Investment Rating - The report gives J&T Express-W (1519 HK) a "Buy" rating, with an initial coverage [5][58] Core Views - J&T Express is a global logistics company with a strong presence in 13 countries, ranking as the 6th largest express service provider in China and showing robust growth in new markets [2][3] - The company's agent-based model, inherited from the "BBK" system, ensures strong policy execution and network stability, facilitating rapid international expansion [2][3] - J&T's profitability has turned positive in 2024, with significant improvements in cash flow and gross profit, indicating self-sustaining growth [3][8] - The company's global network layout and growth potential are highly promising, with a focus on profitability in China, market leadership in Southeast Asia, and strong growth momentum in new markets [5][58] Market Performance China Market - J&T entered the Chinese market late but quickly gained traction with competitive pricing and an efficient agent model, achieving a daily parcel volume of over 48 million and a market share of 11% in H1 2024 [3][24] - The company shifted its strategy from scale-first to profit-first, leading to positive EBITDA in China in 2023, driven by cost optimization and capacity expansion [3][24] - J&T's asset-light approach, combining heavy investments in transportation and automation with leased land and buildings, has helped reduce costs significantly [24][34] Southeast Asia Market - J&T has maintained its leading position in Southeast Asia for four consecutive years, with a 27.4% market share in H1 2024 and a 42% YoY increase in parcel volume [4][42] - The company leverages its unique agent model and competitive pricing to consolidate its market position, with further growth expected as e-commerce platforms like TikTok Shop and Temu expand in the region [4][42] - J&T's cost structure in Southeast Asia continues to improve, with significant reductions in per-parcel costs, driving profitability [42][48] New Markets - J&T has expanded into new markets such as the Middle East and Latin America, achieving a 63.9% YoY increase in parcel volume in H1 2024 and a market share of 6.1% [4][52] - The company has significantly reduced losses in new markets, with EBITDA improving to -$7.8 million in H1 2024, driven by higher-quality non-e-commerce clients and improved operational efficiency [52][56] Financial Projections - The report forecasts J&T's net profit for 2024-2026 to be $150 million, $390 million, and $500 million, respectively, with PE ratios of 41.4X, 16.4X, and 12.7X [5][58] - Revenue is expected to grow at a CAGR of 15% from 2024 to 2026, driven by strong performance in China, Southeast Asia, and new markets [58][59]

Revenue and Profit Growth - Revenue for the first half of 2024 reached $4.86 billion, a 20.6% increase compared to $4.03 billion in the same period of 2023[9] - Express service revenue grew by 33.7% to $4.74 billion in H1 2024, up from $3.55 billion in H1 2023[9] - Gross profit surged by 176.8% to $535.7 million in H1 2024, compared to $193.5 million in H1 2023[9] - Adjusted EBITDA increased by 795.6% to $350.8 million in H1 2024, up from $39.2 million in H1 2023[9] - Operating profit turned positive at $115.0 million in H1 2024, compared to a loss of $1.64 billion in H1 2023[9] - Net cash from operating activities increased significantly to $345.6 million in H1 2024, up from $2.8 million in H1 2023[9] - Revenue increased to $4,861.7 million in H1 2024 from $4,030.4 million in H1 2023, with gross profit rising to $535.7 million from $193.5 million[36] - Operating profit improved to $115.0 million in H1 2024 from a loss of $1,636.2 million in H1 2023, reflecting significant operational improvements[36] - Adjusted EBITDA surged to $350.8 million in H1 2024 from $39.2 million in H1 2023, indicating strong financial recovery[36] - Total revenue increased by 20.6% from $4,030.4 million in the first half of 2023 to $4,861.7 million in the first half of 2024, primarily driven by growth in express delivery services across 13 countries[39] - Express delivery service revenue grew by 33.7% from $3,546.2 million in the first half of 2023 to $4,740.0 million in the first half of 2024, with parcel volume increasing by 38.3% from 7.97 billion to 11.01 billion pieces[40] - Revenue for the first half of 2024 increased to $4,861.7 million, up 20.6% compared to $4,030.4 million in the same period of 2023[108] - Gross profit surged to $535.7 million in H1 2024, a significant increase from $193.5 million in H1 2023[108] - Operating profit improved to $115.0 million in H1 2024, compared to an operating loss of $1,636.2 million in H1 2023[108] - Net profit for H1 2024 was $31.0 million, a turnaround from a net loss of $666.8 million in H1 2023[108] - Basic earnings per share for H1 2024 were $0.003, compared to a loss per share of $0.208 in H1 2023[108] - The company's comprehensive loss for H1 2024 was $40.6 million, an improvement from $676.6 million in H1 2023[109] - The company's profit attributable to owners for the six months ended June 30, 2024, was $27.589 million, a significant improvement from a loss of $1.670 billion in the same period in 2023[155] Parcel Volume and Market Share - The company handled 11.01 billion parcels in H1 2024, a 38.3% increase from 7.97 billion parcels in H1 2023[13] - Southeast Asia parcel volume grew by 42.0% to 2.04 billion parcels in H1 2024, with a market share of 27.4%[12][14] - China parcel volume increased by 37.1% to 8.84 billion parcels in H1 2024, capturing an 11.0% market share[12][14] - New markets parcel volume surged by 63.9% to 136.3 million parcels in H1 2024, with a 6.1% market share[12][14] - Company's market share in Southeast Asia increased to 27.4% in H1 2024, up 2.0 percentage points from 25.4% in 2023[15] - Company's market share in China rose to 11.0% in H1 2024, up 1.1 percentage points from 9.9% in H1 2023[15] - Company's market share in new markets reached 6.1% in H1 2024, up 0.1 percentage points from 6.0% in 