Smart move by parcels player

Themis Qi

China's Hive Box has applied for a listing in Hong Kong with the smart locker operator breaking into profit on the back of surging shipments from thrifty shoppers returning goods they bought amid a bitter online retail war.

The move by the operator under China's logistics giant SF Holding comes after Alibaba (9988) scrapped plans to list its logistic arm Cainiao amid weak market sentiment earlier this year.

Hive Box was founded in 2015 by five logistic service providers including SF Holding to offer pick-up and drop-off services for online purchases.

SF founder Wang Wei controls voting rights to about 48.45 percent of its shares.

Hive Box offers more than 330,000 boxes with 29.9 million compartments serving 209,000 communities across the mainland.

It is China's largest smart locker operator by revenue, with a market share of 6.1 percent as of 2023.

The company provides three services related to the lockers - placing parcels from couriers to lockers for consumers to pick them up, return shipments of goods from consumers, and value-added storage, advertising, laundry and home cleaning and repair services.

Hive Box's revenue rose 51 percent in two years to 3.8 billion yuan (HK$4.17 billion) in 2023 and in the first five months of this year, its income jumped 35.7 percent from a year ago.

The locker operator swung to a net profit of 71.6 million yuan during the January-May period from a net loss of 313.8 million yuan a year ago, following three years in red.

The gross margin also jumped above the zero-bar to 10.6 percent last year and further grew to 26.1 percent for the first five months.

The improved profitability mainly results from booming return shipments, whose revenue soared 584 percent from 149 million yuan in 2021 to 1.02 billion yuan last year and 107 percent year-on-year to 692 million yuan for the five months of the year.

The boom in return shipments was due in no small part to e-commerce platforms such as Pinduoduo, JD.com (9618) and Alibaba's Taobao forcing more merchants to offer return freight insurance, to compete for price-conscious consumers.

This has helped drive up return rate of goods to 60 percent on average and as high as 80 percent for a women's clothing merchant.

The higher gross margin also came after Hive Box adjusted the lifecycle of its lockers from five to up to 10 years in January to reflect actual usage.

Hive Box has taken a lot of flak from some users who say parcels are being put into lockers without their consent amid battle for buyers. Users were also upset about being charged for packages stored more than 12 hours, leading to the operator extending the free storage time to 18 hours.

Amid these complaints, some communities have removed Hive Box's lockers while the Ministry of Transport has warned courier firms that they will be fined up to 30,000 yuan for any delivery to lockers without a customer's consent.

Logistics players have not been sparkling on Hong Kong's bourse of late.

J&T Global Express (1519), which halved its IPO target in October last year, is down 50 percent since its listing, while Kerry Logistics Network (0636), is down 4 percent this year and nearly 72 percent of its September 2021 peak.

Hive Box plans to use the proceeds from the IPO to expand its network and strengthen value-added services.

If Hive Box's IPO succeeds in Hong Kong, it would become the fifth listed firm in the SF universe that includes Shanghai-listed SF Holding, which is up 10.7 percent this year, SF Real Estate Investment Trust (2191), up early 12 percent, Hangzhou Sf Intra-City Industrial (9699), down 1.3 percent, and Kerry Logistics Network.