Analysis of the Potential for Per-Order Cost Reduction in SF Intra-City's Instant Delivery Business

Based on the obtained materials and data, I will systematically analyze the potential for per-order cost reduction in SF Intra-City (HK09699)'s instant delivery business.

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According to 2024 financial data, as China’s largest independent third-party instant delivery service platform, SF Intra-City’s core operating indicators are as follows [1][2]:

Metric	2023	2024	YoY Change
Operating Revenue	CNY 12.387 billion	CNY 15.746 billion	+27.1%
Gross Margin	6.42%	6.80%	+0.4ppts
Net Profit	CNY 51 million	CNY 132 million	+159%
Net Profit Margin	0.41%	0.84%	+0.43ppts

In the first half of 2024, SF Intra-City recorded operating revenue of CNY 3.96 billion from its instant delivery business, representing a YoY increase of 18.5%, with net profit doubling to exceed the full-year 2023 level [3].

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Based on the current

, a comparison with industry leading levels and peer companies is as follows:

Reference Benchmark	Gross Margin Level	Gap	Estimated Reduction Potential
Industry Average	10-12%	3.2-5.2ppts	Catch-up achievable in the medium term (2-3 years)
Meituan Delivery (Estimated)	8-10%	1.2-3.2ppts	Achievable in the short term (1-2 years)
Dada Group (Peer)	~8%	1.2ppts	Near-term target

: SF Intra-City’s per-order cost has a , corresponding to a gross margin increase to 7.5%-8.5%; the , corresponding to a gross margin increase to the 10%-12% range.

According to public information from SF Holding,

in last-mile delivery [4], which is the core breakthrough for cost reduction. SF Intra-City mainly achieves cost reduction through the following methods:

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SF Intra-City’s self-developed

covers three core functions [5]:

• Intelligent business planning and marketing management
• Integrated rider dispatching and intelligent order distribution
• Intelligent operational optimization

Supported by large models, this system can effectively predict order fluctuations, achieve

between orders and riders, and improve overall fulfillment efficiency. In 2024, the on-time delivery rate reached 95%, with an average delivery time of only 22-23 minutes for orders within 3 kilometers.

As of the first half of 2025, SF Intra-City has deployed unmanned delivery vehicles in more than 60 cities across China, with the operating scale increased to

and an average of approximately 20,000 active trips per month [5]:

• Daily Delivery Volume
  : Up to 3,000 orders
• Labor Cost Savings
  : Reduced by 50%
• Technology Maturity
  : Equipped with L4-level autonomous driving technology

SF Holding plans to expand the scale of unmanned vehicles to

in 2025 [4], and cost amortization will be further reduced after large-scale deployment.

Year	Revenue Growth Rate	Contribution of Economies of Scale
2024	+27.1%	Increased order density, amortization of unit fixed costs
2025E	+52.0%	Expected to continue strengthening
2026E	+42.5%	Network effects unleashed

According to iResearch’s forecast, the CAGR of order volume in China’s instant delivery industry will reach 14.5% from 2023 to 2028 [5], and SF Intra-City, as a leading third-party platform, will fully benefit from the industry growth dividend.

The lean management measures continuously promoted by SF Holding include [3]:

• Streamlined backbone network
  : Integration of transit links to build multi-functional venues, improving capacity utilization
• Transportation link optimization
  : Adjustment of transit modes and route planning, reducing transit nodes
• Last-mile model transformation
  : Improvement of outlet efficiency, driving down per-order operating costs

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Based on brokerage forecast data [2][5]:

Year	Gross Margin	Net Profit Margin	Net Profit
2024	6.80%	0.84%	CNY 132 million
2025E	7.24%	1.29%	CNY 309 million
2026E	7.42%	1.71%	CNY 585 million
2027E	7.54%	2.15%	CNY 891 million

:

• It is estimated that the
  2025
  gross margin will increase to 7.24% (+0.44ppts compared to the current level)
• It is estimated that the
  2027
  gross margin will increase to 7.54% (+0.74ppts compared to the current level)
• The net profit margin is expected to rise from the current 0.84% to 2.15% in 2027 (+1.31ppts)

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Scenario	Gross Margin Target	Time Horizon	Main Drivers
Conservative Scenario	7.5%	1-2 years	Economies of scale + lean management
Base Scenario	8.0%	2-3 years	Economies of scale + AI empowerment
Optimistic Scenario	10%+	3-5 years	Large-scale unmanned delivery + technological breakthroughs

:

• Risk of rising labor costs (pressure from rider salary increases)
• Intensified market competition in the instant delivery industry (competition from Meituan and Ele.me)
• Risk of lower-than-expected returns on technology investment (progress in unmanned delivery promotion)

: Multiple securities firms have given it an “Accumulate-A” rating, optimistic about the company’s scarcity as an independent third-party instant delivery platform and its long-term cost reduction potential [2][5].

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[1] SF Intra-City 2024 Annual Promotion Materials - Investor Relations
(https://ir.sf-express.com/media/2wvpl1ki/2024年推介材料-挂网版updated.pdf)

[2] SF Intra-City (09699.HK) 2024 Annual Report Commentary - Soochow Securities
(https://pdf.dfcfw.com/pdf/H3_AP202504051651855375_1.pdf)

[3] SF Holding 2024 Interim Report - Investor Relations
(https://ir.sf-express.com/media/x4eib1mm/2024-interim-report.pdf)

[4] From Hundreds of Thousands to Ten Thousands Yuan: Unmanned Delivery Vehicles Launch a Land Grab Battle - 36Kr
(https://m.chinaventure.com.cn/news/110-20251027-388564.html)

[5] In-Depth Report on SF Intra-City (09699.HK): Instant Delivery Platform, Building New Consumption Infrastructure - Shanxi Securities
(https://pdf.dfcfw.com/pdf/H3_AP202510211766162270_1.pdf)