CICC: Maintain SF INTRA-CITY (09699) Outperform Rating, Target Price of 17.8 Hong Kong Dollars

CICC released a research report stating that the adjusted net profit of SF INTRA-CITY (09699) for the first time was 966 million yuan in 2026, and the current price corresponds to 14/8 times the adjusted P/E ratio for 26/27 years. Maintain an outperform industry rating, with a target price of HK$17.8, corresponding to 23/14 times the adjusted P/E ratio for 26/27 years, with a 65% upside potential. The company's scale effect is expected to continue to manifest, and the bank expects that the expense ratio in 2026 will continue to decrease. Benefiting from the gradual increase in order volume and the company's light asset operation model, the bank expects that the company's expense-to-revenue ratio can still be further optimized. CICC's main points are as follows: Company announced 2025 performance: Revenue increased by 45% year-on-year to 22.899 billion yuan; gross profit increased by 35% year-on-year to 1.445 billion yuan, with a gross margin of 6.3%; net profit increased by 110% year-on-year to 278 million yuan, with a net margin increase of 0.4 percentage points to 1.2%; adjusted net profit increased by 184% year-on-year to 415 million yuan (including 137 million yuan in share-based payments), with an adjusted net margin increase of 0.9 percentage points to 1.8%, performance in line with the bank's expectations. Operational data: The annual active merchant scale increased by 72% year-on-year to 1.12 million, the annual active consumers increased by 11% to over 26.06 million, and the annual active riders increased by 46% to 1.46 million. Intra-city delivery: 1) The growth in takeaway industry volume and the increase in diversified commercial flow demand have catalyzed the demand for instant delivery fulfillment, driving the continued growth of To B revenue, and KA business maintaining high growth. The bank believes that with the development of instant retail industry, the growth in fulfillment demand is strong. In the context of high industry growth, the company, with its third-party neutrality, refined business district network operation capabilities, and flexibility in capacity network, is expected to continue to gain incremental orders from KA merchants. The bank expects that the KA revenue growth rate in 2026 may exceed 20%. 2) To C business is growing steadily with macro demand, and continues to synergize with express delivery business. In 2H25, the revenue growth rate of the company's To C business reached 15%, and under the ecological synergy with express delivery, expanding high-quality service scenarios, the bank expects the To C business to maintain double-digit growth in 2026. Last mile delivery: In 2H25, the revenue of the last mile delivery business increased by 31% year-on-year, benefiting from the growth in group's last mile demand and the improvement in network penetration. The bank believes that with the gradual integration of the company's capacity network and the parent company's express network and the increase in penetration rate in the SF group's network, the growth rate of the last mile business in 2026 may exceed 20%. Risk warning: Demand for instant delivery grows less than expected, competition intensifies, and the proportion of related transactions is high.