Cross-border E-commerce Logistics Service Provider FAR Planned Hong Kong IPO

FAR International Holdings Group Company Limited submitted a prospectus to the Hong Kong Stock Exchange on February 28, 2023, and plans to list it on the Hong Kong Main Board IPO. The declaration type of FAR is indirect overseas listing, and the subject of the filing declaration is Hangzhou Far International Logistics Co., Ltd. (杭州泛远国际物流有限公司). The filing acceptance date is June 29, 2023. Grand Moore Capital (中毅资本) is its sole sponsor, and AllBright (锦天城) is its domestic lawyer.

In the past five years, the market size and revenue of China's e-commerce industry have experienced tremendous growth. Especially in the export cross-border e-commerce logistics industry, the market size grew from about CNY 0.7 trillion in 2017 to about CNY 2.1 trillion in 2021, with a compound annual growth rate of 30.7%. It is predicted that by 2026, the market size of the export cross-border e-commerce logistics industry will reach about CNY 4.0 trillion, and the compound annual growth rate from 2021 is expected to be 14.0%. This shows that the industry still has huge growth potential in the future.

FAR's customer base covers trade customers from traditional trade and e-commerce platforms, e-commerce sellers, and other logistics service providers. FAR not only provides customers with a variety of reliable distribution options but also provides supply chain solutions for Chinese and overseas customers, enabling customers to flexibly choose the services they need during the logistics process, such as freight forwarding, customs clearance, warehouse management, transportation, and last-mile delivery. Foreign export distribution services account for the majority of its revenue.

The prospectus of FAR said, according to the Frost & Sullivan report, in terms of cross-border e-commerce logistics industry revenue in 2021, FAR ranks eighth in China's cross-border e-commerce logistics market, with a market share of 0.04%, while the market share of the top ten suppliers totaled 1.61%. Compared with LOGISTICSYANWEN (燕文物流) in the same industry, FAR has a relatively high proportion of major customers and five major suppliers. However, this also means that the performance of FAR is more easily affected by the upstream and downstream of the industry.

FAR's IPO in Hong Kong this time will bring them more financial support, enhance the brand image, and increase the company's transparency and standardized operations. At the same time, the listing also provides opportunities for capital returns to existing shareholders.

According to the data reported by Frost & Sullivan, the market share of leading companies in the cross-border e-commerce logistics industry is relatively small, and the market share of the number one company is only 0.49%. For FAR, in order to strive for a larger share in this relatively fragmented market, they need to seriously think about how to deal with the challenges of competitors.