2023[15] - Southeast Asia's total parcel volume is projected to reach 14.93 billion in 2024, up 17.1% from 2023[16] - Company processed 2.04 billion parcels in Southeast Asia in H1 2024, a 42.0% increase from 1.44 billion in H1 2023[20] - Southeast Asia's daily parcel volume reached 11.2 million in H1 2024, a 42.0% YoY increase[23] - China's e-commerce retail sales grew 8.8% YoY to RMB 6.0 trillion in H1 2024, with express delivery volume increasing 23.1% YoY to 80.16 billion parcels[25] - The company's market share in China increased to 11.0% in H1 2024, up 1.1 percentage points YoY, ranking 6th among express operators[26] - China's parcel volume grew 37.1% YoY to 8.84 billion in H1 2024, outperforming the industry growth rate[27] - The company's parcel volume in new markets grew 63.9% YoY to 136.3 million in H1 2024, with market share increasing from 6.0% to 6.1%[33] Operational Efficiency and Cost Management - Company's single-ticket cost in Southeast Asia decreased by 15.5% year-over-year in H1 2024[21] - Southeast Asia's average delivery time decreased by 13.8% YoY in H1 2024, with loss and damage rates also declining[22] - China's single-ticket cost decreased from $0.34 in H1 2023 to $0.32 in H1 2024[28] - Single-ticket express revenue remained stable at $0.34 in H1 2024, unchanged from H1 2023, driven by optimized e-commerce platform parcel structure and improved product categories[30] - Single-ticket express cost decreased from $0.34 in H1 2023 to $0.32 in H1 2024, a significant reduction due to scale effects and refined operational management[30] - Southeast Asia's per-parcel cost decreased from $0.71 in H1 2023 to $0.60 in H1 2024, driven by a 42.0% YoY increase in parcel volume and operational optimization leveraging China's experience[48] - The number of Southeast Asia outlets reached 10,600 as of June 30, 2024, with 2,000 network partners, and per-parcel pickup and delivery costs decreased from $0.40 to $0.37[48] - Southeast Asia's transportation fleet grew to 3,800 vehicles (1,500 self-owned) as of June 30, 2024, with per-parcel transportation costs decreasing from $0.19 to $0.16[48] - Southeast Asia's sorting centers decreased to 119 as of June 30, 2024, with 47 automated sorting systems, and per-parcel sorting costs decreased from $0.09 to $0.06[49] - China's per-parcel revenue remained stable at $0.34 in H1 2024, while per-parcel costs decreased from $0.34 to $0.32 through operational optimization[50][51] - China's transportation fleet exceeded 5,900 vehicles (4,200 self-owned) as of June 30, 2024, with per-parcel transportation costs decreasing from $0.08 to $0.07[52] - China's sorting centers totaled 83 as of June 30, 2024, with 6 new automated sorting lines added in H1 2024, reducing per-parcel sorting costs from $0.06 to $0.05[52] - New markets' per-parcel revenue increased from $1.60 in H1 2023 to $2.14 in H1 2024, while per-parcel costs remained flat at $1.88[53][54] - Total operating costs and expenses decreased by 15.9% from $5,623.6 million in the first half of 2023 to $4,731.2 million in the first half of 2024, primarily due to a significant reduction in share-based payments and expenses from $1,426.9 million to $32.2 million[56] - Fulfillment costs increased by 29.9% from $1,790.8 million in the first half of 2023 to $2,326.5 million in the first half of 2024, driven by network expansion and increased parcel volume[57] - Employee costs rose by 23.3% from $540.0 million in the first half of 2023 to $665.7 million in the first half of 2024, mainly due to increased headcount and higher average wages[57] - Other labor costs increased by 39.1% from $213.3 million in the first half of 2023 to $296.7 million in the first half of 2024, reflecting higher parcel volume[58] - Southeast Asia's costs grew by 20.2% from $1,026.0 million in the first half of 2023 to $1,232.7 million in the first half of 2024, driven by a 42.0% increase in parcel volume[59] - China's costs increased by 25.4% from $2,220.2 million in the first half of 2023 to $2,784.4 million in the first half of 2024, with parcel volume rising by 37.1%[60] - New markets' costs surged by 64.2% from $156.2 million in the first half of 2023 to $256.6 million in the first half of 2024, supported by a 63.9% increase in parcel volume[60] - Gross margin improved from 4.8% in the first half of 2023 to 11.0% in the first half of 2024, with significant improvements in China and new markets[61] - Sales, general, and administrative expenses decreased by 78.4% from $1,767.9 million in the first half of 2023 to $381.7 million in the first half of 2024, largely due to reduced share-based payments[64] - Southeast Asia: Adjusted EBITDA increased by 12.9% from $184.1 million in the first half of 2023 to $207.8 million in the first half of 2024, with adjusted EBITDA margins of 14.8% and 13.7% respectively[66] - China: Adjusted EBITDA turned from a loss of $45.0 million in the first half of 2023 to a profit of $198.9 million in the first half of 2024, with adjusted EBITDA margins improving from -2.0% to 6.6%[66] - Cross-border: Adjusted EBITDA loss narrowed from $11.3 million in the first half of 2023 to $7.2 million in the first half of 2024[67] - New markets: Adjusted EBITDA loss significantly improved from $55.2 million in the first half of 2023 to $7.8 million in the first half of 2024, with the adjusted EBITDA margin improving from -41.6% to -2.7%[67] - Financial costs: Total financial costs remained stable at $45.0 million in the first half of 2024 compared to $44.6 million in the first half of 2023, primarily due to interest expenses on borrowings[68] - Other income: Total other income decreased to $3.1 million in the first half of 2024 from $12.2 million in the first half of 2023, mainly due to changes in subsidy policies[69] - Cash flow: Operating cash flow significantly increased to $345.6 million in the first half of 2024 from $2.8 million in the first half of 2023, with cash and cash equivalents totaling $1,428.2 million as of June 30, 2024[71] - Capital