China Post is planning to list the shares of its new express and logistics unit next year oneither the Shanghai or Shenzhen stock exchanges, according to reports in China.
The float will make the recently formed China Postal Express & Logistics Corporation thefirst listed express company in China, and is understood to be part of plans to modernise theChinese state postal operator’s express and logistics businesses.
The unit was set up just last month, integrating the express unit, EMS, and its logistics arm,China Post Logistics.
EMS was established in 1985 as China Post’s Express Mail Service, while China Post Logistics wasfounded in 2003 to provide warehousing, transport and distribution services.
The new entity will own the operator’s overnight cargo aviation network and also have China’slargest domestic express network, according to the group.
Integration of the units was also intended to promote sharing of resources between the twosectors and to help reduce costs.
One logistics analyst in China expected the IPO to raise no more than 1 billion yuan, with somestrategic investors from the airlines sector also expected, according to China Daily.
He suggested the company may, however, use the float proceeds for its less-developed logisticsbusiness, rather than to compete more effectively in the express sector.
Analysts said that one challenge was deciding how to divide the business between the new expressand logistics business and the parent group, and if the company opts for a clear division of itsbusinesses and finances, it may end up facing internal competition.
China’s express, courier and parcels market has been growing at an annual rate of around 25% inrecent years, and is expected to exceed €12 billion by 2011, according to estimates byCEP-Research.
Around 80% of China’s international express market is shared by China Post/EMS and the four bigglobal integrators, while China Post/EMS controls around a third of its domestic express market –which otherwise remains extremely fragmented.
