding”)
On May 12, 2023, Shenzhen Fengwang Holding Co., Ltd (“Fengwang Holding”), a subsidiary of the Company,
entered into a share transfer agreement with Shenzhen J&T Supply Chain Co., Ltd (“J&T Supply Chain”) which was
to sell the entire interests of Shenzhen Fengwang Information Technology Co., Ltd (“Fengwang Information”), a
subsidiary wholly held by Fengwang Holding. The total consideration of the above transaction was RMB1,183
million subject to operating profit or loss of Fengwang Information borne by the Group during the period from March
31, 2023 to June 27, 2023 (“the Transitional Period”).
The consideration had been adjusted to RMB461 million after taking Fengwang Information’s operating results
during the Transitional Period into account. This transaction was completed on June 27, 2023.
Investment gain of RMB243,378,000 was recognized, and RMB155,153,000 among which was attributed to
the shareholders of the Company.
37 PARTLY OWNED SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS
Set out below is summarized financial information for KLN and its subsidiaries since its acquisition by the
Group, which has non-controlling interests that are material to the Group. The amounts disclosed for KLN and its
subsidiaries are before inter-company eliminations.
As at
December 31,
2021
As at
December 31,
2022
As at
December 31,
2023
As at
June 30,
2024
RMB’000 RMB’000 RMB’000 RMB’000
Current assets ................... 22,058,645 21,821,593 18,187,621 19,058,466
Non-current assets ................ 23,566,766 25,615,187 25,760,002 24,116,762
Total assets .................... 45,625,411 47,436,780 43,947,623 43,175,228
Current liabilities ................ 14,795,606 14,196,749 13,130,867 13,009,124
Non-current liabilities ............. 6,645,860 10,240,832 9,017,591 9,523,595
Total liabilities ................. 21,441,466 24,437,581 22,148,458 22,532,719
APPENDIX I ACCOUNTANT’S REPORT
– I-105 –


--- page 600 ---
Period from
September 28,
2021 to
December 31,
2021
Y ear ended
December 31,
2022
Y ear ended
December 31,
2023
Six months
ended
June 30,
2023
Six months
ended
June 30,
2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue ............. 20,260,964 74,261,942 45,944,780 22,462,886 23,988,254
Net profit ............ 883,124 2,838,971 227,315 102,409 103,294
Total comprehensive
income/(loss) ........ 921,320 3,040,177 361,076 153,958 (318,288)
Net cash generated from
operating activities .... 2,123,547 4,918,473 3,043,080 1,449,579 1,157,855
(i) Net profits and total comprehensive income attributable to owners were as follows:
Period from
September 28,
2021 to
December 31,
2021
Y ear ended
December 31,
2022
Y ear ended
December 31,
2023
Six months
ended
June 30,
2023
Six months
ended
June 30,
2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net profits ........ 371,005 1,362,735 209,849 83,039 25,482
Total comprehensive
income/(loss) ..... 252,516 2,182,133 390,618 348,315 (29,708)
(ii) Except for KLN and its subsidiaries, no other subsidiaries had non-controlling interests that are material
to the Group for the years ended December 31, 2021, 2022 and 2023 and the six months ended June 30,
2023 and 2024.
38. RELATED PARTY TRANSACTIONS
(a) Parent entities
Name Type
Place of
incorporation
Ownership interest
2021 2022 2023
Six
months
ended
June 30,
2024
Mingde Holding .... Investment Shenzhen 55.07% 54.95% 54.38% 55.27%
The Company’s ultimate holding company is Mingde Holding, and the ultimate controlling person is Mr. Wang
Wei.
(b) Names and relationships with related parties
Related parties are those parties that have the ability to control, jointly control or exercise significant influence
over the other party in holding power over the investee; exposure or rights to variable returns from its involvement
with the investee; and the ability to use its power over the investee to affect the amount of the investor’s returns.
Parties are also considered to be related if they are subject to common control or joint control. Related parties maybe
individuals or other entities.
APPENDIX I ACCOUNTANT’S REPORT
– I-106 –


--- page 601 ---
Save as disclosed elsewhere in this report, the directors of the Company are of the view that the following
parties/companies were significant related parties that had transactions or balances with the Group for the years ended
or as at December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024:
Name of related parties Relationship with the Group
Fengtu Technology ( i ) ........................ Controlled by the ultimate controlling person of the
Company
Shenzhen Fengxiang Information Technology Co., Ltd.
(“Fengxiang Information Technology”) ..........
Controlled by the ultimate controlling person of the
Company
Hangzhou Fengtai E-Commerce Industrial Park
Management Ltd. .........................
Controlled by the ultimate controlling person of the
Company
Shenzhen Shunshang Investment Co., Ltd. ......... Controlled by the ultimate controlling person of the
Company
Shenzhen SF Hefeng Microfinance Co., Ltd. ........ Controlled by the ultimate controlling person of the
Company
Zhejiang Yibao Network Technology Co., Ltd. ....... Controlled by the ultimate controlling person of the
Company
Suzhou Fengchengda Network Technology Co., Ltd. . . Controlled by the ultimate controlling person of the
Company
Shenzhen Hive Box Technology Co., Ltd and
its subsidiaries ...........................
Controlled by the ultimate controlling person of the
Company
Shenzhen Fengyi Technology Co., Ltd (ii) .......... A n associate of Mingde Holding
Shenzhen Zhongshunyi Finance Service Co., Ltd .... A n associate of Mingde Holding
Canbeidou Supply Chain and its subsidiaries ........ Associates of the Group
Chongqing Boqiang Logistics Co., Ltd. ............ A n associate of the Group
Dazhangfang Information Technology and its
subsidiaries .............................
Associates of the Group
DHL Weiheng (Zhuhai) Supply Chain Management
Co., Ltd. (iii) ............................
An associate of the Group before December 2023
Galaxis Technology and its subsidiaries ........... Associates of the Group
Giao Hang Tiet Kiem Joint Stock Company ........ A n associate of the Group
Kin Shun Information Technology Limited ......... A n associate of the Group
Qingdao Dakai Cargo Agency Co., Ltd. ........... A n associate of the Group
Shanghai Qianqu Network Technology Co., Ltd. and
its subsidiaries ...........................
Associates of the Group
Shanghai Tingdi Logistics Service Co., Ltd. ........ A n associate of the Group
Shenzhen Fenglian Technology Co., Ltd. ........... A n associate of the Group
Shenzhen Shunjie Fengda and its subsidiaries ....... Associates of the Group
Shenzhen Zhongwang Finance and Tax Management
Co., Ltd. ...............................
An associate of the Group
Wuhan Shunluo Supply Chain Management Co., Ltd. . . An associate of the Group
KENGIC Intelligent Technology Co., Ltd. and
its subsidiaries ...........................
Associates of the Group
Shanghai Jiaxing Logistics Co., Ltd. .............. A n associate of the Group
State Grid E-Commerce Y unfeng Logistics Technology
(Tianjin) Co., Ltd. .........................
An associate of the Group from August 2020
SF Real Estate Investment Trust ................ A n associate of the Group from May 2021
Beijing Bei Jian Tong Cheng International Logistics
Co., Ltd ................................
An associate of the Group from September 2021
Xi’an Huahan Air Passenger and Freight Service
Co., Ltd. ...............................
An associate of the Group before October 2022
Rabbit-Line Pay Company Limited ............... A n associate of the Group from December 2021
Sichuan Wulianyida Technology Co., Ltd. and its
subsidiaries (iv) ..........................
Associates of the Group from August 2023
Sunway Express (H.K.) Limited ................. A n associate of the Group from December 2021
Yihai Shunfeng (Shanghai) Supply Chain Technology
Co., Ltd. ...............................
An associate of the Group from December 2021
Beijing Shunhe Tongxin Technology Co., Ltd. ....... A joint venture of the Group
Beijing Wulian Shuntong Technology Co., Ltd. and
its subsidiaries ...........................
Joint ventures of the Group
CR-SF International Express Co., Ltd. ............ A joint venture of the Group
APPENDIX I ACCOUNTANT’S REPORT
– I-107 –


--- page 602 ---
Name of related parties Relationship with the Group
Geling Information and its subsidiaries ............ Joint ventures of the Group
Global Connect Holding Limited ................ A joint venture of the Group
Hubei International Logistics Airport Co., Ltd. ...... A joint venture of the Group
Jinfeng Borun (Xiamen) Equity Investment Partnership
(Limited Partnership) .......................
A joint venture of the Group
POST 11 OÜ .............................. A joint venture of the Group
Shenzhen Shenghai Information Service Co., Ltd. .... A joint venture of the Group
Zhongbao Hua’an Investment Management Co., Ltd.
and its subsidiaries ........................
Joint ventures of the Group
Shenzhen Fengsu Technology Co., Ltd. ........... A joint venture of the Group
Ezhou China Communications SF Airport Industrial
Park Investment Development Co., Ltd. ..........
A joint venture of the Group from February 2021
Zhongyunda Aviation Ground Services Co., Ltd. ..... A joint venture of the Group before June 2021
Wenzhou Fengbaoke Technology Co., Ltd. ......... A joint venture of the Group before June 2022
Shenzhen Zhaoguang Investment Co., Ltd. ......... A n entity that has significant impact on the Company
(i) Fengtu Technology was a subsidiary of the Company. Fengtu Technology was disposed to Mingde
Holding, the Company’s ultimate holding company, in October 2021, since then Fengtu Technology was
no longer in the scope of consolidation of the Group and became a related party controlled by the
ultimate controlling person of the Company.
(ii) Shenzhen Fengyi Technology Limited had been a subsidiary of Mingde Holding until August 2021.
Mingde Holding sold 47.5% shares held and Shenzhen Fengyi Technology Limited then became an
associate company of Mingde Holding.
(iii) DHL Weiheng (Zhuhai) Supply Chain Management Co., Ltd. (“DHL Weiheng”) was an associate of the
Group. In December 2023, the Group acquired the remaining equity interests of DHL Weiheng and DHL
Weiheng became a wholly-owned subsidiary of the Group.
(iv) Sichuan Wulianyida Technology Co., Ltd. and its subsidiaries (“Sichuan Wulianyida”) were subsidiaries
of the Group. In August 2023, the Group disposed a portion of its equity interest in Sichuan Wulianyida.
Since then, Sichuan Wulianyida was no longer in the scope of consolidation of the Group and became
an associate of the Group.
(c) Transactions with related parties
The following significant transactions were carried out between the Group and its related parties during the
Track Record Period. In the opinion of the directors of the Company, the related party transactions were carried out
in the normal course of business and at terms negotiated between the Group and the respective related parties.
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Sales of goods and services:
Controlling shareholder ....... 6 1 1 3 4 6 4 2 6 2 0 3 2 5 5
Entities controlled by the
ultimate controlling person of
the Company ............. 139,478 143,329 127,516 63,668 756,114
Associates of Mingde Holding . . 30,422 18,164 14,759 6,646 7,157
Joint ventures of the Group .... 157,716 15,816 13,937 5,989 14,030
Associates of the Group ....... 44,140 67,320 91,576 32,527 50,706
372,367 244,975 248,214 109,033 828,262
APPENDIX I ACCOUNTANT’S REPORT
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--- page 603 ---
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Purchases of goods and
services:
Controlling shareholder ....... ––––7
Entities controlled by the
ultimate controlling person of
the Company ............. 518,947 846,803 972,582 455,656 385,191
Associates of Mingde Holding . . 14 1,168 839 841 190
Joint ventures of the Group .... 1,230,588 1,079,265 1,279,481 621,518 537,250
Associates of the Group ....... 1,618,086 1,145,864 1,661,741 710,024 343,809
3,367,635 3,073,100 3,914,643 1,788,039 1,266,447
Acquisition of assets through
acquisition of subsidiaries:
Joint ventures of the Group
(Note 35(b)) ............. – – 335,443 – 559,289
– – 335,443 – 559,289
Disposal of equity:
Controlling shareholder ....... 918,52 2––––
Entities controlled by the
ultimate controlling person of
the Company ............. 54,500 – 85,188 85,188 –
Joint ventures of the Group .... 98,108 – 12,827 – –
Associates of the Group ....... – 232,93 9–––
1,071,130 232,939 98,015 85,188 –
Depreciation and interest
expenses borne by the Group
as the lessee:
Entities controlled by the
ultimate controlling person of
the Company ............. 12,677 12,334 12,148 5,938 6,026
Joint ventures of the Group .... – – 31,672 – –
Associates of the Group ....... 142,703 225,826 229,975 113,054 116,707
155,380 238,160 273,795 118,992 122,733
Additions of right-of-use
assets:
Entities controlled by the
ultimate controlling person of
the Company ............. 28,331 43,082 53,598 27,183 2,058
Joint ventures of the Group .... – – 3,876 – –
Associates of the Group ....... 974,664 103,867 32,734 12,093 265
1,002,995 146,949 90,208 39,276 2,323
Other transactions:
Controlling shareholder ....... – – 6 8 3 – 3 4 1
Entities controlled by the
ultimate controlling person of
the Company ............. 1,800 1,071 2,416 809 1,545
Associates of Mingde Holding . . 597 2,530 2,861 1,565 1,391
Joint ventures of the Group .... 6 9 1 6 8 6 1,857 304 408
Associates of the Group ....... 3,050 3,901 4,869 2,207 977
6,138 8,188 12,686 4,885 4,662
APPENDIX I ACCOUNTANT’S REPORT
– I-109 –


--- page 604 ---
(d) Balances with related parties
Y ear ended December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Amounts due from related parties:
Trade
Controlling shareholder ................ 3 7 5 7 5 0
Entities controlled by the ultimate controlling
person of the Company ............... 54,258 38,864 33,048 474,495
Associates of Mingde Holding ........... 23,661 6,409 3,267 3,207
Joint ventures of the Group ............. 3,636 2,318 9,813 6,037
Associates of the Group ................ 15,362 36,588 89,741 84,770
Non-Trade
Controlling shareholder ................ – – 1 6 7 1 3 6
Entities controlled by the ultimate controlling
person of the Company ............... 372,900 406,914 561,979 190,694
Associates of Mingde Holding ........... 2 2 7 1,026 451 450
Joint ventures of the Group ............. 3 4 5 8,747 331,401 1,115
Associates of the Group ................ 135,449 156,602 128,372 139,637
605,841 657,475 1,158,296 900,591
Amounts due to related parties:
Trade
Controlling shareholder ................ 1 9 – – –
Entities controlled by the ultimate controlling
person of the Company ............... 108,216 164,820 136,127 150,340
Associates of Mingde Holding ........... 4,259 4,460 1,303 1,477
Joint ventures of the Group ............. 168,245 155,990 164,046 171,399
Associates of the Group ................ 128,378 184,783 167,865 121,130
Non-Trade
Controlling shareholder ................ 1 8 1 7 1 2 8 1 2 8
Entities controlled by the ultimate controlling
person of the Company ............... 4,535 1,039 2,788 2,844
Associates of Mingde Holding ........... 5 2 6 2,829 3,608 3,589
Joint ventures of the Group ............. 1,419 978 2,393 2,041
Associates of the Group ................ 263,172 215,207 127,181 87,377
678,787 730,123 605,439 540,325
The management do not plan to fully settle all amounts due to related parties that are non-trade in nature prior
to the initial listing of H Shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited.
Lease Liabilities:
Entities controlled by the ultimate
controlling person of the Company ..... 13,266 45,379 92,060 90,324
Joint ventures of the Group ............ – – 98,987 –
Associates of the Group ............... 816,578 784,767 598,296 487,627
829,844 830,146 789,343 577,951
APPENDIX I ACCOUNTANT’S REPORT
– I-110 –


--- page 605 ---
(e) Guarantee provided
As at December 31, 2021
Guaranteed entities:
Guaranteed
amount Guaranteed period
Whether the
guarantee has been
fulfilled
RMB’000
Associates ...................... 126,420 January 15, 2021 to
December 23, 2033
No
Joint ventures ................... 276,000 September 29, 2021
to April 29, 2055
No
402,420
As at December 31, 2022
Guaranteed entities:
Guaranteed
amount Guaranteed period
Whether the
guarantee has been
fulfilled
RMB’000
Associates ...................... 1 13,374 January 15, 2021 to
December 23, 2033
No
Joint ventures ................... 782,000 September 29, 2021
to April 29, 2055
No
895,374
As at December 31, 2023
Guaranteed entities:
Guaranteed
amount Guaranteed period
Whether the
guarantee has been
fulfilled
RMB’000
Joint ventures ................... 782,000 September 29, 2021
to April 29, 2055
No
As at June 30, 2024
Guaranteed entities:
Guaranteed
amount Guaranteed period
Whether the
guarantee has been
fulfilled
RMB’000
Joint ventures ................... 782,000 September 29, 2021
to April 29, 2055
No
(f) Key management compensation
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Key management
compensation ......... 28,414 29,214 48,509 26,241 21,359
APPENDIX I ACCOUNTANT’S REPORT
– I-111 –


--- page 606 ---
(g) Commitments provided
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Joint ventures ....................... 2,890,180 2,384,180 2,384,180 2,384,180
39. COMMITMENTS
(a) Capital Commitments
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Contracted, but not provided for purchase of
property, plant
and equipment ..................... 10,432,197 3,571,632 1,858,672 2,378,529
Investment to be paid ................. 3,134,839 1,811,611 131,895 129,783
Others ............................ 1 1,067 – 944 4,663
13,578,103 5,383,243 1,991,511 2,512,975
40. SUBSEQUENT EVENTS
(a) From July 1 to October 31, 2024, the Company repurchased an aggregate of 10,571,774 shares of the Company
at an aggregate consideration of approximately RMB379,554,000.
(b) On July 18, 2024, Shenzhen S.F. Taisen Holding (Group) Co., Ltd. (“Taisen Holding”), a wholly-owned
subsidiary of the Company, issued 5-year corporate bonds with an aggregate principal amount of RMB500
million at a coupon rate of 2.30%.
On July 22, 2024, Taisen Holding issued 3-year medium-term notes with an aggregate principal amount of
RMB500 million at a coupon rate of 2.15%.
(c) An interim dividend for the six months ended June 30, 2024 of RMB40 cents per ordinary share (tax inclusive)
was approved by the shareholders at the first extraordinary general meeting on October 29, 2024. The dividend
was not recognized as a liability as at June 30, 2024.
(d) A special dividend of RMB1 per ordinary share (tax inclusive) was approved by the shareholders at the first
extraordinary general meeting on October 29, 2024. The dividend was not recognized as a liability as at June
30, 2024.
APPENDIX I ACCOUNTANT’S REPORT
– I-112 –


--- page 607 ---
41. GROUP STRUCTURE-PRINCIPAL SUBSIDIARIES
As at December 31, 2021, 2022 and 2023 and June 30, 2024 and as at the date of this report, the Company’s principal subsidiaries are as follows:
Name
Place of
Incorporation
and Operation Principal Activities
Issued ordinary/
registered share
capital
(in thousand)
Percentage of equity interest
Note
As at December 31, As at June 30,
As at the date
of this report2021 2022 2023 2024
Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect
Taisen Holding ......... Mainland
China
Investment holding RMB5,000,000 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% (i)(vi)
S.F. Express Co., Ltd. ..... Mainland
China
International freight
forwarding, domestic
and international express
service, etc.
RMB150,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
SF Technology Co., Ltd. . . . Mainland
China
Technical maintenance and
development services
RMB60,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
Shenzhen Fengtai
E-commerce Industrial
Park Assets Management
Co., Ltd. ............
Mainland
China
Operation and management
of logistics industrial
parks
RMB9,530,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
Guangdong S.F. E-commerce
Co., Ltd. ............
Mainland
China
International freight
forwarding, domestic
and international express
service, etc.
RMB10,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
Shenzhen Fengwang Express
Co., Ltd. ............
Mainland
China
Domestic express services
through a nationwide
network partner model
RMB10,000 0.00% 63.75% 0.00% 63.75% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% (ii)
SF Holding Group Finance
Co., Ltd. ............
Mainland
China
Internal cash management
services
RMB2,500,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
SF Airlines Company
Limited ............
Mainland
China
Transport service of
aviation cargo
RMB1,510,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
Shenzhen S.F. Shuntai
Logistics Co., Ltd. ......
Mainland
China
Cargo transportation and
freight forwarding
RMB5,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (xii)
Shenzhen SF Freight
Corporation ..........
Mainland
China
Business and supply chain
management
RMB1,695,000 0.00% 87.80% 0.00% 87.80% 0.00% 87.80% 0.00% 100.00% 0.00% 100.00% (vi)
Shenzhen Shunlu Logistics
Co., Ltd. ............
Mainland
China
Cargo transportation and
freight forwarding
RMB160,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
Shenzhen S.F. Intra-city
Logistics Co., Ltd. ......
Mainland
China
Supply chain management
and other services
RMB3,420,000 0.00% 55.85% 0.00% 56.76% 0.00% 56.87% 0.00% 56.87% 0.00% 57.86% (xii)
Guang Zhou S.F. Express
Co., Ltd. ............
Mainland
China
International freight
forwarding, domestic
and international express
service, etc.
RMB150,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
APPENDIX I ACCOUNTANT’S REPORT
– I-113 –


--- page 608 ---
Name
Place of
Incorporation
and Operation Principal Activities
Issued ordinary/
registered share
capital
(in thousand)
Percentage of equity interest
Note
As at December 31, As at June 30,
As at the date
of this report2021 2022 2023 2024
Direct Indirect Direct Indirect Direct Indirect Direct Indirect Direct Indirect
Suzhou S.F. Express Co.,
Ltd. ...............
Mainland
China
International freight
forwarding, domestic
and international express
service, etc.
RMB5,100 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
Jiangsu S.F. Express Co.,
Ltd. ...............
Mainland
China
International freight
forwarding, domestic
and international express
service, etc.
RMB100,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
Zhejiang Shun Feng Express
Co., Ltd. ............
Mainland
China
International freight
forwarding, domestic
and international express
service, etc.
RMB100,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
Zhejiang Fengchi Network
Technology Co., Ltd. ....
Mainland
China
Cargo transportation and
freight forwarding
RMB10,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
Hangzhou SF Intra-city
Industrial Co., Ltd. .....
Mainland
China
Supply chain management
and other services
RMB933,458 0.00% 55.85% 0.00% 56.76% 0.00% 56.87% 0.00% 56.87% 0.00% 57.86% (v)(vi)
Beijing S.F. Express Co.,
L T D . ..............
Mainland
China
International freight
forwarding, domestic
and international express
service, etc.
RMB100,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
Shanghai Shunheng Logistics
Co., Ltd. ............
Mainland
China
International freight
forwarding, domestic
and international express
service, etc.
RMB100,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
Anhui S.F.
Telecommunication Service
Co., Ltd. ............
Mainland
China
V alue-added
telecommunication
service
RMB50,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (vi)
SF Holding (HK) Limited. . . Hong Kong Investment holding HKD8,301,284 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (viii)
Trend Power Investments
Limited ............
Cayman
Islands
Investment holding USD10,000 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (x)
SF Holding Investment 2021
Limited ............
British Virgin
Island
Investment holding USD10 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (x)
Flourish Harmony Holdings
Company Limited ......
Cayman
Islands
Investment holding USD0 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% (xi)
KEX Thailand .......... Thailand Express parcel delivery
services and payment
solutions
THB1,752,485 0.00% 26.82% 0.00% 26.82% 0.00% 26.82% 0.00% 62.66% 0.00% 81.43% (ix)
K-APEX Logistics (HK) Co.,
Ltd. ...............
Hong Kong International freight
forwarding
HKD18,900 0.00% 31.42% 0.00% 40.69% 0.00% 51.50% 0.00% 51.50% 0.00% 51.50% (viii)
APPENDIX I ACCOUNTANT’S REPORT
– I-114 –


--- page 609 ---
(i) The Company’s investment in subsidiaries is as follow:
As at December 31,
As at
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Taisen Holding ................................................................. 50,997,088 58,217,914 66,933,038 66,962,282
(ii) Shenzhen Fengwang Express Co., Ltd. was a subsidiary of Fengwang Information, which was disposed in May 2023. Refer to note 36(c) for details of th e transaction.
The statutory financial statements for the year ended December 31, 2021 were audited by PricewaterhouseCoopers Zhong Tian LLP , a certified public ac counting firm
registered in the PRC. Shenzhen Fengwang Express Co., Ltd. has not issued audited financial statements for the year ended December 31, 2022.
(iii) The English names of the subsidiaries represent the best efforts made by the management of the Group in translating their Chinese names as they do not have official
English names.
(iv) The above list included subsidiaries having material impact on the annual results or net assets of the Group.
(v) Hangzhou SF Intra-city Industrial Co., Ltd. completed its primary listing on Main Board of the Stock Exchange of Hong Kong Limited (“HKEX”) on Dece mber 14, 2021.
(vi) The statutory financial statements of the Company and these entities for the years ended December 31, 2021, 2022 and 2023 prepared in accordance w ith PRC GAAP
were audited by PricewaterhouseCoopers Zhong Tian LLP , a certified public accounting firm registered in the PRC.
(vii) The statutory financial statements of this entity for the years ended December 31, 2021 and 2022 prepared in accordance with PRC GAAP were audite db y
PricewaterhouseCoopers Zhong Tian LLP , a certified public accounting firm registered in the PRC. The statutory financial statements of this entity for the year ended
December 31, 2023 were prepared in accordance with PRC GAAP were audited by Shenzhen Zhenan GP , a certified public accounting firm registered in the PR C.
(viii) The statutory financial statements of these entities for the years ended December 31, 2021, 2022 and 2023 were audited by PricewaterhouseCoop ers, a certified public
accounting firm registered in the Hong Kong.
(ix) The statutory financial statements of this entity for the years ended December 31, 2021, 2022 and 2023 were audited by PricewaterhouseCoopers AB AS Ltd., a certified
public accounting firm registered in Thailand.
(x) No audited financial statements were issued for these entities for the years ended December 31, 2021, 2022 and 2023 as they were not required to issu e audited financial
statements under the statutory requirements of their places of incorporation.
(xi) The statutory financial statements of this entity for the year ended December 31, 2021 were audited by PricewaterhouseCoopers, a certified publ ic accounting firm
registered in the Hong Kong. No audited financial statements were issued for this entity for the years ended December 31, 2022 and 2023, as it was not req uired to issue
audited financial statements under the statutory requirements of their places of incorporation.
(xii) The statutory financial statements of this entity for the years ended December 31, 2021 and 2022 prepared in accordance with PRC GAAP were audite db y
PricewaterhouseCoopers Zhong Tian LLP , a certified public accounting firm registered in the PRC. No audited financial statements were issued for th is entity for the year
ended December 31, 2023, as it was not required to issue audited financial statements under the statutory requirements of their places of incorporati on.
APPENDIX I ACCOUNTANT’S REPORT
– I-115 –


--- page 610 ---
III. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company or any of the
companies now comprising the Group in respect of any period subsequent to June 30, 2024 and
up to the date of this report.
APPENDIX I ACCOUNTANT’S REPORT
– I-116 –


--- page 611 ---
The following is the text of a report set out on pages IA-1 to IA-2, received from the
Company’ s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants,
Hong Kong, for the purpose of incorporation in this prospectus. The information set out below
is the unaudited interim condensed consolidated financial information of the Group for the
nine months ended September 30, 2024 and does not form part of the Accountant’ s Report from
the reporting accountant, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong,
as set out in Appendix I to this prospectus, and is included herein for information purpose only.
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
TO THE BOARD OF DIRECTORS OF S.F. HOLDING CO., LTD.
(ʮ̡)
(Incorporated in the People’s Republic of China with limited liability)
Introduction
We have reviewed the interim financial information set out on pages IA-3 to IA-37, which
comprises the interim condensed consolidated statement of financial position of S.F. Holding
Co., Ltd. (ʮ̡) (the “Company”) and its subsidiaries (together, the
“Group”) as at September 30, 2024, and the interim condensed consolidated statement of profit
or loss and other comprehensive income, the interim condensed consolidated statement of
changes in equity and the interim condensed consolidated statement of cash flows for the nine
months ended September 30, 2024, and selected explanatory notes (the “Interim Financial
Information”). The Interim Financial Information has been prepared by the directors of the
Company solely for the purpose of inclusion in the prospectus of the Company dated November
19, 2024 (the “Prospectus”) in connection with the initial listing of H Shares of the Company
on the Main Board of The Stock Exchange of Hong Kong Limited.
The directors of the Company are responsible for the preparation and presentation of the
Interim Financial Information in accordance with International Accounting Standard 34,
Interim Financial Reporting . Our responsibility is to express a conclusion on the Interim
Financial Information based on our review and to report our conclusion solely to you, as a
body, in accordance with our agreed terms of engagement and for no other purpose. We do not
assume responsibility towards or accept liability to any other person for the contents of this
report.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements 2410, Review of Interim Financial Information Performed by the Independent
Auditor of the Entity issued by the International Auditing and Assurance Standards Board. A
review of the Interim Financial Information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-1 –


--- page 612 ---
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the
Interim Financial Information, for the purpose of this report, is not prepared, in all material
respects, in accordance with International Accounting Standard 34, Interim Financial
Reporting .
Other Matter
The comparative information for the interim condensed consolidated statement of
financial position is based on the audited financial statements as at December 31, 2023. The
comparative information for the interim condensed consolidated statements of profit or loss
and other comprehensive income, changes in equity and cash flows, and related explanatory
notes, for the nine months ended September 30, 2023 has not been audited or reviewed.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, November 19, 2024
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-2 –


--- page 613 ---
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT
OR LOSS AND OTHER COMPREHENSIVE INCOME
Nine months ended September 30,
Notes 2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Revenue ............................... 3 206,860,993 189,011,599
Cost of revenue ........................ 6 (178,481,033) (164,805,568)
Gross profit ........................... 28,379,960 24,206,031
Selling and marketing expenses ......... 6 (2,238,312) (2,146,264)
General and administrative expenses ..... 6 (13,643,430) (13,033,441)
Research and development expenses ..... 6 (1,918,035) (1,681,042)
Net (impairment losses)/reversal of
impairment losses on financial assets
and contract assets ................... (239,708) 34,140
Other income .......................... 4 770,822 1,396,042
Other gains, net ........................ 5 434,420 449,334
Operating profit ...................... 11,545,717 9,224,800
Finance income ........................ 7 486,908 430,842
Finance costs .......................... 7 (1,804,691) (1,682,652)
Finance costs, net ...................... (1,317,783) (1,251,810)
Share of losses of associates and joint
ventures, net ......................... (50,376) (44,137)
Impairment provision for investments in
associates and joint ventures .......... (30,000) –
Profit before income tax ............... 10,147,558 7,928,853
Income tax expenses ................... 8 (2,474,554) (1,934,368)
Profit for the period .................. 7,673,004 5,994,485
Attributable to:
Owners of the Company .............. 7,617,120 6,264,458
Non-controlling interests ............. 55,884 (269,973)
7,673,004 5,994,485
Earnings per share for profit attributable
to the owners of the Company:
– Basis ................................ 9 1.58 1.29
– Diluted .............................. 9 1.58 1.29
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-3 –


--- page 614 ---
Nine months ended September 30,
Notes 2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Profit for the period .................. 7,673,004 5,994,485
Other comprehensive (loss)/income:
Items that may be reclassified to
profit or loss
– Effective portion of changes in fair
value of hedging instruments arising
during the period .................... 5 , 1 1 5 12,002
– Share of other comprehensive
(loss)/income of associates and joint
ventures accounted for using the
equity method ....................... (10,389) 9,191
– Currency translation differences of
foreign operations .................... 101,711 451,066
Items that will not be reclassified to
profit or loss
– Fair value changes of equity
investments designated at fair value
through other comprehensive income . . (1,403,004) (77,236)
– Share of other comprehensive loss of
associates and joint ventures accounted
for using the equity method ........... – (329)
– Income tax effect .................... 2,913 2,018
Other comprehensive (loss)/income for
the period, net of tax ................ (1,303,654) 396,712
Total comprehensive income for
the period .......................... 6,369,350 6,391,197
Attributable to:
Owners of the Company .............. 6,295,644 7,003,259
Non-controlling interests ............. 73,706 (612,062)
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-4 –


--- page 615 ---
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at
September 30,
As at
December 31,
Notes 2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
ASSETS
Non-current assets
Property, plant and equipment ........... 10 59,645,972 60,104,416
Right-of-use assets ..................... 11 19,740,909 20,890,047
Investment properties ................... 12 6,904,892 6,418,720
Intangible assets ....................... 13 19,750,718 21,030,998
Deferred tax assets ..................... 2,086,112 2,263,870
Prepayments, other receivables and
other assets .......................... 14 2,018,209 2,333,562
Investments in associates and
joint ventures ........................ 15 6,781,137 7,378,831
Financial assets at fair value through
other comprehensive income .......... 16 8,057,261 9,489,535
Financial assets at fair value through
profit or loss ........................ 16 451,767 589,996
Total non-current assets ............... 125,436,977 130,499,975
Current assets
Inventories ............................ 17 2,369,462 2,440,425
Contract assets ......................... 2,296,536 1,632,592
Trade and note receivables .............. 18 26,426,602 25,360,433
Prepayments, other receivables and
other assets .......................... 14 10,278,805 12,622,706
Financial assets at fair value through
profit or loss ........................ 16 24,604,743 6,809,742
Financial assets at fair value through
other comprehensive income .......... 16 210,851 99,978
Restricted cash ......................... 19 1,103,342 1,576,496
Cash and cash equivalents .............. 19 21,294,235 40,448,308
Total current assets ................... 88,584,576 90,990,680
Total assets ........................... 214,021,553 221,490,655
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-5 –


--- page 616 ---
As at
September 30,
As at
December 31,
Notes 2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
LIABILITIES
Non-current liabilities
Borrowings ............................ 20 26,142,020 30,396,912
Lease liabilities ........................ 11 7,372,408 8,038,495
Deferred tax liabilities .................. 4,552,561 4,550,974
Other payables and accruals ............. 22 153,717 140,329
Deferred income ....................... 1,238,624 1,090,644
Total non-current liabilities ............ 39,459,330 44,217,354
Current liabilities
Trade and note payables ................ 21 24,836,388 24,914,300
Contract liabilities ..................... 1,584,702 1,832,018
Borrowings ............................ 20 23,343,558 22,309,103
Lease liabilities ........................ 11 5,416,002 5,769,965
Financial liabilities at fair value through
profit or loss ........................ 93,451 92,120
Income tax payable .................... 1,240,757 1,394,250
Other payables and accruals ............. 22 16,546,711 17,637,171
Advances from customers ............... 38,194 40,714
Total current liabilities ................ 73,099,763 73,989,641
Total liabilities ........................ 112,559,093 118,206,995
Net assets ............................. 101,462,460 103,283,660
EQUITY
Share capital ........................... 23 4,815,911 4,895,202
Less: Treasury shares ................... 23 (758,081) (2,575,532)
Reserves .............................. 24 43,010,717 51,634,675
Retained earnings ...................... 43,556,850 38,835,999
Equity attributable to owners of
the Company ........................ 90,625,397 92,790,344
Non-controlling interests ................ 10,837,063 10,493,316
Total equity ........................... 101,462,460 103,283,660
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-6 –


