Alibaba founder Jack Ma once said that Rookie was his "last business dream." Now, the first fire that Tsai Chongxin takes over as chairman of the board of directors of Alibaba Group is directed at rookies. On September 26, the night after Ali announced its intention to spin off Cainiao and go public, information on the website of the Hong Kong Stock Exchange showed that Cainiao had officially submitted a listing application to the Hong Kong Stock Exchange, becoming the first business group to officially enter the IPO process after Ali's "1+6+N".
On September 10, Teachers' Day, Tsai Chongxin officially took over as chairman of the board of directors of Alibaba Group. He has not made any public appearance in the half month since he took office.
At this point, Cainiao may become the first independently listed subsidiary of Alibaba after its spin-off. On September 26, a reporter from Time Weekly consulted Cainiao related personnel about the listing details, but did not receive a specific reply as of press time.
Through the listing application materials, the outside world can get a glimpse of the background of this logistics unicorn growing under the "big tree" of Ali.
Data shows that from fiscal year 2021 to fiscal year 2023 (the year ending March 31), Cainiao achieved revenue of 52.733 billion yuan, 66.867 billion yuan and 77.800 billion yuan respectively, and recorded net losses of 2.015 billion yuan, 2.286 billion yuan and 2.801 billion yuan respectively during the same period; gross profit margins were 10.5%, 10.7% and 10.5% respectively.
In the first quarter of fiscal year 2024 (the three months ending June 30), which was also the first quarter after Cainiao announced its spin-off, Cainiao achieved revenue of 23.164 billion yuan, a year-on-year increase of 34%; adjusted EBITA (earnings before interest and taxes) was 877 million yuan, a loss of 185 million yuan in the same period last year, and a loss of 319 million yuan in the previous quarter. In other words, Rookie turned a profit.
"Although our external customers include merchants and brands that trade on Alibaba's e-commerce platform, we do not rely on Alibaba to obtain merchants or brands as customers." In the listing application materials, Cainiao tried to emphasize its operational independence, but after independence, Cainiao still maintained a close relationship with Alibaba.
According to the listing application materials, Cainiao's board of directors consists of 8 directors, including 2 executive directors, 3 non-executive directors and 3 independent non-executive directors. Among them, Cai Chongxin serves as the chairman of the board of directors, and other members include Dai Shan, Jiang Fan, Wan Lin and other Alibaba executives.
According to the listing application materials, Cainiao has granted stock options to 10,774 employees according to the equity incentive plan, totaling 1.923 billion shares, including 2 directors, 1 member of senior management, 4 other related persons of the company and 10,767 other employees, consultants and suppliers of the group, Alibaba and related companies.
At the same time, the listing application materials disclosed that Alibaba currently holds 69.54% of Cainiao's shares. After the spin-off is completed, Alibaba will continue to hold more than 50% of Cainiao's shares, and Cainiao will remain a subsidiary of Alibaba.
Currently, Cainiao provides a number of logistics services to Alibaba, such as supporting the delivery of AliExpress and Alibaba’s direct business Tmall Supermarket. In addition, Cainiao also earns revenue from merchants on Alibaba’s different e-commerce platforms and consumers within the Alibaba ecosystem.
From fiscal year 2021 to fiscal year 2023 and the first quarter of fiscal year 2024, Cainiao's revenue from its top five customers accounted for 34.4%, 34.8%, 32.3% and 34.4% of its total revenue in each period respectively, and its revenue from its largest customer Alibaba accounted for 29.2%, 30.8%, 28.2% and 29.7% of its total revenue in each period respectively.
"The biggest beneficiary of Cainiao's listing is Alibaba. Cainiao is a relatively heavy asset in Alibaba's system. If it is separated, it can have a better valuation and its business will be more focused. Cainiao has heavy assets, but it is not without growth. Ele.me merges with Cainiao. In the future, Cainiao may integrate instant delivery and local business, and its business may be able to benchmark Meituan." Pan Helin, co-director and researcher of the Digital Economy and Financial Innovation Research Center of Zhejiang University International Business School, said.
At the same time, Pan Helin pointed out that the logistics and express delivery industry has entered a mature stage, and the market expansion space is very limited. Although Cainiao is a platform company, it has certain asset-heavy characteristics. Business expansion and market competition require a lot of investment to continue.
According to the listing application materials, Cainiao intends to raise funds through the listing to further develop international and domestic logistics service capabilities and networks, research and development and technological innovation, as well as for working capital and other general corporate purposes.
At the turn of the spring and summer of 2013, Alibaba teamed up with SF Express, three express delivery companies (YTO, ZTO, STO, Yunda) and other large group companies such as Intime, Fosun, and Fuchun to form Cainiao Network.
Different from other logistics and express companies, Cainiao was positioned as an Internet technology company when it was founded. Its goal was only to open up the logistics backbone network and capillaries, build a logistics network that extends in all directions, and change the efficiency and cost of the logistics and express delivery industry to cope with the rapidly growing volume of express packages.
At that time, Cainiao planned to enter the market with the first phase of 100 billion yuan, and use 5 to 8 years to build an open, socialized logistics infrastructure across the country, and weave an intelligent backbone network that can support an average daily online retail sales of 30 billion yuan and an annual online retail sales of approximately 10 trillion yuan.
In the past 10 years, Cainiao has advanced step by step in accordance with its original goal. It has not only built a fast and convenient Skynet (online data platform) and a criss-crossing National Groundnet (offline warehousing and logistics center), but also started its own logistics and express delivery services. It has also expanded its territory overseas, becoming more and more "heavy".
Within Alibaba, the status of rookies is also increasing day by day. Its revenue contribution to the group's total revenue increased from 2% in fiscal 2018 to 6% in fiscal 2023, with a compound annual growth rate of revenue exceeding 60%, while the compound annual revenue growth rate of SF Express and JD Logistics during the same period was approximately 30%.
In the past quarter, after offsetting the impact of cross-segment transactions, Cainiao's revenue increased by 18% year-on-year to 13.619 billion yuan, accounting for 7% of total revenue and maintaining steady growth.
This gives the rookie the confidence to "fly solo". But the challenges faced by rookies are not small. Looking at the entire market, Cainiao is not the only logistics company seeking an IPO.
On June 16, Jitu Express officially submitted listing application materials to the Hong Kong Stock Exchange, planning to raise US$500 million to US$1 billion, and is expected to be listed as soon as this year.
SF Express, which has been rumored to be planning a secondary listing in Hong Kong, also submitted its listing application materials on August 21. If successfully listed in Hong Kong, SF Express will become the first "A+H" listed company in the express delivery industry.
At present, three express delivery companies, Cainiao, Jitu, and SF Express, are expected to gather on the Hong Kong Stock Exchange. Industry insiders believe that the competitive landscape of the express delivery industry is undergoing some subtle changes. As the price war begins and the industry continues to consolidate and clear out, the competitive pattern of "three links and one delivery" + SF Express + JD Logistics is slowly being broken. In a new round of fighting, all parties need financial support.
Throughout the express delivery industry, various companies continue to hone their internal capabilities in timeliness and "door-to-door" services. SF Express, JD.com, and Cainiao continue to increase their efforts in half-day and same-day delivery, and "door-to-door delivery" has also become an important means of competing for service quality.
According to Zhang Xiaorong, president of the Deepin Technology Research Institute, for rookies, on the one hand, they need to break away from the Alibaba family and embrace a wider range of markets and merchants to expand business scale and market share; on the other hand, they need to continuously improve their service quality and efficiency to meet customer needs and expectations. In addition, Cainiao also needs to respond to industry competition and market changes to maintain technological innovation and competitiveness.
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