expenditure: Total capital expenditure decreased to $165.2 million in the first half of 2024 from $250.6 million in the first half of 2023[73] - Capital commitments: Total capital commitments decreased to $111.8 million as of June 30, 2024, from $134.9 million as of December 31, 2023[74] - The company has 152,145 full-time employees as of June 30, 2024, with competitive compensation packages based on qualifications, expertise, and experience[76] - The company invested approximately $457.0 million in Huisen Global Limited's convertible bonds in 2022, with an additional $58.0 million investment in May 2023[76] - As of June 30, 2024, the fair value of the convertible bonds held in Huisen Global Limited is approximately $484.9 million, representing 7.3% of the company's total assets[76] - The company recognized a fair value change income of approximately $1.4 million from the Huisen Global Limited investment in the first half of 2024[76] - The company has pledged restricted deposits of $31.2 million as collateral as of June 30, 2024[77] - Huisen Global Limited, in which the company holds significant investment, is focusing on expanding overseas markets while maintaining a stable presence in China[78] - As of June 30, 2024, the company has no significant investment or capital asset plans[78] - The company has no significant contingent liabilities as of June 30, 2024[79] - Li Jie holds approximately 11.11% of the company's issued shares through controlled entities[81] - Tencent Holdings Limited holds approximately 6.81% of the company's issued shares through controlled entities[84] - Li Jie holds 979,333,410 Class A shares, representing approximately 55.56% of the total voting rights for non-reserved matters[90] - Tencent holds a total of 533,278,240 Class B shares through its subsidiaries[86] - Boyu Capital Fund IV, L.P. and related entities hold a total of 460,820,640 Class B shares[87] - The 2024 Share Incentive Plan has an authorized limit of 881,216,623 shares available for grant[89] - The company has a dual-class share structure with Class A shares having 10 votes per share and Class B shares having 1 vote per share[90] - Conversion of all Class A shares to Class B shares would result in 979,333,410 Class B shares, representing approximately 12.50% of total Class B shares[91] - The Pre-IPO Share Incentive Plan involved the issuance of 38,000,000 Class A shares to NP Investment Platform Limited[88] - Guangdong Oujia Holdings Co., Ltd. holds approximately 65.9% of Team Spirit Group Limited, which owns 373,175,910 Class B shares[85] - The company's global offering raised a net amount of HKD 3,553.50 million, with 30% (HKD 1,066.05 million) allocated to expanding logistics networks, 30% (HKD 1,066.05 million) for entering new markets, 30% (HKD 1,066.05 million) for R&D and technological innovation, and 10% (HKD 355.35 million) for general corporate purposes and working capital[96] - As of June 30, 2024, the company had utilized USD 286.5 million of the net proceeds, with USD 58.0 million spent on logistics network expansion, USD 83.0 million on service expansion, USD 129.0 million on R&D and technological innovation, and USD 16.5 million on general corporate purposes[97] - The company plans to fully utilize the remaining net proceeds by the end of 2027[97] - The company has appointed Shang Quanxi and Zheng Chengjie as joint company secretaries, with an exemption granted by the Stock Exchange for Shang Quanxi's qualification, valid for three years from her appointment date[94] - The company's board of directors has deviated from the Corporate Governance Code by having Mr. Li Jie serve as both Chairman and CEO, citing his extensive experience and the need for consistent leadership[93] - The company has established an audit committee, corporate governance committee, nomination committee, and remuneration committee to oversee governance and financial matters[101] - The company has not purchased, sold, or redeemed any of its listed securities during the reporting period and holds no treasury shares as of June 30, 2024[98] - The company has confirmed that all directors complied with the standard code for securities transactions during the reporting period, with no violations detected[95] - The company secured a financing agreement with a total facility of up to $674.0 million in USD, HKD 1,362.0 million, and RMB 2,871.4 million[103] - The financing agreement has a term of 36 months from the date of the first drawdown[103] - The company did not declare an interim dividend for the period ending June 30, 2024[103] - The company's financial costs increased to $62.2 million in H1 2024, up from $56.0 million in H1 2023[108] - Total assets increased to $6,653,998 thousand as of June 30, 2024, compared to $6,601,414 thousand at the end of 2023[110] - Non-current assets decreased to $3,277,133 thousand from $3,464,108 thousand, primarily due to a reduction in intangible assets and investment properties[110] - Current assets rose to $3,376,865 thousand, up from $3,137,306 thousand, driven by an increase in cash and cash equivalents and prepayments[110] - Total liabilities increased to $4