--- page 617 ---
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
Attributable to owners of the Company
Share
capital
Less:
Treasury
shares Reserves
Retained
earnings Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
As at January 1, 2023 ...... 4,895,202 (2,040,377) 50,037,565 33,371,351 86,263,741 12,022,308 98,286,049
Comprehensive income:
Profit for the period ........ – – – 6,264,458 6,264,458 (269,973) 5,994,485
Other comprehensive income
for the period ........... – – 738,801 – 738,801 (342,089) 396,712
Total comprehensive income
for the period .......... – – 738,801 6,264,458 7,003,259 (612,062) 6,391,197
Transfer of loss on disposal of
equity investments at fair
value through other
comprehensive income to
retained earnings ........ – – 122,040 (122,040) – ––
Transactions with owners
Capital contribution of non-
controlling interests ...... – – 1,207 – 1,207 137,741 138,948
Repurchases of shares ...... – (959,956) – – (959,956) – (959,956)
Exercise of share options .... – 424,801 (69,612) – 355,189 – 355,189
Share-based payment ....... – – 189,686 – 189,686 2,768 192,454
Transactions with non-
controlling interests and
others ................ – – (894,111) – (894,111) (773,862) (1,667,973)
Non-controlling interests
on acquisition of
subsidiaries ............ – – – – – 47,635 47,635
Dividends ............... – – – (1,213,616) (1,213,616) (523,352) (1,736,968)
Safety reserve appropriation . . – – 27,852 – 27,852 – 27,852
Safety reserve utilization .... – – (27,852) – (27,852) – (27,852)
Others ................. – – 1,696 152 1,848 2,034 3,882
As at September 30, 2023 ... 4,895,202 (2,575,532) 50,127,272 38,300,305 90,747,247 10,303,210 101,050,457
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-7 –


--- page 618 ---
Attributable to owners of the Company
Share
capital
Less:
Treasury
shares Reserves
Retained
earnings Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
As at January 1, 2024 ...... 4,895,202 (2,575,532) 51,634,675 38,835,999 92,790,344 10,493,316 103,283,660
Comprehensive income:
Profit for the period ........ – – – 7,617,120 7,617,120 55,884 7,673,004
Other comprehensive loss for
the period ............. – – (1,321,476) – (1,321,476) 17,822 (1,303,654)
Total comprehensive income
for the period .......... – – (1,321,476) 7,617,120 6,295,644 73,706 6,369,350
Transfer of loss on disposal of
equity investments at fair
value through other
comprehensive income to
retained earnings ........ – – 7,059 (7,059) – – –
Transactions with owners
Capital contribution of non-
controlling interests ...... – – 5 3 – 5 3 33,435 33,488
Repurchases of shares ...... – (1,758,094) – – (1,758,094) – (1,758,094)
Cancellation of shares ...... (79,291) 3,575,545 (3,496,254) – – – –
Share-based payment ....... – – 77,176 – 77,176 6,651 83,827
Transactions with
non-controlling interests
and others ............. – – (3,887,694) – (3,887,694) 537,181 (3,350,513)
Non-controlling interests on
acquisition of subsidiaries . . – – – – – 17,286 17,286
Dividends ............... – – – (2,889,210) (2,889,210) (324,512) (3,213,722)
Safety reserve appropriation . . – – 370,873 – 370,873 – 370,873
Safety reserve utilization .... – – (370,873) – (370,873) – (370,873)
Others ................. – – (2,822) – (2,822) – (2,822)
As at September 30, 2024 ... 4,815,911 (758,081) 43,010,717 43,556,850 90,625,397 10,837,063 101,462,460
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-8 –


--- page 619 ---
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
Nine months ended September 30,
Notes 2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Cash flows from operating activities
Cash generated from operations ......... 25 24,726,370 23,204,339
Income tax paid ........................ (2,174,032) (2,228,245)
Net cash generated from operating
activities ............................ 22,552,338 20,976,094
Cash flows from investing activities
Redemption of financial assets at fair
value through profit or loss ........... 54,894,909 70,437,381
Disposal of financial assets at fair value
through other comprehensive income . . 12,088 162,780
Proceeds from sales of associates and
joint ventures ........................ 386,779 293,450
Repayment from former subsidiaries ..... 316,655 –
Investment gains or dividend income
from financial assets at fair value
through profit or loss ................. 403,086 436,243
Dividends received from associates and
joint ventures ........................ 175,982 191,490
Investment gains or dividend income
from financial assets at fair value
through other comprehensive income . . 19,590 1,998
Proceeds from disposal of property, plant
and equipment and other non-current
assets ............................... 237,257 193,558
Disposal of subsidiaries, net of cash and
cash equivalents held by subsidiaries
at the disposal dates .................. 26 149,054 377,259
Acquisition of subsidiaries, net of cash
and cash equivalents held by
subsidiaries at the acquisition dates .... (636,543) (962,153)
Purchase of property, plant and
equipment and other non-current
assets ............................... (6,849,320) (8,465,250)
Acquisition of financial assets at fair
value through other comprehensive
income .............................. (49,750) (40,426)
Acquisition of financial assets at fair
value through profit or loss ........... (72,579,223) (80,519,871)
Acquisition of associates and joint
ventures ............................. (26,169) (109,973)
Net cash used in investing activities .... (23,545,605) (18,003,514)
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-9 –


--- page 620 ---
Nine months ended September 30,
Notes 2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Cash flows from financing activities
Capital injection from non-controlling
interests ............................. 32,929 138,948
Exercise of share options ............... – 355,189
Drawdown of bank borrowings .......... 26,385,094 27,821,466
Drawdown of loans from non-controlling
interests ............................. 5,542 48,142
Deposits received from lessors after the
expiry of lease contracts .............. 13,376 12,384
Proceeds from corporate bonds and
short-term debentures ................ 4,296,638 1,499,553
Repayment of bank borrowings .......... (32,478,856) (16,183,201)
Repayment of corporate bonds and short-
term debentures ...................... (1,171,050) (8,610,178)
Repayment of loans from non-controlling
interests ............................. (1,279) (22,484)
Dividend paid to non-controlling
interests ............................. (282,790) (537,176)
Dividend paid ......................... (2,889,210) (1,213,616)
Interests paid .......................... (1,337,472) (1,292,300)
Net cash consideration paid to
non-controlling interests without
change of control .................... (3,374,435) (1,762,098)
Payments for repurchase of shares ....... (1,758,094) (959,956)
Payments of lease liabilities ............. (5,599,782) (5,777,167)
Payment of transaction costs related to
financing activities ................... (4,245) (1,149)
Net cash used in financing activities ... (18,163,634) (6,483,643)
Net decrease in cash and
cash equivalents .................... (19,156,901) (3,511,063)
Cash and cash equivalents at beginning
of the period ........................ 40,448,308 40,279,947
Exchange gains on cash and cash
equivalents .......................... 2,828 10,123
Cash and cash equivalents at end of
the period .......................... 21,294,235 36,779,007
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-10 –


--- page 621 ---
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION
1. GENERAL INFORMATION OF THE GROUP
S.F. Holding Co., Ltd. (ʮ̡) (formerly “Ma’anshan Dingtai Rare Earth & New Materials
Co., Ltd.”, hereinafter “S.F. Holding” or “the Company”), was established by 11 natural persons including Liu Jilu
and the Labour Union of Ma’anshan Dingtai Metallic Products Co., Ltd. by cash contribution on 22 May 2003. On
22 October 2007, the Company officially changed to Ma’anshan Dingtai Rare Earth and New Materials Co., Ltd., and
issued additional 19.5 million shares to the public and listed with trading on Shenzhen Stock Exchange on 5 February
2010.
In December 2016, approved by China Securities Regulatory Commission, the Company conducted a series of
material asset restructuring arrangements, including entering into a material asset swap and share subscription
agreement. Upon the completion of material asset restructuring, Shenzhen Mingde Holding Development Co., Ltd.
(“Mingde Holding”) became the parent company and ultimate controlling company of the Company, and Wang Wei
was the ultimate controlling shareholder.
The address of the Company’s registered office is 3/F, Complex Building, SF South China Transit Center, No.
1111, Hangzhan 4th Road, Shenzhen Airport, Caowei Community, Hangcheng Sub-district, Bao’an District,
Shenzhen. The Company is an investment holding company. The Company and its subsidiaries (collectively, the
“Group”) are principally engaged in the development of logistics ecosystem including express delivery, freight
delivery, cold chain and pharmaceutical logistics, intra-city on-demand delivery, international logistics service and
supply chain solutions in the People’s Republic of China (the “PRC”).
2. SUMMARY OF MATERIAL ACCOUNTING POLICIES
2.1 Basis of preparation
This interim condensed consolidated financial information, comprising the interim condensed consolidated
statement of financial position as at September 30, 2024, the interim condensed consolidated statement of profit or
loss and other comprehensive income, the interim condensed consolidated statement of changes in equity and the
interim condensed consolidated statement of cash flows for the nine months ended September 30, 2024 (collectively
referred to as the “Interim Financial Information”), has been prepared in accordance with International Accounting
Standard (“IAS”) 34, Interim Financial Reporting issued by the International Accounting Standard Board (“IASB”).
The Interim Financial Information has been prepared in accordance with the same accounting policies adopted
in the historical financial information for the years ended December 31, 2021, 2022 and 2023 and the six months
ended June 30, 2024 (the “Historical Financial Information”) as disclosed in Appendix I to the Company’s prospectus
dated November 19, 2024 (the “Prospectus”).
This Interim Financial Information contains consolidated financial statements and selected explanatory notes.
The selected notes are included to explain events and transactions that are significant to an understanding of the
changes in financial position and performance of the Group since the latest consolidated financial statements as at
and for the six months ended June 30, 2024. The condensed consolidated interim financial statements and notes
thereon do not include all of the information required for a full set of financial statements prepared in accordance
with IFRS Accounting Standards.
2.2 Significant Accounting Judgements and Estimates
The preparation of an interim financial information in conformity with IAS 34 requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and
liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.
In preparing the Interim Financial Information, the significant accounting judgements made by the
management and the key sources of estimation uncertainty are the same as those applied to the Historical Financial
Information.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-11 –


--- page 622 ---
2.3 Financial risk management
2.3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk,
price risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management strategy focuses
on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial
performance. Risk management is carried out by the directors and senior management of the Group.
The Interim Financial Information does not include all financial risk management information and disclosures
required in the annual financial statements, and should be read in conjunction with the Historical Financial
Information.
There have been no changes in the risk management policies during the nine months ended September 30,
2024.
2.3.2 Capital management
The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as
a going concern and to maintain healthy capital ratios in order to support its business and maximize shareholders’
value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions
and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group is not subject
to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for
managing capital during the nine months ended September 30, 2024.
The Group monitors capital on the basis of the asset-liability ratio and the asset-liability ratio as at September
30, 2024 and December 31, 2023 were as follows:
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Total assets ............................................ 214,021,553 221,490,655
Total liabilities ......................................... 1 12,559,093 118,206,995
Asset-liability ratio ...................................... 52.59% 53.37%
2.3.3 Fair value estimation
The table below analyses the Group’s financial instruments carried at fair value as at September 30, 2024 by
level of the inputs to valuation techniques used to measure fair value. Such inputs are categorized into three levels
within a fair value hierarchy as follows:
 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
 Inputs other than quoted prices included within level 1 that are observable for the assets or liabilities,
either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and
 Inputs for the assets or liabilities that are not based on observable market data (that is, unobservable
inputs) (level 3).
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-12 –


--- page 623 ---
As at September 30, 2024 and December 31, 2023, the financial assets and liabilities measured at fair value
on a recurring basis by the above three levels were analyzed below:
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
As at September 30, 2024
Financial assets at fair value through profit or loss
(“FVPL”) ............................. 7 9 31,712 25,024,719 25,056,510
Financial assets at fair value through other
comprehensive income (“FVOCI”) ............ 1,080,187 210,851 6,977,074 8,268,112
Financial liabilities at FVPL ................. – (93,451) – (93,451)
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
(Audited)
As at December 31, 2023
Financial assets at FVPL .................... 7 8 3 5 4 7,399,306 7,399,738
Financial assets at FVOCI ................... 2,418,842 99,978 7,070,693 9,589,513
Financial liabilities at FVPL ................. – (92,120) – (92,120)
There were no significant transfers between levels or changes in valuation techniques during the period.
The changes in Level 3 assets are analyzed below:
Reconciliation of Level 3 fair value measurements
Financial assets
at FVOCI
Financial assets
at FVPL
Nine months
ended
September 30,
Nine months
ended
September 30,
2024 2024
RMB’000 RMB’000
(Unaudited) (Unaudited)
Opening balance ........................................ 7,070,693 7,399,306
Additions ............................................. 49,783 72,034,448
Disposals/settlements ..................................... (2,721) (54,690,828)
Changes in fair value recognized in other comprehensive income ...... (63,254) –
Changes in fair value recognized in profit or loss ................. – 282,096
Currency translation differences ............................. (77,427) (303)
Closing balance ......................................... 6,977,074 25,024,719
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
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--- page 624 ---
The following table summarizes the quantitative information about the significant unobservable inputs used in
level 3 fair value measurements and the sensitivity analysis of fair value to the inputs:
Description
Fair Value
Valuation
technique(s)
Significant
unobservable
input(s)
Range of
inputs
(probability-
weighted
average)
Sensitivity of fair
value to the input(s)
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Financial assets at
FVPL
– Structured deposits
and others .......
24,380,790 6,543,851 Discounted cash
flow
Expected rate
of return
1.93%-4.00% 10% increase/
decrease in
expected rate of
return would result
in increase/
decrease in
fair value by
0.04%-0.05%
– Equity investment in
unlisted entities ....
84,282 135,359 Recent transaction
price
N/A N/A N/A
– Investments in funds
and equity-class
securities .......
559,647 720,096 Adjusted net assets
value
Adjusted net
assets value
N/A 10% increase/
decrease in
adjusted net assets
value would result
in increase/
decrease in fair
value by 10%
25,024,719 7,399,306
Financial assets at
FVOCI
– Equity investment in
unlisted entities ....
4,896,018 4,960,693 Recent transaction
price
N/A N/A N/A
2,081,056 2,110,000 A combination of
observable and
unobservable
inputs
Discount for
lack of
marketability
17.41% 10% increase/
decrease in
discount for lack
of marketability
would result in
decrease/
increase in fair
value by 2.11%
6,977,074 7,070,693
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-14 –


--- page 625 ---
3. REVENUE AND SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker (“CODM”). The CODM, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the executive management team that makes strategic
decisions.
3.1 CODM, reviews the Group’s internal reporting in order to assess performance and allocate resources:
The CODM identifies operating segments based on the internal organization structure, management
requirements and internal reporting system, and discloses segment information of reportable segments which is
determined on the basis of operating segments. An operating segment is a component of the Group that satisfies all
of the following conditions: (1) the component is able to earn revenues and incur expenses from its ordinary
activities; (2) whose operating results are regularly reviewed by the Group’s management to make decisions about
resources to be allocated to the segment and to assess its performance, and (3) for which the information on financial
position, operating results and cash flows is available to the Group. If two or more operating segments have similar
economic characteristics and satisfy certain conditions, they are aggregated into one single operating segment.
The segment businesses are separately presented as the express and freight delivery segment, the intra-city
on-demand delivery segment, and supply chain and international segment. The types of services from which
reportable segments derive revenue are listed below:
 Express and freight delivery segment, which provides time-define express, economy express, cold chain
and pharmaceuticals logistics service, as well as freight service;
 Intra-city on-demand delivery segment, which provides intra-city delivery for merchants and
consumers, and last-mile delivery services;
 Supply chain and international segment, which provides supply chain services, international express
service and international freight forwarding service.
Except for the above business segments, the other segments did not have a material impact on the Group’s
operating outcome, and as such are not separately presented. Management monitors the operating results of the
Group’s business units separately for the purpose of making decisions regarding resource allocation and performance
assessment.
Segment performance is assessed based on key performance indicators. Transfer prices between operating
segments are based on the amount stated in the contracts agreed by both sides.
During the nine months ended September 30, 2024, no revenue from a single customer exceeded 10% or more
of the total revenue.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-15 –


--- page 626 ---
Segment information for the nine months ended September 30, 2024 is as follows:
Nine months ended September 30, 2024
Express
and freight
delivery
segment
Intra-city
on-demand
delivery
segment
Supply
chain and
international
segment
Undistributed
units
Inter-
segment
elimination Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue from external customers ..... 146,225,270 6,540,832 53,209,586 885,305 – 206,860,993
Inter-segment revenue ............ 9,468,605 4,489,815 748,810 3,722,426 (18,429,656) –
Cost of revenue ............... 131,768,757 10,297,286 49,473,342 3,603,973 (16,662,325) 178,481,033
Profit/(loss) before tax ........... 9,108,894 110,869 (53,222) 955,170 25,847 10,147,558
Income tax expenses ............ 1,664,508 26,286 520,172 263,602 (14) 2,474,554
Net profit/(loss) ............... 7,444,386 84,583 (573,394) 691,568 25,861 7,673,004
Depreciation of right-of-use assets
(Note (6)) .................. 4,309,582 11,234 1,303,658 183,444 (661,143) 5,146,775
Depreciation and amortization
(excluding right-of-use assets)
(Note (6)) .................. 4,934,869 35,954 1,182,831 1,710,521 (5,986) 7,858,189
Net impairment losses/(reversal of
impairment losses) on financial assets
and contract assets ............ 82,676 4,036 158,977 16,513 (22,494) 239,708
Segment information for the nine months ended September 30, 2023 is as follows:
Nine months ended September 30, 2023
Express
and freight
delivery
segment
Intra-city
on-demand
delivery
segment
Supply
chain and
international
segment
Undistributed
units
Inter-
segment
elimination Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue from external customers ..... 135,647,718 5,440,967 46,918,278 1,004,636 – 189,011,599
Inter-segment revenue ............ 8,244,012 3,503,329 480,045 11,412,326 (23,639,712) –
Cost of revenue ............... 123,989,437 8,388,017 43,544,030 10,823,193 (21,939,109) 164,805,568
Profit/(loss) before tax ........... 7,501,764 33,746 (108,722) 467,879 34,186 7,928,853
Income tax expenses ............ 1,580,037 2,451 131,204 209,696 10,980 1,934,368
Net profit/(loss) ............... 5,921,727 31,295 (239,926) 258,183 23,206 5,994,485
Depreciation of right-of-use assets
(Note (6)) .................. 4,457,869 20,429 1,307,021 136,465 (458,915) 5,462,869
Depreciation and amortization
(excluding right-of-use assets)
(Note (6)) .................. 5,618,686 40,546 1,218,590 565,358 (20,718) 7,422,462
Net (reversal of impairment
losses)/impairment losses on financial
assets and contract assets ........ (72,434) 3,676 58,908 28,286 (52,576) (34,140)
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-16 –


--- page 627 ---
3.2 Disaggregation of revenue
Nine months ended September 30, 2024
Logistics
and freight
forwarding
services
Sales of
goods Others Total
RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue from main operations
Including: At a point in time .............. – 4,790,626 297,263 5,087,889
Over time ................... 200,573,042 – 659,570 201,232,612
Lease income ................. – – 233,938 233,938
200,573,042 4,790,626 1,190,771 206,554,439
Revenue from other operations
Including: At a point in time .............. – – 53,491 53,491
Over time ................... – – 1 17,380 117,380
Lease income ................. – – 135,683 135,683
– – 306,554 306,554
Total revenue ......................... 200,573,042 4,790,626 1,497,325 206,860,993
Nine months ended September 30, 2023
Logistics
and freight
forwarding
services
Sales of
goods Others Total
RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue from main operations
Including: At a point in time .............. – 4,398,615 283,034 4,681,649
Over time ................... 183,462,534 – 333,612 183,796,146
Lease income ................. – – 225,825 225,825
183,462,534 4,398,615 842,471 188,703,620
Revenue from other operations
Including: At a point in time .............. – – 48,799 48,799
Over time ................... – – 1 14,148 114,148
Lease income ................. – – 145,032 145,032
– – 307,979 307,979
Total revenue ......................... 183,462,534 4,398,615 1,150,450 189,011,599
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-17 –


--- page 628 ---
4. OTHER INCOME
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Government grants ...................................... 546,320 1,198,353
Dividends income ....................................... 4 2 7 2,975
Others ............................................... 224,075 194,714
770,822 1,396,042
5. OTHER GAINS, NET
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Gains/(losses) on disposal of investments in associates and
joint ventures ......................................... 67,632 (1,466)
Gains on disposal of investments in subsidiaries (Note 26) ........... 80,556 268,405
Fair value changes in financial assets at FVPL ................... 495,967 479,624
Gains/(losses) on disposal of property, plant and equipment, right-of-use
assets and other non-current assets .......................... 1 1,845 (69,946)
Impairment of inventories, property, plant and equipment and
other non-current assets ................................. (1,964) (3,006)
Net exchange gains/(losses) ................................ 6,623 (81,602)
Others ............................................... (226,239) (142,675)
434,420 449,334
6. EXPENSES BY NATURE
Expenses included in cost of revenue, selling and marketing expenses, general and administrative expenses and
research and development expenses are analyzed as follows:
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Labour outsourcing cost ................................... 70,519,803 64,066,972
Transportation expenses ................................... 38,644,850 32,595,030
Transportation outsourcing cost .............................. 28,344,632 27,961,652
Employee benefit expenses ................................. 24,362,636 23,758,196
Depreciation of right-of-use assets (Note 11) .................... 5,146,775 5,462,869
Depreciation and amortization (excluding right-of-use assets) ......... 7,858,189 7,422,462
Rent and venue usage expenses .............................. 5,400,631 5,258,463
Others ............................................... 16,003,294 15,140,671
196,280,810 181,666,315
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
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--- page 629 ---
7. FINANCE INCOME AND COSTS
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Finance income:
Interest income on deposits in financial institutions ................ 486,908 430,842
Finance costs:
Interest expenses on borrowings ............................. 1,466,987 1,339,384
Interest expenses on lease liabilities (Note 11.2) .................. 370,452 426,420
Less: Interest capitalised .................................. (32,748) (83,152)
1,804,691 1,682,652
Finance costs, net: ...................................... 1,317,783 1,251,810
8. INCOME TAX EXPENSES
The following table sets forth the component of income tax expenses of the Group for the nine months ended
September 30, 2024 and 2023:
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Current income tax ...................................... 2,257,843 2,202,351
Deferred income tax ..................................... 216,711 (267,983)
2,474,554 1,934,368
(a) PRC corporate income tax (“PRC CIT”)
The income tax rate applicable to the principal subsidiaries in Mainland China is 25%, except for certain
subsidiaries which enjoy a preferential income tax rate.
For the nine months ended September 30, 2023 and 2024, several subsidiaries in PRC were qualified as small
and micro enterprises, which enjoyed a corporate income tax rate of 2.5%-10%.
Besides, certain Group’s subsidiaries benefit from a preferential tax rate of 15% under the CIT Law if they are
qualified as high and new technology enterprises under relevant regulations or located in applicable PRC regions,
such as certain western regions and special economic zone, as specified in the relevant catalogue of encouraged
industries, subject to certain general restrictions described in the CIT Law and the related regulations.
(b) Corporate income tax in Hong Kong and other jurisdictions
(i) Hong Kong profits tax
Hong Kong profits tax has been provided for at the rate of 8.25% on assessable profits up to HK$2,000,000
and 16.5% on any assessable profits over HK$2,000,000 for the nine months ended September 30, 2023 and 2024.
(ii) Corporate income tax in other jurisdictions
Income tax on profit arising from other jurisdictions, including Macau, Singapore, Japan, South Korea, the
United States and Thailand, has been calculated on the estimated assessable profit for the period at the respective
rates prevailing in the relevant jurisdictions, ranging from 12% to 24% for the nine months ended September 30, 2023
and 2024.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-19 –


--- page 630 ---
9. EARNINGS PER SHARE
9.1 Basic
Basic earnings per share (“EPS”) is calculated by dividing the profit attributable to owners of the Company
by the weighted average number of ordinary shares in issue during nine months.
Nine months ended September 30,
2024 2023
(Unaudited) (Unaudited)
Profit attributable to owners of the Company (RMB’000) ............ 7,617,120 6,264,458
Weighted average number of shares in issue ..................... 4,825,429,005 4,852,613,045
Basic EPS (RMB per share) ................................ 1.58 1.29
9.2 Diluted
The share options granted by the Company have potential dilutive effect on the EPS. Diluted EPS is calculated
by adjusting the weighted average number of ordinary shares outstanding by the assumption of the conversion of all
potential dilutive ordinary shares arising from share options (collectively forming the denominator for computing the
diluted EPS). For the nine months ended September 30, 2024, the share options granted by the Company had
anti-dilutive effect on the EPS.
Nine months ended September 30,
2024 2023
(Unaudited) (Unaudited)
Profit attributable to owners of the Company for the calculation of
diluted EPS (RMB’000) .................................. 7,617,120 6,264,458
Weighted average number of shares in issue ..................... 4,825,429,005 4,852,613,045
Adjustment for share options ............................... – 5,595,663
Weighted average number of shares for the calculation of Diluted EPS . . 4,825,429,005 4,858,208,708
Diluted EPS (RMB per share) ............................... 1.58 1.29
10. PROPERTY, PLANT AND EQUIPMENT
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Freehold land and buildings ................................ 28,021,585 26,267,016
Machinery and equipment .................................. 10,552,905 10,634,212
Aircraft, aircraft engines, rotables and high-value maintenance ........ 9,084,941 8,853,163
Construction in progress ................................... 3,436,939 4,032,884
Office and other equipment ................................ 3,106,037 4,200,743
Transportation vehicles ................................... 2,171,841 2,628,610
Leasehold improvements .................................. 2,054,033 2,141,678
Computers and electronic equipment .......................... 1,217,691 1,346,110
59,645,972 60,104,416
(a) Certain property, plant and equipment with a net carrying amount of approximately RMB809,139,000
and RMB503,330,000, as at December 31, 2023 and September 30, 2024 respectively, were pledged as
securities for bank loan facilities and bank overdrafts granted to the Group (Note 20).
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-20 –


--- page 631 ---
11. LEASE
This note provides information for leases where the Group is a lessee.
11.1 Amounts recognized in the unaudited interim consolidated statement of financial position
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Right-of-use assets
Buildings ............................................. 12,727,492 13,692,555
Leasehold land and land use rights ........................... 6,727,666 6,816,476
Motor vehicles ......................................... 252,489 333,921
Equipment and others .................................... 33,262 47,095
19,740,909 20,890,047
Lease liabilities
Current ............................................... 5,416,002 5,769,965
Non-current ........................................... 7,372,408 8,038,495
12,788,410 13,808,460
(a) Leasehold land and land use rights with a net carrying amount of approximately RMB292,495,000 and
RMB130,754,000, as at December 31, 2023 and September 30, 2024 respectively, were pledged as
securities for bank loan facilities and bank overdrafts granted to the Group (Note 20).
11.2 Amounts recognized in the unaudited interim consolidated statement of profit or loss and other
comprehensive income
The unaudited interim consolidated statement of profit or loss and other comprehensive income shows the
following amounts relating to leases:
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Depreciation charge of right-of-use assets
Buildings ............................................. 4,863,504 5,218,212
Leasehold land and land use rights ........................... 143,352 114,061
Motor vehicles ......................................... 1 1 1,824 102,879
Equipment and others .................................... 28,095 27,717
5,146,775 5,462,869
Interest expenses (Note 7) ................................. 370,452 426,420
Expense relating to short-term leases and low-value assets (included in
costs and expenses) .................................... 2,604,849 2,690,086
Total cash outflow for lease (included in operating and financing cash
outflow) ............................................ 8,347,546 8,616,274
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-21 –


--- page 632 ---
12. INVESTMENT PROPERTIES
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Cost ................................................. 7,403,146 6,742,097
Accumulated depreciation .................................. (498,254) (323,377)
Accumulated impairment .................................. – –
Net book value ......................................... 6,904,892 6,418,720
(a) Certain investment properties with a net carrying amount of approximately RMB111,124,000, and
RMB113,158,000, as at December 31, 2023 and September 30, 2024 respectively, were pledged as
securities for bank loan facilities and bank overdrafts granted to the Group (Note 20).
13. INTANGIBLE ASSETS
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Cost
Development expenditures ................................. 103,868 129,845
Goodwill ............................................. 9,570,165 9,572,871
Customer relationships .................................... 5,918,695 5,952,090
Software .............................................. 8,543,840 8,134,147
Trademark ............................................ 4,929,086 4,966,033
Others ............................................... 370,167 358,340
29,435,821 29,113,326
Accumulated amortization
Development expenditures ................................. – –
Goodwill ............................................. – –
Customer relationships .................................... (1,390,680) (1,150,340)
Software .............................................. (6,967,719) (5,778,057)
Trademark ............................................ (1,011,050) (842,331)
Others ............................................... (232,801) (211,727)
(9,602,250) (7,982,455)
Accumulated impairment
Goodwill ............................................. (2,435) (2,435)
Software .............................................. (80,408) (97,428)
Trademark ............................................ ( 4 ) ( 4 )
Others ............................................... ( 6 ) ( 6 )
(82,853) (99,873)
Net book value ......................................... 19,750,718 21,030,998
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-22 –


--- page 633 ---
14. PREPAYMENTS, OTHER RECEIV ABLES AND OTHER ASSETS
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Non-current:
Amounts due from related parties (Note 27(d)) ................... 48,735 1,363
Deferred pilot recruitment costs ............................. 757,356 805,415
Prepayments (Note (a)) ................................... 650,207 944,833
Loans to employee ...................................... 1 6 7 15,575
Finance lease receivables .................................. 60,041 89,380
Others ............................................... 514,635 492,174
2,031,141 2,348,740
Less: Provision for impairment .............................. (12,932) (15,178)
2,018,209 2,333,562
Current:
Amounts due from related parties (Note 27(d)) ................... 296,629 1,032,722
V alue added tax recoverable ................................ 3,526,258 4,641,173
Prepayments (Note (b)) ................................... 2,776,931 3,248,665
Prepayments for listing expenses ............................. 30,332 25,068
Deposits .............................................. 1,598,610 1,523,589
Cash to collect on behalf of customers ......................... 761,137 659,441
Loans to employees ...................................... 16,218 26,454
Prepaid corporate income tax ............................... 328,284 551,327
Finance lease receivables .................................. 146,243 226,652
Others ............................................... 1,147,180 1,043,853
10,627,822 12,978,944
Less: Provision for impairment .............................. (349,017) (356,238)
10,278,805 12,622,706
(a) The balances of the Group mainly comprised prepaid construction equipment balances during the nine
months ended September 30, 2024 and the year ended December 31, 2023.
(b) The balances of the Group mainly comprised prepaid freight and transportation costs during the nine
months ended September 30, 2024 and the year ended December 31, 2023.
(c) Impairment on other receivables and other assets accounted as amortized cost is measured as either
12-month expected credit losses or lifetime credit loss. On such basis, the Group’s loss allowance was
mainly in Stage 1.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-23 –


--- page 634 ---
15. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Movement of investments in associates is analyzed as follows:
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
As at January 1 ........................................ 4,120,128 4,209,624
Additions and disposals, net ................................ (63,561) 109,973
Share of profits, net ...................................... 38,494 58,426
Share of other comprehensive (loss)/income ..................... (10,389) 8,862
Share of other equity movement ............................. 3,813 6,736
Dividends declared during the period .......................... (174,662) (189,635)
Exchange differences and others ............................. 8,838 113,616
Less: Impairment loss provided for the period ................... (30,000) –
As at September 30 ..................................... 3,892,661 4,317,602
Movement of investments in joint ventures is analyzed as follows:
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
As at January 1 ........................................ 3,258,703 3,648,376
Additions and disposals, net ................................ (279,443) (282,498)
Share of losses, net ...................................... (88,870) (102,563)
Share of other equity movement ............................. ( 5 ) (1,101)
Dividends declared during the period .......................... – (892)
Exchange differences and others ............................. (1,909) 6,789
Less: Impairment loss provided for the period ................... – –
As at September 30 ..................................... 2,888,476 3,268,111
16. FINANCIAL ASSETS AT FVPL AND FVOCI
(a) Financial assets at FVPL
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Non-current:
– Industry fund investments ................................ 361,066 499,320
– Equity investment in unlisted entities at fair value ............... 84,282 84,401
– Others .............................................. 6,419 6,275
451,767 589,996
Current:
– Structured deposits ..................................... 24,379,820 6,542,881
– Fund investment and others ............................... 224,923 266,861
24,604,743 6,809,742
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-24 –


--- page 635 ---
(b) Financial assets at FVOCI
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Non-current:
– Listed equity investments ................................ 1,080,187 2,418,842
– Unlisted equity investments ............................... 6,977,074 7,070,693
8,057,261 9,489,535
Current:
– Notes held for sale ..................................... 210,851 99,978
210,851 99,978
17. INVENTORIES
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Raw materials .......................................... 614,800 472,994
Finished goods ......................................... 839,618 1,040,816
Aviation consumables .................................... 616,238 499,062
Consumables and supplies ................................. 207,033 365,165
Costs to fulfil a contract .................................. 94,908 65,170
2,372,597 2,443,207
Less: Provision for impairment loss ........................... (3,135) (2,782)
2,369,462 2,440,425
18. TRADE AND NOTE RECEIV ABLES
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Trade and note receivables
– related parties (Note 27(d)) ............................... 468,444 124,211
– third parties .......................................... 27,252,850 26,614,887
27,721,294 26,739,098
Less: Allowance for expected credit losses ...................... (1,294,692) (1,378,665)
26,426,602 25,360,433
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-25 –


--- page 636 ---
(a) The Group has various credit policies for different business operations depending on the requirements
of the markets and businesses. The ageing analysis of the trade and note receivables based on invoice
date is as follows:
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Within 1 year (including 1 year) ........................ 26,660,785 25,719,098
Between 1 and 2 years (including 2 years) ................. 446,618 490,411
Over 2 years ...................................... 613,891 529,589
27,721,294 26,739,098
There is no concentration of credit risk with respect to trade and note receivables, as the Group has a
large number of customers.
(b) The Group applies the simplified approach to provide for expected credit losses prescribed by IFRS 9.
(c) The provision and reversal of provision for impairment of receivables have been included in impairment
losses on financial assets and contract assets in the consolidated statement of profit or loss. Amounts
charged to the allowance account are written off when there is no expectation of recovery.
(d) The carrying amount at the reporting date approximates the fair value of each class of receivables
mentioned above.
19. CASH AND CASH EQUIV ALENTS AND RESTRICTED CASH
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Restricted cash
Statutory reserve deposits with the PBOC for banking operations
(Note (a)) ........................................... 992,225 1,476,938
Pledged bank deposits (Note (b)) ............................. 64,389 52,830
Others ............................................... 46,728 46,728
1,103,342 1,576,496
Cash and cash equivalents
Cash on hand and cash at banks (excluding the PBOC) ............. 21,262,211 40,434,748
Surplus reserve deposits with the PBOC (Note (a)) ................ 32,024 13,560
21,294,235 40,448,308
(a) On September 18, 2016, SF Holding Group Finance Co., Ltd. (“SF Group Finance Ltd.,”), a subsidiary
of the Group, was incorporated as a licensed financial institution, which operates internal banking,
finance and wealth management and consulting.
SF Group Finance Ltd., places mandatory reserve funds and surplus reserves with the People’s Bank of
China (the “PBOC”). As at September 30, 2024 and December 31, 2023, mandatory reserve funds placed
with the PBOC were calculated at 5% of qualified RMB deposits from corporates. Mandatory reserve
funds were restricted cash. Surplus reserves represent funds for clearing purposes and balances other
than mandatory reserves placed with the PBOC.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-26 –


