IPO Express

No, despite the similarity in initials, this is not a new Chinese express company. However, according to reports piling up in the Chinese media this week, YTO Express, ZTO Express, STO Express, and SF Express are all in the process of making an Initial Public Offering – that is, they have all boarded the IPO Express.

Two years ago, a consortium that included CITIC Capital, China Merchants Group, and Oriza Holdings acquired a 24.5% stake in Shenzhen-based SF Express for a reported 8 billion yuan. Two of those firms – CITIC and China Merchants – are now counseling SF in preparation for going public, with the company being valued at as much as 100 billion yuan (US$15.2 billion at today’s exchange rate).

Also on board the IPO Express are:

• Shanghai-based Yuan Tong (YTO Express). Given that Alibaba has a stake in YTO, and that Alibaba has already gone public, it is not surprising to hear that YTO is headed in that direction. According to a report in the South China Morning Post, YTO will enter the Shanghai stock market in a “back-door listing” through garment company Dayang Group.

• Shanghai-based Zhong Tong (ZTO Express). According to reports from The Wall Street Journal and Reuters, ZTO is considering listing in both the US and Hong Kong. So far ZTO has not confirmed a date or location. ZTO is a partner in the Alibaba-backed Cainiao network, but does not work exclusively for Alibaba.

• Shanghai-based Shun Tong (STO Express). STO may be the first to hit the market, perhaps before the end of this year. But, like YTO, STO appears to be planning to make the move via a back-door listing through plumbing company Zhejiang IDC Fluid Control.

Why the sudden rush to go public?

In a single word, “money.”

Demand for their services has skyrocketed, but, with intense competition, yields have not kept up with demand. In fact, according to data from China’s State Post Bureau, rates have fallen 35% over the four years since 2011. This has left big express companies in need of outside investment to fund their growth plans.

Join us for more air cargo insights and networking at Cargo Facts Asia, 19-20 April 2016 in Hong Kong. Click here for details.