Investment Rating - The report maintains a "Buy" rating for the company, with a market price of HKD 6.07 and an industry rating of "Outperform" [1][3]. Core Insights - The company achieved its first profitable quarter in domestic operations, with a significant increase in market share in Southeast Asia. The revenue for the first half of 2024 reached USD 4.86 billion, a year-on-year growth of 20.6%, and the net profit was USD 30 million, marking a turnaround from losses [3]. - The company’s express delivery volume grew nearly 40% in the first half of 2024, with a total of 11.01 billion packages delivered, reflecting a year-on-year increase of 38.3% [3]. - The company’s market share in Southeast Asia increased to 27.4%, up from 25.4% in 2023, while its market share in China rose to 11.0% from 9.9% [3]. - The report highlights the scale effects of logistics infrastructure, with a decrease in per-package costs in the Chinese market, contributing to improved profitability [3]. Summary by Sections Financial Performance - For the first half of 2024, the company reported revenues of USD 4.86 billion, with segment revenues of USD 3.00 billion from China, USD 1.52 billion from Southeast Asia, and USD 290 million from emerging markets, showing growth rates of 36.1%, 22.0%, and 119.6% respectively [3][4]. - The adjusted EBITDA for 2024 is projected to be RMB 2.898 billion, with net profit expected to reach RMB 560 million, a significant turnaround from a loss of RMB 7.845 billion in 2023 [4][5]. Market Position - The company’s market share in Southeast Asia has shown a notable increase, indicating a strong competitive position and potential for further growth in the region [3][4]. - The report emphasizes the company's ability to leverage domestic operational expertise to enhance its performance in Southeast Asia [3]. Valuation - The report adjusts profit forecasts, projecting net profits of RMB 5.60 billion, RMB 22.48 billion, and RMB 33.40 billion for 2024, 2025, and 2026 respectively, with corresponding EPS of RMB 0.06, RMB 0.25, and RMB 0.38 [3][4].

Investment Rating - The report maintains an "Accumulate" rating for Jitu Express-W (01519) [1] Core Views - Jitu Express has achieved profitability in the China region, continuing its growth trajectory with a significant increase in business volume [1][4] - The company reported a total business volume of 11.01 billion parcels in H1 2024, representing a year-on-year growth of 38.3% [2][4] - The revenue for H1 2024 reached $4.862 billion, up 20.62% year-on-year, with a gross profit of $536 million, reflecting a substantial increase of 176.81% [3][4] Summary by Sections Business Performance - In H1 2024, Jitu Express achieved a business volume of 11.01 billion parcels, with Southeast Asia, China, and new markets contributing 2.043 billion, 8.836 billion, and 136 million parcels respectively, showing year-on-year growth rates of 42.0%, 37.1%, and 63.9% [2][4] - The company’s Q2 2024 business volume was 5.983 billion parcels, a 30.7% increase year-on-year [2][4] Revenue and Profitability - The company’s revenue for H1 2024 was $4.862 billion, a 20.62% increase from the previous year, with a net profit of $28 million, marking a turnaround from losses [3][4] - The average revenue per parcel varied across markets, with Southeast Asia at $0.74, China at $0.34, and new markets at $2.14, reflecting changes of -14.12%, -0.72%, and +34.07% respectively [3][4] Cost Management - Jitu Express has implemented refined management strategies that have significantly reduced per-parcel costs in Southeast Asia and China, leading to improved gross margins [6][7] - In Southeast Asia, the per-parcel cost decreased to $0.60, down 15.41% year-on-year, while in China, it fell to $0.32, an 8.51% reduction [6][7] Market Outlook - The growth in e-commerce continues to provide opportunities for Jitu Express, with expectations for sustained business volume growth and improved profitability driven by economies of scale [7][8] - The company is projected to achieve revenues of $10.137 billion, $12.022 billion, and $14.004 billion for 2024, 2025, and 2026 respectively, with corresponding net profits of $185 million, $390 million, and $476 million [8][9]

Investment Rating - The investment rating for J&T Express has been upgraded from Hold to Buy [1][2]. Core Insights - J&T Express achieved a net profit of $31 million in the first half of 2024, a significant improvement compared to losses of $264 million and $168 million in the first and second halves of 2023, respectively [1]. - The company is on a clearer path to sustainable profitability due to ongoing cost-cutting trends in Southeast Asia and China [1]. - Revenue for the first half of 2024 grew by 22% year-on-year to $1.52 billion, driven by a 42% increase in parcel volume, although this was offset by a 14% decline in average selling price (ASP) [1][6]. - The target price has been adjusted to HK$10 from HK$12.80, reflecting a more conservative valuation approach post-industry correction [1][10]. Southeast Asia Performance - In the first half of 2024, revenue in Southeast Asia increased by 22% to $1.52 billion, with parcel volume rising by 42% to 2 billion units [1]. - The average selling price (ASP) decreased by 14% to $0.74, while market share increased by 2 percentage points to 27.4% [1][6]. - The unit gross margin only declined by 8% year-on-year to $0.14 due to a 16% reduction in annual unit costs [1]. China Performance - Revenue in China grew by 36% year-on-year to $3 billion in the first half of 2024, supported by a 37% increase in parcel volume to 8.8 billion units [1]. - The ASP remained stable at $0.34, with market share expanding by 1.1 percentage points to 11% [1][6]. - The unit cost decreased by 6% year-on-year, resulting in a gross profit of $0.02 per parcel [1]. New Markets - Revenue in new markets surged by 120% year-on-year to $292 million in the first half of 2024, driven by a 64% increase in parcel volume [1]. - However, growth is expected to moderate in the second half of 2024 due to new tariffs affecting cross-border e-commerce in Brazil [1]. Financial Projections - Revenue projections for FY24E and FY25E have been revised upwards by 12% and 7%, respectively [1][2]. - Adjusted net profit is expected to reach $186.5 million in FY24E and $495.6 million in FY25E [2]. - The company is projected to achieve a P/E ratio of 39.7x in FY24E, decreasing to 15.2x in FY25E [2]. Valuation Methodology - The target price is based on a sum-of-the-parts (SOTP) valuation approach, applying different EV/EBITDA multiples for various markets [10][11]. - Southeast Asia is assigned a target P/E of 15x, reflecting a premium due to competitive advantages and market share growth [10]. - The valuation for China has shifted to an EV/EBITDA approach, applying a target multiple of 10x, which is approximately 50% higher than local peers [10].