--- page 637 ---
(b) The Group’s bank balances amounting to approximately RMB29,435,000 and RMB17,133,000,
respectively, as at September 30, 2024 and December 31, 2023, represented deposits pledged to secure
general banking or letter of guarantee facilities granted to the Group.
The Group’s bank balances amounting to approximately RMB34,954,000 and RMB35,697,000,
respectively, as at September 30, 2024 and December 31, 2023, represented deposits of performance
bonds that shall be repaid when the services were completed.
20. BORROWINGS
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Non-current:
Long-term bank borrowings (Note (a))
– secured (Note (a)(i)) .................................... 9,416 2,680,031
– unsecured and guaranteed (Note (a)(ii)) ....................... 6,602,204 8,675,210
Corporate bonds (Note (c)) ................................. 19,346,293 18,794,782
Loans from non-controlling interests .......................... 184,107 246,889
26,142,020 30,396,912
Current portion of non-current:
Long-term bank borrowings (Note (a))
– secured (Note (a)(i)) .................................... 25,366 742,364
– unsecured and guaranteed (Note (a)(ii)) ....................... 2,174,162 2,071,021
Corporate bonds (Note (c)) ................................. 667,510 615,295
Loans from non-controlling interests .......................... 22,006 1,541
Short term:
Short-term bank borrowings (Note (b))
– secured (Note (b)(i)) .................................... 68,909 105,969
– unsecured and guaranteed (Note (b)(ii)) ....................... 17,952,457 18,659,397
Short-term debentures (Note (c)) ............................. 2,322,672 –
Loans from non-controlling interests .......................... 1 10,476 113,516
23,343,558 22,309,103
(a) Long-term bank borrowings
(i) The Group’s long-term bank borrowings of approximately RMB2,150,466,000 were secured by lease
receivables of Shun Y uan Financial Leasing (Tianjin) Co., Ltd., a subsidiary of the Group, with a net
carrying amount of approximately RMB2,496,880,000 as at December 31, 2023. Shun Y uan Financial
Leasing (Tianjin) Co., Ltd., recognized the receivables as engaging in aircraft financial lease business
with SF Airlines Company Limited, which was the subsidiary of the Group.
Certain non-current assets had been pledged as securities for long-term bank borrowings as at September
30, 2024 and December 31, 2023. Refer to Note 10(a), Note 11.1(a) and Note 12(a).
(ii) The Group’s long-term bank borrowings of approximately RMB5,192,205,000 and RMB5,633,173,000
as at September 30, 2024 and December 31, 2023 respectively, were guaranteed by the subsidiaries
within the Group.
(iii) The interest rates of major long-term bank borrowings ranged from 2.44% to 5.30% and 2.20% to 6.91%
as at September 30, 2024 and December 31, 2023 respectively.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-27 –


--- page 638 ---
(b) Short-term bank borrowings
(i) Certain non-current assets had been pledged as securities for short-term bank borrowings for the year
ended December 31, 2023 and the nine months ended September 30, 2024. Refer to Note 10(a), Note
11.1(a) and Note 12(a).
(ii) Short-term bank borrowings of approximately RMB488,717,000 and RMB5,156,012,000 as at
September 30, 2024 and December 31, 2023 respectively, were guaranteed by the Company or its
subsidiaries.
(iii) The interest rates of major current bank borrowings ranged from 2.27% to 6.77% and 2.20% to 7.74%
as at September 30, 2024 and December 31, 2023 respectively.
(c) Corporate bonds and short-term debentures
(i) Corporate bonds and short-term debentures of RMB17,498,967,000 and RMB18,393,642,000 as at
September 30, 2024 and December 31, 2023, respectively, were guaranteed by the Company.
(ii) The interest rates of bonds and debentures ranged from 1.85% to 3.13% and 2.38% to 3.79% as at
September 30, 2024 and December 31, 2023 respectively.
21. TRADE AND NOTE PAYABLES
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Trade and note payables
– related parties (Note 27(d)) ............................... 321,872 421,194
– third parties .......................................... 24,514,516 24,493,106
24,836,388 24,914,300
An ageing analysis of the trade and note payables based on invoice date as at the end of the reporting period
was as follows:
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Within 1 year (including 1 year) ............................. 24,504,102 24,505,848
Over 1 year ........................................... 332,286 408,452
24,836,388 24,914,300
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-28 –


--- page 639 ---
22. OTHER PAYABLES AND ACCRUALS
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Non-current:
Salaries, wages and benefits ................................ 83,433 82,216
Others ............................................... 70,284 58,113
153,717 140,329
Current:
Amounts due to related parties (Note 27(d)) ..................... 152,078 136,098
Salaries, wages and benefits ................................ 4,836,492 5,872,341
Payable for purchases of property, plant and equipment ............. 3,616,231 4,345,119
Deposits .............................................. 2,541,676 2,355,449
Other taxes payable ...................................... 908,388 735,465
Payables of cash collected on delivery service ................... 1,688,718 1,534,338
Consideration payable for business combinations ................. 242,930 289,306
Others ............................................... 2,560,198 2,369,055
16,546,711 17,637,171
23. SHARE CAPITAL AND TREASURY SHARES
Number of
registered,
issued and fully
paid ordinary
shares Share capital Treasury shares Total
RMB’000 RMB’000 RMB’000
(Unaudited)
As at January 1, 2023 .......... 4,895,202,373 4,895,202 (2,040,377) 2,854,825
Repurchases of shares (Note (a)) . . . – – (959,956) (959,956)
Exercise of share options (Note (b)) . – – 424,801 424,801
As at September 30, 2023 ....... 4,895,202,373 4,895,202 (2,575,532) 2,319,670
(Unaudited)
As at January 1, 2024 .......... 4,895,202,373 4,895,202 (2,575,532) 2,319,670
Repurchases of shares (Note (a)) . . . – – (1,758,094) (1,758,094)
Cancellation of shares (Note (a)) . . . (79,291,153) (79,291) 3,575,545 3,496,254
As at September 30, 2024 ....... 4,815,911,220 4,815,911 (758,081) 4,057,830
(a) For the nine months ended September 30, 2023 and 2024, a total of 19,838,884 and 49,011,565 A shares
have been repurchased respectively for future employee stock ownership plan or share-based incentive,
and treasury stocks amounting to approximately RMB959,956,000, and RMB1,758,094,000 therefore
were recognized respectively.
During the nine months ended September 30, 2024, under the approval and authorization of the general
meeting, the Company cancelled a total of 79,291,153 shares, and therefore treasury stocks amounting
to approximately RMB3,575,545,000 and share capital of approximately RMB79,291,000 were
derecognized with a corresponding debit to capital reserve of approximately RMB3,496,254,000 for the
nine months ended September 30, 2024.
(b) During the nine months ended September 30, 2023, a total of 8,420,193 share options were exercised,
as 1,328 participants met the performance requirements. Therefore, contribution of approximately
RMB355,189,000 was received by the Company from the participants, treasury stock of
RMB424,801,000 and capital reserve of RMB69,612,000 were derecognized.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-29 –


--- page 640 ---
24. RESERVES
Capital
reserve
Other
comprehensive
income
General and
regulatory
reserve
Special
reserve
Statutory
reserve Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2023 ....... 43,996,237 4,538,027 493,048 – 1,010,253 50,037,565
Other comprehensive income. . . – 738,801 – – – 738,801
Transfer of loss on disposal of
equity investments at fair
value through other
comprehensive income to
retained earnings ......... – 122,040 – – – 122,040
Transactions with owners:
Capital contribution from
non-controlling interests .... 1,207 – – – – 1,207
Exercise of share options
(Note 23 (b)) ........... (69,612) – – – – (69,612)
Share-based payment ....... 189,686 – – – – 189,686
Transaction with non-controlling
interests and others ....... (894,111) – – – – (894,111)
Safety reserve appropriation . . . – – – 27,852 – 27,852
Safety reserve utilization ..... – – – (27,852) – (27,852)
Others ................ 1,848 – (152) – – 1,696
As at September 30, 2023 .... 43,225,255 5,398,868 492,896 – 1,010,253 50,127,272
Capital
reserve
Other
comprehensive
income
General and
regulatory
reserve
Special
reserve
Statutory
reserve Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2024 ....... 43,164,085 5,532,428 524,376 – 2,413,786 51,634,675
Other comprehensive loss ..... – (1,321,476) – – – (1,321,476)
Transfer of loss on disposal of
equity investments at fair
value through other
comprehensive income to
retained earnings ......... – 7,059 – – – 7,059
Transactions with owners:
Capital contribution from
non-controlling interests .... 5 3 – – – – 5 3
Cancellation of shares
(Note 23 (a)) ........... (3,496,254) – – – – (3,496,254)
Share-based payment ....... 77,176 – – – – 77,176
Transaction with non-controlling
interests and others ....... (3,887,694) – – – – (3,887,694)
Safety reserve appropriation . . . – – – 370,873 – 370,873
Safety reserve utilization ..... – – – (370,873) – (370,873)
Others ................ (2,822) – – – – (2,822)
As at September 30, 2024 .... 35,854,544 4,218,011 524,376 – 2,413,786 43,010,717
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-30 –


--- page 641 ---
25. NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Profit before income tax for the period ........................ 10,147,558 7,928,853
Adjustments for:
Net addition/(reversal) of impairment losses on financial assets and
contract assets ........................................ 239,708 (34,140)
Impairment of inventories, property, plant and equipment and other
non-current assets (Note 5) ............................... 1,964 3,006
Depreciation of right-of-use assets (Note 6) ..................... 5,146,775 5,462,869
Depreciation and amortization (excluding right-of-use assets) (Note 6) . . 7,858,189 7,422,462
Amortization of deferred income ............................. (30,345) (35,411)
Gains/(losses) on disposal of property, plant and equipment, right-of-use
assets and other non-current assets (Note 5) ................... ( 1 1,845) 69,946
Fair value changes in financial assets at FVPL (Note 5) ............. (495,967) (479,624)
Finance costs (Note 7) .................................... 1,804,691 1,682,652
Gains on disposal of investments in subsidiaries (Note 5) ............ (80,556) (268,405)
Share of loss of associates and joint ventures, net ................. 50,376 44,137
Gains/(losses) on disposal of investments in associates and joint ventures
(Note 5) ............................................ (67,632) 1,466
Impairment provision of investments in associates and joint ventures . . . 30,000 –
Share-based compensation expenses ........................... 83,827 192,454
Dividends income (Note 4) ................................. (427) (2,975)
Operating cash flow before working capital changes ............. 24,676,316 21,987,290
Changes in working capital:
Decrease/(increase) in inventories ............................ 70,611 (218,311)
Decrease in trade and note receivables, prepayment, contract assets and
other receivables ...................................... 1,045,568 2,227,972
Decrease in trade and note payables, contract liabilities, and other
payables ............................................ (1,066,125) (792,612)
Cash generated from operations ............................ 24,726,370 23,204,339
26. DISPOSAL OF SUBSIDIARIES
Transactions of disposal of subsidiaries during the nine months ended September 30, 2024 and 2023 are
analyzed as follows:
(a) Net cash received from disposal of subsidiaries
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Cash consideration
Including: Shenzhen Fengwang Information Technology Co., Ltd
(Note (c)) ........................................... – 460,930
Other subsidiaries ...................................... 298,489 113,050
Total disposal consideration ............................... 298,489 573,980
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-31 –


--- page 642 ---
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Total cash consideration ................................... 298,489 573,980
Less: Outstanding and included in other receivables ............... (143,236) –
Less: Cash and cash equivalents held by the subsidiaries at the dates of
disposal ............................................. (6,199) (196,721)
Net cash flow impact from disposal of subsidiaries .............. 149,054 377,259
(b) Gains on disposal of investments in subsidiaries
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Total cash consideration ................................... 298,489 573,980
Carrying amount of net assets sold ........................... (217,933) (305,575)
Gains on disposal before income tax and reclassification of foreign
currency translation reserve ............................... 80,556 268,405
Reclassification of other comprehensive income .................. – –
Gains on disposal of investments in subsidiaries ................ 80,556 268,405
(c) Gains on disposal of Shenzhen Fengwang Information Technology Co., Ltd
On May 12, 2023, Shenzhen Fengwang Holding Co., Ltd (“Fengwang Holding”), a subsidiary of the Company,
entered into a share transfer agreement with Shenzhen J&T Supply Chain Co., Ltd (“J&T Supply Chain”) pursuant
to which Fengwang Holding transferred the entire equity interests in Shenzhen Fengwang Information Technology
Co., Ltd (“Fengwang Information”), the then wholly owned subsidiary of Fengwang Holding, to J&T Supply Chain
at a total consideration of RMB1,183 million which was subject to an adjustment of the operating profit or loss of
Fengwang Information attributable to the Group during the period from March 31, 2023 to June 27, 2023 (“the
Transitional Period”).
The consideration had been adjusted to RMB461 million after taking into account Fengwang Information’s
operating results during the Transitional Period. Upon the completion of the share transfer transaction, Fengwang
Information was no longer a subsidiary of the Company.
For the nine months ended September 30, 2023, the Group recognized disposal gain of RMB243,378,000 of
which RMB155,153,000 was attributed to the owners of the Company.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-32 –


--- page 643 ---
27. RELATED PARTY TRANSACTIONS
(a) Parent entities
Name Type
Place of
incorporation
Ownership interest
As at
September 30,
2024
As at
December 31,
2023
Mingde Holding ....... Investment Shenzhen 55.27% 54.38%
The Company’s ultimate holding Company is Mingde Holding, and the ultimate controlling person is
Wang Wei.
(b) Names and relationships with related parties
The directors of the Company are of the view that the following parties/companies were significant related
parties that had transactions with the Group during the nine months ended September 30, 2024 and 2023, or had
balances as at September 30, 2024 and December 31, 2023:
Name of related parties Relationship with the Group
Guangdong Fengxing Zhitu Technology Co., Ltd. ..... Controlled by the ultimate controlling person of the
Company
Hangzhou Fengtai E-Commerce Industrial Park
Management Ltd. .........................
Controlled by the ultimate controlling person of the
Company
Shenzhen Fengxiang Information Technology Co.,
Ltd. ...................................
Controlled by the ultimate controlling person of the
Company
Shenzhen Hive Box Technology Co., Ltd and its
subsidiaries .............................
Controlled by the ultimate controlling person of the
Company
Shenzhen SF Hefeng Microfinance Co., Ltd. ........ Controlled by the ultimate controlling person of the
Company
Shenzhen Fengyi Technology Co., Ltd. ............ A n associate of Mingde Holding before July 2024
Chongqing Boqiang Logistics Co., Ltd. ........... A n associate of the Group
DHL Weiheng (Zhuhai) Supply Chain Management
Co., Ltd. ( i ).............................
An associate of the Group before December 2023
Galaxis Technology and its subsidiaries ........... Associates of the Group
Giao Hang Tiet Kiem Joint Stock Company ........ A n associate of the Group
KENGIC Intelligent Technology Co., Ltd. and its
subsidiaries .............................
Associates of the Group
SF Real Estate Investment Trust ................ A n associate of the Group
Shanghai Jiaxing Logistics Co., Ltd. .............. A n associate of the Group before September 2024
Shanghai Tingdi Logistics Service Co., Ltd. ........ A n associate of the Group before July 2024
Shenzhen Fenglian Technology Co., Ltd. .......... A n associate of the Group
Shenzhen Shunjie Fengda and its subsidiaries ....... Associates of the Group before August 2024
Shenzhen Zhongwang Finance and Tax Management
Co., Ltd. ...............................
An associate of the Group
Sichuan Wulianyida Technology Co., Ltd. and its
subsidiaries (ii) ...........................
Associates of the Group from August 2023
State Grid E-Commerce Y unfeng Logistics Technology
(Tianjin) Co., Ltd. .........................
An associate of the Group
Wuhan Shunluo Supply Chain Management Co., Ltd. . An associate of the Group
Yihai Shunfeng (Shanghai) Supply Chain Technology
Co., Ltd. ...............................
An associate of the Group
Beijing Wulian Shuntong Technology Co., Ltd. and its
subsidiaries .............................
Joint ventures of the Group
CC SF China Logistics Properties Investment
Fund, L.P . ..............................
Joint ventures of the Group
CR-SF International Express Co., Ltd. ............ A joint venture of the Group
Ezhou China Communications SF Airport Industrial
Park Investment Development Co., Ltd. ..........
A joint venture of the Group
Global Connect Holding Limited ................ A joint venture of the Group
Hubei International Logistics Airport Co., Ltd. ...... A joint venture of the Group
Shenzhen Shenghai Information Service Co., Ltd. .... A joint venture of the Group
Zhongbao Hua’an Investment Management Co., Ltd.
and its subsidiaries ........................
Joint ventures of the Group
(i) DHL Weiheng (Zhuhai) Supply Chain Management Co., Ltd. (“DHL Weiheng”) used to be an associate
of the Group. In December 2023, the Group acquired the remaining equity interests of DHL Weiheng
and DHL Weiheng became a wholly-owned subsidiary of the Group.
(ii) Sichuan Wulianyida Technology Co., Ltd. and its subsidiaries (“Sichuan Wulianyida”) used to be
subsidiaries of the Group. In August 2023, the Group disposed a portion of its equity interest in Sichuan
Wulianyida. Since then, Sichuan Wulianyida was no longer in the scope of consolidation of the Group
and became an associate of the Group.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-33 –


--- page 644 ---
(c) Transactions with related parties
The following significant transactions were carried out between the Group and its related parties during the
period. In the opinion of the directors of the Company, the related party transactions were carried out in the normal
course of business and at terms negotiated between the Group and the respective related parties.
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Sales of goods and services
Controlling shareholder ................................... 4 1 0 3 2 4
Entities controlled by the ultimate controlling person of the Company . . . 1,117,684 89,879
Associates of Mingde Holding .............................. 8,706 11,026
Joint ventures of the Group ................................ 20,958 8,644
Associates of the Group ................................... 71,453 56,693
1,219,211 166,566
Purchases of goods and services
Controlling shareholder ................................... 7 –
Entities controlled by the ultimate controlling person of the Company . . . 583,878 705,786
Associates of Mingde Holding .............................. 1 9 0 8 4 8
Joint ventures of the Group ................................ 791,257 965,378
Associates of the Group ................................... 609,937 1,302,353
1,985,269 2,974,365
Acquisition of assets through acquisition of subsidiaries
Joint ventures of the Group ................................ 559,289 –
559,289 –
Disposal of equity
Entities controlled by the ultimate controlling person of the Company . . . – 85,188
– 85,188
Depreciation and interest expenses borne by the Group as the lessee
Entities controlled by the ultimate controlling person of the Company . . . 8,587 8,971
Associates of the Group ................................... 174,490 179,622
183,077 188,593
Additions of right-of-use assets
Entities controlled by the ultimate controlling person of the Company . . . 3,081 51,987
Associates of the Group ................................... 2 6 5 44,739
3,346 96,726
Other transactions
Controlling shareholder ................................... 5 1 3 5 1 2
Entities controlled by the ultimate controlling person of the Company . . . 2,336 1,396
Associates of Mingde Holding .............................. 1,611 2,192
Joint ventures of the Group ................................ 5 7 1 4 4 6
Associates of the Group ................................... 1,026 960
6,057 5,506
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-34 –


--- page 645 ---
(d) Balances with related parties
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Amounts due from related parties
Trade
Controlling shareholder ................................... 9 3 5 7
Entities controlled by the ultimate controlling person of the Company . . . 422,357 33,048
Associates of Mingde Holding .............................. 1 3,267
Joint ventures of the Group ................................ 5,004 9,813
Associates of the Group ................................... 78,516 89,741
Non-Trade
Controlling shareholder ................................... 1 2 0 1 6 7
Entities controlled by the ultimate controlling person of the Company . . . 190,342 561,979
Associates of Mingde Holding .............................. – 4 5 1
Joint ventures of the Group ................................ 9 7 4 331,401
Associates of the Group ................................... 1 16,401 128,372
813,808 1,158,296
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Amounts due to related parties
Trade
Controlling shareholder ................................... 3 –
Entities controlled by the ultimate controlling person of the Company . . . 137,333 136,127
Associates of Mingde Holding .............................. – 1,303
Joint ventures of the Group ................................ 210,767 164,046
Associates of the Group ................................... 19,241 167,865
Non-Trade
Controlling shareholder ................................... 1 2 9 1 2 8
Entities controlled by the ultimate controlling person of the Company . . . 2,764 2,788
Associates of Mingde Holding .............................. 3 1 8 3,608
Joint ventures of the Group ................................ 3,073 2,393
Associates of the Group ................................... 145,794 127,181
519,422 605,439
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
(Unaudited) (Audited)
Lease Liabilities
Entities controlled by the ultimate controlling person of the Company . . . 90,761 92,060
Joint ventures of the Group ................................ – 98,987
Associates of the Group ................................... 414,939 598,296
505,700 789,343
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-35 –


--- page 646 ---
(e) Guarantee provided
As at September 30, 2024
Guaranteed entities:
Guaranteed
amount Guaranteed period
Whether the
guarantee has
been fulfilled
RMB’000
(Unaudited)
Joint ventures of the Group ........... 782,000 September 29, 2021 to
April 29, 2055
No
782,000
As at December 31, 2023
Guaranteed entities:
Guaranteed
amount Guaranteed period
Whether the
guarantee has
been fulfilled
RMB’000
(Audited)
Joint ventures of the Group ........... 782,000 September 29, 2021 to
April 29, 2055
No
782,000
(f) Key management compensation
Nine months ended September 30,
2024 2023
RMB’000 RMB’000
(Unaudited) (Unaudited)
Key management compensation .............................. 31,026 37,707
(g) Commitment provided
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
Joint ventures of the Group ................................ 2,384,180 2,384,180
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-36 –


--- page 647 ---
28. COMMITMENTS
The Group had the following capital commitments at the end of the reporting period:
As at
September 30,
As at
December 31,
2024 2023
RMB’000 RMB’000
Contracted, but not provided for purchases of property, plant and
equipment ........................................... 1,354,285 1,858,672
Investment to be paid ..................................... 125,860 131,895
Others ............................................... 4,519 944
1,484,664 1,991,511
29. SUBSEQUENT EVENTS
(a) An interim dividend for the six months ended June 30, 2024 of RMB40 cents per ordinary share (tax
inclusive) was approved by the shareholders at the first extraordinary general meeting on October 29,
2024. The dividend was not recognized as a liability as at September 30, 2024.
(b) A special dividend of RMB1 per ordinary share (tax inclusive) was approved by the shareholders at the
first extraordinary general meeting on October 29, 2024. The dividend was not recognized as a liability
as at September 30, 2024.
APPENDIX IA UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
– IA-37 –


--- page 648 ---
The following information does not form part of the Accountant’ s Report from
PricewaterhouseCoopers, Certified Public Accountants, the reporting accountant of the
Company, as set forth in Appendix I to this prospectus, and is included herein for information
only. The unaudited pro forma financial information should be read in conjunction with the
section entitled “Financial Information” in this prospectus and the “Accountant’ s Report” set
forth in Appendix I to this prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma statement of adjusted consolidated net tangible assets
of the Group prepared in accordance with Rule 4.29 of the Listing Rules is for illustrative
purposes only, and is set out below to illustrate the effect of the Global Offering on the net
tangible assets of the Group attributable to the owners of the Company as of June 30, 2024 as
if the Global Offering had taken place on June 30, 2024.
This unaudited pro forma statement of adjusted consolidated net tangible assets has been
prepared for illustrative purposes only and because of its hypothetical nature, it may not give
a true picture of the consolidated net tangible assets of the Group as of June 30, 2024 or at any
future dates following the Global Offering.
Audited
Consolidated Net
Tangible Assets of
the Group
attributable to the
owners of the
Company as of
June 30, 2024
Estimated Net
Proceeds from the
Global Offering
Unaudited Pro
Forma Adjusted
Consolidated Net
Tangible Assets
Attributable to the
Owners of the
Company as of
June 30, 2024
Unaudited Pro Forma
Adjusted Consolidated
Net Tangible Assets
per Share
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4)
Based on an Offer
Price of HK$32.30
per Offer Share 71,329,826 4,895,906 76,225,732 15.32 16.67
Based on an Offer
Price of HK$36.30
per Offer Share 71,329,826 5,511,439 76,841,265 15.44 16.80
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 649 ---
Notes:
(1) The audited consolidated net tangible assets of the Group attributable to the owners of the Company as of June
30, 2024 is extracted from the Accountant’s Report set out in Appendix I to this prospectus, which is based
on the audited consolidated net assets of the Group attributable to the owners of the Company as of June 30,
2024 of approximately RMB88,571,197,000 after deducting the Group’s intangible assets attributable to the
owners of the Company of approximately RMB17,241,371,000 as of June 30, 2024.
(2) The estimated net proceeds from the Global Offering are based on 170,000,000 Offer Shares and the indicative
Offer Price of HK$32.30 per Offer Share and HK$36.30 per Offer Share, being low and high end of the
indicative Offer Price range, after deduction of the underwriting fees and other related expenses (excluding
listing expenses of RMB579,000 which were incurred up to June 30, 2024 and charged to consolidated
statements of profit or loss for the year ended December 31, 2023 and the six months ended June 30, 2024).
(3) The unaudited pro forma adjusted consolidated net tangible assets per Share is arrived at after the adjustments
referred to in the preceding paragraphs and on the basis that 4,975,711,636 Shares (representing 4,815,911,220
Shares in issue as of June 30, 2024, excluding 10,199,584 treasury shares as of June 30, 2024, adding
170,000,000 Offer Shares) were in issue, assuming that the Global Offering had been completed on June 30,
2024 but does not take into account of any Shares which may be allotted and issued by the Company pursuant
to the exercise of the Over-allotment Option or may be issued by the Company pursuant to the exercise of any
options may be granted under the 2022 Stock Option Incentive Plan.
(4) For the purpose of the unaudited pro forma statement of adjusted consolidated net tangible assets, the
translation of Renminbi amounts into Hong Kong dollars was of rate of RMB0.91906 to HK$1.00. No
representation is made that Renminbi amounts have been, could have been or may be converted to Hong Kong
dollars, or vice versa, at that rate.
(5) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to reflect
any trading results or other transactions of the Group entered into subsequent to June 30, 2024. In particular,
the unaudited pro forma adjusted net tangible assets of the Group has not taken into account payment of
dividends of RMB6.7 billion which was approved by the Shareholders at the first extraordinary general
meeting on October 29, 2024. The unaudited pro forma net tangible assets per Share would have been
HK$15.20 and HK$15.34 per Share based on the Offer Price of HK$32.30 and HK$36.30 respectively if the
dividend had been accounted for as at June 30, 2024.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 650 ---
B. REPORT FROM THE REPORTING ACCOUNTANT ON THE UNAUDITED PRO
FORMA FINANCIAL INFORMATION
The following is the text of a report received from PricewaterhouseCoopers, Certified Public
Accountants, Hong Kong, for the purpose of incorporation in this prospectus.
INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
To the Directors of S.F. Holding Co., Ltd. (ʮ̡)
We have completed our assurance engagement to report on the compilation of unaudited
pro forma financial information of S.F. Holding Co., Ltd. (ʮ̡) (the
“Company”) and its subsidiaries (collectively the “Group”) by the directors of the Company
(the “Directors”) for illustrative purposes only. The unaudited pro forma financial information
consists of the unaudited pro forma statement of adjusted consolidated net tangible assets of
the Group as of June 30, 2024 and related notes (the “Unaudited Pro Forma Financial
Information”) as set out on pages II-1 and II-2 of the Company’s prospectus dated November
19, 2024 in connection with the proposed global offering of the H Shares of the Company (the
“Prospectus”). The applicable criteria on the basis of which the Directors have compiled the
Unaudited Pro Forma Financial Information are described on pages II-1 and II-2 of the
Prospectus.
The Unaudited Pro Forma Financial Information has been compiled by the Directors to
illustrate the impact of the proposed global offering on the Group’s financial position as of
June 30, 2024 as if the proposed global offering had taken place at June 30, 2024. As part of
this process, information about the Group’s financial position has been extracted by the
Directors from the Group’s financial information for the six months ended June 30, 2024, on
which an accountant’s report has been published.
Directors’ Responsibility for the Unaudited Pro Forma Financial Information
The Directors are responsible for compiling the Unaudited Pro Forma Financial
Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to
Accounting Guideline 7, Preparation of Pro Forma Financial Information for Inclusion in
Investment Circulars, (“AG 7”) issued by the Hong Kong Institute of Certified Public
Accountants (“HKICPA”).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 651 ---
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behaviour.
Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1, Quality
Management for Firms that Perform Audits or Reviews of Financial Statements, or Other
Assurance or Related Services Engagements , issued by the HKICPA, which requires the firm
to design, implement and operate a system of quality management including policies or
procedures regarding compliance with ethical requirements, professional standards and
applicable legal and regulatory requirements.
Reporting Accountant’s Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the
Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to
you. We do not accept any responsibility for any reports previously given by us on any
financial information used in the compilation of the Unaudited Pro Forma Financial
Information beyond that owed to those to whom those reports were addressed by us at the dates
of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420, Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus , issued by the HKICPA. This standard requires
that the reporting accountant plans and performs procedures to obtain reasonable assurance
about whether the Directors have compiled the Unaudited Pro Forma Financial Information in
accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the
HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the Unaudited Pro
Forma Financial Information, nor have we, in the course of this engagement, performed an
audit or review of the financial information used in compiling the Unaudited Pro Forma
Financial Information.
The purpose of unaudited pro forma financial information included in a prospectus is
solely to illustrate the impact of a significant event or transaction on unadjusted financial
information of the entity as if the event had occurred or the transaction had been undertaken
at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any
assurance that the actual outcome of the proposed global offering at June 30, 2024 would have
been as presented.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 652 ---
A reasonable assurance engagement to report on whether the unaudited pro forma
financial information has been properly compiled on the basis of the applicable criteria
involves performing procedures to assess whether the applicable criteria used by the directors
in the compilation of the unaudited pro forma financial information provide a reasonable basis
for presenting the significant effects directly attributable to the event or transaction, and to
obtain sufficient appropriate evidence about whether:
 The related pro forma adjustments give appropriate effect to those criteria; and
 The unaudited pro forma financial information reflects the proper application of
those adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountant’s judgment, having regard to
the reporting accountant’s understanding of the nature of the company, the event or transaction
in respect of which the unaudited pro forma financial information has been compiled, and other
relevant engagement circumstances.
The engagement also involves evaluating the overall presentation of the unaudited pro
forma financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Our work has not been carried out in accordance with auditing standards or other
standards and practices generally accepted in the United States of America or auditing
standards of the Public Company Accounting Oversight Board (United States) or standards and
practices of any professional body in any other overseas jurisdiction and accordingly should
not be relied upon as if it had been carried out in accordance with those standards and practices.
Opinion
In our opinion:
(a) the Unaudited Pro Forma Financial Information has been properly compiled by the
Directors on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma
Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing
Rules.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, November 19, 2024
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 653 ---
This Appendix mainly provides investors with an overview of the Articles of Association.
As the following information is in summary form, it does not contain all the information that
may be important to investors.
SHARES AND REGISTERED CAPITAL
The shares of the Company shall be issued in an open, fair and equal manner. Each share
of the same class shall rank pari passu with each other. Shares of a class in each issuance shall
be issued under the same terms and at the same price. Each of the shares shall be subscribed
for at the same price by any entity or individual.
Upon filing with the China Securities Regulatory Commission (the “ CSRC ”), the
Company may issue shares to domestic investors and overseas investors. Holders of domestic
shares and holders of foreign shares are both ordinary shareholders and shall enjoy the same
rights and assume the same obligations.
Upon filing with the CSRC of the plan to issue overseas listed foreign shares and
domestic shares of the Company, the Board of Directors of the Company may make
implementation arrangements for separate issuance. The Company’s plan to separately issue
overseas listed foreign shares and domestic shares as stipulated in the preceding paragraph
could be implemented separately within fifteen months from the date of the filing with the
CSRC. Where the Company separately issues overseas listed foreign shares and domestic
shares within the total number of shares determined in the issuance plan, such shares shall be
fully subscribed for at their respective offerings. If the shares are not fully subscribed for at
their respective offerings due to exceptional circumstances, these shares may be issued in
separate tranches.
Unless otherwise stipulated by laws, administrative regulations, the relevant provisions of
the securities regulatory authorities of the place where the Company’s shares are listed and the
Hong Kong Stock Exchange, the shares of the Company which have been fully paid may be
freely transferred without any lien attached. The transfer of the Company’s shares shall be
conducted in accordance with the applicable national laws, administrative regulations and the
listing rules of the place where the Company’s shares are listed or the relevant provisions of
the securities regulatory authorities.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-1 –


--- page 654 ---
INCREASE, DECREASE, REPURCHASE AND TRANSFER OF SHARES
Increase and Decrease of Shares
According to the operation and development needs of the Company, subject to the laws,
regulations and the Articles of Association, the Company may increase the capital by the
following ways upon approval of special resolutions at the Shareholders’ general meeting:
(1) public issuance of shares;
(2) non-public issuance of shares;
(3) distribution of bonus shares to existing shareholders;
(4) capitalization of common reverse fund;
(5) other means stipulated by laws and administrative regulations or approved by the
government authorities.
The Company must prepare a balance sheet and an inventory of assets when it reduces its
registered capital. The Company shall notify its creditors within ten days from the date of the
Company’s resolution to reduce registered capital being passed and shall publish an
announcement on http://www.stcn.com/, https://www.cs.com.cn/, https://www.cnstock.com/,
http://www.zqrb.cn/, http://www.cninfo.com.cn and www.hkexnews.hk within thirty days from
the date of such resolution being passed. A creditor shall have the right, within 30 days upon
receipt of the notice from the Company or, in the case of a creditor who does not receive such
notice, within 45 days of the date of the announcement, to require the Company to repay its
debt or to provide corresponding guarantee for such debt.
Repurchase of Shares
The Company may, in accordance with the requirements under laws, administrative
regulations, the Listing Rules of Hong Kong Stock Exchange, departmental rules or the
Articles of Association, and subject to approval by the relevant regulatory authorities of the
State, repurchase its shares under the following circumstances:
(1) reducing the Company’s registered capital;
(2) merging with other companies holding our shares;
(3) using the shares as an employee stock ownership plan or equity incentive plan;
(4) purchasing its shares from Shareholders who have voted against the resolutions on
the merger or division of the Company at a Shareholders’ general meeting upon their
request;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-2 –


