Over the past decade, the wave of digitalization has been rolling in at an unprecedented rate. Especially in recent years, the impact of the pandemic has made the importance of digital transformation more and more prominent. A large number of enterprises around the world have increased their investment in digital solutions to reduce personnel contact during production and operation activities. In the process, marketing education on digital solutions was completed quickly, and most people realized the benefits of digital solutions.

Correspondingly, in the past ten years, the global capital market has given birth to a number of dark horses that have excelled because they have benefited from the digital wave. Among them, United Rentals (United Rentals), a leader in the logistics equipment circuit in the field, achieved ten times its shares in ten years, giving investors a very good return.

Recently, the Hong Kong stock market also welcomed a relevant target — this month, France successfully landed on the Hong Kong Stock Exchange and successfully won the Hong Kong Stock Exchange as “the first stock in China's market logistics equipment solutions”. According to Insight Consulting, in terms of revenue in 2022, the company is the largest provider of full-life cycle solutions for on-site logistics equipment in China.

Digitally reinvent the application scenarios of on-site logistics equipment

On-site logistics equipment is used in a wide range of scenarios, including manufacturing plants, logistics centers, warehouses, airports, ports and other similar workplaces that perform mechanical operations such as handling, moving, sorting, and stacking of goods and heavy goods.

Looking back at the development history of the United States, the penetration rate of on-site logistics equipment has continued to rise, and it has gone through three stages of development: the first stage was mechanization, that is, enterprises began to rely on mechanical equipment to achieve on-site logistics operations, and realized the transformation from manpower to machinery. With the continuous advancement of electronic technology, on-site logistics equipment has entered a new stage of development. This is the second stage, and automation is the dominant trend in this period.

Since the 21st century, we have ushered in the third stage: with the rapid development of technologies such as artificial intelligence, the Internet of Things and big data, on-site logistics equipment is no longer an isolated single device, but is gradually being upgraded to integrated digital solutions, providing more efficient and intelligent one-stop services for various application scenarios such as manufacturing and logistics industries. Simply put, the main theme of the third phase is the trend of digitalization and intelligence. The emerging market for digital on-site logistics equipment solutions provides customers with personalized solutions, including equipment combinations, equipment operation guidance, regular maintenance and repair, and real-time operation monitoring to help reduce customer expenses in fixed asset procurement and equipment maintenance. The solution solves the problems of high acquisition and maintenance costs, strong professionalism, and difficult management in traditional on-site logistics equipment use scenarios.

Take France's smart asset operation management system based on IoT technology as an example: the system is built on IoT technology and has real-time monitoring of equipment status, flexible supply chain and inventory management, and timely personnel and equipment scheduling functions. The smart asset operation management system can monitor equipment around the clock and provide key data such as daily utilization rates. Customers can better understand how to use the equipment they have subscribed to more efficiently; companies can also formulate personalized operation plans based on factors such as fleet size, brand, model mix, number of vehicles, and vehicle age, thereby improving equipment utilization efficiency, minimising operating costs and expenses, and reducing waste of resources caused by idle equipment. According to Insight Consulting, compared with traditional on-site logistics equipment procurement models, this solution can reduce costs by about 20% over the entire equipment life cycle. This data-driven, efficient decision-making platform currently covers more than 97.3% of the company's equipment fleet, and this data is in a leading position in the industry.

Stones from other mountains can attack jade.

At present, the market for on-site logistics equipment solutions in the US has entered a mature stage and has experienced comprehensive development from the first stage to the third stage. According to 2022 estimates, the penetration rate of on-site logistics equipment solutions in the US has reached 54.6%. In contrast, China's on-site logistics equipment solutions market is still in the transition stage from mechanization and automation to digitalization. Currently, the overall market penetration rate in 2022 is only 3.7%. Compared with the US market, the Chinese market still has 15 times the potential to grow.

Currently, the resonance of policy and demand will continue to drive the increase in the penetration rate of in-market logistics equipment solutions in China.If the development of China's economy over the past few decades was a low-end manufacturing industry based on a demographic dividend, then in recent years it has reached the next stage — the transformation and upgrading of the country's economic structure has become one of the most important topics, and the construction of a digital China has also been included in top-level planning. The market for on-site logistics equipment solutions is an important means to increase productivity, promote digital intelligence upgrading, and economic structural transformation, and has also ushered in an unprecedented dividend period. According to data from Insight Consulting, the market size of on-site logistics equipment solutions in China is expected to reach 34.9 billion yuan by 2027, with a compound annual growth rate of 25.0% in 2022-2027. It is easy to see that the industry has broad development space and strong growth certainty. Leading enterprises such as Francis undoubtedly have great potential for growth.

Leading the golden age

Focusing back on France itself, what is the quality of the company?

First of all, what is certain is that France's unique business model has established it as a market leader.

Based on 16 years of industry experience, the company launched a one-stop smart logistics solution platform covering the entire life cycle of on-site logistics equipment, connecting online and offline. The company uses equipment subscription services as an entry point to provide different services to relevant customers through cross-sales; however, after the company has won the customer's trust in technology and execution capabilities in the field of maintenance, there is a high probability that customers will use the company's equipment subscription services. According to the prospectus, nearly 70% of the company's on-site logistics equipment subscription service customers were converted from equipment maintenance and maintenance service customers, highlighting the effectiveness of the company's cross-selling strategy.

In addition, the company has also built online+offline full-coverage channels. As of April 30, 2023, the company has 67 offline service outlets in 47 cities across the country, managing more than 40,000 units of on-site logistics equipment. Benefiting from a comprehensive and flexible service network layout, France can respond accurately and quickly to customer needs, and the company can reach the customer's designated location from any service point within 8 hours of receiving the demand.

Simply put, through online and offline collaboration between the three business lines of equipment subscription, maintenance, and equipment and accessories sales, France not only helps customers achieve digital upgrading, but also meets the needs of on-site logistics scenarios in all aspects. This model not only gave the company a leading edge in the competition, but also played a positive role in its long-term development. According to the “2022 China Top 50 Logistics Enterprises” list published by the China Federation of Logistics and Purchasing, seven of the top ten logistics companies in China in 2022 are the company's customers. According to Insight Consulting, in terms of revenue in 2022, the company is the largest provider of on-site logistics equipment solutions in China.

On this basis, and in the context of the rapid growth of the industry, France has built a virtuous cycle of self-strengthening through the flywheel effect, continuously gaining more market share and resources, and achieving continued high growth.

Financial data can confirm this view. Between 2020 and 2022, the industry was generally under pressure due to the pandemic, but Flance's revenue still increased from 981 million yuan to 1,194 billion yuan, an increase of 21.7%; the number of the company's major customers rose from 87 to 123, an increase of 41.4%. In the four months ended April 30, 2023, the company achieved revenue of 436 million yuan, an increase of 25.8% over the previous year.

Once the company has completed its listing, it is possible that it will reach a new starting point. According to the prospectus, the capital raised this time will be used to enhance service capabilities, expand customer coverage and expand the range of on-site logistics equipment, expand and upgrade supply chain infrastructure, enhance technical capacity and infrastructure, and strategic mergers and acquisitions. The company has an opportunity to accelerate into the expansion period and is expected to release strong performance elasticity over the next 1-3 years. The future market is worth paying attention to.