The stock of Chinese logistics giant SF Holding (SHZ: 002352) fell 10% to RMB 72.72 (USD 11.10) in the A-share market on Friday. Its trading was halted following a profit warning for the first quarter on Thursday night. The company now expects a net loss of RMB 900 million to 1.1 billion (USD 137–168 million), after generating RMB 907.3 million in net profits in the first quarter of 2020, at the height of the COVID-19 pandemic in China.
SF Holding cited expenditures for new businesses among the main reasons for the losses, without identifying specific new initiatives in its filing with the Shenzhen Stock Exchange. KrASIA reported in January that the firm launched a community group-buying mini program on WeChat, called Fenghuotai, adding its name to the list of well-known companies entering the booming sector.
The company is seeking to acquire a majority stake in Kerry Logistics, via its wholly owned subsidiary Flourish Harmony, in an HKD 17.5 billion (USD 2.3 billion) deal that will allow it to expand internationally. This deal is yet to close. Investments in service capacity to meet increasing demand also contributed to the losses, the company said in the filing.
SF Express encouraged its couriers and other employees to stay on duty during the Chinese Spring Festival in February by paying them more than in any other year. However, its competitors followed suit and managed to acquire several lucrative orders, aggravating the pain for the logistics firm.