--- page 655 ---
(5) use of shares for conversion of convertible corporate bonds issued by the Company;
(6) necessary for the Company to maintain its value and protect the interests of the
shareholders;
A resolution shall be passed at the Shareholders’ general meeting when the Company is
to repurchase its own shares under the circumstances (1) and (2) set out above. In case of the
circumstances stipulated in (3), (5) and (6) above, a resolution of the Company’s Board shall
be passed by more than two-thirds of the Directors attending the Board meeting in accordance
with the provisions of the Articles of Association or the authorization of Shareholders’ general
meeting. After the Company has repurchased its own shares in accordance with the
circumstances (1) to (6) set out above, the shares so repurchased shall be canceled within ten
days from the date of purchase (under the circumstance set out in (1) above), or shall be
transferred or canceled within six months (under the circumstances set out in (2) and (4)
above). If the Company repurchases its shares under the circumstances set out in (3), (5) and
(6) above, the total number of shares held by the Company shall not exceed ten percent of the
total issued shares of the Company, and such shares shall be transferred or canceled within
three years. If the share repurchase is made under the circumstances stipulated in (3), (5) or (6)
above, it shall be conducted by way of open centralized trading.
Subject to the approval by the relevant competent authorities of the State, the Company
may repurchase its shares in one of the following ways:
(1) open centralized trading;
(2) other ways recognized by laws, administrative regulations, the CSRC and other
stock exchanges of the place where the Company’s shares are listed, and shall
comply with the provisions of applicable laws, administrative regulations,
departmental rules and securities regulatory rules of the place where the Company’s
shares are listed.
Transfer of Shares
Shares of the Company held by the founders shall not be transferred within one year from
the date of incorporation of the Company. Shares of the Company that were issued prior to a
public issue shall not be transferred within one year from the date on which shares of the
Company are listed and traded on the stock exchange.
The Directors, Supervisors and senior management of the Company shall notify the
Company of their holdings of shares in the Company and the changes therein. The shares
transferable by them during each year of their tenures shall not exceed 25% of their total
holdings of shares in the Company. The shares in the Company held by them shall not be
transferred within one year from the date on which the Company’s shares are listed for trading.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 656 ---
The shares in the Company held by them shall not be transferred within half a year from their
departure from the Company. Where the listing rules of the place where the Company’s shares
are listed provide otherwise in respect of the restrictions on the transfer of overseas listed
shares, such rules shall prevail.
All transfers of H Shares shall be effected by instruments of transfer in writing in a
general or common form or in any other form acceptable to the Board of Directors, including
the standard transfer form or form of transfer specified by the Hong Kong Stock Exchange
from time to time. The instruments of transfer may be signed by hand only or (where the
transferor or transferee is a corporation) stamped with the corporation’s chop. If the transferor
or transferee is a recognized clearing house as defined by the relevant provisions that come into
effect from time to time according to the laws of Hong Kong or its nominee, the instruments
of transfer may be signed by hand or in a machine imprinted format. All instruments of transfer
shall be deposited with the legal address of the Company or such places as the Board of
Directors may designate from time to time.
SHAREHOLDERS AND SHAREHOLDERS’ GENERAL MEETINGS
Shareholders
The Company shall establish a register of Shareholders based on the certificates provided
by the securities registration authority and the register of Shareholders is sufficient evidence
to prove that the Shareholders hold the shares of the Company. The original register of
Shareholders of overseas listed foreign shares listed in Hong Kong is kept in Hong Kong and
is available for inspection by Shareholders, but the Company may suspend the registration of
Shareholders in accordance with applicable laws and regulations and the securities regulatory
rules of the place where the Company’s Shares are listed (if necessary). In the event that any
Shareholder whose name is recorded in or any person who requests to have its name entered
in the register of holders of H Shares loses his/her share certificate(s), he/she may apply to the
Company for replacement of new share certificate(s) in respect thereof. Where a holder of
overseas-listed foreign shares loses his/her share certificate(s) and applies for replacement,
such application shall be dealt with in accordance with the laws, rules of the stock exchange
or other relevant regulations of the place where the original copy of the register of shareholders
of overseas-listed foreign shares is maintained. Shareholders shall enjoy rights and assume
obligations according to the class and number of shares they hold. Shareholders holding shares
of the same class shall enjoy the same rights and assume the same obligations.
Shareholders of the Company enjoy the following rights:
(1) to receive dividends and other forms of interest distributions in proportion to the
shares they hold;
(2) to file a petition of, to convene, hold and attend the Shareholders’ general meetings
either in person or by proxy and exercise their corresponding voting right according
to laws;
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--- page 657 ---
(3) to supervise, present suggestions on or make inquiries about the business operations
of the Company;
(4) to transfer, donate or pledge their shares in accordance with laws, administrative
regulations and the Articles of Association;
(5) to inspect the Articles of Association, register of Shareholders, counterfoils of
corporate bonds, minutes of Shareholders’ general meetings, resolutions of the
Board meetings, resolutions of the meetings of Board of Supervisors, financial and
accounting reports;
(6) to participate in the distribution of the remaining properties of the Company in
proportion to their shareholdings in the event of the termination or liquidation of the
Company;
(7) to request the Company to purchase their shares for the Shareholders who object to
the Company’s resolution on merger or division made by the Shareholders’ general
meetings; and
(8) to enjoy other rights stipulated by laws, administrative regulations, departmental
rules, the Articles of Association or securities regulatory rules of the place where the
Company’s shares are listed.
In the event that any resolution of the Shareholders’ general meeting or resolution of the
Board of Directors violates laws or administrative regulations, the Shareholder is entitled to
request the People’s Court to deem it as invalid (H Shareholders shall apply to Dispute
Resolution Rules of Articles of Association). In the event that the convening procedure or
voting method of the Shareholders’ general meeting or the Board meeting violates any of laws,
administrative regulations or the Articles of Association, or any resolution of which violates
the Articles of Association, the Shareholder is entitled to request the People’s Court to overturn
the resolution within 60 days upon the resolution was adopted (H Shareholders shall apply to
Dispute Resolution Rules of Articles of Association).
Shareholders of the Company shall assume the following obligations:
(1) to abide by the laws, administrative regulations and the Articles of Association;
(2) to pay subscription monies according to the number of shares subscribed and the
method of subscription;
(3) not to withdraw the shares unless required by the laws and administrative
regulations;
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--- page 658 ---
(4) not to abuse their shareholders’ rights to jeopardize the interests of the Company or
other shareholders, and not to abuse the status of the Company as an independent
legal entity and the limited liability of shareholders to jeopardize the interests of any
creditors of the Company;
(5) to keep business secrets of the Company;
(6) other obligations imposed by the laws, administrative regulations and the Articles of
Association;
Where any shareholder of the Company abuses the shareholders’ rights and incur losses
to the Company or other shareholders, such shareholder shall be liable for the damages
according to laws. Where shareholders of the Company abuse the Company’s status as an
independent legal entity and the limited liability of shareholders for the purposes of evading
debts, thereby materially impairing the interests of the creditors of the Company, such
shareholders shall be jointly and severally liable for the debts owed by the Company.
General Provisions for Shareholders’ General Meetings
The Shareholders’ general meeting is the organ of authority of the Company, which
exercises its powers in accordance with the PRC Company Law.
(1) to decide on the Company’s operational policies and investment plans;
(2) to elect or remove the Directors and Supervisors (other than the employee
representatives) and to decide on matters relating to the remuneration of Directors
and Supervisors;
(3) to examine and approve reports of the Board of Directors;
(4) to examine and approve reports of the Board of Supervisors;
(5) to examine and approve the Company’s proposed annual financial budget and final
accounts;
(6) to examine and approve the Company’s proposals for profit distribution plans and
loss recovery plans;
(7) to decide on any increase or decrease of the Company’s registered capital;
(8) to decide on the issue of securities or corporate bonds by the Company;
(9) to decide on matters such as merger, division, dissolution and liquidation or change
of corporate form of the Company;
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--- page 659 ---
(10) to amend the Articles of Association;
(11) to decide on the purchase of the Company’s shares under the circumstances
stipulated in Article 24 (1) and (2) of the Company’s Articles of Association;
(12) resolution on appointment and dismissal of an accounting firm by the Company;
(13) to examine and approve the provision of guarantees stipulated in Article 42;
(14) to examine matters relating to the purchases and disposals of the Company’s
material assets within one year, which exceed 30% of the Company’s latest audited
total assets;
(15) to examine and approve the related party transactions which the Company intends
to enter into with related parties with a transaction amount of more than RMB30
million and accounting for more than 5% of the absolute value of the latest audited
net assets of the Company;
(16) to examine and approve matters relating to changes in the use of proceeds;
(17) to examine and approve the equity incentive plans and employee stock ownership
plans;
(18) to examine other matters as required by the laws, administrative regulations,
departmental rules, the Articles of Association of the Company or the securities
regulatory rules of the place where the Company’s shares are listed, which shall be
decided by the Shareholders’ general meeting.
The following provision of guarantees to third parties by the Company are subject to the
consideration and approval by the Shareholders’ general meeting:
(1) any guarantee provided after the total amount of guarantee to third parties provided
by the Company and its controlled subsidiaries has exceeded 50% of the Company’s
latest audited net assets;
(2) any guarantee provided after the total amount of guarantee to third parties provided
by the Company and its controlled subsidiaries has exceeded 30% of the Company’s
latest audited total assets;
(3) the cumulative guarantee amount in the last 12 months has exceeded 30% of the
Company’s latest audited total assets;
(4) a guarantee provided to a party with an asset-liability ratio of over 70% as shown
in its latest financial statement;
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--- page 660 ---
(5) a single guarantee that exceeds 10% of the Company’s latest audited net assets;
(6) the guarantee to be provided to shareholders, beneficial controllers and their related
parties;
(7) other guarantees required by the laws, administrative regulations, rules, securities
regulatory rules of the place where the Company’s shares are listed or other
regulatory documents that shall be considered by the Shareholders’ general meeting.
The guarantee in item (3) of the preceding paragraph shall be approved by more than
two-thirds of the voting rights held by the shareholders attending the meeting.
Where a director, general manager, other senior management or other personnel of the
Company fails to perform the procedures for reviewing guarantees to third parties as required
and signs a guarantee contract without authorization, the parties concerned shall be held
accountable.
Shareholders’ general meetings are divided into annual general meetings and
extraordinary general meetings. The annual general meeting is convened once a year and shall
be held within six months after the end of the previous accounting year.
The Company shall convene an extraordinary general meeting within two months from
the date of the occurrence of any of the following circumstances:
(1) where the number of directors is less than the number provided for in the Company
Law or less than two-thirds of the number prescribed in these Articles of
Association;
(2) where the losses of the Company that have not been made up reach one-third of its
total paid in share capital;
(3) where it is requested by a shareholder alone or shareholders together holding more
than 10 percent of the Company’s shares;
(4) the Board of Directors considers it necessary;
(5) the Board of Supervisors proposes that such a meeting shall be held;
(6) other circumstances conferred by the laws, administrative regulations, departmental
rules, securities regulatory rules of the place where the Company’s shares are listed
and the Articles of Association.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 661 ---
Convening of Shareholders’ General Meetings
Shareholders requesting to convene an extraordinary general meeting shall follow the
procedures as follows:
Shareholders who individually or collectively hold more than 10% of the shares of the
Company shall have the right to request the Board of Directors to convene an extraordinary
general meeting, and shall submit such request in writing to the Board of Directors. The Board
of Directors shall, in accordance with the provisions of laws, administrative regulations and the
Articles of Association, provide written feedback on whether or not to convene the
extraordinary general meeting within 10 days after receiving the request.
Where the Board of Directors agrees to convene an extraordinary general meeting, it shall
issue a notice of convening the general meeting within 5 days after the resolution of the Board
of Directors is made, and changes to the original request in the notice shall be subject to the
consent of the relevant shareholders. Where the Board of Directors does not agree to convene
an extraordinary general meeting, or fails to give feedback within 10 days after receiving the
request, shareholders who individually or collectively hold more than 10% of the Company’s
shares have the right to propose to the Board of Supervisors to hold an extraordinary general
meeting, and shall make a written request to the Board of Supervisors.
Where the Board of Supervisors agrees to convene an extraordinary general meeting, it
shall issue a notice of convening the general meeting within 5 days of receiving the request,
and any changes to the original request in the notice shall be subject to the consent of the
relevant shareholders. Where the Board of Supervisors fails to issue a notice of the general
meeting within the prescribed time limit, it shall be deemed that the Board of Supervisors has
not convened and presided over the general meeting, and shareholders who individually or
collectively hold more than 10% of the Company’s shares for more than 90 consecutive days
may convene and preside over it on their own.
Where the Board of Supervisors or shareholders decide to convene a Shareholders’
general meeting by themselves, they shall notify the Board of Directors in writing and file with
the SZSE at the same time. Prior to the announcement of the resolution of the Shareholders’
general meeting, the shareholding ratio of the convening shareholders shall not be less than
10%. The Board of Supervisors or the convening shareholders shall submit relevant supporting
materials to the SZSE when issuing the notice of the general meeting and the announcement
of the resolutions of the Shareholders’ general meeting.
The expenses necessary for the Shareholders’ general meeting convened by the Board of
Supervisors or the shareholders themselves shall be borne by the Company.
The Shareholders’ general meeting shall be chaired by the chairman. When the chairman
is unable to perform his duties or fails to perform his duties, the chairman shall be presided
over by a director jointly elected by more than half of the directors.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 662 ---
The Shareholders’ general meeting convened by the Board of Supervisors shall be
presided over by the chairman of the Board of Supervisors. If the chairman of the Board of
Supervisors is unable to perform his duties or has failed to perform his duties, a Supervisor
elected by more than half of the Supervisors shall preside over the meeting. Shareholders may
convene the meeting themselves and a representative nominated by the convener shall preside
over the meeting. When the Shareholders’ general meeting is held and the chairman of the
meeting violates the rules of procedures which makes it difficult for the general meeting to
continue, a person may be elected at the general meeting to act as the chairman of the meeting,
subject to the approval of more than half of the shareholders having the voting rights who are
present at the meeting.
Notice of Shareholders’ General Meeting
The convener shall notify all Shareholders by way of announcement 21 days prior to the
convening of the annual general meeting, and each Shareholder shall be notified by way of
announcement 15 days prior to the convening of the extraordinary general meeting. The date
of the meeting shall not be included in the calculation of the commencement period.
The notice of a Shareholders’ general meeting shall include the following:
(1) the time, place and duration of the meeting;
(2) matters and proposals submitted to the meeting for consideration;
(3) in plain language: all Shareholders have the right to attend the general meeting of
shareholders, and may entrust a proxy in writing to attend the meeting and vote.
Such a proxy does not need to be a shareholder of the Company;
(4) the shareholding registration date of the Shareholders entitled to attend the general
meeting;
(5) name and telephone number of the permanent contact person for conference affairs;
(6) voting time and voting procedures on the Internet or in other ways.
The notice and supplementary notice of the Shareholders’ general meeting shall fully and
completely disclose all the specific contents of all proposals. Where an independent
non-executive director is required to express opinions on matters to be discussed, the opinions
and reasons of the independent non-executive directors shall be disclosed at the same time
when the notice of Shareholders’ general meeting and the supplementary notice are issued.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 663 ---
Proposals at Shareholders’ General Meetings
The Board of Directors, the Board of Supervisors and Shareholders who individually or
jointly hold more than 3% of the shares of the Company shall have the right to put forward
proposals to the Company. Shareholders who individually or collectively hold more than 3%
of the shares of the Company may submit an interim proposal in writing to the convener 10
days prior to the convening of the Shareholders’ general meeting. The convener shall issue a
supplementary notice of the Shareholders’ general meeting within 2 days after receiving the
proposal, and announce the contents of the interim proposal. Where the Shareholders’ general
meeting is postponed in accordance with the requirements of the securities regulatory rules of
the place where the Company’s shares are listed due to the issuance of a supplementary notice
of the Shareholders’ general meeting, the convening of the Shareholders’ general meeting shall
be postponed in accordance with the provisions of the securities regulatory rules of the place
where the Company’s shares are listed.
Proxy for the Shareholders’ General Meeting
A shareholder may attend and vote at the shareholders’ general meeting in person or by
proxy.
Individual shareholders attending the meeting in person shall present their personal
identity cards or other valid certificates or documents or proof of shareholding. Proxies
attending the meeting shall present their personal identity cards and the proxy statements from
the shareholder.
Corporate shareholders shall be represented by its legal representative or proxies
authorized by the legal representative. Legal representatives attending the meeting shall
present their personal identity cards or valid documents that can prove its identity as the legal
representative. Proxies authorized to attend the meeting shall present their personal identity
cards or the written proxy statement legally issued by the legal representative of the legal
person shareholder, except for shareholders who are a recognized clearing house as defined in
the relevant ordinances in force from time to time under the laws of Hong Kong or the
securities regulatory rules of the place where the shares of the company are listed (hereinafter
referred to as the “Recognized Clearing House”) or its proxy.
If the shareholder is a Recognized Clearing House, the Recognized Clearing House may
authorize one or more persons it deems fit to act as its proxy at any general meeting or any
meeting of creditors; however, if more than one person is authorized, the power of attorney
shall specify the number and class of shares in respect of which each such person is so
authorized. A person so authorized may act on behalf of the Recognized Clearing House (or its
proxies) (no shareholding voucher, notarized authorization and/or further evidence to the duly
authorization is required) as if such person were an individual shareholder of the Company.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 664 ---
If the power of attorney is signed by another person authorized by the principal, the power
of attorney or other document authorizing the signature shall be notarized. The notarized power
of attorney or other authorizing document, together with the instrument appointing the voting
proxy, shall be deposited at the domicile of the Company or at such other place as specified
in the notice of the meeting.
If the principal is a legal person, its legal representative or the person authorized by a
resolution of the Board or other decision-making body shall attend the shareholders’ general
meeting of the Company as the representative of such legal person.
The power of attorney issued by a shareholder to appoint another person to attend a
general meeting shall contain the following particulars:
(I) name of the proxy;
(II) with or without voting rights;
(III) instructions to vote for, against or abstain from voting on each matter to be
considered that are included on the agenda of the shareholders’ general meeting,
respectively;
(IV) date of issuance and date of expiry of the power of attorney;
(V) signature (or seal) of the principal. If the principal is a corporate shareholder, the
seal of the corporate shall be affixed.
The power of attorney should state whether the proxy may vote as he/she wishes if the
shareholder does not give specific instructions. If no such instruction is given, it is deemed that
the proxy of the shareholder may vote as he/she wishes.
Voting at the Shareholders’ General Meeting
Resolutions at shareholders’ general meeting are divided into ordinary resolutions and
special resolutions. An ordinary resolution at a shareholders’ general meeting shall be passed
by more than half of the voting rights held by the shareholders present at the shareholders’
general meeting (including proxies). A special resolution at a shareholders’ general meeting
shall be passed by at least two-thirds of the voting rights held by the shareholders present at
the shareholders’ general meeting (including proxies).
Shareholders (including proxies) shall exercise voting rights based on the number of
shares with voting rights held by them, and each share shall be entitled to one vote. On a poll,
Shareholders (including proxies) with two or more votes need not use all their voting rights in
the same way. Where material issues affecting the interests of minority shareholders are
considered at the shareholders’ general meeting, the votes of minority shareholders shall be
counted separately. The separate votes counting results shall be disclosed publicly in a timely
manner. The shares held by the Company shall have no voting right, and shall not be included
in the total number of shares with voting rights of shareholders present at the shareholders’
general meeting.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 665 ---
Where a related party transaction is considered at a shareholders’ general meeting, the
interested shareholder(s) shall abstain from voting, and the voting shares held by the interested
shareholder(s) shall not be counted in the total number of voting shares. The announcement on
the resolutions of the shareholders’ general meeting shall fully disclose the voting of the
non-interested shareholders.
If any shareholder, under applicable laws and regulations and Hong Kong Stock Exchange
Listing Rules of the Hong Kong Stock Exchange, is required to abstain from voting on any
particular matter being considered or is restricted to voting only for or only against any
particular matter being considered, any votes cast by or on behalf of such shareholder in
contravention of such requirement or restriction shall not be counted.
If a shareholder purchases shares with voting rights of the Company in violation of the
provisions of Article 63(1) and (2) of the Securities Law, the voting rights of such shares in
excess of the prescribed proportion shall not be exercised and shall not be counted towards the
total number of shares with voting rights present at the shareholders’ general meeting for
thirty-six months after the purchase.
The Board of Directors, independent non-executive Directors, shareholders holding more
than one per cent of the shares with voting rights or investor protection agencies established
in accordance with laws, administrative regulations or the provisions of the CSRC may
publicly solicit shareholders’ voting rights. The solicitation of shareholders’ voting rights shall
provide full disclosure of information such as specific voting intentions to the solicited person.
The solicitation of shareholders’ voting rights by way of remuneration or disguised
remuneration is prohibited. Except for statutory conditions, the Company shall not impose
minimum shareholding restrictions on the solicitation of voting rights.
The following matters shall be passed by ordinary resolutions at the shareholders’ general
meeting:
(I) work reports of the Board of Directors and the Board of Supervisors;
(II) plans for the distribution of profits and for recovery of losses proposed by the Board;
(III) the election and removal of the members of the Board of Directors and the Board of
Supervisors who are not staff representatives, and their remuneration and payment
method;
(IV) the annual financial budget and final account report of the Company;
(V) the annual report of the Company;
(VI) Any other matters other than those shall be passed by special resolutions as required
by laws, administrative regulations, the listing rules of the place where the shares of
the Company are listed, or the Articles of Association.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-13 –


--- page 666 ---
The following matters shall be passed as special resolutions of a shareholders’ general
meeting:
(I) the increase or reduction of the registered capital of the Company;
(II) the division, spin-off, merger, dissolution and liquidation of the Company or change
of company form;
(III) any amendment to the Articles of Association;
(IV) purchase or sale of significant assets within a year or guarantee which exceeds 30%
of the Company’s audited total assets for the latest period;
(V) share option incentive plan;
(VI) adjustments to the profit distribution policy;
(VII) any other matters stipulated by laws, administrative regulations, securities
regulatory rules of the place where the Company’s shares are listed or the Articles
of Association, which have a significant impact on the Company if to be passed by
an ordinary resolution of a shareholders’ general meeting and which are deemed
necessary to be passed as a special resolution.
DIRECTORS AND THE BOARD OF DIRECTORS
Directors
Directors of the Company may include executive Directors, non-executive Directors and
independent non-executive Directors. Non-executive Directors refer to Directors who do not
hold management positions in the Company. The qualification, nomination, election
procedures and powers of independent non-executive Directors and other related matters shall
be implemented in accordance with laws and relevant requirements of the CSRC and the stock
exchange of the place of listing.
Directors shall be elected or replaced at a shareholders’ general meeting, and can be
removed by a shareholders’ general meeting before the expiry of the term of office. Directors’
term of office shall be three years, and upon expiry of the term of office, the Director may be
re-elected in accordance with securities regulatory rules of the place where the Company’s
shares are listed.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 667 ---
The term of office of a Director shall be from the date of appointment to the expiry of
term of office of the current Board. Where re-election is not promptly carried out upon expiry
of the term of office of a Director, prior to appointment of a new Director, the original Director
shall continue to carry out director duties pursuant to the provisions of laws, administrative
regulations, ministry rules and the Articles of Association. The general manager or any other
senior management may hold the position of Director concurrently, but the aggregate number
of Directors who hold the position of general manager or any other senior management position
concurrently shall not exceed half of the total number of Directors of the Company.
A Director may resign prior to expiry of his/her term of office. A resigning Director shall
submit a written resignation report to the Board of Directors. The Board of Directors shall
disclose the relevant information within two days. Where the resignation of the Director will
render the number of Directors to fall below the statutory quorum or absence of accounting
professional among the independent non-executive Directors, the original Director shall
continue to perform director duties pursuant to the provisions of laws, administrative
regulations, ministry rules and the Articles of Association prior to appointment of his/her
replacement. The resignation of the Director shall take effect upon the election of a Director
in place of the leaving Director.
Chairman
The Board of Directors shall appoint a Chairman. The Chairman shall be elected by more
than one half of all Directors.
The Chairman shall exercise the following functions and powers:
(I) to preside over shareholders’ general meetings and to convene and to preside over
Board meetings;
(II) to supervise and inspect the implementation of Board resolutions;
(III) to sign the documents of the Board and other documents which shall be signed by
the legal representative of the Company;
(IV) to exercise the functions and powers as a legal representative;
(V) in case of emergency of catastrophic natural disasters and other force majeure, to
exercise the special right of disposal that is in line with the requirements of laws and
interests of the Company on the matters of the Company, and report to the Board and
the shareholders’ general meeting afterwards; and
(VI) to exercise other functions and powers conferred by the Board.
Where the Chairman is unable or fails to perform his/her duties, more than one half of the
Directors shall elect a Director to discharge such duties.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 668 ---
Board of Directors
The Company shall establish a Board of Directors, which shall comprise seven Directors.
The Board of Directors has one Chairman.
The Board of Directors shall be accountable to the shareholders’ general meetings and
shall exercise the following functions and powers:
(I) to convene shareholders’ general meetings, and submit work reports to shareholders’
general meetings;
(II) to implement the resolutions of shareholders’ general meetings;
(III) to resolve on the Company’s business plans and investment plans;
(IV) to formulate the Company’ annual financial budgets and final accounting plans;
(V) to formulate the Company’s profit distribution plan and plan for making up of
losses;
(VI) to formulate the Company’s plans for increase or reduction of registered capital,
issuance of bonds or other securities and listing plan;
(VII) to formulate the Company’s plans for significant acquisition, acquisition of the
Company’s shares (due to circumstances provided in items (I) and (II) of Article 24
of the Articles of Association) or merger, division, dissolution and change of
company form;
(VIII) subject to compliance with securities regulatory rules of the place where the
Company’s shares are listed, to decide on the acquisition of the Company’s shares
(due to circumstances provided in items (III), (V) and (VI) of Article 24 of the
Articles of Association);
(IX) to decide, within the scope of the mandate granted by a shareholders’ general
meeting, on the Company’s external investments, acquisition and sale of assets,
mortgage of assets, external guarantees, entrusted wealth management, related party
transactions, external donations, etc;
(X) to decide on the establishment of the Company’s internal management organisations
and branches;
(XI) to decide on the appointment or dismissal of the general manager, secretary to the
Board and other senior management members of the Company, and to decide on
their remunerations, incentives and penalties; to decide on the appointment or
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-16 –


--- page 669 ---
dismissal of senior management members such as the deputy general manager or
person-in-charge of finance of the Company based on the nominations by the
general manager, and to decide on their remunerations, incentives and penalties;
(XII) to formulate and amend the basic management system of the Company;
(XIII) to formulate the proposals for any amendment to the Articles of Association;
(XIV) to manage information disclosure of the Company;
(XV) to propose to a shareholders’ general meeting on appointment or change of the
accounting firms which provide audit services to the Company;
(XVI) to listen to work reports of the general manager of the Company and inspect his/her
work; and
(XVII) any other functions and powers stipulated by laws, administrative regulations,
ministry rules, securities regulatory rules of the place where the Company’s shares
are listed or the Articles of Association.
Meetings of the Board of Directors shall be classified into regular meetings and
extraordinary meetings. The Board of Directors shall convene at least four meetings every year
and the Chairman shall convene the Board meetings. A written notice of a regular meeting of
the Board of Directors shall be served 14 days before the meeting on all Directors and
Supervisors.
Any shareholder(s) holding 1/10 or more of the voting rights, one-third or more of the
Directors or the Board of Supervisors may propose the holding of an extraordinary meeting of
the Board. The Chairman shall convene and preside over a Board meeting within 10 days from
receipt of such proposal.
The notice of an extraordinary meeting of the Board shall be served by telephone and
written notice (including personal delivery, post, fax and e-mail). Notice of the meeting shall
be served on all Directors three days before the date of the meeting. In case of an emergency,
with the unanimous consent of all Directors, the convening of an extraordinary meeting of the
Board may not be limited by the aforementioned notice period, but this shall be recorded in the
minutes of the Board meeting and signed by all the Directors in attendance.
The Board meeting shall be held upon the attendance of more than half of Directors.
Resolutions made by the Board of Directors must be passed by more than half of all Directors
of the Company. V oting on the resolutions of the Board of Directors shall be conducted on a
one-person-one-vote basis.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-17 –


--- page 670 ---
If any Director has connection with the enterprise involved in the resolution made at a
Board meeting, the said Director shall not vote on the said resolution for himself/herself or on
behalf of another Director. The Board meeting may be held when more than half of the
non-connected Directors attend the meeting. The resolution of the Board meeting shall be
passed by more than half of the non-connected Directors. If the number of non-connected
Directors attending the meetings is less than three, the issue shall be submitted to the
shareholders’ general meeting for consideration. If there are any additional restrictions on
Directors’ participation in and voting at Board meetings in accordance with laws and
regulations and the securities regulatory rules of the place where the Company’s shares are
listed, such provisions shall prevail.
Directors shall attend Board meetings in person. If any Director cannot attend the meeting
for any reason, he/she may authorize in writing another Director to act on his/her behalf. The
power of attorney shall set out the name of the proxy, the matters represented, scope of
authorization and validity period, and shall be signed or sealed by the appointing Director. The
appointed Director who attends the meeting shall exercise the Director’s duties within the
scope of authorization. If a Director does not attend a Board meeting in person and does not
appoint a proxy to attend the meeting, he/she shall be deemed to have waived the voting rights
at the meeting.
Special Committees under the Board
The Company has established the audit committee, the remuneration and appraisal
committee, the nomination committee, the strategy committee and the risk management
committee under the Board of Directors according to the actual situation and needs.
The special committees shall be responsible to the Board of Directors, and perform their
duties according to the Articles of Association and the authorization granted by the Board of
Directors. The proposals shall be submitted to the Board of Directors for consideration and
approval. All members of the special committees are composed of Directors, among which the
number of independent non-executive Directors shall be the majority of the audit committee,
remuneration and appraisal committee and nomination committee, and they shall act as the
chairman of the committees. The chairman of the audit committee shall be an accounting
professional. The Board of Directors is responsible for formulating the working procedures of
the special committees and regulating their operations.
Secretary to the Board
The Company shall have a secretary to the Board, and shall be responsible for the
preparation of the shareholders’ general meeting and Board meeting, document keeping and
management of information regarding the shareholders of the Company and other matters, and
shall deal with information disclosure and other matters. The secretary to the Board shall
comply with the relevant provisions of the laws, administrative regulations, departmental rules
and the Articles of Association.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-18 –


--- page 671 ---
General Manager and Other Senior Management Members
The Company shall have one general manager, who shall be appointed or dismissed by the
Board. The Company shall have several deputy general managers, one (1) financial officer and
several other senior management members recognized by the Board. Their appointment and
dismissal are to be nominated by the general manager for approval by the Board.
The general manager, deputy general managers, financial officer, secretary to the Board
of Directors and other senior management members recognized by the Board are senior
management members of the Company. A Director may serve concurrently as the general
manager, deputy general manager, financial officer or other member of the senior management.
The term of office of the general manager and other member of the senior management
shall be three (3) years, renewable upon re-appointment.
The general manager shall be accountable to the Board of Directors and shall exercise the
following functions and powers:
(I) to be in charge of the Company’s production, operation and management, and to
organize and implement the resolutions of the Board of Directors and report on
works to the Board of Directors;
(II) to organize and implement the Company’s annual business plan and investment
proposals;
(III) to draft plans for the establishment of the Company’s internal management
organizations;
(IV) to draft the Company’s basic management system;
(V) to formulate specific rules and regulations for the Company;
(VI) to propose to the Board of Directors on the appointment or dismissal of deputy
general manager and financial officer of the Company;
(VII) to appoint or dismiss management personnel other than those required to be
appointed or dismissed by the Board of Directors;
(VIII) to approve transactions and related party transactions that are not subject to
consideration and approval by the shareholders’ general meeting and the Board of
Directors, but where there are relevant provisions of laws, regulations and
regulatory authorities, such provisions shall prevail;
(IX) Other functions and powers stipulated in the general manager’s work rules;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-19 –


--- page 672 ---
(X) other functions and powers conferred by the Articles of Association or the Board of
Directors.
The general manager shall attend meetings of the Board of Directors.
Senior management members shall faithfully perform their duties and safeguard the best
interests of the Company and all shareholders. If any senior management member causes
damage to the interests of the Company and its public shareholders due to failure in faithfully
performing their duties or violation of his/her fiduciary duties, he/she shall be liable for
compensation in accordance with laws.
SUPERVISORS AND BOARD OF SUPERVISORS
Supervisors
The Board of Supervisors shall include shareholder representatives and employee
representatives, the ratio of employee representatives shall not be less than one-third of all
Supervisors. The employee representatives sitting on the Board of Supervisors shall be elected
by the employees through the employee representative congress, employee congress or any
other democratic form.
Each Supervisor shall serve for a term of three years. Upon expiry of the term, the
Supervisor may be re-appointed upon re-election. The Directors, general manager and other
senior management members shall not act concurrently as Supervisors.
Supervisors may be in attendance at Board meetings, and raise questions or suggestions
pertaining to Board resolutions.
Supervisors shall comply with laws, administrative regulations and the Articles of
Association and bear fiduciary obligations and diligence obligations towards the Company.
They shall not abuse their authority to accept bribes or other illegal income and shall not
misappropriate the properties of the Company.
Board of Supervisors
The Company shall have a Board of Supervisors. The Board of Supervisors shall consist
of five Supervisors and one chairman. The chairman of the Board of Supervisors shall be
elected by a simple majority of all Supervisors. The meetings of the Board of Supervisors shall
be presided over and chaired by the chairman of the Board of Supervisors. If the chairman of
the Board of Supervisors is unable or fails to perform his/her duties, such meeting shall be
convened and presided over by a Supervisor nominated by not less than half of the Supervisors.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-20 –


--- page 673 ---
The Board of Supervisors shall exercise the following functions and powers:
(I) to examine regular reports prepared by the Board of Directors and propose written
examination suggestions;
(II) to review the Company’s financial position;
(III) to supervise the Directors and senior management members’ acts in performing their
duties in the Company, and to propose a removal of any Director or senior
management member in violation of any laws, administrative regulations, the
Articles of Association or resolutions adopted at the shareholders’ general meeting;
(IV) to demand any Director or senior management member who acts in a manner which
is harmful to the Company’s interest to rectify such behaviour;
(V) to propose to convene an extraordinary general meeting, and to convene and preside
over shareholders’ general meetings where the Board of Directors fails to perform
its duty to do so as required by the Company Law;
(VI) to submit proposals to shareholders’ general meetings;
(VII) to initiate legal proceedings against any Director or senior management member
according to Article 151 of the Company Law;
(VIII) to investigate into unusual operation of the Company and if necessary, to engage an
accounting firm, a law firm or other professional institutions to assist in its work at
the expenses of the Company;
(IX) other functions and powers stipulated in the Articles of Association or conferred by
the shareholders’ general meetings.
Meetings of the Board of Supervisors
The Board of Supervisors shall convene a meeting at least once every six months.
Supervisors may propose to convene extraordinary meetings of the Board of Supervisors.
Resolutions of the Board of Supervisors shall be passed by more than half of the members of
the Board of Supervisors.
QUALIFICATIONS AND RESPONSIBILITIES OF DIRECTORS, SUPERVISORS AND
SENIOR MANAGEMENT
A person may not serve as a Director, Supervisor, general manager or other member of
senior management of the Company in any of the following circumstances:
(I) a person who has no or restricted capacity for civil conduct;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-21 –


