Chinese logistics giant SF Holding's acquisition of shares in Kerry Express (Thailand) is set to intensify competition in Thailand's delivery services sector.
The move should provide Kerry Express with the ability to engage more artificial intelligence (AI) technology and a broader range of services, enhancing its competitive edge.
According to logistics aggregator Shippop, the express parcel delivery market in Thailand will continue to grow in 2024 due to the diverse online selling platforms available to sellers and trends concerning online purchases among consumers.
As a result, the value of the express parcel delivery market is expected to surpass 100 billion baht by the end of 2024, up 12% from 2023. The value of the market in 2023 is expected to reach 96 billion baht, up 13% from 2022.
Kerry Express informed the Stock Exchange of Thailand on Jan 2 of a potential change to its list of major shareholders.
Kerry Logistics Network Limited (KLN), which indirectly owns 49% of Kerry Express (Thailand), plans to distribute 52.1% of all Kerry Express issued shares as a special interim dividend to its entitled shareholders by way of a distribution in specie (DIS).
As part of the process, SF International Holding (Thailand) Co (SFTH), which currently holds 1,000 shares in Kerry Express, will eventually hold another 467,373,855 shares in Kerry Express by acquiring them from Flourish Harmony Holdings Co, a shareholder of KLN. As a result, SFTH will hold 26.8% of all Kerry Express shares issued and will be required to make a mandatory tender offer to acquire all of the company's issued shares.
Once the transaction has been completed, KLN would no longer hold any shares in Kerry, resulting in a change in the company's shareholding structure.
According to Kerry Express, the company's current top three shareholders are KLN Logistics (Thailand) with a 52.06% stake, VGI Plc with a 15.45% stake, and BTS Group Holdings Plc with a 5% stake. KLN holds the majority voting rights in KLN Logistics (Thailand).
The signal is positive as SF is number one express company in the region focusing on tech and great services, Alex Ng, chief executive of Kerry Express (Thailand), told the Bangkok Post.
The tech ranges from the use of AI technology for route optimisation to order management systems, parcel carriage and sorting technologies, and user applications.
Moreover, SF's business model does not depend solely on e-commerce customers but also general consumers and and business parcels. The model will provide Kerry Express with a global network of international parcels, too.
According to the business performance of Kerry Express, the company's revenue and service offerings for first nine months of 2023 stood at 8.9 billion baht, a 30.7% decrease when compared to the corresponding period of 2022.
The decline in revenue has been attributed to a reduction in the volume of parcel deliveries, particularly those contributed by its e-commerce partners, due to intense competition in the e-commerce delivery market.
The company implemented a system in 2022 that utilises shareholder assistance to enhance operational efficiency.
The company has been strategically dividing its operations into segments, targeting users at various levels, ranging from general consumers to high-level users and industrial users.
These user segments possess significant potential in terms of both revenue and parcel delivery volume. The company continues to enhance its service quality to meet the needs of these user groups and increase revenue per parcel in line with its corporate goals.
The company's customer-to-customer service users accounted for 45% of total revenue in the third quarter of 2023. Additionally, there has been an increase in revenue and services provided to business-to-business service users, with a growth rate of 9% from the second quarter of 2023.
Kerry Express reported a net loss attributable to the owners of the company for first nine months of 2023 at 2.72 billion, a 43.6% wider loss when compared to the corresponding period of 2022. It aims to attain profitability in 2024.
According to an analyst at UOB Kay Hian Securities, the new major shareholder of Kerry Express will conduct the tender offer for Kerry Express's shares at a price of 5.50 baht per share, which is 11% higher than the market price of 4.94 baht as of Dec 28, and 24% higher than analyst's target price of 4.45 baht.
Kerry Express's shares closed at 5.95 baht on the Stock Exchange of Thailand at midday on Tuesday, up 20.4% in trade worth 304.9 million baht.
After this transaction, KLN will no longer hold shares in Kerry Express, and the major shareholder of Kerry Express will be SF Holding. SF Holding will be obliged to make a tender offer for all of Kerry Express's shares. The purchase price has ben set at 5.50 baht.
However, SF Holding has no intention of delisting Kerry Express from the SET within 12 months, unless the law, rules and regulations specify otherwise.