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Issuer Credit Research

Issuer Flash: S.F. Holding Co., Ltd.

Issuer: Sf Holding | Document: Issuer Flash | Date: 2026-09-02 | Event: H1 2026

Report date: 2026-09-02 Event date: 2026-08-28 Event title: H1 2026 Interim Results

1. Flash Conclusion

S.F. Holding’s unaudited H1 2026 results announcement supports a stable credit view, but does not yet justify describing the group’s credit profile as materially stronger. The interim financial information was reviewed by PricewaterhouseCoopers, rather than audited. Revenue grew 5.9% year on year to RMB155.5bn and adjusted profit attributable to owners rose 9.3% to RMB5.0bn. The core express and freight-delivery business remained profitable, while supply chain and international returned to a small segment profit. These are constructive indicators for a network-based logistics issuer whose previous credit case rested on the resilience of its domestic franchise and the potential, but unproven, earnings contribution of international operations.

The offset is that reported attributable profit fell 4.1% to RMB5.5bn, EBITDA rose only 0.7% and the EBITDA margin declined to 10.75% from 11.31%. The reported-profit comparison was affected by a RMB590m after-tax disposal gain recorded in H1 2025, so adjusted earnings give a more useful view of underlying operating progress. Nevertheless, operating cash flow fell 13.7% to RMB11.2bn and the asset-liability ratio rose to 50.08% from 49.03% at end-2025. The decline in cash generation and margin is not a liquidity event in the reported period, but it keeps cash conversion and capital allocation central to the credit analysis.

The issuer reported liquidity resources of RMB25.0bn of cash and cash equivalents and RMB45.9bn when including its stated cash, structured-deposit and fixed-income-certificate pool. It also reported RMB5.0bn of issuer-defined free cash inflow after RMB6.1bn of capital expenditures excluding equity investments. The availability, currency, restrictions and deployability of the non-cash portion of that broader pool have not been established in this workflow. Dividend and repurchase commitments were meaningful, and the report does not replace the still-unreviewed maturity ladder, committed-facility information, offshore cash availability or instrument terms. The full settlement and cancellation of the guaranteed H-share convertible bonds in July removes a near-term known maturity, but does not by itself establish a broader security-level conclusion.

2. H1 Operating and Earnings Read-Through

The H1 disclosure shows continued top-line growth across a business model that combines domestic express delivery, freight, intra-city delivery and supply-chain/international logistics. Gross profit increased 7.5% to RMB20.5bn, faster than revenue. On a simple calculation from the disclosed totals, gross margin rose to about 13.2% from about 13.0% a year earlier. That improvement is helpful, but it did not translate into a higher EBITDA margin: EBITDA was RMB16.7bn and its margin was 10.75%, down 0.56 percentage point year on year. The difference reinforces the need to assess cost discipline, operating leverage and cash conversion together rather than treating revenue scale as a stand-alone credit strength.

Reported profit attributable to owners declined to RMB5.50bn from RMB5.74bn. Management explained that H1 2025 included an after-tax RMB590m gain from transferring three wholly owned property-holding subsidiaries to Southern SF Logistics REIT, which was not repeated in H1 2026. The disclosed non-recurring-gain-adjusted profit attributable to owners was RMB4.97bn, up 9.32% year on year. The adjusted figure indicates that the underlying earnings trend was better than the headline comparison, but it remains important not to equate an adjusted-profit increase with fully improved cash earnings.

The core express and freight-delivery segment generated RMB106.8bn of external revenue and RMB5.57bn of segment net profit, the latter up 3.5% year on year. Its resilience remains central to the group’s repayment capacity. Intra-city on-demand delivery reported RMB6.8bn of external revenue and RMB349m of segment net profit, versus RMB137m a year earlier. Supply chain and international revenue increased to RMB41.3bn and segment net profit was RMB30m, compared with a RMB8m loss in the comparable period. The return to profit is directionally favourable, particularly because international operations are a key investment area, but the segment’s absolute profit contribution remains very small relative to group earnings. It should therefore be viewed as an early operating improvement rather than evidence that international expansion has become a major cash-flow support.

3. Cash Flow, Balance Sheet and Capital Allocation

Net cash generated from operating activities was RMB11.17bn, down from RMB12.94bn in H1 2025. The issuer described RMB5.03bn of free cash inflow, calculated as operating cash flow less RMB6.14bn of capital expenditures excluding equity investments. This positive result provides some evidence that capital investment was absorbed in the period, but the lower operating-cash-flow comparison and the company’s capital-intensive network model mean that the sustainability of post-investment cash generation needs to be tested over further quarters.

Working-capital movements contributed to the lower cash conversion. The interim cash-flow reconciliation shows an increase in trade receivables, prepayments, contract assets and other receivables of RMB4.15bn, compared with RMB2.06bn in H1 2025, while the increase in trade payables, contract liabilities and other payables was RMB1.08bn, compared with RMB1.42bn in the prior-year period. These movements can be affected by timing and business mix and should not be read as a stand-alone deterioration signal. Still, they make a sustained recovery in operating cash flow more important to verify than an earnings comparison alone.

At 30 June 2026, total assets were RMB228.9bn and equity attributable to owners was RMB102.8bn. Total liabilities rose to RMB114.6bn, lifting the asset-liability ratio by 1.05 percentage points to 50.08%. These reported balance-sheet metrics should be assessed alongside the separately disclosed cash-and-cash-equivalents figure, not as proof that all broader reported liquidity resources are readily deployable. The flash does not infer a rating, leverage or refinancing conclusion because the detailed maturity profile, unused facilities, currency split, accessibility of non-cash liquidity resources and bond-specific ranking/covenants have not been reviewed.

The report also highlights a more active capital-allocation backdrop. The 2026 interim dividend was set at RMB0.49 per share, expected to total about RMB2.50bn, equal to 45% of H1 attributable profit. Cash paid for share repurchases during H1 was RMB4.37bn. These actions may be manageable in the context of reported liquidity and operating cash flow, but their aggregate scale makes it important that margins and cash conversion do not weaken while investment needs continue.

The cash-flow statement also shows net financing inflow of RMB6.18bn in H1, following a net outflow in H1 2025. This partly offset the period’s weaker operating cash conversion, but the interim report does not provide sufficient detail to treat it as evidence of durable funding access. The credit read-through should remain focused on the group’s capacity to fund operating investment and returns without relying disproportionately on additional borrowing during a period of softer cash conversion.

SF Holding Investment 2023 Limited’s HKD2.95bn zero-coupon H-share convertible bonds, unconditionally and irrevocably guaranteed by the parent, were fully settled and cancelled at maturity on 8 July 2026. This resolves the convertible-bond maturity identified in the May issuer summary. The interim filing does not provide enough information to identify the funding source or to generalise from this settlement to all debt instruments. Separately, an indirect wholly owned subsidiary subscribed for Hive Box shares for approximately RMB304.8m, increasing its fully diluted and as-converted interest to about 10.03%. Relative to group liquidity, this is a modest allocation, but it adds to the need to monitor the balance between investment, returns and debt management.

4. What To Watch Next

5. Sources