--- page 674 ---
(II) a person who has committed an offense of corruption, bribery, infringement of
property, misappropriation of property or disruption of the socialism economic order
and has been punished because of committing such offense where less than five
years have lapsed following the completion of the implementation of the
punishment; or who has been deprived of his/her political rights for committing an
offense where less than five years have lapsed following such deprivation;
(III) a person who is a former director, factory manager or president of a company or
enterprise which has entered into insolvent liquidation and is personally liable for
the insolvency of such company or enterprise, where less than three years have
lapsed following the date of the completion of the insolvency and liquidation of such
company or enterprise;
(IV) a person who is a former legal representative of a company or enterprise which had
its business license revoked or had been ordered to close down due to violation of
the laws and has incurred personal liability, where less than three years have lapsed
since the date of the revocation of such business license;
(V) a person who has a relatively large amount of debt due and outstanding;
(VI) a person who is currently being prohibited from participating in the securities
market by the China Securities Regulatory Commission as unfit to serve as a
director, supervisor or senior management member of listed companies and such
barring period has not elapsed;
(VII) a person who has been publicly determined by the stock exchange as unfit to serve
as a director, supervisor or senior management member of listed companies, with the
term yet to be expired;
(VIII) any other circumstances stipulated by laws, administrative regulations, securities
regulatory rules or departmental rules of the place where the Company’s shares are
listed.
If any of the circumstances described in (I) to (VI) of the first paragraph above occurs to
a Director of the Company during his/her term of office or an independent non-executive
Director fails to meet the requirements of independence during his/her term of office, the
relevant Director shall immediately cease to perform his/her duties and be removed from
his/her position by the Company in accordance with the corresponding regulations. If any of
the circumstances described in (VII) and (VIII) of the first paragraph above occurs to a
Director of the Company during his/her term of office, the Company shall remove him/her from
his/her position within 30 days from the date of the occurrence of such circumstance. Unless
otherwise provided by the Stock Exchanges.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-22 –


--- page 675 ---
If the relevant Director shall be removed from office but is not removed, and he/she
attends and votes at the meetings of the Board of Directors and its special committees, or the
special meeting of independent non-executive Directors, his/her vote shall be void.
Where a Director, Supervisor, general manager and other senior management members of
the Company has direct or indirect material interest with the contracts, transactions or
arrangements (except the employment contracts between the Company and its Directors,
Supervisors, general manager and other senior management members) signed or planned by the
Company, such person shall notify the Board of Directors of the nature and degree of the
interest as soon as possible, regardless of whether such matter, in general, shall be subject to
approval of the Board of Directors.
Any gains from sale of Company’s shares or other securities with an equity nature by the
Directors, Supervisors and senior management members or shareholders holding 5% or more
of the Company’s shares within six (6) months after their purchase of the same, and any gains
from the purchase of the shares or other securities with an equity nature by any of the aforesaid
parties within six (6) months after sale of the same shall be disgorged and paid to the Company,
and the Board of Directors of the Company shall be responsible for recovering such gains from
the abovementioned parties. However, a securities company which holds 5% or more of the
Company’s shares as a result of its undertaking of the untaken shares in an offer, and other
circumstances stipulated by the CSRC are excluded. If the listing rules of the place where the
Company’s shares are listed provide otherwise, such provisions shall prevail.
FINANCIAL AND ACCOUNTING SYSTEM
The Company shall establish its financial and accounting system in accordance with the
laws, administrative regulations and the provisions stipulated by the relevant authorities of the
PRC. The Company shall adopt the Gregorian calendar year for its fiscal year, i.e. the fiscal
year shall be from January 1 to December 31.
The Company shall submit and disclose its annual reports to the CSRC and the stock
exchange in the place where the Company’s shares are listed within four months from the end
of each fiscal year, and its interim reports to the relevant branch office of the CSRC and the
stock exchange in the place where the Company’s shares are listed within two months from the
end of the first half of each fiscal year.
The aforesaid annual reports and interim reports shall be prepared in accordance with
relevant laws, administrative regulations and requirements of the CSRC and the stock exchange
in the place where the Company’s shares are listed.
The Company will not establish account books other than the statutory account books.
The assets of the Company shall not be deposited in any personal account.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-23 –


--- page 676 ---
The Company is required to allocate 10% of its profits into its statutory reserve fund when
distributing each year’s after-tax profits. When the cumulated amount of the statutory reserve
fund of the Company has reached 50% or more of its registered capital, no further allocations
is required. Where the statutory reserve fund of the Company is insufficient to make up the
losses of the Company for the preceding year, profits of the current year shall be applied to
make up the losses before any allocation to the statutory reserve fund in accordance with the
provisions in the preceding paragraph.
Subject to a resolution of the shareholders’ general meeting, after allocation has been
made to the Company’s statutory reserve fund from its after-tax profits, the Company may set
aside funds for the discretionary reserve fund. After making up of losses and appropriation to
reserve funds, balance of the profit after tax shall be distributed to shareholders in proportion
to their shareholdings, unless otherwise stipulated in the Articles of Association.
No profit shall be distributed in respect of the shares of the Company which are held by
the Company.
Reserve funds of the Company are used for recovering losses of the Company and
expanding scale of operation of the Company or conversion into its capital, but capital reserve
fund shall not be used for making up the Company’s losses. When the statutory reserve funds
are converted into capital, the remaining balance of such reserve fund must not be less than
25% of its registered capital before such conversion.
The Company shall distribute profits in cash, shares, in a way integrating cash and shares
or other ways permitted by laws. Such distribution shall not exceed the amount of the accrued
distributable profits and shall in no way prejudice the Company’s sustainability of operation.
The profits distributed in cash in any fiscal year by the Company shall be no less than 10% of
the distributable profits sustained in the same year.
The Company shall appoint one or more collection agents for H shareholders in Hong
Kong. The collection agents shall collect on behalf of the relevant H shareholders the dividends
distributed and other funds payable by the Company in respect of the H shares, and hold such
monies in their custody pending payment to the H shareholders concerned. The collection
agents appointed by the Company shall meet the requirements of the laws, regulations and the
securities regulatory rules of the place where the Company’s shares are listed.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-24 –


--- page 677 ---
INTERNAL AUDIT
The Company has implemented an internal audit system and established the internal audit
department equipped with full-time auditors to conduct internal audit and supervision on the
Company’s financial revenues and expenditures and economic activities.
The internal audit system of the Company and the duties of the auditors shall be
implemented upon approval by the Board. The person in charge of audit shall be accountable
and report to the Board.
APPOINTMENT OF ACCOUNTING FIRM
The Company shall appoint such accounting firm which has complied with the Securities
Law for carrying out the audit for the accounting statements, net asset verification and other
relevant consultancy services. The term of appointment is one (1) year and can be re-appointed.
The appointment of accounting firm by the Company shall be subject to the approval of
the shareholders’ general meetings. The Board of Directors may not appoint accounting firm
before the approval of the shareholders’ general meeting.
The Company guarantees that it shall provide the appointed accounting firm with true and
complete accounting vouchers, accounting books, financial and accounting reports and other
accounting information, and that it engages without any refusal, withholding, and
misrepresentation.
The audit fees of an accounting firm shall be determined at the shareholders’ general
meeting.
If the Company removes or no longer re-appoints the accounting firm, it shall notify such
accounting firm fifteen (15) days in advance. When shareholders vote for the removal of such
accounting firm, such accounting firm shall be entitled to state its opinions at the shareholders’
general meeting.
Where the accounting firm resigns its office, it shall make clear to the shareholders’
general meeting whether or not there are irregularities in the Company.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-25 –


--- page 678 ---
MERGER, DIVISION, CAPITAL INCREASE AND REDUCTION OF THE COMPANY
Merger of the Company may take the form of absorption or establishment of a new
company.
In the case of merger by absorption, a company absorbs any other company and the
absorbed company shall be dissolved. Merger by establishment of a new company shall refer
to the establishment of a new company as a result of merger of two or more companies and
dissolution of the merger parties.
In the event of a merger, the merger parties shall enter into a merger agreement, and
formulate a balance sheet and an inventory list for assets. The Company shall notify its
creditors within 10 days from passing of the resolution on merger, and make an announcement
within 30 days on the Securities Times , China Securities Journal , Shanghai Securities News ,
Securities Daily and the websites of CNINFO ( http://www.cninfo.com.cn ) and Hong Kong
Stock Exchange ( www.hkexnews.hk ) as designated by the Company. Creditors may require
the Company to repay the debts or to provide the corresponding guarantee within 30 days from
receipt of notification or within 45 days from the date of announcement if they do not receive
notification.
At the time of merger, the claims and debts of the merger parties shall be succeeded by
the company which subsists after the merger or the newly-established company.
When the Company undergoes a division, its assets shall be divided accordingly.
In the event of a division, a balance sheet and an inventory list for assets shall be
prepared. The Company shall notify its creditors within 10 days from passing of the resolution
on division, and make an announcement within 30 days on the Securities Times , China
Securities Journal , Shanghai Securities News , Securities Daily and the websites of CNINFO
(http://www.cninfo.com.cn ) and Hong Kong Stock Exchange ( www.hkexnews.hk )a s
designated by the Company.
The debts of the Company prior to the division shall be assumed jointly and severally by
the companies arising from the division, unless provided otherwise in a written agreement
reached by the Company and the creditors in respect of repayment of the debts prior to the
division.
Where the Company needs to reduce its registered capital, it shall formulate a balance
sheet and an inventory list for assets.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-26 –


--- page 679 ---
The Company shall notify its creditors within 10 days from passing of the resolution on
reduction of registered capital, and make an announcement within 30 days on the Securities
Times, China Securities Journal , Shanghai Securities News , Securities Daily and the websites
of CNINFO ( http://www.cninfo.com.cn ) and Hong Kong Stock Exchange
(www.hkexnews.hk ) as designated by the Company. The creditors shall have the right to
require the Company to repay the debts or to provide the corresponding guarantee within 30
days from receipt of notification or within 45 days from the date of announcement if they do
not receive notification.
The reduced registered capital of the Company shall not be lower than the minimum
statutory amount.
In the event of change in registration matters due to merger or division, the Company
shall complete change registration formalities with the company registration authority pursuant
to the law; where the Company is dissolved, the Company shall apply for deregistration
pursuant to the law; where a new company is established, company establishment formalities
shall be completed pursuant to the law.
If the Company increase or reduce its registered capital, the Company shall complete
change registration formalities with the company registration authority pursuant to the law.
DISSOLUTION AND LIQUIDATION OF THE COMPANY
The Company shall be dissolved for the following reasons:
(I) expiry of term of business stipulated in the Articles of Association or occurrence of
any other trigger for dissolution stipulated in the Articles of Association;
(II) A shareholders’ general meeting has resolved on dissolution of the Company;
(III) dissolution is required due to the merger or division of the Company;
(IV) the Company’s business licence is cancelled or the Company is ordered to be closed
down or deregistered pursuant to the law; or
(V) where the Company has serious difficulties in its business management that cannot
be resolved through any other means, and its subsistence will cause serious damages
to the interests of its shareholders, the shareholders who hold 10% or more of the
total voting rights of the Company may apply to the people’s court for dissolution
of the Company.
Where the Company is dissolved pursuant to items (I), (II), (IV) or (V) above, it shall
establish a liquidation committee for liquidation within 15 days after the dissolution
circumstance arises. The members of the liquidation committee shall be determined by
Directors or the shareholders’ general meeting. If the liquidation committee is not duly set up
within the specified period, the creditors may request the people’s court to designate related
persons to form a liquidation committee to carry out liquidation.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-27 –


--- page 680 ---
The liquidation committee shall exercise the following functions and powers during the
period of liquidation:
(I) to liquidate the Company’s assets and compile a balance sheet and a property
inventory separately;
(II) to inform creditors by notice or announcement;
(III) to deal with the outstanding businesses of the Company relating to liquidation;
(IV) to pay off the taxes owed and the taxes arising during liquidation;
(V) to clear credits and debts;
(VI) to dispose of the remaining assets of the Company after all the debts are paid off;
(VII) to participate in civil proceedings on behalf of the Company.
The liquidation committee shall notify all creditors within 10 days after its establishment
and shall make announcements in Securities Times, China Securities Journal, Shanghai
Securities News, Securities Daily, Juchao Information Website ( http://www.cninfo.com.cn )
and HKExnews Website ( www.hkexnews.hk ) within 60 days. The creditors shall declare their
rights to the liquidation committee within 30 days after receipt of the notice or within 45 days
after announcement if the creditors haven’t received the notice.
The creditors shall explain matters relating to their rights and provide relevant evidential
documents.
The liquidation committee shall register the creditor’s rights. The liquidation committee
shall not pay off any debts to any creditors during the period of declaration of creditor’s rights.
After the liquidation committee has liquidated the assets of the Company and has
compiled a balance sheet and a property inventory, it shall formulate a liquidation proposal and
submit it to the shareholders’ general meeting or the People’s Court for confirmation.
The Company’s assets shall be used respectively for payment of liquidation expenses,
employees’ wages, social security premiums and statutory compensation, and payment of tax
in arrears and the Company’s debts; the residual assets thereafter shall be distributed in
accordance with the shareholding type and percentage of the shareholders.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-28 –


--- page 681 ---
During the liquidation period, the Company shall subsist but shall not engage in business
activities unrelated to liquidation. The Company’s assets shall not be distributed to
shareholders prior to making repayment pursuant to the provisions of the preceding paragraph.
After the liquidation committee has liquidated the assets of the Company and compiled
a balance sheet and a property inventory, if it discovers that the Company’s assets are
insufficient to repay its debts in full, it shall immediately apply to the people’s court for
declaration of bankruptcy of the Company.
Following a ruling by the people’s court that the Company is bankrupt, the liquidation
committee shall transfer to the People’s Court all matters relating to the liquidation.
Following the completion of the liquidation of the Company, the liquidation committee
shall formulate a liquidation report, submit it to the shareholders’ general meeting or the
People’s Court for confirmation, deliver it to the company registry, apply for the cancellation
of the Company’s registration and publicly announce the Company’s termination.
AMENDMENT TO THE ARTICLES OF ASSOCIATION
Under any of the following circumstances, the Company shall amend the Articles of
Association:
(I) Following the revision of the Company Law or relevant laws, administrative
regulations and the securities regulatory rules of the place where the Company’s
shares are listed, the matters stipulated in the Articles of Association contradict the
provisions of the revised laws, administrative regulations and the securities
regulatory rules of the place where the Company’s shares are listed;
(II) There is any change to the Company’s particulars which result in inconsistency with
the matters set out in the Articles of Association; or
(III) A Shareholders’ General Meeting has decided on making amendments to the Articles
of Association.
If the amendment to the Articles of Association adopted by resolution of the shareholders’
general meeting is subject to the approval of the competent authority, it shall be reported to the
competent authority for approval; if it involves matters of company registration, the
registration of the changes shall be made with the company registration authority in accordance
with the law.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-29 –


--- page 682 ---
SETTLEMENT OF DISPUTES
The Company shall comply with the following principles for settlement of disputes:
(I) For all disputes or claims in connection with the Company’s affairs arising between
the shareholders of H shares and the Company, between the shareholders of H shares
and the Directors, Supervisors, general manager and senior management of the
Company with respect to the rights and obligations specified in these Article of
Associations, the Company Law, and other pertinent laws and administrative
regulations, the parties concerned shall submit such disputes or claims for settlement
by arbitration.
When submitted for arbitration, the above disputes or claims shall be the entirety of
the claims or entirety of the disputes. All persons with cause of action for the same
origin of particulars or all necessary participants to such disputes or claims, if they
are the Company or the shareholders, Directors, Supervisors, general manager or
senior management of the Company, shall obey the arbitration.
Disputes concerning the definition of shareholders and the register of shareholders
are not required to be settled by arbitration.
(II) Arbitration applicants may select China International Economic and Trade
Arbitration Commission to carry out the arbitration in accordance with its
arbitration rules or choose Hong Kong International Arbitration Center to carry out
the arbitration in accordance with its securities arbitration rules. After an arbitration
applicant submit a dispute or claim for arbitration, the other party must accept
arbitration at the arbitration organization chosen by the applicant.
If an arbitration applicant chooses Hong Kong International Arbitration Center for
arbitration, either party to such dispute or claim may require arbitration to be
conducted in Shenzhen in accordance with the securities arbitration rules of Hong
Kong International Arbitration Centre.
(III) The arbitration proceedings in connection with any dispute or claim specified in
item (I) shall be governed by the laws of the People’s Republic of China (excluding
Hong Kong Special Administrative Region, Macao Special Administrative Region
and Taiwan), unless otherwise specified in laws and administrative regulations.
(IV) The arbitration award issued by the arbitration institution shall be final and binding
upon each party to the dispute or claim.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-30 –


--- page 683 ---
1. FURTHER INFORMATION ABOUT OUR COMPANY
A. Incorporation
Our Company was established under the PRC laws under the name of Maanshan Dingtai
Rare Earth & New Materials Co., Ltd.* (ʮ̡) on May 22,
2003 and was converted to a joint stock company on October 22, 2007 and listed on the SZSE
in February 2010. As part of the Material Asset Restructuring, on December 26, 2016, our
Company acquired 100% of the share equity of SF Taisen (then under the company name of
SF Holding (Group) Co., Limited* (ٰ(ණྠ)ʮ̡)) with the consideration of
(i) transferring all the assets and liabilities of our Company as of December 31, 2015 to SF
Taisen; and (ii) the issuance of an aggregate of 3,950,185,873 A Shares by our Company to all
the then shareholders of SF Taisen on January 18, 2017, with the approval of CSRC. In
February 2017, our Company was renamed to S.F. Holding Co., Ltd. (ʮ̡).
For further details of the Material Asset Restructuring, see “History, Development and
Corporate Structure — Major Share Capital Changes of our Company — Material Asset
Restructuring in 2016 and our A Share listing on the SZSE in 2017” in this prospectus.
Our registered office is located at 3/F, Complex Building, SF South China Transit Center,
No. 1111, Hangzhan 4th Road, Shenzhen Airport, Caowei Community, Hangcheng Sub-district,
Bao’an District, Shenzhen, PRC. We were registered as a non-Hong Kong company under Part
16 of the Companies Ordinance on November 2, 2023 and our principal place of business in
Hong Kong is at 9/F, Asia Logistics Hub-SF Centre, No. 36 Tsing Yi Hong Wan Road, Tsing
Yi, Hong Kong. Mr. SHUM Tze Leung is the authorized representative of the Company for the
acceptance of service of process and notices on behalf of our Company in Hong Kong. The
address for service of process on our Company in Hong Kong is the same as our principal place
of business in Hong Kong as set out above.
As our Company was established in the PRC, we are subject to the relevant laws and
regulations of the PRC. A summary of the relevant aspects of laws and regulations of the PRC
and our Articles of Association is set out in “Regulatory Overview” in this prospectus and
Appendix III to this prospectus respectively.
B. Changes in Share Capital of our Company
Save as disclosed below, there has been no alteration in our total issued share capital
within the two years immediately preceding the date of this prospectus.
As approved by the second extraordinary Shareholders’ meeting in 2021 on March 2,
2021, and with the approvals obtained from the CSRC on May 31, 2021 and August 25, 2021
respectively, 349,772,647 A Shares were issued and listed on the SZSE on November 19, 2021.
The total issued share capital of our Company was then increased from RMB4,556,440,455
comprising 4,556,440,455 A Shares of nominal value of RMB1.00 each to RMB4,906,213,102
comprising 4,906,213,102 A Shares of nominal value of RMB1.00 each.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1–


--- page 684 ---
As approved by the twenty-first meeting of the fifth session of the Board on January 26,
2022 and the first extraordinary Shareholders’ meeting in 2022 on February 11, 2022,
11,010,729 A Shares repurchased by our Company in 2019 under a repurchase mandate for
employee share incentive scheme were canceled in April 2022. The total issued share capital
of our Company was then decreased from RMB4,906,213,102 comprising 4,906,213,102 A
Shares of nominal value of RMB1.00 each to RMB4,895,202,373 comprising 4,895,202,373 A
Shares of nominal value of RMB1.00 each.
A repurchase mandate for the repurchase of A Shares for the purpose of the Company’s
employee share incentive scheme was approved by the twenty-second meeting of the fifth
session of the Board on March 2, 2022. As of September 1, 2022, the repurchase of A Shares
was completed under the repurchase mandate with a total of 38,797,055 A Shares repurchased
pursuant to transactions conducted between March 3, 2022 and September 1, 2022, at an
average price of RMB51.54 per A Share. The repurchased A Shares are held under the
Company stock repurchase account and do not carry any right or entitlement to profit sharing,
capitalization of reserves, allotment of share and bonus issue, share pledge, voting on
Shareholders’ meetings. Any repurchased A Shares not granted to employees within 36 months
after the completion of the repurchase shall be canceled. As approved by the twelfth meeting
of the sixth session of the Board on March 26, 2024 and by the annual general meeting of
Shareholders held on 30 April, 2024, the purpose of the repurchase mandate for the remaining
30,376,862 repurchased A Shares shall be revised as for cancellation and for reduction of the
Company’s registered capital.
A repurchase mandate for the repurchase of A Shares for the purpose of the Company’s
employee share incentive scheme was approved by the twenty-eighth meeting of the fifth
session of the Board on September 22, 2022. As of September 21, 2023, the repurchase of A
Shares was completed under the repurchase mandate with a total of 20,674,084 A Shares
repurchased pursuant to transactions conducted between October 31, 2022 and August 10,
2023, at an average price of RMB48.39 per A Share. The repurchased A Shares are held under
the Company stock repurchase account and do not carry any right or entitlement to profit
sharing, capitalization of reserves, allotment of share and bonus issue, share pledge, voting on
Shareholders’ meetings. Any repurchased A Shares not granted to employees within 36 months
after the completion of the repurchase shall be canceled. As approved by the twelfth meeting
of the sixth session of the Board on March 26, 2024 and by the annual general meeting of
Shareholders held on 30 April, 2024, the purpose of the repurchase mandate for the 20,674,084
repurchased A Shares shall be revised as for cancellation and for reduction of the Company’s
registered capital.
A repurchase mandate for the repurchase of A Shares for the purpose of the Company’s
employee share incentive scheme to be adopted was approved by the eleventh meeting of the
sixth session of the Board on January 30, 2024. As of April 26, 2024, the repurchase of A
Shares was completed under the repurchase mandate with a total of 28,240,207 A Shares
repurchased pursuant to transactions conducted between January 31, 2024 and April 26, 2024,
at an average price of RMB35.41 per A Share. The repurchased A Shares are held under the
Company stock repurchase account and do not carry any right or entitlement to profit sharing,
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2–


--- page 685 ---
capitalization of reserves, allotment of share and bonus issue, share pledge, voting on
Shareholders’ meetings. As approved by the twelfth meeting of the sixth session of the Board
on March 26, 2024 and by the annual general meeting of Shareholders held on 30 April, 2024,
the purpose of the repurchase mandate for the 28,240,207 repurchased A Shares shall be
revised as for cancellation and for reduction of the Company’s registered capital.
A repurchase mandate for the repurchase of A Shares for the purpose of the Company’s
employee share incentive scheme to be adopted was approved by the thirteenth meeting of the
sixth session of the Board on April 29, 2024. The repurchase mandate will be valid for 12
months from the date it is approved by the Board. As of October 31, 2024, a total of 20,771,358
A Shares were repurchased at an average price of RMB36.49 per A Share pursuant to
transactions conducted since April 30, 2024. Any repurchased A Shares not granted to
employees within 36 months after the completion of the repurchase shall be canceled.
An aggregate of 79,291,153 A Shares repurchased by our Company were canceled on June
20, 2024. The total issued share capital of our Company was decreased from
RMB4,895,202,373 comprising 4,895,202,373 A Shares of nominal value of RMB1.00 each to
RMB4,815,911,220 comprising 4,815,911,220 A Shares of nominal value of RMB1.00 each.
As of the Latest Practicable Date, due to the exercise of options by grantees under the
2022 Stock Option Incentive Plan (defined below), the total issued share capital of our
Company was increased from RMB4,815,911,220 comprising 4,815,911,220 A Shares of
nominal value of RMB1.00 each to RMB4,816,186,983 comprising 4,816,186,983 A Shares of
nominal value of RMB1.00 each.
C. Changes in Share Capital of our Major Subsidiaries
We have applied to the Stock Exchange for, and the Stock Exchange has granted us a
waiver from strict compliance with the requirements of paragraph 26 of Appendix D1A to the
Listing Rules in relation to the disclosure of information relating to the changes in the share
capital of any member of our Group within the two years immediately preceding the date of
this prospectus. For details, see “Waivers and Exemptions — Particulars of Any Alterations of
Capital and Authorized Debentures” in this prospectus.
The following alterations in the registered capital of our major subsidiaries have taken
place within the two years preceding the date of this prospectus:
(1) SF Holding (HK)
The share capital of SF Holding (HK) was reduced from HK$8,346,998,482.21 to
HK$8,301,283,983.85 on January 12, 2024.
(2) SF Taisen
The registered share capital of SF Taisen was increased from RMB2,010,000,000 to
RMB2,020,000,000 on December 8, 2022, and was further increased to RMB5,000,000,000 on
December 15, 2023.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3–


--- page 686 ---
(3) Shenzhen Fengtai E-commerce Industrial Park Asset Management Co., Ltd.* ( ଉέ̹
ʮ̡)
The registered share capital of Shenzhen Fengtai E-commerce Industrial Park Asset
Management Co., Ltd.* (ʮ̡) was increased from
RMB8,510,000,000 to RMB9,530,000,000 on June 7, 2023 and was further increased to
RMB9,530,010,000 on October 30, 2024.
(4) Shenzhen SF Intra-city Logistics Co., Ltd.* (
ʮ̡)
The registered share capital of Shenzhen SF Intra-city Logistics Co., Ltd.* ( ଉέ̹නᔮ
ʮ̡) was increased from RMB3,220,000,000 to RMB3,420,000,000 on July 11,
2023.
(5) S.F . Holding Group Finance Co., Limited* (ʮ̡)
The registered share capital of S.F. Holding Group Finance Co., Limited* (ණྠ
ʮ̡) was increased from RMB1,000,000,000 to RMB2,500,000,000 on October 19,
2023.
(6) SF Intra-city
The registered share capital of SF Intra-city was increased from RMB802,276,907 to
RMB933,457,707 on February 24, 2023.
(7) Shenzhen S.F . Freight Corporation* (ʮ̡)
The registered share capital of Shenzhen S.F. Freight Corporation* (΅Ϟ
ʮ̡) was decreased from RMB1,695,000,000 to RMB1,230,000,000 on September 3, 2024.
(8) TREND POWER INVESTMENTS LIMITED (ʮ̡)
The registered share capital of TREND POWER INVESTMENTS LIMITED (ҳ༟Ϟ
ʮ̡) was increased from US$10,000,000 to US$12,500,000 on December 31, 2023.
D. Resolutions Passed by Our Shareholders in Relation to the Global Offering
At the extraordinary general meeting of our Shareholders held on August 17, 2023, the
following resolutions, among other things, were duly passed:
(a) the issue by the Company of H Shares with a nominal value of RMB1.00 each and
such H Shares be listed on the Stock Exchange;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4–


--- page 687 ---
(b) the number of H Shares to be issued shall be up to 10% of the total share capital of
our Company upon completion of the Global Offering and before any exercise of the
Over-allotment Option, and the grant of the Over-allotment Option in respect of no
more than 15% of the number of H Shares initially issued pursuant to the Global
Offering;
(c) authorization of the Board or its authorized individual to handle all matters relating
to, among other things, the Global Offering, the issue of the H Shares and the
Listing; and
(d) subject to the completion of the Global Offering, the conditional adoption of the
revised Articles of Association, which shall become effective on the Listing Date;
and the authorization of the Board to amend the Articles of Association in
accordance with relevant laws and regulations and upon the request from the Stock
Exchange and relevant PRC regulatory authorities.
2. FURTHER INFORMATION ABOUT OUR BUSINESS
A. Summary of Material Contracts
We have entered into the following contracts (not being contracts entered into in the
ordinary course of business) within two years preceding the date of this prospectus which are
or may be material:
(a) a cornerstone investment agreement dated November 15, 2024 entered into among
our Company, Oaktree Capital Management, L.P ., Goldman Sachs (Asia) L.L.C.,
Huatai Financial Holdings (Hong Kong) Limited, J.P . Morgan Securities (Far East)
Limited, J.P . Morgan Securities (Asia Pacific) Limited, China International Capital
Corporation Hong Kong Securities Limited and UBS AG Hong Kong Branch, with
respect to a subscription of H Shares at the Offer Price in the aggregate amount of
the Hong Kong dollar equivalent of US$25,000,000;
(b) a cornerstone investment agreement dated November 15, 2024 entered into among
our Company, Wise Honest Limited, Goldman Sachs (Asia) L.L.C., Huatai Financial
Holdings (Hong Kong) Limited, J.P . Morgan Securities (Far East) Limited, J.P .
Morgan Securities (Asia Pacific) Limited, China International Capital Corporation
Hong Kong Securities Limited and UBS AG Hong Kong Branch, with respect to a
subscription of H Shares at the Offer Price in the aggregate amount of the Hong
Kong dollar equivalent of US$25,000,000;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 5–


--- page 688 ---
(c) a cornerstone investment agreement dated November 15, 2024 entered into among
our Company, WT ASSET MANAGEMENT LIMITED, Goldman Sachs (Asia)
L.L.C., Huatai Financial Holdings (Hong Kong) Limited, J.P . Morgan Securities
(Far East) Limited, J.P . Morgan Securities (Asia Pacific) Limited, China
International Capital Corporation Hong Kong Securities Limited and UBS AG Hong
Kong Branch, with respect to a subscription of H Shares at the Offer Price in the
aggregate amount of the Hong Kong dollar equivalent of US$25,000,000;
(d) a cornerstone investment agreement dated November 15, 2024 entered into among
our Company, Pacific Asset Management Co., Limited (ப΂ʮ
̡), Goldman Sachs (Asia) L.L.C., Huatai Financial Holdings (Hong Kong) Limited,
J.P . Morgan Securities (Far East) Limited, J.P . Morgan Securities (Asia Pacific)
Limited, China International Capital Corporation Hong Kong Securities Limited and
UBS AG Hong Kong Branch, with respect to a subscription of H Shares at the Offer
Price in the aggregate amount of the Hong Kong dollar equivalent of
US$15,000,000;
(e) a cornerstone investment agreement dated November 15, 2024 entered into among
our Company, CPIC INVESTMENT MANAGEMENT (H.K.) COMPANY
LIMITED, Goldman Sachs (Asia) L.L.C., Huatai Financial Holdings (Hong Kong)
Limited, J.P . Morgan Securities (Far East) Limited, J.P . Morgan Securities (Asia
Pacific) Limited, China International Capital Corporation Hong Kong Securities
Limited and UBS AG Hong Kong Branch, with respect to a subscription of H Shares
at the Offer Price in the aggregate amount of the Hong Kong dollar equivalent of
US$5,000,000;
(f) a cornerstone investment agreement dated November 15, 2024 entered into among
our Company, Green Better Limited, Goldman Sachs (Asia) L.L.C., Huatai Financial
Holdings (Hong Kong) Limited, J.P . Morgan Securities (Far East) Limited, J.P .
Morgan Securities (Asia Pacific) Limited, China International Capital Corporation
Hong Kong Securities Limited and UBS AG Hong Kong Branch, with respect to a
subscription of H Shares at the Offer Price in the aggregate amount of the Hong
Kong dollar equivalent of US$20,000,000;
(g) a cornerstone investment agreement dated November 15, 2024 entered into among
our Company, Infini Global Master Fund, Goldman Sachs (Asia) L.L.C., Huatai
Financial Holdings (Hong Kong) Limited, J.P . Morgan Securities (Far East) Limited,
J.P . Morgan Securities (Asia Pacific) Limited, China International Capital
Corporation Hong Kong Securities Limited and UBS AG Hong Kong Branch, with
respect to a subscription of H Shares at the Offer Price in the aggregate amount of
the Hong Kong dollar equivalent of US$20,000,000;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 6–


--- page 689 ---
(h) a cornerstone investment agreement dated November 15, 2024 entered into among
our Company, Wind Sabre Fund SPC acting on behalf of and for the account of Wind
Sabre Opportunities Fund SP , Goldman Sachs (Asia) L.L.C., Huatai Financial
Holdings (Hong Kong) Limited, J.P . Morgan Securities (Far East) Limited, J.P .
Morgan Securities (Asia Pacific) Limited, China International Capital Corporation
Hong Kong Securities Limited and UBS AG Hong Kong Branch, with respect to a
subscription of H Shares at the Offer Price in the aggregate amount of the Hong
Kong dollar equivalent of US$20,000,000;
(i) a cornerstone investment agreement dated November 15, 2024 entered into among
our Company, Morgan Stanley & Co. International plc, Goldman Sachs (Asia)
L.L.C., Huatai Financial Holdings (Hong Kong) Limited, J.P . Morgan Securities
(Far East) Limited, J.P . Morgan Securities (Asia Pacific) Limited, China
International Capital Corporation Hong Kong Securities Limited and UBS AG Hong
Kong Branch, with respect to a subscription of H Shares at the Offer Price in the
aggregate amount of the Hong Kong dollar equivalent of US$19,800,000;
(j) a cornerstone investment agreement dated November 15, 2024 entered into among
our Company, Ghisallo Fund Master Ltd, Goldman Sachs (Asia) L.L.C., Huatai
Financial Holdings (Hong Kong) Limited, J.P . Morgan Securities (Far East) Limited,
J.P . Morgan Securities (Asia Pacific) Limited, China International Capital
Corporation Hong Kong Securities Limited and UBS AG Hong Kong Branch, with
respect to a subscription of H Shares at the Offer Price in the aggregate amount of
the Hong Kong dollar equivalent of US$15,000,000;
(k) a cornerstone investment agreement dated November 18, 2024 entered into among
our Company, Wisdomshire Asset Management Co., Ltd, Goldman Sachs (Asia)
L.L.C., Huatai Financial Holdings (Hong Kong) Limited, J.P . Morgan Securities
(Far East) Limited, J.P . Morgan Securities (Asia Pacific) Limited, China
International Capital Corporation Hong Kong Securities Limited and UBS AG Hong
Kong Branch, with respect to a subscription of H Shares at the Offer Price in the
aggregate amount of the Hong Kong dollar equivalent of US$15,000,000; and
(l) the Hong Kong Underwriting Agreement.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 7–


--- page 690 ---
B. Our Intellectual Property Rights
(a) Trademarks
(i) Registered Trademarks
As of the Latest Practicable Date, we had registered the following trademarks which
we consider to be or may be material to our business:
No. Trademark
Place of
registration Registration No.
Registered
Owner Class Expiry Date
1 . ....
 PRC 3101969 SF Taisen 39 June 6, 2033
2 . ...
 PRC 7844308 SF Taisen 39 March 13, 2033
3 . ...
 PRC 7841747 SF Taisen 39 April 20, 2034
4 . ...
 PRC 7844264 SF Taisen 39 December 27, 2031
5 . ...
 PRC 7844210 SF Taisen 39 March 6, 2031
6 . ...
 PRC 7841752 SF Taisen 39 January 13, 2034
7 . ...
 PRC 11843729 SF Taisen 16 May 20, 2034
8 . ...
 PRC 11836062 SF Taisen 39 May 13, 2034
9 . ...
 PRC 10996639 SF Taisen 16 January 27, 2034
10. . . .
 PRC 10996849 SF Taisen 35 September 27, 2033
1 1 ....
 PRC 11003781 SF Taisen 39 November 6, 2033
12. . . .
 PRC 13809964 SF Taisen 25 March 6, 2025
13. . . .
 PRC 25582656 SF Taisen 25 July 20, 2028
14. . . .
 PRC 25577290 SF Taisen 35 July 20, 2028
15. . . .
 PRC 7165332 SF Taisen 12 April 13, 2031
16. . . .
 PRC 7165331 SF Taisen 16 January 6, 2034
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 8–