Investment Rating - The report upgrades the investment rating for J&T Express to BUY from Hold [2]. Core Insights - J&T Express achieved a net profit of US$31 million in 1H24, a significant improvement from a loss of US$264 million in 1H23 and US$168 million in 2H23, indicating a clearer path to sustainable profitability [2]. - The revenue in 1H24 grew by 22% year-on-year to US$1.52 billion, driven by a 42% increase in parcel volume, although this was offset by a 14% decline in average selling price (ASP) [2]. - The company is expected to see full-year volume growth of 30% year-on-year, despite a projected double-digit decrease in ASP [2]. - In China, revenue grew by 36% year-on-year to US$3 billion, supported by a 37% increase in parcel volume and stable ASP [2]. - The report anticipates a slowdown in revenue growth in new markets due to regulatory changes affecting cross-border e-commerce in Brazil [2]. Summary by Sections Financial Performance - J&T Express reported a revenue of US$4.86 billion in 1H24, a 20.6% increase from US$4.03 billion in 1H23 [7]. - The gross profit surged to US$536 million, reflecting a 176.8% increase year-on-year [7]. - The adjusted net profit is forecasted to be US$186.5 million for FY24, a significant recovery from a loss of US$432.3 million in FY23 [4]. Market Analysis - In Southeast Asia, the market share expanded by 2 percentage points year-on-year to 27.4%, with a unit gross margin of US$0.14 [2]. - In China, the market share increased by 1.1 percentage points year-on-year to 11%, with a unit gross profit of US$0.02 [2]. - The report highlights a strong competitive edge for J&T in Southeast Asia, with a target multiple of 15x for valuation, reflecting a premium over global integrated logistics operators [10]. Valuation - The target price is revised down to HK$10 from HK$12.8, reflecting a more conservative approach following sector pullbacks [2][10]. - The valuation methodology for the China segment has shifted to EV/EBITDA, applying a target multiple of 10x, which is approximately a 50% premium to local peers [10]. - The total equity value is estimated at US$11.1 billion, with a target price of HK$10.00 [11].

Summary of Conference Call Transcript Company and Industry - The document discusses the express delivery industry in China, specifically highlighting a company's performance in the first half of 2024. Core Points and Arguments - The company achieved a significant breakthrough in its express delivery business, with a year-on-year volume growth of 37.1% [1] - The market share increased by 1.1 percentage points compared to the previous year [1] - Adjusted EBITDA turned positive, indicating a successful turnaround in profitability [1] - The dual achievement of increased market share and profitability demonstrates the feasibility and effectiveness of the company's strategy in China [1] Other Important but Possibly Overlooked Content - The document emphasizes the rapid growth and competitive positioning of the company within the Chinese express delivery market, suggesting a strong operational strategy [1]

Financial Performance - Revenue for the six months ended June 30, 2024, reached $4.86 billion, a 20.6% increase compared to the same period in 2023[2] - Gross profit surged to $535.7 million, marking a 176.8% year-over-year growth[2] - Adjusted EBITDA for the period was $350.8 million, a 795.6% increase from the previous year[2] - Operating profit for the period was $115.0 million, compared to a loss of $1.64 billion in the same period of 2023[2] - Net cash flow from operating activities reached $345.6 million, a significant improvement from $2.8 million in the previous year[2] - Revenue grew by 20.6% to $4,861.7 million in H1 2024, driven by growth in express delivery services across 13 countries[33] - Adjusted EBITDA for H1 2024 was $350.8 million, a significant improvement from $39.2 million in H1 2023[30] - The company's gross profit increased to $535.7 million in H1 2024, up from $193.5 million in H1 2023[30] - Adjusted EBIT improved to $118.2 million in H1 2024, compared to a loss of $212.8 million in H1 2023[30] - Revenue for the first half of 2024 was $4.862 billion, an increase of 20.6% compared to $4.030 billion in the same period of 2023[75] - Gross profit for the first half of 2024 was $535.732 million, a significant increase of 176.8% compared to $193.540 million in 2023[75] - Net profit for the first half of 2024 was $31.026 million, a turnaround from a net loss of $666.769 million in 2023[75] - Basic earnings per share for the first half of 2024 were $0.003, compared to a loss per share of $0.208 in 2023[75] - Total comprehensive loss for the first half of 2024 was $40.635 million, an improvement from a loss of $676.591 million in 2023[76] - Operating cash flow for the first six months of 2024 was $345.63 million, a significant increase from $2.8 million in the same period in 2023[77] - Net cash used in investing activities for the first six months of 2024 was $266.31 million, compared to $366.04 million in 2023[77] - Net cash used in financing activities for the first six months of 2024 was $114.71 million, compared to a net cash inflow of $64.17 million in 2023[77] - Total segment revenue for the first six months of 2024 was $4.86 billion, with Southeast Asia contributing $1.52 billion and China contributing $2.99 billion[82] - Adjusted EBITDA for the first six months of 2024 was $350.78 million, a significant improvement from $39.17 million in 2023[82] - The company reported a net profit of $31.03 million for the first six months of 2024, compared to a net loss of $666.77 million in 2023[83] - Basic earnings per share for the first six months of 2024 were $0.003, compared to a loss per share of $0.208 in 2023[85] - Diluted loss per share for the six months ended June 30, 2024, was $0.003, compared to a loss of $0.222 for the same period in 2023[87] - The company's net profit attributable to owners for the six months ended June 30, 2024, was $27.589 million, a significant improvement from a net loss of $640.967 million in the same period in 2023[87] Market Share and Parcel Volume - The company handled 11.01 billion parcels in the first half of 2024, a 38.3% increase from 7.97 billion parcels in the same period of 2023[6] - Southeast Asia market share stood at 27.4%, with parcel volume growing by 42.0% to 2.04 billion parcels[7] - China's parcel volume increased by 37.1% to 8.84 billion parcels, capturing an 11.0% market share[7] - New markets, including Saudi Arabia, UAE, Mexico, Brazil, and Egypt, saw a 63.9% increase in parcel volume to 136.3 million parcels[7] - Company's market share in Southeast Asia increased to 27.4% in H1 2024, up 2.0 percentage points from 2023[8] - Company's market share in China rose to 11.0% in H1 2024, up 1.1 percentage points from H1 2023[8] - Southeast Asia's total parcel volume is projected to reach 14.93 billion in 2024, a 17.1% increase from 2023[9] - Company processed 2.04 billion parcels in Southeast Asia in H1 2024, a 42.0% year-over-year increase[12] - Company is the leading express operator in Southeast Asia by parcel volume, maintaining a 27.4% market share in H1 2024[10] - Southeast Asia parcel volume increased by 42.0% YoY in H1 2024, reaching 11.2 million parcels per day[15] - China's express delivery industry volume grew by 23.1% YoY to 80.16 billion parcels in H1 2024[18] - The company processed 8.84 billion parcels in China in the first half of 2024, a 37.1% YoY increase from 6.45 billion in the same period of 2023, surpassing industry growth rates[20] - China's express delivery industry handled 80.16 billion parcels in H1 2024, growing 23.1% YoY, with the company capturing significant market share[20] - New market parcel volume increased by 63.9% to 136.3 million in H1 2024, up from 83.2 million in H1 2023, with market share rising from 6.0% to 6.1%[26] - Southeast Asia revenue increased by 22.0% from $1,246.1 million in the first half of 2023 to $1,520.0 million in the first half of 2024, with parcel volume growing by 42.0% from 1.438 billion to 2.043 billion pieces, capturing a 27.4% market share[39] - China revenue grew by 36.1% from $2,203.1 million in the first half of 2023 to $2,998.3 million in the first half of 2024, with parcel volume increasing by 37.1% from 6.446 billion to 8.836 billion pieces, achieving an 11.0% market share[40] - New markets revenue surged by 119.6% from $132.8 million in the first half of 2023 to $291.6 million in the first half of 2024, with parcel volume growing by 63.9% from 832 million to 1.363 billion pieces, increasing market share from 6.0% to 6.1%[41] Operational Efficiency and Cost Management - Southeast Asia single-ticket cost decreased by 15.5% YoY in H1 2024, driven by operational optimization and cost reduction strategies[13] - Average delivery time in Southeast Asia shortened by 13.8% YoY in H1 2024, with reduced loss and damage rates[14] - The company's single-ticket cost decreased from $0.34 in H1 2023 to $0.32 in H1 2024, driven by scale effects and operational optimization[22] - Southeast Asia single-ticket cost decreased from $0.71 in the first half of 2023 to $0.60 in the first half of 2024, driven by a 42.0% increase in parcel volume and operational optimization leveraging China's express delivery experience[43] - The company operates approximately 10,600 outlets in Southeast Asia, managing around 2,000 network partners, and reduced single-ticket pickup and delivery costs from $0.40 in the first half of 2023 to $0.37 in the first half of 2024[44] - Single-ticket sorting cost: The company reduced its single-ticket sorting cost from $0.09 in the first half of 2023 to $0.06 in the first half of 2024, driven by increased automation and employee training[45] - China single-ticket cost: The overall single-ticket cost in China decreased from $0.34 in the first half of 2023 to $0.32 in the first half of 2024, with transportation costs dropping from $0.08 to $0.07 and sorting costs from $0.06 to $0.05[46][48] - New market single-ticket cost: Single-ticket cost in new markets remained flat at $1.88 in the first half of 2024, despite rapid parcel volume growth and scale effects[50] - Total operating costs: The company's total operating costs and expenses decreased by 15.9% from $5,623.6 million in the first half of 2023 to $4,731.2 million in the first half of 2024, primarily due to reduced share-based payments and expenses[51] - Fulfillment costs: Fulfillment costs increased by $535.7 million in the first half of 2024 compared to the same period in 2023, driven by growth in parcel volume[51] - Fulfillment costs increased by 29.9% from $1,790.8 million in H1 2023 to $2,326.5 million in H1 2024, accounting for 44.4% and 47.9% of total revenue respectively[52] - Employee costs rose by 23.3% from $540.0 million in H1 2023 to $665.7 million in H1 2024, driven by increased headcount and higher average wages[52] - Other labor