SF Holding: Initiating on H-Shares With HKD 61.80 Fair Value Estimate; Shares Cheap

We initiate coverage on wide-moat SF Holding’s, or SF’s, Hong Kong-listed shares with a fair value estimate of HKD 61.80 per share. We maintained the A-shares’ fair value estimate at CNY 57.60 as the dilution from the H-shares listing is limited, amounting to only 3.4% of the total issued shares upon listing before over-allotment. We retain our revenue and net profit forecasts on SF, and view both A-shares and H-shares as undervalued. We believe SF’s margin expansion potential has not been fully reflected in current share prices.