--- page 691 ---
No. Trademark
Place of
registration Registration No.
Registered
Owner Class Expiry Date
17. . . .
 PRC 7165329 SF Taisen 25 April 13, 2031
18. . . .
 PRC 7165328 SF Taisen 35 January 6, 2031
19. . . .
 PRC 7165325 SF Taisen 42 April 27, 2031
20. . . .
 PRC 7165326 SF Taisen 39 December 6, 2033
21. . . .
 PRC 7351536 SF Taisen 16 September 27, 2030
22. . . .
 PRC 7351563 SF Taisen 25 September 20, 2030
23. . . .
 PRC 7351574 SF Taisen 35 January 6, 2031
24. . . .
 PRC 7351615 SF Taisen 39 January 20, 2034
25. . . .
 PRC 7165262 SF Taisen 12 July 20, 2030
26. . . .
 PRC 7165258 SF Taisen 16 July 20, 2030
27. . . .
 PRC 7165279 SF Taisen 25 April 27, 2031
28. . . .
 PRC 7165576 SF Taisen 35 February 20, 2031
29. . . .
 PRC 7165572 SF Taisen 39 November 20, 2030
30. . . .
 PRC 7165589 SF Taisen 42 November 13, 2030
31. . . .
 PRC 29570182 SF Taisen 39 January 27, 2029
32. . . .
 PRC 29567370 SF Taisen 39 January 27, 2029
33. . . .
 PRC 38465556 SF Taisen 39 January 13, 2030
3 4 ...
 PRC 64677352 SF Taisen 25 August 20, 2033
35. . . .
 PRC 67880840 SF Taisen 35 September 13, 2034
36. . . .
 India 1841023 SF (IP)
LIMITED
39 July 17, 2029
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 9–


--- page 692 ---
No. Trademark
Place of
registration Registration No.
Registered
Owner Class Expiry Date
37. . . .
 Canada TMA857265 SF (IP)
LIMITED
39 August 7, 2028
38. . . .
 Canada TMA857267 SF (IP)
LIMITED
16, 39 August 7, 2028
39. . . .
 Taiwan 01386913 SF (IP)
LIMITED
16, 39 November 15, 2029
40. . . .
 Taiwan 01386912 SF (IP)
LIMITED
16, 39 November 15, 2029
41. . . .
 Taiwan 01296703 SF (IP)
LIMITED
16, 39 December 31, 2027
42. . . .
 Hong Kong 301302380 SF (IP)
LIMITED
16, 39 March 11, 2029
43. . . .
 Hong Kong 301302399 SF (IP)
LIMITED
16, 39 March 11, 2029
44. . . .
 Hong Kong 302057193 SF (IP)
LIMITED
35, 36, 38 October 13, 2031
45. . . .
 Hong Kong 305791078 SF (IP)
LIMITED
35, 36, 39 November 2, 2031
46. . . .
 Hong Kong 305791087 SF (IP)
LIMITED
35, 36, 39 November 2, 2031
47. . . .
 Macau N/41893 SF (IP)
LIMITED
16 July 24, 2030
48. . . .
 Macau N/41894 SF (IP)
LIMITED
39 July 24, 2030
49. . . .
 Macau N/60649 SF (IP)
LIMITED
35 May 28, 2026
50. . . .
 Japan 5085481 SF (IP)
LIMITED
16, 39 October 19, 2027
51. . . .
 European
Union
017984899 SF (IP)
LIMITED
16, 39 November 15, 2028
52. . . .
 South Korea 4020220092224 SF (IP)
LIMITED
12, 16, 18,
20, 25,
35, 39,
42
March 27, 2034
53. . . .
United States 97417418 SF (IP)
LIMITED
39 February 20, 2034
54. . . .
 Indonesia IDM000950737 SF (IP)
LIMITED
9, 16, 35,
39, 42
February 1, 2031
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-10 –


--- page 693 ---
No. Trademark
Place of
registration Registration No.
Registered
Owner Class Expiry Date
55. . . .
 Thailand 210105430 SF (IP)
LIMITED
39 February 9, 2031
56. . . .
 European
Union
018715515 Kerry Logistics
Network
Limited
35, 39 June 10, 2032
57. . . .
Hong Kong 305902263 Kerry Logistics
Network
Limited
35, 39 March 9, 2032
58. . . .
European
Union
018715519 Kerry Logistics
Network
Limited
35, 39 June 10, 2032
59. . . .
Hong Kong 305902272 Kerry Logistics
Network
Limited
35, 39 March 9, 2032
60. . . .
Thailand 220128229 Kerry Logistics
Network
Limited
35, 39 August 18, 2032
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 1–


--- page 694 ---
(ii) Trademarks under application
As of the Latest Practicable Date, we had applied for the registration of the
following trademarks which we consider to be or may be material to our business:
No. Trademark
Place of
registration Application No. Applicant Class Application Date
1....
 PRC 80310990 SF Taisen 35 August 12, 2024
2....
 PRC 80654513 SF Taisen 9 August 30, 2024
3....
 PRC 80209872 SF Taisen 42 August 6, 2024
4....
 Vietnam 4-2022-18109 SF (IP)
LIMITED
39 May 17, 2022
5....
 Malaysia TM2021000264 SF (IP)
LIMITED
39 January 6, 2021
6....
 Bangladesh 276625 SF (IP)
LIMITED
39 May 19, 2022
7....
 Nepal 7422 SF Taisen 39 May 20, 2022
8....
 Myanmar T/2020/001739 SF (IP)
LIMITED
16, 39 October 13, 2020
9....
 United States 97343237 Kerry Logistics
Network
Limited
35, 39 April 1, 2022
1 0 ...
United States 97343232 Kerry Logistics
Network
Limited
35, 39 April 1, 2022
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-12 –


--- page 695 ---
(b) Patents
(i) Registered Patents
As of the Latest Practicable Date, we were the registered owner of and had the right
to use the following patents which we consider to be or may be material to our business:
No. Patent Patentee
Place of
Registration Patent Number
Application
Date Expiry Date
1.... Crossbelt control method,
system, computer
equipment and storage
medium ( ʹɸ੭છՓ˙
ၑዚண௪
ձπᎷʧሯ)
SF Technology PRC 202010138957.8 March 3, 2020 March 2, 2040
2.... Crossbelt control method,
system, computer
equipment and storage
medium ( ʹɸ੭છՓ˙
ၑዚண௪
ձπᎷʧሯ)
SF Technology PRC 202010139177.5 March 3, 2020 March 2, 2040
3.... A method and device for
predicting the
transportation time of
logistics items on a
conveyor belt (ي
༶፩
˸ʿༀ
ໄ)
SF Technology PRC 202010119110.5 February 26,
2020
February 25,
2040
4.... Business processing
method, system, device
and readable storage
medium based on block
chain (ุ
eༀໄeண
௪ձ̙ᛘπᎷʧሯ)
SF Technology PRC 201911239763.0 December 6,
2019
December 5,
2039
5.... Item delivery time analysis
method, system,
computer equipment
and storage medium
(˙
ၑዚண௪
ձπᎷʧሯ)
SF Technology PRC 201911311798.0 December 18,
2019
December 17,
2039
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-13 –


--- page 696 ---
No. Patent Patentee
Place of
Registration Patent Number
Application
Date Expiry Date
6.... Conveying strategy
generation method,
system, equipment and
storage medium ( ʱౝ
eༀ
ໄeண௪ʿπᎷʧሯ)
SF Technology PRC 201911253729.9 December 9,
2019
December 8,
2039
7.... Bulk items conveying
method, system and
storage medium ( ණ౳
eༀໄʿπ
Ꮇʧሯ)
SF Technology PRC 201911185434.2 November 27,
2019
November 26,
2039
8.... Item conveying method,
system, control
equipment and storage
medium (ʱౝ˙
eༀໄeછՓண௪ʿ
πᎷʧሯ)
SF Technology PRC 201911137474.X November 19,
2019
November 18,
2039
9.... A method, equipment and
storage medium for
conveying items ( ɓ၇
eண௪
ʿπᎷʧሯ)
SF Technology PRC 201910984086.9 October 16,
2019
October 15,
2039
10 . . . Resources allocation
method, system,
computer equipment
and storage medium
(eༀໄe
ၑዚண௪ձπᎷʧሯ)
SF Technology PRC 201911380451.1 December 27,
2019
December 26,
2039
1 1 .... A method and system for
processing express
delivery (ࢹڦ
ձӻ୕)
SF Express PRC 201510155769.5 April 2, 2015 April 1, 2035
12 . . . A conveying method and
conveying system for
express delivery ( ɓ၇
ʿ
Չʱౝༀໄ)
SF Express PRC 201510179370.0 April 16, 2015 April 15, 2035
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-14 –


--- page 697 ---
No. Patent Patentee
Place of
Registration Patent Number
Application
Date Expiry Date
13 . . . A method and device for
searching express items
in the track of an
automatic conveying
belt ( ɓ၇Іਗʷʱౝዚ
ج
ʿༀໄ)
SF Express PRC 201510204204.1 April 27, 2015 April 26, 2035
14 . . . A method, equipment and
system for processing
abnormal delivery ( ɓ
၇ዑΣମ੬΁ஈଣ˙
eༀໄʿӻ୕)
SF Express PRC 201510266615.3 May 22, 2015 May 21, 2035
15 . . . A method and equipment
for detecting abnormal
express mail between
carriers of express mail
(༱
ʿ
ༀໄ)
SF Express PRC 201510270352.3 May 25, 2015 May 24, 2035
16 . . . Auto switch cells ( Іਗක
ࣸ)
SF Technology PRC 201510510509.5 August 19,
2015
August 18,
2035
17 . . . Wrapping device and
one-stop self-service
mailing system and
method thereof (ᚂ
ᔎༀໄձɓ१όІп੔
ج)
SF Technology PRC 201510510510.8 August 19,
2015
August 18,
2035
18 . . . A control method of
electromagnetic lock,
electromagnetic lock
and express cabinet ( ɓ
e
ཥှᕁʿҞ჈ᓞ)
SF Technology PRC 201510547990.5 August 31,
2015
August 30,
2035
19 . . . A delivery control method,
pick-up control method,
and control device of
an express cabinet ( ɓ
၇Ҟ჈ᓞ੔΁છՓ˙
ʿછ
Փༀໄ)
SF Technology PRC 201510567494.6 September 8,
2015
September 7,
2035
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-15 –


--- page 698 ---
No. Patent Patentee
Place of
Registration Patent Number
Application
Date Expiry Date
20 . . . Locking device embedded
in the shaft (ᔷ
ᕁછༀໄ)
SF Technology PRC 201510579694.3 September 11,
2015
September 10,
2035
21 . . . Method for opening
intelligent express
cabinet and intelligent
express cabinet system
(ศɓศ͂ක౽ঐҞ
ʿ౽ঐҞ჈
ᓞӻ୕)
SF Technology PRC 201510951767.7 December 17,
2015
December 16,
2035
22 . . . Wireless data converter ( ೌ
ᇞᅰኽᔷ౬ༀໄ)
Fengyi
Technology
PRC 201510991158.4 December 25,
2015
December 24,
2035
23 . . . Unattended wireless data
forwarding workstation
(ೌᇞᅰኽᔷ
೯ʈЪ१)
Fengyi
Technology
PRC 201510991159.9 December 25,
2015
December 24,
2035
24 . . . A data forwarding method,
device and equipment
(eༀ
ໄʿண௪)
Fengyi
Technology
PRC 201510991252.X December 25,
2015
December 24,
2035
25 . . . A method and device for
bi-directional data
forwarding ( ɓ၇ᅰኽᕐ
ʿༀໄ)
Fengyi
Technology
PRC 201510998571.3 December 25,
2015
December 24,
2035
26 . . . Assist system for item
transfer (ෂ৔Ⴞп
ӻ୕)
SF Technology PRC 201610132772.X March 9, 2016 March 8, 2036
27 . . . A type of bag rack ( ɓ၇ન
ݖ)
SF Express PRC 201610446951.0 June 21, 2016 June 20, 2036
28 . . . Conveyor control system
and method ( ፩৔ዚછ
ج)
SF Express PRC 201610539008.4 July 8, 2016 July 7, 2036
29 . . . Express conveying method
and conveying system
(ʿʱౝӻ
୕)
SF Express PRC 201610539513.9 July 8, 2016 July 7, 2036
30 . . . Mounting bracket and
conveyor containing it
(ʱ
ౝዚ)
SF Express PRC 201610586715.9 July 25, 2016 July 24, 2036
31 . . . Display device stand ( ᜑͪ
ݖ)
SF Express PRC 201610588880.8 July 25, 2016 July 24, 2036
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-16 –


--- page 699 ---
No. Patent Patentee
Place of
Registration Patent Number
Application
Date Expiry Date
32 . . . A self-locking mechanism
(ɓ၇Іᕁዚ࿴)
SF Technology PRC 201610607167.3 July 28, 2016 July 27, 2036
33 . . . Insulated box, ice box and
insulated box
components used with
it (Դ
๝ᇌଡ଼΁)
SF Express PRC 201610624110.4 August 2, 2016 August 1, 2036
34 . . . Automatic conveying
system and method ( І
ج)
SF Technology PRC 201610870452.4 September 29,
2016
September 28,
2036
35 . . . Conveying method and
conveying system ( ʱౝ
ʿʱౝӻ୕)
SF Technology PRC 201610870453.9 September 29,
2016
September 28,
2036
36 . . . Configuration method of
wireless conveying
equipment ( ೌᇞʱౝண
ج)
SF Technology PRC 201610882550.X October 10,
2016
October 9,
2036
37 . . . A method and device for
detecting bag blockage
in a conveying belt ( ɓ
ج
ձༀໄ)
SF Express PRC 201610912016.9 October 19,
2016
October 18,
2036
38 . . . Smart locker, smart door
lock and control
method thereof ( ౽ঐᎷ
ᕁʿՉછ
ج)
SF Technology PRC 201610913692.8 October 20,
2016
October 19,
2036
39 . . . Automatic conveying
equipment ( Іਗʱౝண
௪)
SF Technology PRC 201610941978.7 November 1,
2016
October 31,
2036
40 . . . A peony porcelain
packaging structure,
packaging box and
packaging method ( ɓ
၇ӫʗନ̍ༀഐ࿴e̍
ج)
SF Express PRC 201610988928.4 November 10,
2016
November 9,
2036
41 . . . Automatic letter conveying
mechanism (΁Іਗ
ʱౝዚ࿴)
SF Technology PRC 201611130744.0 December 9,
2016
December 8,
2036
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-17 –


--- page 700 ---
No. Patent Patentee
Place of
Registration Patent Number
Application
Date Expiry Date
42 . . . A carton with adjustable
inner space structure
(ගഐ
ॷᇌ)
SF Express PRC 201710020112.7 January 11,
2017
January 10,
2037
43 . . . A tray device ( ɓ၇ϖᆵༀ
ໄ)
Shenzhen SF
Cold Chain
PRC 201710208618.0 March 31,
2017
March 30,
2037
44 . . . Conveying method,
conveying server,
conveying device and
conveying system ( ʱౝ
ਕ၌eʱ
ౝༀໄʿʱౝӻ୕)
SF Technology PRC 201710306712.X May 4, 2017 May 3, 2037
45 . . . A packaging device,
packaging component
and packaging method
for fragile goods ( ɓ၇
̍ༀༀໄe̍ༀ
ج)
SF Express PRC 201710339169.3 May 15, 2017 May 14, 2037
46 . . . Electronic tie ( ཥɿୖ੭) SF Technology PRC 201710359388.8 May 19, 2017 May 18, 2037
47 . . . A method, system and
device for detecting
abnormality of
outsourced order ( ɓ၇
̮̍፩ఊମ੬Ꮸ಻˙
eӻ୕ʿண௪)
SF Technology PRC 201710373179.9 May 24, 2017 May 23, 2037
48 . . . An express grabbing
method applied to
express delivery robots
(Ҟ჈΁ዚኜ
ج)
SF Express PRC 201710514027.6 June 29, 2017 June 28, 2037
49 . . . A speed control method
applied to the robots of
small express delivery
(ʃ΁Ҟ჈΁
ܓ
ج)
SF Express PRC 201710514030.8 June 29, 2017 June 28, 2037
50 . . . A method, system, and
device for detecting
abnormalities in
delivery orders (ݟ
eӻ୕
ʿண௪)
SF Technology PRC 201710579191.5 July 17, 2017 July 16, 2037
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-18 –


--- page 701 ---
No. Patent Patentee
Place of
Registration Patent Number
Application
Date Expiry Date
51 . . . A method, device and
system for acquiring
abnormal index based
on time nodes ( ɓ၇ਿ
ᅰ
eண௪ʿӻ
୕)
SF Technology PRC 201710579192.X July 17, 2017 July 16, 2037
52 . . . A login abnormal detection
method, system and
device ( ɓ၇೮፽ମ੬Ꮸ
eӻ୕ʿண௪)
SF Technology PRC 201710579217.6 July 17, 2017 July 16, 2037
53 . . . Method, system and device
for acquiring network
device information and
automatic segmentation
of IP address ( ၣഖண௪
ᐏ՟ʿIPήѧІਗ
eӻ୕ʿண௪)
SF Technology PRC 201710725068.X August 22,
2017
August 21,
2037
54 . . . A flow control method,
device, equipment, and
storage medium ( ɓ၇
eༀໄe
ண௪eπᎷʧሯ)
SF Technology PRC 201710845770.X September 19,
2017
September 18,
2037
55 . . . A method and storage
medium for enabling
qemu/kvm virtual
machine to execute
arbitrary commands ( ɓ
၇Դqemu/kvm ൈᏝዚੂ
ʿπ
Ꮇʧሯ)
SF Technology PRC 201710969898.7 October 18,
2017
October 17,
2037
56 . . . An address allocation
method and system ( ɓ
ʿӻ୕)
SF Technology PRC 201710991130.X October 23,
2017
October 22,
2037
57 . . . A communication control
system and control
method for indoor
positioning (ʫ
છՓӻ୕ʿ
ج)
SF Technology PRC 201711088811.1 November 8,
2017
November 7,
2037
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-19 –


--- page 702 ---
No. Patent Patentee
Place of
Registration Patent Number
Application
Date Expiry Date
58 . . . MySQL partition automatic
management method,
system, equipment and
storage medium
(MySQL ʱਜІਗ၍ଣ
eӻ୕eண௪eπ
Ꮇʧሯ)
SF Technology PRC 201711088812.6 November 8,
2017
November 7,
2037
59 . . . A volume measurement
method and system ( ɓ
ʿӻ୕)
SF Technology PRC 201811141066.7 September 28,
2018
September 27,
2038
60 . . . A conveying mechanism
vector and conveying
method thereof ( ɓ၇ͨ
ඎʱౝዚ࿴ʿՉʱౝ˙
ج)
SF Technology PRC 201811207365.6 October 17,
2018
October 16,
2038
61 . . . Wristwatch, earphones and
scanning ring and
delivery system,
method and medium
(ᐑ
ձ
ʧሯ)
SF Technology PRC 201910164548.2 March 5, 2019 March 4, 2039
62 . . . A vehicle control system
and control method ( ɓ
၇ԓሿછՓӻ୕ʿછՓ
ج)
SF Technology PRC 201910875036.7 September 17,
2019
September 16,
2039
63 . . . Hybrid robot positioning
method, device,
equipment and
computer readable
medium (֛
eༀໄeண௪ʿ
ၑዚ̙ᛘʧሯ)
SF Technology PRC 201910424233.7 May 21, 2019 May 20, 2039
64 . . . A crossbelt conveying
system and its grid
flow control method
and device ( ɓ၇ʹɸ੭
ඎ
ձༀໄ)
SF Technology PRC 201910935673.9 September 29,
2019
September 28,
2039
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-20 –


--- page 703 ---
No. Patent Patentee
Place of
Registration Patent Number
Application
Date Expiry Date
65 . . . Conveying item system,
method and storage
medium (΁ʱౝӻ
ʿπᎷʧሯ)
SF Technology PRC 201910966644.9 October 12,
2019
October 11,
2039
66 . . . Conveying mechanism and
conveying equipment
(ʱౝዚ࿴ʿʱౝண௪)
SF Technology PRC 201910916554.9 September 26,
2019
September 25,
2039
67 . . . Calculation method of
sprocket, assembled
sprocket, conveying
equipment and length
of chain tension ( ᗡ
ቃeଡ଼ༀόᗡቃeʱౝ
ٙܓڗ
ج)
SF Technology PRC 201910161525.6 March 4, 2019 March 3, 2039
68 . . . Conveying item method,
robotic arm conveying
system and storage
medium (ʱౝ˙
eዚ૛ᑑʱౝӻ୕ʿ
πᎷʧሯ)
SF Technology PRC 201910966635.X October 12,
2019
October 11,
2039
69 . . . Conveying item method,
device, industrial
control equipment and
storage medium (ۜي
eༀໄeʈછ
ண௪ʿπᎷʧሯ)
SF Technology PRC 201910966647.2 October 12,
2019
October 11,
2039
70 . . . Chassis control method,
device and storage
medium (ᆵછՓ
eༀໄ˸ʿπᎷʧ
ሯ)
SF Technology PRC 201910734280.1 August 9, 2019 August 8, 2039
71 . . . Clock synchronization
method, device, system
and storage medium
(eༀໄe
ӻ୕ʿπᎷʧሯ)
SF Technology PRC 201910741045.7 August 12,
2019
August 11,
2039
72 . . . Robotic arm path planning
method, device,
industrial control
equipment and storage
medium (஝
eༀໄeʈછண
௪ʿπᎷʧሯ)
SF Technology PRC 201910652685.0 July 19, 2019 July 18, 2039
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-21 –


--- page 704 ---
No. Patent Patentee
Place of
Registration Patent Number
Application
Date Expiry Date
73 . . . Logistics transportation
management method
and device, logistics
device and logistics
system (༶፩၍ଣ
ༀໄ
ӻ୕)
SF Technology PRC 201910318455.0 April 19, 2019 April 18, 2039
74 . . . A method, system,
terminal and storage
medium for conveying
slot distribution ( ɓ၇
eӻ
୕e୞၌ʿπᎷʧሯ)
SF Technology PRC 201910605016.8 July 5, 2019 July 4, 2039
75 . . . System status prediction
method, device, server
and storage medium
(e
ਕኜʿπᎷʧ
ሯ)
SF Technology PRC 201910923181.8 September 27,
2019
September 26,
2039
76 . . . Method and device for
data transmission ( ᅰኽ
ձༀໄ)
SF Technology PRC 201910042578.6 January 16,
2019
January 15,
2039
77 . . . Method and device for
measuring volume ( ಻
ձༀໄ)
SF Technology PRC 201910031293.2 January 14,
2019
January 13,
2039
78 . . . Data loading method and
system (ج
ձӻ୕)
Shenzhen
Fengchi
PRC 201610323245.7 May 16, 2016 May 15, 2036
79 . . . Intelligent storage and
withdraw system ( ౽ঐ
π՟ӻ୕)
SF Technology Hong Kong HK1256436 February 28,
2019
February 28,
2027
80 . . . V olumetric method,
system, device and
computer readable
storage medium (ጐ
ၑ
ዚ̙ᛘπᎷʧሯ)
SF Technology South Korea KR1020210080368A June 6, 2019 June 6, 2039
81 . . . V olume measurement
method and system,
device and computer
readable storage
medium (ج
ၑዚ
̙ᛘπᎷʧሯ)
SF Technology US US11436748B2 June 6, 2019 June 6, 2039
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-22 –


--- page 705 ---
No. Patent Patentee
Place of
Registration Patent Number
Application
Date Expiry Date
82 . . . Transmission device,
sorting device, sorting
device control method,
and storage medium
(ෂ፩ༀໄeʱౝண௪e
ʿπ
Ꮇʧሯ)
SF Technology PRC 201911135628.1 November 19,
2019
November 18,
2039
83 . . . A transmission mechanism,
transmission device and
sorting transmission
line ( ɓ၇ෂ፩ዚ࿴eෂ
፩ༀໄʿʱౝෂ፩ᇞ)
SF Taisen PRC 202011215348.4 November 4,
2020
November 3,
2040
(ii) Pending Patents
As of the Latest Practicable Date, we had filed applications for the following patents
which we consider to be or may be material to our business:
No. Patent Title Applicant
Place of
Registration
Application
Number
Application
Date
1.... Distributed task processing
system and method ( ʱбό
ج)
SF Technology PRC CN115904640A August 6,
2021
2.... Internet of things data
processing method, device,
device and computer-
readable storage medium (ي
eༀໄe
ၑዚ̙ᛘπᎷʧሯ)
SF Technology PRC CN115914376A September 29,
2021
3.... Distributed cluster load control
method and device ( ʱбό
ʿༀໄ)
SF Technology PRC CN116107731A November 9,
2021
4.... Logistics route planning
method, device, computer
equipment and storage
medium (ᇞ༩஝ྌ˙
ၑዚண௪ʿπ
Ꮇʧሯ)
SF Technology PRC CN117010787A April 25,
2022
5.... V olume measurement method
and system, apparatus and
computer-readable storage
medium (ձӻ
ၑዚ̙ᛘπᎷ
ʧሯ)
SF Technology Canada CA3114457A1 June 6, 2019
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-23 –


--- page 706 ---
No. Patent Title Applicant
Place of
Registration
Application
Number
Application
Date
6.... Method and system for
measuring volume,
instrument and computer
readable storage medium ( ͜
ၑዚ
ձӻ୕)
SF Technology Thailand TH2101001848A June 6, 2019
(c) Domain Names
As of the Latest Practicable Date, we had registered the following domain names which
we consider to be or may be material to our business:
No. Domain Name Registered Owner Expiry Date
1.... sf-treasury.com S.F. Holding Group Finance Co., Limited*
(ʮ̡)
August 31, 2025
2.... sf-financial.com Shenzhen Shunheng Rongfeng Supply Chain
Technology Co., Ltd.* (ፄᔮԶᏐ
ʮ̡)
March 11, 2025
3.... s f fix.cn Shenzhen Fengxiu Technology Co., Ltd.* ( ଉέ
ʮ̡)
July 27, 2025
4.... sf-express.com SF Express May 15, 2033
5.... sf-tech.com.cn SF Technology August 27, 2025
6.... sfbest.us SF Express May 22, 2025
7.... sfvip.us SF Express September 19, 2025
8.... sfexpress.us SF Express August 26, 2025
9.... sf-express.com.hk S.F. EXPRESS (HONG KONG) LIMITED July 1, 2032
10 . . . sf-express.hk S.F. EXPRESS (HONG KONG) LIMITED November 28, 2032
11 . . . chinaexpress.com.hk S.F. EXPRESS (HONG KONG) LIMITED November 28, 2032
12 . . . china-express.com.hk S.F. EXPRESS (HONG KONG) LIMITED November 28, 2032
13 . . . china-express.hk S.F. EXPRESS (HONG KONG) LIMITED November 28, 2032
14 . . . sfexpress.hk S.F. EXPRESS (HONG KONG) LIMITED November 28, 2032
15 . . . spay.com.hk SF (IP) LIMITED March 5, 2025
16 . . . kln.com Kerry Logistics Network Limited January 13, 2030
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-24 –


--- page 707 ---
(d) Software copyrights
As of the Latest Practicable Date, we had registered the following software copyrights
which we consider to be material to our business:
No. Name of Copyright
Place of
Registration
Registration
Number
Registered
Owner
Date of First
Publication
1.... Niepan Report Management System V4.5
(၍ଣӻ୕V4.5)
PRC 2018SR678429 SF Technology November 23,
2017
2.... W arehousing Operation Platform V3.5 (ࡑ
Ꮇ༶ᐄ̨̻V3.5)
PRC 2018SR675273 SF Technology November 14,
2017
3.... Niepan Integration Plug-In V ersion User
Authentication Plug-in System V1.0.0
(͉͜˒ᛡᛆౢ΁ӻ୕
V1.0.0)
PRC 2018SR677654 SF Technology November 10,
2017
4.... Niepan Integration of Scanning Plug-in
Interface and Single Product
Realization System V1.0.0 ( च࿿ፄΥધ
ྼତӻ୕V1.0.0)
PRC 2018SR677782 SF Technology November 10,
2017
5.... C I Integrated Management System V1.0
(CIණϓ၍ଣӻ୕V1.0)
PRC 2018SR658797 SF Technology November 1,
2017
6.... T h e5 t h Generation Overseas Call Centre
System V1.2 ( ୋ5˾ऎ̮խ̣ʕːӻ୕
V1.2)
PRC 2018SR608819 SF Technology October 10,
2017
7.... D D S Route Scheduling-MongoDb
Management Service System V1.0
(DDSܓMongoDbਕӻ
୕V1.0)
PRC 2018SR673794 SF Technology September 15,
2017
8.... P D A Delivery System V1.2.181 (ݼ
΁ӻ୕V1.2.181)
PRC 2018SR672359 SF Technology September 1,
2017
9.... P D A Receiving System V1.2.181 ( ˋ࿻ϗ
΁ӻ୕V1.2.181)
PRC 2018SR675839 SF Technology September 1,
2017
10 . . . Niepan Integration of Receiving and
Delivering Template System V1.0.0 ( च
ӻ୕V1.0.0)
PRC 2018SR678243 SF Technology August 8, 2017
11 . . . Warehouse Housekeeper Receiving
Delivery/Receiving Package WEB
Application Software V1.0 (ϗ΁
/ϗ̍WEBᏐ͜ழ΁V1.0)
PRC 2018SR621723 SF Technology July 27, 2017
12 . . . Warehouse Housekeeper Receiving
Delivery/Receiving Package System
V1.0 (ϗ΁/ϗ̍ӻ୕V1.0)
PRC 2018SR622007 SF Technology July 27, 2017
13 . . . Warehousing Order Management System
V4.9 (ఊ၍ଣӻ୕V4.9)
PRC 2018SR120355 SF Technology July 22, 2017
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-25 –


--- page 708 ---
No. Name of Copyright
Place of
Registration
Registration
Number
Registered
Owner
Date of First
Publication
14 . . . Express Handover WEB Application
Software V1.0 ( Ҟ჈ʹટWEBᏐ͜ழ΁
V1.0)
PRC 2018SR618565 SF Technology May 23, 2017
15 . . . Express Handover System V1.0 ( Ҟ჈ʹ
ટӻ୕V1.0)
PRC 2018SR622000 SF Technology May 23, 2017
16 . . . DDS Route Scheduling-Redis
Management Service System V1.0
(DDSܓRedisਕӻ୕
V1.0)
PRC 2018SR677643 SF Technology April 20, 2017
17 . . . HHT Integration Server System V9.5
(HHTਕኜӻ୕V9.5)
PRC 2018SR190508 SF Technology April 20, 2017
18 . . . HHT Interface Platform V7.0 (HHT ટɹ
̨̻V7.0)
PRC 2018SR202799 SF Technology April 20, 2017
19 . . . HHT Gateway Proxy System V3.0 (HHT
ၣᗫ˾ଣӻ୕V3.0)
PRC 2018SR202808 SF Technology April 20, 2017
20 . . . HHT Gateway System V9.0 (HHT ၣᗫӻ
୕V9.0)
PRC 2018SR202939 SF Technology April 20, 2017
21 . . . Niepan APP Configuration Information
Management System V1.9 ( च࿿APPৣ
၍ଣӻ୕V1.9)
PRC 2018SR179422 SF Technology March 15, 2017
22 . . . Niepan Personnel Information
Management System V1.9 (ڦࡰ
၍ଣӻ୕V1.9)
PRC 2018SR178715 SF Technology March 15, 2017
23 . . . Customer Contact Service Platform –
Back-end Membership Module V1.0
(ਕ̨̻––ᅼ෯
V1.0)
PRC 2018SR041777 SF Technology March 2, 2017
24 . . . Customer Contact Service Platform –
Back-end Basic Module V1.0 (˒ટ
ਕ̨̻––၌ਿᓾᅼ෯V1.0)
PRC 2018SR042313 SF Technology March 2, 2017
25 . . . Customer Contact Service Platform –
Back-end Wallet Module V1.0 (˒ટ
ਕ̨̻––၌፺̍ᅼ෯V1.0)
PRC 2018SR039631 SF Technology March 2, 2017
26 . . . Customer Contact Service Platform –
Push Message Module V1.0 (˒ટᙃ
ਕ̨̻––પ৔ᅼ෯V1.0)
PRC 2018SR129749 SF Technology March 2, 2017
27 . . . Customer Contact Service Platform –
Inquiry Module V1.0 (ਕ̻
̨––ఊᅼ෯V1.0)
PRC 2018SR042299 SF Technology March 1, 2017
28 . . . Customer Contact Service Platform –
Back-end Order Checking Module
System V1.0 (ਕ̨̻––၌
ఊᅼ෯ӻ୕V1.0)
PRC 2018SR130474 SF Technology March 1, 2017
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-26 –


--- page 709 ---
No. Name of Copyright
Place of
Registration
Registration
Number
Registered
Owner
Date of First
Publication
29 . . . Customer Contact Service Platform –
Back-end Order Module V1.0 (˒ટ
ਕ̨̻––၌ɨఊᅼ෯V1.0)
PRC 2018SR129378 SF Technology March 1, 2017
30 . . . Customer Contact Service Platform –
Membership Module V1.0 (؂
ਕ̨̻––ᅼ෯V1.0)
PRC 2018SR127998 SF Technology March 1, 2017
31 . . . Customer Contact Service Platform –
Front Desk Shipping Module V1.0 (܄
ਕ̨̻––̨੔΁ᅼ෯V1.0)
PRC 2018SR043499 SF Technology March 1, 2017
32 . . . Customer Contact Service Platform –
Order Module V1.0 (ਕ̨̻
––ɨఊᅼ෯V1.0)
PRC 2018SR042910 SF Technology March 1, 2017
33 . . . Customer Contact Service Platform –
Consumption kafka V1.0 (؂
ਕ̨̻––ऊ൬kafka V1.0)
PRC 2018SR040759 SF Technology March 1, 2017
34 . . . The 5th Generation Call Centre System-
CCS-CONFIG V2.3 ( ୋ5˾խ̣ʕːӻ
୕––CCS-CONFIG V2.3)
PRC 2017SR579500 SF Technology February 21,
2017
35 . . . The 5th Generation Call Centre System-
CCS-CORE V2.3 ( ୋ5˾խ̣ʕːӻ୕
––CCS-CORE V2.3)
PRC 2017SR579495 SF Technology February 21,
2017
36 . . . The 5th Generation Call Centre System-
CCS-INTERFACE V2.3 ( ୋ5˾խ̣ʕ
ːӻ୕––CCS-INTERFACE V2.3)
PRC 2017SR579461 SF Technology February 21,
2017
37 . . . The 5th Generation Call Centre System-
CCS-MONITOR V2.3 ( ୋ5˾խ̣ʕː
ӻ୕––CCS-MONITOR V2.3)
PRC 2017SR579463 SF Technology February 21,
2017
38 . . . The 5th Generation Call Centre System-
CCS-SYNCDA TA V2.3 ( ୋ5˾խ̣ʕː
ӻ୕––CCS-SYNCDA TA V2.3)
PRC 2017SR579496 SF Technology February 21,
2017
39 . . . The 5th Generation Call Centre System-
CCS-CLIENT V2.3 ( ୋ5˾խ̣ʕːӻ
୕––CCS-CLIENT V2.3)
PRC 2017SR572615 SF Technology February 15,
2017
40 . . . Customer Master Data Platform System
V2.4 (˒˴ᅰኽ̨̻ӻ୕V2.4)
PRC 2017SR572620 SF Technology February 15,
2017
41 . . . ASURA-BAR Information Maintenance
System V12.0 (ASURA-BARၪᚐ
ӻ୕V12.0)
PRC 2018SR204456 SF Technology January 13, 2017
42 . . . HHT Information Maintenance System
V5.8 (HHTၪᚐӻ୕V5.8)
PRC 2018SR202816 SF Technology January 12, 2017
43 . . . Niepan Basic Communication Platform
V1.9 (̨̻V1.9)
PRC 2017SR018424 SF Technology September 15,
2016
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-27 –