costs surged by 39.1% from $213.3 million in H1 2023 to $296.7 million in H1 2024 due to increased parcel volume[53] - Southeast Asia costs grew by 20.2% from $1,026.0 million in H1 2023 to $1,232.7 million in H1 2024, with parcel volume increasing by 42.0% to 2,042.9 million pieces[54] - China costs increased by 25.4% from $2,220.2 million in H1 2023 to $2,784.4 million in H1 2024, with parcel volume rising by 37.1% to 8,835.7 million pieces[55] - New markets costs surged by 64.2% from $156.2 million in H1 2023 to $256.6 million in H1 2024, driven by a 63.9% increase in parcel volume to 136.3 million pieces[55] - Gross margin improved from 4.8% in H1 2023 to 11.0% in H1 2024, with China turning from a -0.8% loss to a 7.1% profit[56][57] - Sales, general, and administrative expenses decreased by 78.4% from $1,767.9 million in H1 2023 to $381.7 million in H1 2024, primarily due to reduced share-based payments[58][59] Regional Performance - Southeast Asia adjusted EBIT grew by 45.9% YoY to $134.8 million in H1 2024, with an adjusted EBIT margin of 8.9%[16] - China's e-commerce retail sales grew by 8.8% YoY to RMB 6.0 trillion in H1 2024[17] - China business achieved adjusted EBITDA of $198.9 million in H1 2024, with an EBITDA margin of 6.6%, turning from a -2.0% margin in H1 2023[23] - Adjusted EBIT for China operations reached $59.6 million in H1 2024, a significant improvement from a loss of $183.1 million in H1 2023[23] - The company expanded into rural markets, reducing shipping costs for remote areas and improving e-commerce experiences, while launching agricultural support projects[21] - New market's nominal GDP reached $5.9 trillion in 2023, with an 8.0% YoY growth, and e-commerce penetration is expected to grow from 14.7% in 2023 to 32.5% by 2028[25] - New market's express delivery industry is projected to grow at an 18.5% CAGR, reaching 9.25 billion parcels by 2028, with a fragmented competitive landscape[25] - Southeast Asia's adjusted EBITDA increased by 12.9% from $184.1 million in H1 2023 to $207.8 million in H1 2024, with adjusted EBITDA margins of 14.8% and 13.7% respectively[61] - China's adjusted EBITDA turned from a loss of $45.0 million in H1 2023 to a profit of $198.9 million in H1 2024, with adjusted EBITDA margins improving from -2.0% to 6.6%[61] - New markets' adjusted EBITDA loss narrowed significantly from $55.2 million in H1 2023 to $7.8 million in H1 2024, with adjusted EBITDA margins improving from -41.6% to -2.7%[62] - Cross-border adjusted EBITDA loss decreased from $11.3 million in H1 2023 to $7.2 million in H1 2024[62] - Unallocated adjusted EBITDA loss increased from $33.5 million in H1 2023 to $40.8 million in H1 2024, mainly due to fair value changes in financial assets[62] Infrastructure and Network Expansion - The company operates in 13 countries, including seven Southeast Asian nations, China, and five new markets[6] - Company operates 237 transit centers, 254 automated sorting lines, and over 4,100 trunk lines with more than 9,900 vehicles, including 5,700 self-owned vehicles[8] - Company's network covers over 99% of county-level regions in China and over 95% in new markets[8] - Company has 8,000 network partners and 19,900 service points as of June 30, 2024[8] - The company operates 35 transfer centers, over 200 mainline vehicles, and more than 2,200 service points in new markets as of June 30, 2024[28] - The company added 800 new service points and invested in two automated sorting lines in new markets during H1 2024[28] - Southeast Asia operations: As of June 30, 2024, the company operates 119 transfer centers in Southeast Asia, a decrease of 29 compared to June 30, 2023. The company has optimized the layout of transfer centers and upgraded key centers with automated sorting equipment, increasing the number of automated sorting systems to 47, up by 11 from the previous year[45] - China network partners: As of June 30, 2024, the company has over 6,000 network partners and operates approximately 7,100 service points in China, with a slight decrease in service points compared to the previous year[47] - China transportation fleet: The company operates over 5,900干线 vehicles in China, with over 4,200 being self-owned, an increase of more than 1,000 self-owned vehicles compared to June 30, 2023[48] Revenue Composition and Business Segments - Express delivery services accounted for 97.5% of total revenue in H1 2024, up from 88.0% in H1 2023[33] - Cross-border services revenue decreased to $51.9 million in H1 2024 from $448.5 million in H1 2023, representing a shift in revenue composition[33] - Express service revenue increased by 33.7% from $3,546.2 million in the first half of 2023 to $4,740.0 million in the first half of 2024, driven by growth in parcel volume from 7.97 billion to 11.01 billion pieces, a 38.3% increase[34] - Cross-border service revenue decreased by 88.4% from $448.5 million in the first half of 2023 to $51.9 million in the first half of 2024 due to business transformation and discontinuation of small parcel services[35] - Rental income grew by 22.3% from $23.3 million in the first half of 2023 to $28.5 million in the first half of 2024, primarily from property leasing in Southeast Asia and increased leasing of reusable bags in China[36] - Sales of accessories revenue surged by 237.7% from $8.5 million in the first half of 2023 to $28.6 million in the first half of 2024, driven by increased sales of thermal paper and waterproof