(Yicai Global) April 9 -- Shares in SF Holding plunged by the exchange-imposed daily limit today after the Chinese logistics giant announced that it is expecting losses of between CNY900 million (USD137 million) and CNY1.1 billion (USD168 million) in the first quarter this year due to a sharp increase in expenditures.

SF Holding’s share price [SHE:002352] plummeted 10 percent to close at CNY72.72 (USD11.10).

This is a three-fold decrease from the profit of CNY910 million (USD138 million) that the company made in the same period last year, the Shenzhen-based firm said in its latest earnings report today.

The company is in a critical period of expanding capacity to meet burgeoning demand, the parent firm to China's second biggest courier service SF Express said. It has been investing heavily in new resources since the fourth quarter last year to overcome a delivery bottleneck caused by investment delays due to the Covid-19 pandemic coupled with a big jump in orders.

Things should be better by the second quarter, it added.

For the year 2020, the company did not fare badly. SF Holding logged a 26 percent jump in net profit from the year before to CNY7.3 billion (USD1.1 billion). Revenue surged 37 percent to CNY153.99 billion (USD23.51 billion). The logistics firm’s average income per shipment dropped 19 percent year on year to CNY17.77 (USD2.71).

As online shopping gets more popular in smaller cities and rural areas, SF Express’ budget delivery services have grown but the profit margin has shrunk. The company will look at reducing expenses in this area, it added.

Meanwhile its premium express delivery service has gained ground and its customer base has expanded as SF Express was able to meet all orders during the Covid-19 pandemic last year.

SF Express lost some ground to competitors over the Chinese Near Year holiday last month which were also busy during the holiday period, it added.

Editor: Kim Taylor