--- page 710 ---
No. Name of Copyright
Place of
Registration
Registration
Number
Registered
Owner
Date of First
Publication
44 . . . Asura General Management System
V11.1 (ᖯஷ͜၍ଣӻ୕V11.1)
PRC 2017SR019646 SF Technology September 8,
2016
45 . . . Niepan Task Status System V1.0 ( च࿿΂
࿒ӻ୕V1.0)
PRC 2018SR041227 SF Technology August 23, 2016
46 . . . Niepan Test Self-Service System V0.3.5
(ਕӻ୕V0.3.5)
PRC 2018SR039617 SF Technology April 20, 2016
47 . . . Niepan 020 Order Management System
V1.0 ( च࿿020ఊ၍ଣӻ୕V1.0)
PRC 2017SR018110 SF Technology April 15, 2016
48 . . . Niepan Merchant Settlement System V2.9
(ഐၑӻ୕V2.9)
PRC 2017SR620190 SF Technology April 15, 2016
49 . . . Customer Information Management
System V1.0 (၍ଣӻ୕V1.0)
PRC 2017SR573205 SF Technology December 16,
2015
50 . . . Warehouse Allocation and Withdrawal
System V1.0 (౤ӻ୕V1.0)
PRC 2017SR022401 SF Technology August 17, 2015
51 . . . HTS Handheld Terminal Server System
V1.0 (HTS୞၌ટɹӻ୕V1.0)
PRC 2017SR026202 SF Technology July 1, 2015
52 . . . Warehouse Distribution Logistics
Settlement System V1.3 (ഐၑ
ӻ୕V1.3)
PRC 2017SR030409 SF Technology June 30, 2015
53 . . . Dry Port Order Management System V1.0
(ఊ၍ଣӻ୕V1.0)
PRC 2019SR0474014 SF Technology December 9,
2018
54 . . . Integrated Service Platform Configuration
System V6.3 (ਕ̨̻ৣໄӻ୕
V6.3)
PRC 2019SR0500542 SF Technology June 20, 2018
55 . . . SF Express Hong Kong APP (Android)
V1.9.1 (وAPP
(Android)V1.9.1)
PRC 2019SR0500574 SF Technology January 28, 2019
56 . . . SF Express Hong Kong APP (iOS) V1.9.1
(وAPP (iOS)V1.9.1)
PRC 2019SR0500633 SF Technology January 28, 2019
57 . . . Huabei – Collection and Delivery System
V1.0 ( ശ̏––ණ஬ਖ਼৔ӻ୕V1.0)
PRC 2019SR0661109 SF Technology December 25,
2018
58 . . . Merchant Export System V6.2 (̈ɹ
ӻ୕V6.2)
PRC 2019SR0244903 SF Technology Not published
59 . . . Fengsheng iOS Client Platform V3.2 ( ᔮ
ᑊiOS˒၌̨̻V3.2)
PRC 2019SR0353961 SF Technology May 5, 2017
60 . . . Fengsheng Android Client Platform V3.2
(˒၌̨̻V3.2)
PRC 2019SR0354805 SF Technology May 5, 2017
61 . . . Customer Service Quality Management
System V2.0 (ሯඎ၍ଣӻ୕V2.0)
PRC 2019SR0474131 SF Technology March 31, 2018
62 . . . Customer Contact Service Platform V4.9
(ਕ̨̻V4.9)
PRC 2019SR0504720 SF Technology June 7, 2018
63 . . . SF Medical Link System V1.0 ( නᔮᔼᖹ
ஷӻ୕V1.0)
PRC 2019SR0779641 SF Technology April 22, 2019
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-28 –


--- page 711 ---
No. Name of Copyright
Place of
Registration
Registration
Number
Registered
Owner
Date of First
Publication
64 . . . Transport Hub Fixed Scanner System
V4.6 (ધ౜ኜӻ୕V4.6)
PRC 2019SR0794900 SF Technology April 26, 2018
65 . . . FLUX Warehouse Management System
(E-commerce Environment) V5.5 ( బਔ
Ꮇ၍ଣӻ୕(ཥਠᐑྤ)V5.5)
PRC 2019SR0906695 SF Technology December 1,
2018
66 . . . FLUX Warehouse Management System
(Refrigerated Transport Environment)
V5.5 (Ꮇ၍ଣӻ୕(и༶ᐑ
ྤ)V5.5)
PRC 2019SR0892120 SF Technology November 30,
2018
67 . . . FLUX Warehouse Management System
(East China Environment) V4.8 ( బਔ
Ꮇ၍ଣӻ୕(ᐑྤ)V4.8)
PRC 2019SR0906798 SF Technology December 28,
2018
68 . . . Refrigerated Transport Control Equipment
Monitoring System V3.0 ( и༶๝છண௪
္છӻ୕V3.0)
PRC 2019SR0817855 SF Technology December 6,
2018
69 . . . Refrigerated Transport Control Equipment
Management System V2.8 ( и༶๝છண
௪၍ଣӻ୕V2.8)
PRC 2019SR0817844 SF Technology December 6,
2018
70 . . . Refrigerated Chain Basic Data System
V4.3 ( иᗡਿᓾᅰኽӻ୕V4.3)
PRC 2019SR0817835 SF Technology December 17,
2018
71 . . . Warehousing Order Management System
V6.8 (ఊ၍ଣӻ୕V6.8)
PRC 2019SR0821623 SF Technology August 20, 2018
72 . . . DDS Central Control System V5.0 (DDS
ʕછӻ୕V5.0)
PRC 2019SR0892357 SF Technology June 6, 2017
73 . . . Real-name Authentication System V5.5
(ྼΤႩᗇӻ୕V5.5)
PRC 2019SR0956907 SF Technology February 20,
2019
74 . . . Resources Master Data System V7.2 ( ༟
๕˴ᅰኽӻ୕V7.2)
PRC 2019SR0892555 SF Technology February 18,
2019
75 . . . DDS Real-time Business Analysis Service
Background System V5.1 (DDSุ
̨ӻ୕V5.1)
PRC 2019SR0957289 SF Technology March 1, 2019
76 . . . Real-time Computing Platform V5.7 ( ྼ
ၑ̨̻V5.7)
PRC 2019SR0991237 SF Technology July 25, 2018
77 . . . SF Express APP Mainland China version
(Android) V9.1.2 ( නᔮ஺༶APPو
Android)V9.1.2)
PRC 2019SR0990656 SF Technology March 15, 2019
78 . . . SF Express APP Mainland China version
(iOS) V9.1.0 ( නᔮ஺༶APPو
iOS)V9.1.0)
PRC 2019SR0990328 SF Technology March 14, 2019
79 . . . SF Express APP International version
(Android) V6.9.14 ( නᔮ஺༶
APP਷ყ
وAndroid)V6.9.14)
PRC 2019SR0992500 SF Technology January 11, 2019
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-29 –


--- page 712 ---
No. Name of Copyright
Place of
Registration
Registration
Number
Registered
Owner
Date of First
Publication
80 . . . SF Express APP International version
(iOS) V6.9.14 ( නᔮ஺༶APPو
iOS)V6.9.14)
PRC 2019SR0990628 SF Technology January 11, 2019
81 . . . Process Centre System V5.13 (೻ʕː
ӻ୕V5.13)
PRC 2019SR1054508 SF Technology July 2, 2019
82 . . . Timing Distribution System V5.2 (ৣ
ӻ୕V5.2)
PRC 2020SR0233478 SF Technology July 15, 2019
83 . . . inc-sgs-if Niepan Interface Microservice
Platform V8.5 (inc-sgs-if؂
ਕ̨̻V8.5)
PRC 2020SR0450476 SF Technology July 24, 2019
84 . . . Contract Master Data Software V5.2 ( Υ
Ν˴ᅰኽழ΁V5.2)
PRC 2020SR0449640 SF Technology May 15, 2016
85 . . . Integrated Service Platform Configuration
System V9.4 (ਕ̨̻ৣໄӻ୕
V9.4)
PRC 2020SR0465720 SF Technology October 25,
2019
86 . . . Customer Service Complaint System
V12.3 (ҳൡӻ୕V12.3)
PRC 2020SR0500158 SF Technology January 6, 2011
87 . . . After-sales Operation Monitoring
Platform V6.9 (༶ᐄ္છ̨̻V6.9)
PRC 2020SR0499163 SF Technology October 29,
2019
88 . . . SF Coupon Management System V7.1 ( න
ᔮՎ၍ଣӻ୕V7.1)
PRC 2020SR0502037 SF Technology April 20, 2018
89 . . . Problem Management Platform V8.8 ( ਪ
ᕚ΁၍ଣ̨̻V8.8)
PRC 2020SR0500630 SF Technology August 12, 2019
90 . . . Operational Quality Control Department –
Operational Quality System V5.2 ( ᐄ༶
ሯඎછՓ௅-ᐄ༶ሯඎӻ୕V5.2)
PRC 2020SR0499600 SF Technology July 23, 2019
91 . . . Over-limit Items Management System
V4.9 (΁၍ଣӻ୕V4.9)
PRC 2020SR0498522 SF Technology October 10,
2019
92 . . . Resources Master Data System V10.3 ( ༟
๕˴ᅰኽӻ୕V10.3)
PRC 2020SR0682432 SF Technology April 9, 2020
93 . . . PDA Application Management Platform
V3.4 ( ˋ࿻Ꮠ͜၍ଣ̨̻V3.4)
PRC 2020SR0817098 SF Technology April 3, 2018
94 . . . Niepan Basic Information Management
System V8.0 (၍ଣӻ୕
V8.0)
PRC 2020SR0815892 SF Technology April 23, 2020
95 . . . Enterprise Service Platform V16.4 ( Άุ
ਕ̨̻V16.4)
PRC 2020SR0905577 SF Technology May 9, 2020
Save as disclosed above, as of the Latest Practicable Date, there were no other trade or
service marks, patents, intellectual or industrial property rights which were material in relation
to our business.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-30 –


--- page 713 ---
3. FURTHER INFORMATION ABOUT OUR DIRECTORS, SUPERVISORS AND
SUBSTANTIAL SHAREHOLDERS
A. Particulars of Directors’ and Supervisors’ Contracts and Appointment Letters
We have entered into a service contract or appointment letter with each of the Directors.
The principal particulars of these service contracts and appointment letters comprise (a) the
term of the service; (b) subject to termination in accordance with their respective term; and (c)
a dispute resolution provision. The service contracts and appointment letters may be renewed
in accordance with our Articles of Association and the applicable laws, rules and regulations
from time to time.
Save as disclosed above, none of the Directors or Supervisors has or is proposed to have
a service contract with any member of our Group (other than contracts expiring or determinable
by the relevant employer within one year without the payment of compensation other than
statutory compensation).
B. Remuneration of Directors and Supervisors
The aggregate remuneration (including fees, salaries, contribution to pension schemes,
housing allowances, other allowances and benefits-in-kind and discretionary bonuses, but
excluding share-based compensation expenses) for our Directors, former Directors,
Supervisors and former Supervisors for the years ended December 31, 2021, 2022 and 2023
and the six months ended June 30, 2024, were approximately RMB19.7 million, RMB19.8
million, RMB19.9 million and RMB11.1 million, respectively.
During the Track Record Period, no remuneration was paid by us to, or receivable by, our
Directors, former Directors, Supervisors, former Supervisors or the five highest paid
individuals as an inducement to join or upon joining our Company. No compensation was paid
by us to, or receivable by, our Directors, former Directors, Supervisors, former Supervisors or
the five highest-paid individuals for each of the Track Record Period for the loss of any office
in connection with the management of the affairs of any members of our Group. Furthermore,
none of the Directors, former Directors, Supervisors or former Supervisors had waived or
agreed to waive any emoluments during the same periods.
Save as disclosed above, no other payments have been made or are payable in respect of
the years ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2024
by any member of our Group to any of our Directors, former Directors, Supervisors, former
Supervisors or the five highest paid individuals.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-31 –


--- page 714 ---
C. Disclosure of Interests
(a) Interests in the Shares of our Company
For information on the persons (other than our Directors, Supervisors and chief executive
of our Company) who will, immediately following the completion of the Global Offering, have
interests or short positions in our Shares or underlying Shares which would be required to be
disclosed to us and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV
of the SFO, or, directly or indirectly, be interested in 10% or more of the nominal value of any
class of share capital carrying the rights to vote in all circumstances at general meetings of our
Company, see “Substantial Shareholders” in this prospectus.
(b) Interests in our Company’s subsidiaries
So far as the Directors are aware, the persons (other than our Directors, the chief
executive of our Company, and any member of our Group) will, immediately following the
completion of the Global Offering, be interested in 10% or more of the nominal value of any
class of share capital carrying the rights to vote in all circumstances at general meetings of the
members of our Group (other than our Company):
Our subsidiaries
Parties with 10% or
more equity interest
Approximate
percentage of
shareholding
(%)
Shenzhen Yijiayi Technology Co.,
Ltd.* (ʮ̡)
Ningbo Ruijiayi Enterprise
Management Partnership (Limited
Partnership)* (Άุ၍
ଣΥྫΆุ(Υྫ))
38.8%
Shenzhen Shunlian Technology
Co., Ltd.* (ʮ
̡)
Shenzhen Y ueshi Internet Technology
Co., Ltd.* (ҦϞ
ʮ̡)
49%
Hubei Fengxinling Supply Chain
Management Co., Ltd.* ( ಳ̏ᔮ
ʮ̡)
Hubei Three Gorges Yinling Cold
Chain Logistics Co., Ltd.* ( ಳ̏ɧ
ʮ̡)
30%
Huanggang Huixin Asset Operation
Co., Ltd.* (ࠢ
ʮ̡)
19%
Beijing S.F. Intra-city Technology
Co., Ltd.* (ҦϞ
ʮ̡)
Ningbo Meishan Bonded Port Area
Danwu Investment Management
Partnership (Limited Partnership)*
(ҳ༟၍ଣΥ
ྫΆุ(Υྫ))
19.05%
Ningbo Meishan Bonded Port Area
Danwu Investment Management
Partnership (Limited
Partnership)* (೼ಥ
ҳ༟၍ଣΥྫΆุ(ࠢ
Υྫ))
Zhao Xiaoyan* ( Ⴛወዲ) 39.99%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-32 –


--- page 715 ---
Our subsidiaries
Parties with 10% or
more equity interest
Approximate
percentage of
shareholding
(%)
Sichuan Tianfu Aviation
Co., Ltd.* (ʮ
̡)
Chengdu Communication Investment
Aviation Investment Group Co.,
Ltd.* (ࠢ
ʮ̡)
30%
Hubei Churongfeng Supply Chain
Co., Ltd.* ( ಳู̏ፄᔮԶᏐᗡϞ
ʮ̡)
Beijing Wangxian Supply Chain
Technology Co., Ltd.* ( ̏ԯၣᒻ
ʮ̡)
30%
Henan SF Pharmaceutical Supply
Chain Co., Ltd.* (නᔮᔼᖹ
ʮ̡)
CHEN Shiquan ( ௓˰Ό) 10.71%
Suzhou Industrial Park Customs
Broker Co., Ltd.* ( ᘽψʈุ෤
ʮ̡)
Suzhou Logistics Center
Co., Ltd.* (ʮ
̡)
34%
Guangdong Shunxin Express
Co., Ltd.* (ʮ
̡)
Shanghai Shangguang Enterprise
Management Consulting Co., Ltd.*
(ʮ̡)
37.23%
Shunfeng (Chengdu) International
Logistics
Co., Ltd.* ( නᔮ(ϓே)ݴي
ʮ̡)
Chengdu International Railway Port
Economic and Technological
Development Zone Construction
and Development Co., Ltd.* ( ϓே
ண೯
ʮ̡)
40%
Fengniao WRJ Technology
Co., Ltd.* (ࠢ
ʮ̡)
Chongqing Liangjiang Aerospace
Industry Investment Group Co.,
Ltd.* (ঘ˂ପุҳ༟
ʮ̡)
18.52%
Ningbo Meishan Bonded Port Area
Fengniaoxingkong Investment
Management Partnership (Limited
Partnership)* (೼ಥਜ
ҳ༟၍ଣΥྫΆุ(Υ
ྫ))
14.81%
Beijing Fengjietai Enterprise
Management Co., Ltd.* ( ̏ԯᔮ
ʮ̡)
Beijing Daxing Airport Economic
Zone Development Fund (Limited
Partnership)* (຾᏶
ږ(Υྫ))
15%
Beijing Xinghang Phase I Industrial
Equity Investment Fund (Limited
Partnership)* ( ̏ԯጳঘɓಂପุ
ږ(Υྫ))
10%
Shanghai Taigenrun Enterprise
Management Co., Ltd.* ( ɪऎइ
ʮ̡)
Shanghai Hesheng Enterprise
Management Partnership (Limited
Partnership)* (Άุ၍ଣ
ΥྫΆุ(Υྫ))
20%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-33 –


--- page 716 ---
Our subsidiaries
Parties with 10% or
more equity interest
Approximate
percentage of
shareholding
(%)
Chengdu Fengcheng Logistics Co.,
Ltd.* (ʮ̡)
Chengdu Shu Language Culture
Communication Co., Ltd.* ( ϓே໳
ʮ̡)
40%
Tiancheng Fengyi Technology
(Nanjing) Co., Ltd.* (ᔮᑈ
Ҧ(ԯ)ʮ̡)
Nanjing Tiancheng Transportation
Academy Co., Ltd.* (ʹ
ʮ̡)
49%
Chongqing Xuefeng Refrigeration
Logistics Co., Ltd.* (ࢤ
ʮ̡)
SONG Ru ( ҂ন) 30%
Changsha Xueyuan Cold Chain
Logistics Co., Ltd.* (ࡡ
ʮ̡)
HUANG Juanjuan (ࢇࢇ10%
Shenzhen Xuefeng Cold Chain
Logistics Co., Ltd.* (ࢤ
ʮ̡)
HUANG Juanjuan (ࢇࢇ10%
New Joy Japanese Food (Beijing)
Supply Chain Management Co.,
Group Ltd.* (࠮(̏ԯ)
ʮ̡)
SONG Fugang (࡝49%
Bon Way Logistics (H.K.)
Company Limited (ݴي۾(࠰
ಥ)ʮ̡)
BEST ASSETS LIMITED (ࠢ
ʮ̡)
49%
KEX Express (Thailand) Public
Company Limited
Kerry Properties Limited 10.85%
Kerry Logistics Network
Limited
Kerry Properties Limited 20.84%
Kerry Logistics Cold Chain
(Australia) Pty. Ltd.
Hadi Investments Pty Ltd. 17%
Kerry Far East Logistics
(Bangladesh) Limited
Alamgir Hossain 15%
Anowara Begum 15%
Beijing Tengchang International
Transportation Service Co.,
Ltd.* (ʮ
̡)
Beijing Zhi’en Commerce Co., Ltd.*
(ʮ̡)
11.7%
Beijing Jialiduo Commerce Co.,
Ltd.* (ʮ̡)
11.7%
Beijing Y outu Zhongcheng
Commerce Co., Ltd.* ( ̏ԯᎴ௄଺
ʮ̡)
11.7%
Jia Hui Logistics (Zhangjiagang)
Co., Ltd.* (ݴي(ಥ)Ϟ
ʮ̡)
Longyi Supply Chain Management
(Zhangjiagang) Co., Ltd.* ( ᎲᄂԶ
Ꮠᗡ၍ଣ(ಥ)ʮ̡)
15%
JST Logistics Corporation Limited
(ʮ̡) (formerly
known as Pacific Logistics
Corporation Limited
(ʮ̡))
China Railway Container Transport
Corp., Ltd.* (ࠢ
ப΂ʮ̡)
50%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-34 –


--- page 717 ---
Our subsidiaries
Parties with 10% or
more equity interest
Approximate
percentage of
shareholding
(%)
Kerry Cold Chain Solution
Co., Ltd.* (ݴي(ɪऎ)
ʮ̡)
HU Zhigang (࡝49%
Kerry EAS Logistics Co., Ltd.*
(ʮ̡)
Huatong Industrial Development Co.,
Ltd.* (ப΂ʮ̡)
30%
Kerry Lanhai (Tianjin)
Logistics Co., Ltd.* ( ྗԢᔝऎ
(ݵ)ʮ̡)
ZHAO Jinning (ኑ) 49%
Shanghai TCI Freight Forwarding
Co., Ltd.* ( ɪऎᙜඤ਷ყ஬༶˾
ʮ̡)
Shanghai Puyun Enterprise
Management Consulting Co., Ltd.
(ʮ̡)
49%
Shenzhen Kerry Y antian Port
Logistics Company Limited*
ʮ̡
Shenzhen Shenzhen Port Logistics
Group Co., Ltd.* ( ଉέ̹ଉέಥ
ʮ̡)
45%
Kerry eCommerce Limited
(ʮ̡)
TIMES GLOBAL LOGISTICS
LIMITED (ݴي(ᐑଢ)ʮ
̡)
40%
Kerry Logistics Engineering
Limited (ʮ
̡)
Chung Hau Lim 19.5%
Yiu Chun Yip 19.5%
Lee Kin Ming 13%
POWER HUB LIMITED
(ʮ̡)
Chan King Che Stephen 10%
PRO-MED TECHNOLOGY
LIMITED (ʮ
̡)
Y u Tak Kwong 36.5%
Chum Y u Pei 12.5%
KERRY INDEV LOGISTICS
PRIV A TE LIMITED
Mr. Swamikannu Xavier Britto 37.7%
Mrs. Vimala Rani Britto 12.3%
PT. KERRY LOGISTICS
INDONESIA
Zenith Indonesia Co., Limited 24.5%
KERRY FREIGHT (SINGAPORE)
PTE. LTD.
Ong Boon Chong 10%
TRANSPEED CARGO (S)
PTE. LTD.
Ong Boon Chong 10%
KERRY LOGISTICS LANKA
(PRIV A TE) LIMITED
IAS HOLDINGS (PRIV A TE)
LIMITED
49%
Kerry Siam Seaport Limited Kledchai Benjaathonsirikul 17.04%
F.D.I CO., LTD Tran Huu Nghia 20%
Tran Thi Phuong Lien 10%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-35 –


--- page 718 ---
(c) Disclosure of Interests of Directors, Supervisors and Chief Executive
Immediately following the completion of the Global Offering (assuming the Over-
allotment Option is not exercised and no Shares are issued pursuant to the share options
granted under the 2022 Stock Option Incentive Plan), so far as our Directors are aware, the
interest or short position of our Directors, Supervisors or Chief Executives in the Shares,
underlying shares and debentures of our Company or its associated corporations (within the
meaning of Part XV of the SFO) which will be required to be notified to our Company and the
Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including
interest or short positions which they were taken or deemed to have under such provisions of
the SFO) or which will be required, pursuant to section 352 of the SFO, to be entered in the
register referred to therein, or which will be required, pursuant to the Model Code for
Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing
Rules, to be notified to our Company and the Hong Kong Stock Exchange, will be as follows:
(i) Interests in our Company
As of the Latest Practicable Date
Immediately following the completion of the
Global Offering (assuming no exercise of the
Over-allotment Option and no Shares are issued
pursuant to the share options granted under the
2022 Stock Option Incentive Plan)
Name of Shareholder
Nature of
Interest
Description
of Shares (1)
Number of
Shares (2)
Approximate
percentage of
shareholding in
the total issued
share capital of
our Company
Number of
Shares (2)
Approximate
percentage of
shareholding in
our A Shares
Approximate
percentage of
shareholding in
the total issued
share capital of
our Company
M r . W a n g ........ I n terest in
controlled
corporations
A Shares 2,661,927,139
(3) 55.27% 2,661,927,139 (3) 55.27% 53.39%
M r . H O C h i t ...... B eneficial
Owner
A Shares 488,000 (4) 0.01% 488,000 (4) 0.01% 0.01%
M s . W A N G X i n.... B eneficial
Owner
A Shares 477,000 (5) 0.01% 477,000 (5) 0.01% 0.01%
Mr. XU Bensong .... B eneficial
Owner
A Shares 258,200 (6) 0.005% 258,200 (6) 0.005% 0.005%
Mr. LEE Carmelo
K a S z e ........
Beneficial
Owner
A Shares 38,000 0.001% 38,000 0.001% 0.001%
M r . L I S h e n g ...... B eneficial
Owner
A Shares 488,000 (6) 0.01% 488,000 (6) 0.01% 0.01%
Mr. ZHOU
H a i q i a n g .......
Beneficial
Owner
A Shares 366,000 (7) 0.008% 366,000 (7) 0.008% 0.007%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-36 –


--- page 719 ---
As of the Latest Practicable Date
Immediately following the completion of the
Global Offering (assuming no exercise of the
Over-allotment Option and no Shares are issued
pursuant to the share options granted under the
2022 Stock Option Incentive Plan)
Name of Shareholder
Nature of
Interest
Description
of Shares (1)
Number of
Shares (2)
Approximate
percentage of
shareholding in
the total issued
share capital of
our Company
Number of
Shares (2)
Approximate
percentage of
shareholding in
our A Shares
Approximate
percentage of
shareholding in
the total issued
share capital of
our Company
Mr. GENG Y ankun . . Beneficial
Owner
A Shares 427,000 (8) 0.009% 427,000 (8) 0.009% 0.01%
M s . G A N L i n g ..... B eneficial
Owner
A Shares 170,000 (9) 0.004% 170,000 (9) 0.004% 0.003%
Mr. LIU Jilu ...... B eneficial
Owner
A Shares 35,793,780 0.74% 35,793,780 0.74% 0.72%
Notes:
(1) For the avoidance of doubt, both A Shares and H Shares are ordinary Shares in the share capital of our
Company and are considered as one class of Shares.
(2) All interests stated are long positions.
(3) The 2,661,927,139 A Shares comprise (1) 2,561,927,139 A Shares held by Mingde Holding (among which an
aggregate of 737,400,000 A Shares had been pledged to certain PRC financial institutions regulated by NAFR
and/or CSRC, and a total of 382,430,000 A Shares held had been pledged to the EB Pledge Agent under the
EB Security Account, as security in respect of the 2021 Mingde Exchangeable Bonds and 2024 Mingde
Exchangeable Bonds), and (2) 100,000,000 A Shares held by Shenzhen Weishun, a wholly-owned subsidiary
of Mingde Holding. As of the Latest Practicable Date, Mr. Wang holds 99.90% of the equity interests in
Mingde Holding. Therefore, Mr. Wang is deemed to be interested in the A Shares held by Mingde Holding
under the SFO. For details, see “Substantial Shareholders” in this prospectus.
(4) Includes (1) 122,000 Shares held by Mr. HO Chit, (2) Mr. HO Chit’s entitlement to receive up to 366,000
Shares pursuant to the exercise of options granted to him under the 2022 Stock Option Incentive Plan, subject
to the conditions (including exercise conditions) of those options.
(5) Includes (1) 172,000 Shares held by Ms. W ANG Xin, (2) Ms. W ANG Xin’s entitlement to receive up to
305,000 Shares pursuant to the exercise of options granted to her under the 2022 Stock Option Incentive Plan,
subject to the conditions (including exercise conditions) of those options.
(6) Includes (1) 54,200 Shares held by Mr. XU Bensong, (2) Mr. XU Bensong’s entitlement to receive up to
204,000 Shares pursuant to the exercise of options granted to him under the 2022 Stock Option Incentive Plan,
subject to the conditions (including exercise conditions) of those options.
(7) Includes (1) 122,000 Shares held by Mr. LI Sheng, (2) Mr. LI Sheng’s entitlement to receive up to 366,000
Shares pursuant to the exercise of options granted to him under the 2022 Stock Option Incentive Plan, subject
to the conditions (including exercise conditions) of those options.
(8) Includes (1) 61,000 Shares held by Mr. ZHOU Haiqiang, (2) Mr. ZHOU Haiqiang’s entitlement to receive up
to 305,000 Shares pursuant to the exercise of options granted to him under the 2022 Stock Option Incentive
Plan, subject to the conditions (including exercise conditions) of those options.
(9) Includes (1) 122,000 Shares held by Mr. GENG Y ankun, (2) Mr. GENG Y ankun’s entitlement to receive up to
305,000 Shares pursuant to the exercise of options granted to him under the 2022 Stock Option Incentive Plan,
subject to the conditions (including exercise conditions) of those options.
(10) Represents Ms. GAN Ling’s entitlement to receive up to 170,000 Shares pursuant to the exercise of options
granted to her under the 2022 Stock Option Incentive Plan, subject to the conditions (including exercise
conditions) of those options.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-37 –


--- page 720 ---
(ii) Interests in Associated Corporations of our Company
Name of Director/
Chief Executive
Capacity/
nature of interest
Number and
description of
securities (1)
Total number of
securities of the
associated
corporation
Approximate
percentage of
shareholding in
the total share
capital of the
associated
corporation
Mingde Holding
M r . W a n g............ Beneficial Owner 113,286,600 113,400,000 99.90%
SF Intra-city
M r . W a n g............ Interest in a
controlled
corporation and
others
(2)
364,738,662
H shares
917,375,507 58.48%
171,764,898
domestic
shares
Kerry Logistics
M r . W a n g............ Interest in a
controlled
corporation and
others
(3)
972,698,478 1,807,429,342 53.82%
Notes:
(1) All interests stated are long positions.
(2) Includes 171,764,898 H Shares and 171,764,898 domestic shares held by SF Taisen, 75,000,000 H
shares held by Beijing SF Intra-city Technology Co., Ltd. (ʮ̡), 117,076,764 H
shares held by SF Holding (HK), and 897,000 H shares held by Celestial Ocean Investment Limited.
Beijing SF Intra-city Technology Co., Ltd. is a non-wholly owned subsidiary of SF Technology,
Celestial Ocean Investment Limited is a wholly-owned subsidiary of SF Holding (HK), and both SF
Technology and SF Holding (HK) are wholly-owned subsidiaries of SF Taisen. SF Taisen is a
wholly-owned subsidiary of our Company and therefore a non-wholly owned subsidiary of Mingde
Holding, which is held by Mr. Wang as to approximately 99.90%. As such, Mr. Wang is deemed to be
interested in the shares of SF Intra-city which SF Taisen is deemed to be interested in.
(3) Includes 931,209,117 shares of Kerry Logistics held by Flourish Harmony, which is an indirect
wholly-owned subsidiary of the Company through Advance Harmony Holdings Company Limited and
SF Holding (HK). In addition, SF Holding (HK) is interested in the perpetual convertible bonds issued
by Kerry Logistics convertible for 41,489,361 shares of Kerry Logistics. SF Holding (HK) is a
wholly-owned subsidiary of SF Taisen. SF Taisen is a wholly-owned subsidiary of our Company and
therefore a non-wholly owned subsidiary of Mingde Holding, which is held by Mr. Wang as to
approximately 99.90%. As such, Mr. Wang is deemed to be interested in the shares of Kerry Logistics
which SF Holding (HK) is deemed to be interested in.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-38 –


--- page 721 ---
D. Disclaimers
Save as disclosed herein:
(a) none of our Directors, Supervisors or the chief executive of our Company has any
interest or short position in the shares, underlying shares or debentures of our
Company or any of its associated corporation (within the meaning of the SFO)
which will have to be notified to our Company and the Hong Kong Stock Exchange
pursuant to Divisions 7 and 8 of Part XV of the SFO or which will be required,
pursuant to section 352 of the SFO, to be entered in the register referred to therein,
or which will be required to be notified to our Company and the Hong Kong Stock
Exchange pursuant to the Model Code for Securities Transactions by Directors of
Listed Issuers once the H Shares are listed;
(b) none of our Directors, Supervisors or any of the experts referred to under the
paragraph headed “—5. Other Information — G. Qualification of Experts” in this
appendix has any direct or indirect interest in the promotion of our Company, or in
any assets which have within the two years immediately preceding the date of this
prospectus been acquired or disposed of by or leased to any member of our Group,
or are proposed to be acquired or disposed of by or leased to any member of our
Group;
(c) none of our Directors or Supervisors is materially interested in any contract or
arrangement subsisting at the date of this prospectus which is significant in relation
to the business of our Group taken as a whole;
(d) none of our Directors or Supervisors has any existing or proposed service contracts
with any member of our Group (excluding contracts expiring or determinable by the
employer within one year without payment of compensation (other than statutory
compensation));
(e) so far as is known to our Directors, no person (not being a Director, Supervisor or
chief executive of our Company or any member of our Group) will, immediately
following the completion of the Global Offering, have an interest or short position
in the Shares or underlying Shares of our Company which would fall to be disclosed
to our Company under the provisions of Divisions 2 and 3 of Part XV of SFO or be
interested, directly or indirectly, in 10% or more of the nominal value of any class
of share capital carrying rights to vote in all circumstances at general meetings of
any member of our Group; and
(f) none of our Directors, Supervisors or their respective close associates (as defined
under the Listing Rules) or our Shareholders who are interested in more than 5% of
the issued share capital of our Company has any interest in the five largest customers
or the five largest suppliers of our Group.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-39 –


--- page 722 ---
4. OUR INCENTIVE SCHEMES AND PARTICULARS OF OUR CAPITAL UNDER
OPTION
A. 2022 Stock Option Incentive Plan
The following is a summary of the principal terms of the 2022 Stock Option Incentive
Plan as approved by the second extraordinary Shareholders’ meeting on May 17, 2022 and
amended by the Board on May 30, 2022, October 28, 2022 and August 1, 2023. Given no
further share options will be granted under the 2022 Stock Option Incentive Plan after the
Listing, the terms of the 2022 Stock Option Incentive Plan are not subject to the provisions of
Chapter 17 of the Listing Rules.
(i) Purpose and administration of the 2022 Stock Option Incentive Plan
The purpose of the 2022 Stock Option Incentive Plan is to establish and improve the
corporate governance structure and operation mechanism of the Company, to establish and
improve the incentive mechanism of the Company, to connect the interests of Shareholders and
the Company together with the individual interests of the core talents of the Company and to
promote all parties to focus on the long-term development of the Company, and to attract and
retain outstanding core talents. The 2022 Stock Option Incentive Plan shall be subject to the
administration of the Board and the supervision of the Board of Supervisors.
(ii) Selected participants
Selected participants under the 2022 Stock Option Incentive Plan are core talents who are
important for the Company’s future operation and development, including Directors and
members of senior management team, key management members and key staff, excluding
independent directors, supervisors and shareholders or actual controller who individually or
collectively hold 5% or more of the share equity of the Company and their spouse, parents,
children and any person prohibited by article 8 of the Measures for the Administration of
Equity Incentives of Listed Companies to be eligible participants.
The selected participants shall be employed by the Company or its subsidiaries at the time
the relevant options are granted and during the assessment period of the 2022 Stock Option
Incentive Plan and have not participated in any other share related incentive scheme currently
in force.
(iii) A Shares involved in the incentive plan
The shares subject to the options to be granted under the 2022 Stock Option Incentive
Plan shall be A Shares in the repurchase account of the Company or A Shares to be issued by
the Company to the selected participants. Each option granted represent the right to purchase
one Share within the exercise period at the exercise price.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-40 –