bags[37] - Southeast Asia single-ticket revenue decreased from $0.87 in the first half of 2023 to $0.74 in the first half of 2024 due to promotional activities and strategic price adjustments to maintain competitiveness[42] - China single-ticket revenue: The single-ticket revenue in China remained stable at $0.34 in the first half of 2024, unchanged from the same period in 2023, due to optimized e-commerce platform parcel structure and improved cargo categories[47] - New market single-ticket revenue: Single-ticket revenue in new markets increased from $1.60 in the first half of 2023 to $2.14 in the first half of 2024, driven by changes in business volume structure and increased high-quality non-platform customers[49] Strategic Initiatives and Future Plans - The company plans to further expand market share, deepen partnerships with e-commerce platforms, and strengthen infrastructure in new markets[29] - The company increased brand customer acquisition, partnering with notable brands like Red Dragonfly and Wang Xiao Lu, enhancing brand value and customer structure[24] - Automation equipment investment in network endpoints increased, improving operational efficiency and reducing costs for both the

Investment Rating - The report initiates coverage with a "Buy" rating for the company [3][4]. Core Insights - The company is a leader in the Southeast Asian express logistics industry and is expanding its overseas logistics market. It has shown significant revenue growth, with a fivefold increase from 2020 to 2023, and is leveraging its experience in China to enhance its operations in Southeast Asia and other emerging markets [3][10][18]. Company Overview - The company, established in 2019, focuses on express transportation and cross-border logistics services, covering 13 countries including Indonesia, Vietnam, and China. It has a robust logistics network with over 8,500 partners and 19,600 collection and delivery points [10][13]. - The express service revenue has grown significantly, contributing to the overall revenue increase, with a reported revenue of 80.87 billion USD in 2023, up from 14.82 billion USD in 2020 [14][18]. Market Analysis - The domestic e-commerce market in China is experiencing rapid growth, with a 2023 online retail sales figure of 15.43 trillion RMB, reflecting an 11.90% year-on-year increase. The live e-commerce sector is particularly booming, with a market size reaching 4.92 trillion RMB in 2023, up 35.2% from the previous year [21][22]. - The Southeast Asian express market is projected to maintain a compound annual growth rate (CAGR) of 15.5% from 2023 to 2027, with the company holding a 25.4% market share in the region as of 2023 [28][30]. Financial Overview - The company’s total revenue is expected to reach 766.19 billion RMB in 2024, with a projected net profit of -28.25 billion RMB. The earnings per share (EPS) are forecasted to improve from -0.32 RMB in 2024 to 0.22 RMB by 2026 [4][5]. - The gross profit margin has improved from -17.03% in 2020 to 5.34% in 2023, indicating better cost management and operational efficiency [18][19]. Future Outlook - The company aims to consolidate its position in the Chinese market while continuing to expand in Southeast Asia and new markets. The focus will be on leveraging its logistics network and operational strategies to capture additional market share [33][35].

Investment Rating - The report assigns a "Buy" rating to the company, with an initial rating of "No Rating" prior to this report [1][3]. Core Insights - The company is a leader in the Southeast Asian express logistics industry and is expanding into overseas markets, leveraging its experience from China. The financial performance has shown consistent growth in business volume and improving profitability. The integration of advanced domestic practices into Southeast Asia and other emerging markets is expected to yield significant future growth [3][4]. Summary by Sections Company Overview - The company, J&T Express, was established in Indonesia and has rapidly expanded its global presence, focusing on express delivery services. It operates in 13 countries, including major markets in Southeast Asia and China. The express service remains the core business, while cross-border logistics is increasingly contributing to revenue [8][12][14]. Market Analysis - The domestic e-commerce market in China is experiencing significant growth, with live-streaming e-commerce gaining a larger market share. The Southeast Asian express market is projected to maintain a high growth rate, with the company holding a leading market share. Emerging markets are still in the early stages of e-commerce development but show rapid growth potential [19][26][29]. Financial Overview - The company has seen substantial revenue growth from $15.35 billion in 2020 to $88.49 billion in 2023, with a significant improvement in gross margin from -17.03% to 5.34% during the same period. The net profit margin has also shown improvement, indicating better cost management and operational efficiency [16][17][41]. Profitability Forecast and Valuation - The company is expected to generate revenues of RMB 766.19 billion, RMB 910.85 billion, and RMB 1,065.31 billion for the years 2024 to 2026, with corresponding net profits of -28.25 billion, 10.47 billion, and 19.01 billion respectively. The valuation is based on a price-to-sales (P/S) ratio, with estimates indicating a reasonable valuation compared to peers [36][42][41].