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SF Holding retreats despite strong profit, as speculative rally fades

SF Holding, the country’s biggest parcel delivery company, saw its share price retreated today despite of reporting sharp increase of profit.

Just starting trading in Shenzhen last month, SF Holding said its profit doubled to 4.2 billion yuan (US$610 million) in 2016, according to its first annual report released on Sunday night.

The company's annual profit soared 112.5 percent year on year, with operating revenue rose 22 percent to 57 billion yuan. It delivered 2.58 billion parcels last year, up 31 percent from the year before.

But shares of the company still dropped 3.21 percent to 60.89 yuan today despite the annual report, as Han Yichao, analyst at Changjiang Securities Co, said the market valuation for SF Holding is too high at present.

Shares of SF Holding had jumped by the exchange’s daily 10 percent limit for four consecutive trading days since its debut on February 24. The company's market valuation topped 254.7 billion yuan by the end of today, overtaking the country's biggest developer Vanke Co, and the electronics giant Midea Group as the most valuable company listed in the Shenzhen market by far.

Some market insiders said idle money was allegedly ramping up the price, as the small trading circulation of the stock makes it possible for light capitals to pull up the value, said Yang Delong, chief economist of Shenzhen-based Qianhai First Seafront Fund.

SF Holding has 133 million shares of public float in Shenzhen’s market, accounting for only 3.2 percent of total issued share capital.

Caixin reported earlier that China Securities Regulatory Commission, the country’s stock regulator, was closely monitoring the trading process of SF Holding, as some analysts said that the company aims to capitalize on the huge share price gain to issue additional shares at a higher price.

SF Holding listed through backdoor listing that allowed assets injecting into publicly traded Maanshan Dingtai Rare Earth & New Material Co in exchange for stock. It was the fourth major delivery company in China to get listed on the mainland through reverse merger deals after YTO Express Group Co, STO Express Co and Yunda Holding Co.


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