--- page 723 ---
We have granted 49,500,100 share options to 1,493 participants under the 2022 Stock
Option Incentive Plan in two tranches, with the first tranche granted on May 30, 2022 (“ First
Tranche ”), and the second tranche granted on October 28, 2022 (“ Reserved Tranche ”). On
August 1, 2023, as (i) 99 grantees under the First Tranche were no longer eligible to hold share
options under the 2022 Stock Option Incentive Plan and (ii) 257 grantees under the First
Tranche whose share options reached the first period of exercise were not eligible to exercise
their granted options in full based on their performance appraisal results in 2022, 6,676,212
options granted under the First Tranche were therefore approved by the Board to be canceled.
For the options under the First Tranche exercisable under the first period of exercise, 1,252
grantees have exercised an aggregate of 8,420,193 granted options, representing 8,420,193 A
Shares. On October 10, 2024, as (i) 116 grantees under the First Tranche were no longer
eligible to hold share options under the 2022 Stock Option Incentive Plan, (ii) 64 grantees
under the First Tranche voluntarily gave up their right of exercise under the first period of
exercise, (iii) 281 grantees under the First Tranche whose share options reached the second
period of exercise were not eligible to exercise their granted options in full based on their
performance appraisal results in 2023, (iv) 12 grantees under the Reserved Tranche were no
longer eligible to hold share options under the 2022 Stock Option Incentive Plan, and (v) 4
grantees under the Reserved Tranche whose share options reached the first period of exercise
were not eligible to exercise their granted options in full based on their performance appraisal
results in 2022, an aggregate of 6,691,167 options granted were therefore approved by the
Board to be canceled. On October 29, 2024, as 16 grantees under the Reserved Tranche whose
share options reached the first period of exercise did not exercise their granted options, an
aggregate of 115,058 options granted were therefore approved by the Board to be canceled. On
November 14, 2024, as four grantees under the Reserved Tranche whose share options reached
the second period of exercise were not eligible to exercise their granted options in full based
on their performance appraisal results in 2023, an aggregate of 26,312 options granted were
approved by the Board to be canceled. As of November 14, 2024, 57 grantees have exercised
an aggregate of 275,763 options since October 2024, and the number of underlying A Shares
pursuant to the outstanding options granted under the 2022 Stock Option Incentive Plan
exercisable by an aggregate of 1,266 grantees amounts to 27,295,395, representing
approximately 0.55% of the total issued Shares immediately following the completion of the
Global Offering (assuming the Over-allotment Option is not exercised and no Shares are issued
pursuant to the share options granted under the 2022 Stock Option Incentive Plan). The impact
on earnings per Share for the year ended December 31, 2023 upon full exercise of the
outstanding options granted under the 2022 Stock Option Incentive Plan (assuming A Shares
will be issued for the exercise of the outstanding options and A Shares in the repurchase
account of the Company will not be utilised) is minimal, as the diluted weighted average
outstanding shares only increased from 4,850,497,640 to 4,854,981,954 for the year ended
December 31, 2023, which brought minimal dilutive effect as compared to the total Shares in
issue.
(iv) Duration of the incentive plan
The 2022 Stock Option Incentive Plan will be valid from the first grant of options till all
the options granted are exercised or canceled and shall in any event not exceeding 67 months.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-41 –


--- page 724 ---
(v) Grant Conditions
The selected participants are entitled to be granted options under the 2022 Stock Option
Incentive Plan only if the following conditions were met:
(a) With respect to the Company, none of the following circumstances having occurred:
(1) An audit report with an adverse opinion or a disclaimer of opinion has been
issued by the reporting accounts with respect to the Company’s accountant’s
report for the most recent fiscal year;
(2) An audit report with an adverse opinion or a disclaimer of opinion has been
issued by the Company’s accountant with respect to the internal control report
contained in accountant’s report for the most recent fiscal year;
(3) The Company has not distributed dividends in accordance with the laws and
regulations, our Articles of Association or our public commitment within the
most recent 36 months after its listing;
(4) Applicable laws and regulations prohibits the implementation of any share
incentive scheme; or
(5) Any other circumstances recognized by the CSRC.
(b) With respect to the grantee, none of the following circumstances having occurred:
(1) The grantee has been regarded as an inappropriate person by the SZSE within
the most recent 12 months;
(2) The grantee has been regarded as an inappropriate person by the CSRC or its
dispatched office within the most recent 12 months;
(3) The grantee has been punished or prohibited from entering into the securities
market by the CSRC or its dispatched office within the most recent 12 months;
(4) The grantee is not qualified to serve as a director or senior management
according to the PRC Company Law;
(5) The grantee is prohibited from participating in any incentive plan of listed
companies according to applicable laws and regulations;
(6) The grantee has been recognized by the 2022 Stock Option Incentive Plan as
not being eligible or is no longer eligible; or
(7) Any other circumstances recognized by the CSRC.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-42 –


--- page 725 ---
(vi) Exercise conditions
(a) Company’ s performance target
The annual performance assessment target of the Company are as follows:
Period of exercise Performance assessment target
The first period of
exercise
The revenue income of 2022 is not less than RMB270
billion or the net profit margin attributable to parent
company in 2022 is not less than 2.1%
The second period of
exercise
The revenue income of 2023 is not less than RMB315
billion or the net profit margin attributable to parent
company in 2023 is not less than 2.6%
The third period of
exercise
The revenue income of 2024 is not less than RMB370
billion or the net profit margin attributable to parent
company in 2024 is not less than 2.9%
The fourth period of
exercise
The revenue income of 2025 is not less than RMB435
billion or the net profit margin attributable to parent
company in 2025 is not less than 3.3%
If the performance assessment target is not achieved, the granted options exercisable
in that year cannot be exercised and shall be canceled by the Company.
(b) Grantee’ s performance appraisal requirements
The performance appraisal requirements for the Directors, members of the senior
management team and key management members are as follows:
Appraisal results A1 A2 B1 B2 B3 C1
C2 and
below
Percentage of exercise 100% 50% 0%
The performance appraisal requirements for the key staff are as follows:
Appraisal results A1 A2 B1 B2 B3 C1
C2 and
below
Percentage of exercise 100% 50% 0%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-43 –


--- page 726 ---
When Company’s performance target is achieved, the actual exercisable options of
the selected participants shall be determined by the following formula:
Individual’ s exercisable options pursuant to the exercise schedule * individual’ s
percentage of exercise
The selected participants shall exercise options granted based on the actual
exercisable options. The non-exercisable options in each year shall be canceled by the
Company.
(vii) Grant and exercise of the options
The grant date shall be a trading day under the SZSE as determined by the Board. Our
Company shall grant, register and announce the options to be granted to certain selected
participants within 60 days after the approval date of the 2022 Stock Option Incentive Plan by
the Shareholders’ meeting. Failure to complete the procedures within such time will result in
termination of the 2022 Stock Option Incentive Plan. The grant date for the reserved options
shall be determined by the Board within seven months after the approval date of the 2022 Stock
Option Incentive Plan by the Shareholders’ meeting.
The grant of options under the 2022 Stock Option Incentive Plan is at nil consideration.
The exercise price shall be RMB40.199 as amended by the Board on October 28, 2022, August
1, 2023, October 10, 2024, and November 14, 2024.
The exercise schedule of the options granted are as follows:
Exercise schedule Exercise period
Exercise
percentage
The first period of
exercise
From the first trading day after the 12
months anniversary from the date of
grant to the last trading day before
the 24-month anniversary of the
date of grant
25%
The second period of exercise From the first trading day after the 24
months anniversary from the date of
grant to the last trading day before
the 36-month anniversary of the
date of grant
25%
The third period of exercise From the first trading day after the 36
months anniversary from the date of
grant to the last trading day before
the 48-month anniversary of the
date of grant
25%
The fourth period of exercise From the first trading day after the 48
months anniversary from the date of
grant to the last trading day before
the 60-month anniversary of the
date of grant
25%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-44 –


--- page 727 ---
The exercise of the options granted shall be on a trading day, which shall not fall in the
following periods, (i) 30 days before the publication of annual report and interim report, (ii)
10 days before the publication of quarterly report, earnings forecast and preliminary earnings
estimate, (iii) the period starting from the date of any significant price-sensitive incident till
the date of its publication; and (iv) any other period prohibited by the CSRC and SZSE.
Options granted shall not be transferred or used for debt guarantee or payment.
(viii) Lock-up for Directors and the senior management team
The annual transferable shares during his or her employment shall not exceed 25% of the
total Shares he or she holds. No share can be transferred within six months after termination
of his or her employment. Income gained through sale of Shares within six months of the
purchase or purchase of Shares within six months of the sale shall belong to the Company and
will be forfeited by the Board. Any sale of Shares is also subject to the relevant requirements
under applicable laws.
(ix) Grantees
The table below set forth the details of the grantees under the 2022 Stock Option
Incentive Plan who are Directors, members of senior management team or connected persons
of the Company:
Name of the grantee
Position in
the Company/
rank in the Group Address
Exercise
Price
Number
of options
granted
Number of
A Shares
under the
outstanding
options
granted Date of grant Option period
Underlying A
Shares of granted
options
outstanding as
a percentage
of issued Shares
immediately after
completion of the
Global Offering (1)
Mr. HO Chit .... Executive Director, deputy
general manager and
head of finance
Flat G, 20/F, Tower 7,
Park Avenue,
18 Hoi Ting Road,
Kowloon,
Hong Kong
RMB40.199 488,000 366,000 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.007%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-45 –


--- page 728 ---
Name of the grantee
Position in
the Company/
rank in the Group Address
Exercise
Price
Number
of options
granted
Number of
A Shares
under the
outstanding
options
granted Date of grant Option period
Underlying A
Shares of granted
options
outstanding as
a percentage
of issued Shares
immediately after
completion of the
Global Offering (1)
Ms. W ANG Xin . . . Executive Director Flat 1805, Tower A,
Shuangxi Garden
Phase II, No. 1099
Wanghai Road,
Shekou, Nanshan
District, Shenzhen,
Guangdong
Province, PRC
RMB40.199 488,000 305,000 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.006%
Mr. XU Bensong . . Executive Director Flat 21B, Tower D,
Huifangyuan,
North Xuefu Road,
Nanshan District,
Shenzhen,
Guangdong
Province, PRC
RMB40.199 272,000 204,000 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant to
the last trading day
before the
60-month
anniversary of the
date of grant
0.005%
Mr. LI Sheng .... Deputy general manager Flat 17D, Tower 2
Zhongtai Art
Mingting, No. 4076
Dongbin Road,
Nanshan District,
Shenzhen,
Guangdong
Province, PRC
RMB40.199 488,000 366,000 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.007%
Mr. ZHOU Haiqiang . Deputy general manager Flat 722, Tower C, No.
555 Huanan Road,
Qingpu District,
Shanghai, PRC
RMB40.199 488,000 305,000 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.006%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-46 –


--- page 729 ---
Name of the grantee
Position in
the Company/
rank in the Group Address
Exercise
Price
Number
of options
granted
Number of
A Shares
under the
outstanding
options
granted Date of grant Option period
Underlying A
Shares of granted
options
outstanding as
a percentage
of issued Shares
immediately after
completion of the
Global Offering (1)
Mr. GENG Y ankun. . Deputy general manager No. 1502, Floor 12,
Building 6, No. 7
Anli Road,
Chaoyang District,
Beijing, PRC
RMB40.199 488,000 305,000 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.006%
Ms. GAN Ling . . . Deputy general manager,
Board secretary and
joint company
secretary
Flat 301, Building 46,
Lianhua Yicun,
Sungang West Road,
Futian District,
Shenzhen,
Guangdong
Province, PRC
RMB40.199 272,000 170,000 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.003%
Ms. OOI BEE TI
(2) . Person in charge of
Shunfeng Shuke
(Shenzhen)
Technology Service
Co., Ltd.* (߅
(ଉέ)ʮ
̡), an indirect
wholly-owned
subsidiary of our
Company
9A, Unit 5, Building 3,
Mangrove West
Bank, Nanshan
District, Shenzhen,
Guangdong
Province, PRC
RMB40.199 272,000 204,000 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.004%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-47 –


--- page 730 ---
Name of the grantee
Position in
the Company/
rank in the Group Address
Exercise
Price
Number
of options
granted
Number of
A Shares
under the
outstanding
options
granted Date of grant Option period
Underlying A
Shares of granted
options
outstanding as
a percentage
of issued Shares
immediately after
completion of the
Global Offering (1)
Mr. W ANG
Shuhuai (2) ....
Person in charge of the
express business in
Shenzhen
1304, Block B,
Building 1, Shanhai
Meiyu Garden,
Intersection of
Qianhai Road and
Mianshan Road,
Nanshan District,
Shenzhen,
Guangdong
Province, PRC
RMB40.199 76,000 57,000 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.001%
Mr. GUAN Li
(2) . . . Person in charge of the
express business
operation mode
academy
8B, Unit 2, Building C,
Xiangge Mingyuan,
Mianshan Road,
Nanshan District,
Shenzhen,
Guangdong
Province, PRC
RMB40.199 76,000 47,500 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.001%
Mr. CHEN Bin
(2) . . Person in charge of the
operation and
management of
department
21C, Block 2,
Zhonghai Huating
Huajingfeng, No. 89
Mintian Road,
Futian District,
Shenzhen,
Guangdong
Province, PRC
RMB40.199 65,000 48,750 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.001%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-48 –


--- page 731 ---
Name of the grantee
Position in
the Company/
rank in the Group Address
Exercise
Price
Number
of options
granted
Number of
A Shares
under the
outstanding
options
granted Date of grant Option period
Underlying A
Shares of granted
options
outstanding as
a percentage
of issued Shares
immediately after
completion of the
Global Offering (1)
Ms. LIU Y ahong (2) . Person in charge of the
logistics business for
the financial industry
5C, North Block,
Jingyuan Building,
Airong Road,
Nanshan District,
Shenzhen,
Guangdong
Province, PRC
RMB40.199 60,000 45,000 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.0009%
Ms. SONG Y ajie
(2) . Person in charge of the
fundamental finance
department
10H, Building 2,
No. 75 Songyuan
Road, Guiyuan
Street, Luohu
District, Shenzhen,
Guangdong
Province, PRC
RMB40.199 46,000 34,500 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.0007%
Mr. HUANG
Y uquan
(2) .....
Person in charge of the
resolution department
Room 06, 16th Floor,
Building 7,
Mid-Levels Garden,
1606 Zhongkai
High-tech Zone,
Huizhou City,
Guangdong
Province, PRC
RMB40.199 20,000 15,000 May 30, 2022 From the first trading
day after the
12 months
anniversary from
the date of grant
to the last trading
day before the
60-month
anniversary of the
date of grant
0.0003%
Notes:
(1) The calculation is based on the assumption that no new Shares are issued under the Over-allotment Option and
our 2022 Stock Option Incentive Plan, and no other changes are made to the issued share capital of our
Company between the Latest Practicable Date and Listing.
(2) Connected persons of the Company who are director(s) or supervisor(s) of the Company’s subsidiaries.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-49 –


--- page 732 ---
The table below sets forth details of the grantees under the 2022 Stock Option Incentive
Plan with 200,000 or more outstanding options granted as of the Latest Practicable Date, who
are not a Director, members of senior management team or connected person of the Company,
and are still eligible grantees under the 2022 Stock Option Incentive Plan:
(note)
Name of grantee
Position in
the Company/
rank in the Group Address
Exercise
price
Number
of options
granted
Number of
A shares
under the
outstanding
options
granted Date of grant Option period
Underlying A
Shares of granted
options
outstanding as
a percentage
of issued Shares
immediately after
completion of the
Global Offering (1)
Mr. HUANG Sihai . . Chief operating officer Flat 3803, Building 2G,
Y angguangyuehai
Garden, Keji South
First Road, Y uehai
Street, Nanshan
District, Shenzhen,
Guangdong
Province, PRC
RMB40.199 488,000 366,000 May 30, 2022 From the first trading
day after the 12
months anniversary
from the date of
grant to the last
trading day before
the 60-month
anniversary of the
date of grant
0.007%
Mr. FENG
Xiaoping .....
Person in charge of the
operation center of
the industrial park
Flat 4, Building 19,
Dongfang
Taiyangcheng
Qingboyuan, Renhe
Sub-district, Shunyi
District, Beijing,
PRC
RMB40.199 488,000 305,000 May 30, 2022 From the first trading
day after the 12
months anniversary
from the date of
grant to the last
trading day before
the 60-month
anniversary of the
date of grant
0.006%
M r . F u J i e ..... Person in charge of the
express business in
Beijing
Flat 1801, Unit 3,
Building 6, Baoli
Heguang Yijing, No.
83 West Fourth Ring
Middle Road,
Lugouqiao Street,
Fengtai District,
Beijing, PRC
RMB40.199 400,000 200,000 May 30, 2022 From the first trading
day after the 12
months anniversary
from the date of
grant to the last
trading day before
the 60-month
anniversary of the
date of grant
0.004%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-50 –


--- page 733 ---
Name of grantee
Position in
the Company/
rank in the Group Address
Exercise
price
Number
of options
granted
Number of
A shares
under the
outstanding
options
granted Date of grant Option period
Underlying A
Shares of granted
options
outstanding as
a percentage
of issued Shares
immediately after
completion of the
Global Offering (1)
M r . L I J i a ..... Assistant chief operating
officer and person in
charge of Asia
operation center
Flat 107, Building 13,
Biguiyuan Y uyuan,
Jinshanhu Road,
Heping Street,
Runzhou District,
Zhenjiang, Jiangsu
Province, PRC
RMB40.199 272,000 204,000 May 30, 2022 From the first trading
day after the 12
months anniversary
from the date of
grant to the last
trading day before
the 60-month
anniversary of the
date of grant
0.004%
Ms. HUO
Qiaoqiao .....
Head of procurement
supply chain centre
Flat 12212, Unit 1,
Building 6,
Y ongning
International (Dahua
South Gate), No.
113 Chang’an North
Road, Beilin
District, Xi’an,
Shaanxi Province,
PRC
RMB40.199 272,000 204,000 May 30, 2022 From the first trading
day after the 12
months anniversary
from the date of
grant to the last
trading day before
the 60-month
anniversary of the
date of grant
0.004%
Mr. LIU Guohua. . . Chief audit officer Flat 107, Building 3,
Tianhai Garden,
Nanshan District,
Shenzhen,
Guangdong
Province, PRC
RMB40.199 272,000 204,000 May 30, 2022 From the first trading
day after the 12
months anniversary
from the date of
grant to the last
trading day before
the 60-month
anniversary of the
date of grant
0.004%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-51 –


--- page 734 ---
Name of grantee
Position in
the Company/
rank in the Group Address
Exercise
price
Number
of options
granted
Number of
A shares
under the
outstanding
options
granted Date of grant Option period
Underlying A
Shares of granted
options
outstanding as
a percentage
of issued Shares
immediately after
completion of the
Global Offering (1)
Mr. JIA Y ongjian . . Assistant chief human
resources officer
No. 21 Furong Road
East, Xiasha, Futian
District, Shenzhen,
Guangdong
Province, PRC
RMB40.199 272,000 204,000 May 30, 2022 From the first trading
day after the 12
months anniversary
from the date of
grant to the last
trading day before
the 60-month
anniversary of the
date of grant
0.004%
Mr. DENG
Shangxin .....
Head of the distribution
department of Ezhou
cargo hub
No. 77, Tiyu East Road,
Linkong Economic
Zone, Ezhou City,
Hubei Province,
PRC
RMB40.199 272,000 204,000 May 30, 2022 From the first trading
day after the 12
months anniversary
from the date of
grant to the last
trading day before
the 60-month
anniversary of the
date of grant
0.004%
Mr. LI Qiuyu .... Head of investment
department
Flat 11E, Building 6,
Donghai Garden,
Agricultural Science
Center, Shennan
West Road, Futian
District, Shenzhen,
Guangdong
Province, PRC
RMB40.199 272,000 204,000 May 30, 2022 From the first trading
day after the 12
months anniversary
from the date of
grant to the last
trading day before
the 60-month
anniversary of the
date of grant
0.004%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-52 –


--- page 735 ---
Name of grantee
Position in
the Company/
rank in the Group Address
Exercise
price
Number
of options
granted
Number of
A shares
under the
outstanding
options
granted Date of grant Option period
Underlying A
Shares of granted
options
outstanding as
a percentage
of issued Shares
immediately after
completion of the
Global Offering (1)
Mr. W ANG Chao . . Senior Director Room 101, No. 12, Lane
1398, Jinmei Road,
Minhang District,
Shanghai, PRC
RMB40.199 272,000 204,000 May 30, 2022 From the first trading
day after the 12
months anniversary
from the date of
grant to the last
trading day before
the 60-month
anniversary of the
date of grant
0.004%
Mr. HUANG
Zhenyu ......
Automation technology
expert
Room 1705, Block A,
Building 3, Xixiang
Shanhaishang Park
Phase II, Xixiang
Street, Bao’an
District, Shenzhen,
Guangdong
Province, PRC
RMB40.199 272,000 204,000 May 30, 2022 From the first trading
day after the 12
months anniversary
from the date of
grant to the last
trading day before
the 60-month
anniversary of the
date of grant
0.004%
Note:
(1) The calculation is based on the assumption that no new Shares are issued under the Over-allotment Option and
our 2022 Stock Option Incentive Plan, and no other changes are made to the issued share capital of our
Company between the Latest Practicable Date and Listing.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-53 –


--- page 736 ---
As of November 14, 2024, other than the three Directors, four senior management
members of the Company (who are not Directors), and seven connected persons of the
Company who are director(s) or supervisor(s) of the Company’s subsidiaries, as disclosed
above, no options were granted to any Directors, senior management or other connected
persons of the Company under the 2022 Stock Option Incentive Plan. As of November 14,
2024, other than (i) three Directors, (ii) four senior management members of the Company, (iii)
seven connected persons of the Company who are director(s) or supervisor(s) of the
Company’s subsidiaries, and (iv) 11 grantees with 200,000 or more outstanding options granted
and who are not a Director, member of senior management team or connected person of the
Company as set out above, the other 1,241 grantees have been granted in aggregate 22,319,645
share options which were outstanding under the 2022 Stock Option Incentive Plan, for which
a total of 22,319,645 A Shares may be issued or transferred to the grantees from the Company’s
A share repurchase account under the outstanding options, representing approximately 0.45%
of the total issued share capital of our Company upon completion of the Global Offering
(assuming the Over-allotment Option is not exercised and no Shares are issued pursuant to the
share options granted under the 2022 Stock Option Incentive Plan), with the number of Shares
to be issued upon exercise of the relevant options ranging from 5,000 Shares to 170,000 Shares
(assuming the actual exercisable options of the selected participants equals to the options
respectively granted to them). We granted options to the other individuals as part payment for
their services rendered to the Group.
The table below shows the details of options granted to other grantees under the 2022
Stock Option Incentive Plan which were outstanding as of November 14, 2024:
Range of number
of A Shares under
the outstanding
options granted
Number of
grantees Exercise price
Aggregate
number of
A Shares
under the
outstanding
options
granted Date of grant Option period
Underlying A Shares of
granted options
outstanding as a
percentage of issued
Shares immediately
after completion of the
Global Offering (1)
1 to 25,000 1,043 RMB40.199 13,844,245 Between May 30, 2022 to
October 28, 2022 (both
days inclusive)
From the first trading day after
the 12 months anniversary
from the date of grant to
the last trading day before
the 60-month anniversary
of the date of grant
0.28%
25,001 to 75,000 192 RMB40.199 7,689,150 Between May 30, 2022 to
October 28, 2022 (both
days inclusive)
From the first trading day after
the 12 months anniversary
from the date of grant to
the last trading day before
the 60-month anniversary
of the date of grant
0.15%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-54 –


--- page 737 ---
Range of number
of A Shares under
the outstanding
options granted
Number of
grantees Exercise price
Aggregate
number of
A Shares
under the
outstanding
options
granted Date of grant Option period
Underlying A Shares of
granted options
outstanding as a
percentage of issued
Shares immediately
after completion of the
Global Offering (1)
75,001 to 199,999 6 RMB40.199 786,250 May 30, 2022 From the first trading day after
the 12 months anniversary
from the date of grant to
the last trading day before
the 60-month anniversary
of the date of grant
0.02%
Notes:
The above table assumes the Over-allotment Option is not exercised and no Shares are issued pursuant to the share
options granted under the 2022 Stock Option Incentive Plan.
B. Kerry Logistics Perpetual Convertible Securities
On May 18, 2023, Kerry Logistics completed the issuance of perpetual convertible
securities in the principal amount of HK$780,000,000 (the “ Kerry Logistics Perpetual
Convertible Securities ”) to SF Holding (HK) (our wholly-owned subsidiary). The distribution
rate of the Kerry Logistics Perpetual Convertible Securities is 3.30% per annum payable
semi-annually, which is subject to an increase of 3% per annum upon occurrence of the
delisting or a suspending in trading for 45 consecutive trading days of the shares of Kerry
Logistics on the Stock Exchange.
Subject to compliance with relevant Listing Rules requirements applicable to Kerry
Logistics, the Kerry Logistics Perpetual Convertible Securities are convertible at the option of
SF Holding (HK) into new shares to be allotted and issued by Kerry Logistics at any time on
or after June 5, 2023 (i.e. 14 days after the closing date, which was May 18, 2023) to the close
of business on the date falling seven days prior to the date fixed for redemption of the relevant
convertible securities. The initial conversion price is at HK$18.80 per share of Kerry Logistics,
which is subject to adjustment upon occurrence of specified events. On the basis of the initial
conversion price of HK$18.80, the number of new shares of Kerry Logistics subject to such
conversion right would be 41,489,361 shares, representing (i) approximately 2.30% of the total
number of issued shares of Kerry Logistics as at the Latest Practicable Date; and (ii)
approximately 2.24% of the total number of issued shares of Kerry Logistics as enlarged by the
allotment and issue of the conversion shares, assuming that there is no other change to the total
number of shares of Kerry Logistics. Upon full exercise of the conversion rights pursuant to
the Kerry Logistics Perpetual Convertible Securities and taking into account the shareholding
we held in Kerry Logistics through Flourish Harmony, our aggregate shareholding interests in
Kerry Logistics would increase to 52.61%, assuming that there is no other change to the total
number of shares of Kerry Logistics.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-55 –


--- page 738 ---
5. OTHER INFORMATION
A. Estate Duty
We have been advised that no material liability for estate duty under PRC law is likely
to fall upon the Group.
B. Litigation
During the Track Record Period and up to the Latest Practicable Date, so far as our
Directors are aware, no litigation or claim of material importance (to our Group’s financial
condition or results of operation) is pending or threatened against any member of our Group.
C. Joint Sponsors
The Joint Sponsors has made an application on our behalf to the Listing Committee of the
Hong Kong Stock Exchange for the listing of, and permission to deal in, the H Shares to be
issued as mentioned in this prospectus. All necessary arrangements have been made enabling
the H Shares to be admitted into CCASS.
Each of the Joint Sponsors satisfies the independence criteria applicable to sponsors as set
out in Rule 3A.07 of the Listing Rules. The sponsor fee payable to the Joint Sponsors in
connection with the Listing payable by our Company is HK$9.6 million in aggregate.
D. Compliance Advisor
Our Company has appointed Caitong International Capital Co., Limited as our
compliance advisor in compliance with Rules 3A.19 of the Listing Rules.
E. Preliminary Expenses
We have not incurred any material preliminary expense.
F. Promoters
The promoters of our Company are LIU Jilu, LIU Lingyun, GONG Weiping, HUANG
Xuechun, TANG Chengkuan, WU Cuihua, YUAN Fuxiang and ZHAO Ming.
Save as disclosed in this prospectus, within the two years immediately preceding the date
of this prospectus, no cash, securities or other benefit have been paid, allotted or given or have
been proposed to be paid, allotted or given to the above promoters in connection with the
Global Offering or related transactions in this prospectus within the two years immediately
preceding the date of this prospectus.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-56 –


--- page 739 ---
G. Qualification of Experts
The qualifications of the experts, as defined under the Hong Kong Listing Rules, who
have given opinions in this prospectus, are as follows:
Name Qualifications
Goldman Sachs (Asia) L.L.C. A licensed corporation under the SFO for Type 1
(dealing in securities), Type 4 (advising on
securities), Type 5 (advising on futures contracts),
Type 6 (advising on corporate finance) and Type 9
(asset management) regulated activities under the
SFO
Huatai Financial Holdings
(Hong Kong) Limited
A licensed corporation under the SFO to conduct
Type 1 (dealing in securities), Type 2 (dealing in
futures contracts), Type 4 (advising on securities),
Type 6 (advising on corporate finance), Type 7
(providing automated trading services) and Type 9
(asset management) regulated activities as defined
under the SFO
J.P . Morgan Securities (Far East)
Limited
A licensed corporation under the SFO for type 1
(dealing in securities), type 4 (advising on securities)
and type 6 (advising on corporate finance) of the
regulated activities as defined under the SFO
PricewaterhouseCoopers Certified Public Accountants under Professional
Accountant Ordinance (Chapter 50 of the Laws of
Hong Kong) and Registered Public Interest Entity
Auditor under Accounting and Financial Reporting
Council Ordinance (Chapter 588 of the Laws of Hong
Kong)
CM Law Firm Legal adviser to our Company as to PRC law
Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co.
Independent industry consultant
Grandall Law Firm (Beijing) Legal adviser to our Company as to PRC data
compliance laws
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-57 –


--- page 740 ---
H. Consents of Experts
Each of the experts as referred to in “— 5. Other Information — G. Qualification of
Experts” in this Appendix has given and has not withdrawn its consent to the issue of this
prospectus with the inclusion of its view, report and/or letter and/or legal opinion (as the case
may be) and references to its name included herein in the form and context in which it
respectively appears.
None of the experts named above has any shareholding interest in any member of our
Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons
to subscribe for securities in any member of our Group.
I. Binding Effect
This prospectus shall have the effect, if an application is made in pursuance hereof, of
rendering all persons concerned bound by all of the provisions (other than the penal provisions)
of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance so far as applicable.
J. No Material Change
Our Directors confirm that, there has been no material change in our business, financial
condition and results of operations since June 30, 2024, being the latest balance sheet date of
our consolidated financial statements as set out in the Accountant’s Report in Appendix I to this
prospectus, and up to the date of this prospectus.
K. Taxation of Holders of H Shares
The sale, purchase and transfer of H Shares are subject to Hong Kong stamp duty if such
sale, purchase and transfer are affected on the H Share register of members of our Company,
including in circumstances where such transactions are effected on the Stock Exchange. The
current rate of Hong Kong stamp duty for such sale, purchase and transfer on each of the
purchaser and the seller is 0.13% of the consideration or, if higher, the fair value of the H
Shares being sold or transferred.
L. Restriction on Share Repurchases
For details of the restrictions on share repurchases by the Company, see “Summary of
Articles of Association — Increase, Decrease, Repurchase and Transfer of Shares” in Appendix
III to this prospectus.
M. Related Party Transactions
Our Group entered into the related party transactions within the two years immediately
preceding the date of this prospectus. See Note 38 to the Accountant’s Report in Appendix I
to this prospectus.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-58 –


--- page 741 ---
N. Miscellaneous
Save as disclosed in this prospectus:
(a) within the two years immediately preceding the date of this prospectus:
(i) no share or loan capital of our Company or any of our subsidiaries had been
issued or agreed to be issued or proposed to be fully or partly paid either for
cash or a consideration other than cash;
(ii) no commissions, discounts, brokerages or other special terms had been granted
or agreed to be granted in connection with the issue or sale of any share or loan
capital of our Company or any of our subsidiaries;
(iii) no commission had been paid or payable for subscription, agreeing to
subscribe, procuring subscription or agreeing to procure subscription of any
share in our Company or any of our subsidiaries;
(b) no share or loan capital of our Company or any of our subsidiaries had been under
option or agreed conditionally or unconditionally to be put under option;
(c) there are no founder, management or deferred shares, convertible debt securities nor
any debentures in our Company or any of our subsidiaries;
(d) there has not been any interruption in the business of our Group which may have or
has had a significant effect on the financial position of our Group in the 12 months
preceding the date of this prospectus;
(e) our Company has no outstanding convertible debt securities or debentures;
(f) there is no arrangement under which future dividends are waived or agreed to be
waived;
(g) save for the A Shares of our Company that are listed on the SZSE, and save for the
H Shares to be issued in connection with the Global Offering, none of the equity and
debt securities of our Company, if any, is listed or dealt with in any other stock
exchange nor is any listing or permission to deal being or proposed to be sought; and
(h) all necessary arrangements have been made to enable the H Shares to be admitted
into CCASS for clearing and settlement.
O. Bilingual Prospectus
The English language and Chinese language versions of this prospectus are being
published separately in reliance on the exemption provided in section 4 of the Companies
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong).
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-59 –


--- page 742 ---
DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG
The documents attached to a copy of this prospectus and delivered to the Registrar of
Companies in Hong Kong for registration were:
(i) a copy of each of the material contracts referred to in “Statutory and General
Information — 2. Further Information about our Business — A. Summary of
Material Contracts” in Appendix IV to this prospectus; and
(ii) the written consents referred to in “Statutory and General Information — 5. Other
Information — H. Consents of Experts” in Appendix IV to this prospectus.
DOCUMENTS A V AILABLE ON DISPLAY
Copies of the following documents will be published on the Stock Exchange’s website at
www.hkexnews.hk and www.sf-express.com during a period of 14 days from the date of this
prospectus:
(a) the Articles of Association;
(b) the accountant’s report from PricewaterhouseCoopers, the text of which is set out in
Appendix I to this prospectus;
(c) the audited consolidated financial statements of our Group for the years ended
December 31, 2021, 2022 and 2023 and the six months ended June 30, 2024;
(d) the report on review of the unaudited interim condensed consolidated financial
information of our Group for the nine months ended September 30, 2024 from
PricewaterhouseCoopers, the text of which is set out in the section headed
“Unaudited Interim Condensed Consolidated Financial Information” in Appendix IA
to this prospectus;
(e) the report from PricewaterhouseCoopers on the unaudited pro forma financial
information of our Group, the text of which is set out in Appendix II to this
prospectus;
(f) the industry report issued by Frost & Sullivan referred to in “Industry Overview” in
this prospectus;
(g) the PRC legal opinion issued by CM Law Firm, our PRC Legal Adviser, in respect
of, among other things, certain general corporate matters and property interests
matters of our Group;
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY
–V - 1–


--- page 743 ---
(h) the legal opinion issued by Grandall Law Firm (Beijing), our PRC Data Compliance
Legal Adviser, in respect of, among other things, certain data protection, data
compliance and cybersecurity matters of our Group;
(i) the material contracts referred to in “Statutory and General Information — 2.
Further Information about our Business — A. Summary of Material Contracts” in
Appendix IV to this prospectus;
(j) the written consents referred to in “Statutory and General Information — 5. Other
Information — H. Consents of Experts” in Appendix IV to this prospectus;
(k) the contracts and appointment letters referred to in the section headed “3. Further
Information About Our Directors, Supervisors and Substantial Shareholders” — A.
Particulars of Directors’ and Supervisors’ Contracts and Appointment Letters” in
Appendix VI to this prospectus;
(l) the PRC Company Law, Securities Law, and the Trial Measures for the
Administration Related to the Overseas Securities Offering and Listing by Domestic
Companies, together with unofficial English translations thereof; and
(m) the terms of the 2022 Stock Option Incentive Plan.
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY
–V - 2–


--- page 744 ---
