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].

Global Expansion and Market Penetration - J&T Express achieved a peak daily order volume of 50 million in China in 2022[3] - The company expanded into 5 new countries during the pandemic, entering the Middle East, Latin America, and North Africa[3] - J&T Express operates in 17,508 islands in Indonesia, ensuring last-mile delivery even to remote locations[4] - In Saudi Arabia, the company's logistics network spans 5,000 kilometers, overcoming local transportation bottlenecks[4] - The company's global strategy focuses on deep penetration into every island, desert, and remote town[5] - J&T Express emphasizes the importance of respecting and understanding local cultures in its international expansion[4] - The company's entry into the Chinese market in 2019 was described as a high-risk, high-reward move[6] - J&T Express attributes 90% of its success to favorable market opportunities, particularly in Indonesia and China[6] - The company handled 18.81 billion parcels in 2023, a 29.0% YoY increase, with a 369.0% YoY growth in new markets[27] - The company's market share in Southeast Asia increased to 25.4% in 2023 from 22.5% in 2022[27] - The company's market share in China increased to 11.6% in 2023 from 10.9% in 2022[27] - The company's market share in new markets increased to 6.0% in 2023 from 1.6% in 2022[27] - The company achieved over 95% coverage in new markets and over 99% coverage at the county level in China[28] - The company processed a peak of over 16 million parcels per day during the "Double 12" period in Southeast Asia in 2023[29] - The company processed 3.24 billion parcels in Southeast Asia in 2023, a 28.9% YoY increase from 2.51 billion in 2022[30] - The company's market share in Southeast Asia increased to 25.4% in 2023, up 2.9 percentage points from 22.5% in 2022[30] - The company processed 230.3 million parcels in new markets in 2023, a 369.0% YoY increase from 49.1 million in 2022, with market share rising from 1.6% to 6.0%[43][44] - The company strengthened partnerships with cross-border and local e-commerce platforms in new markets, including Shopee, AliExpress, Shein, and Noon[45] - The company invested in infrastructure in new markets, operating 35 transit centers, over 200 trunk vehicles, and more than 1,300 service points as of December 31, 2023[46] - J&T Express holds a 25.4% market share in Southeast Asia by parcel volume in 2023, ranking first for four consecutive years[47] - In China, J&T Express achieved an 11.6% market share in 2023, ranking sixth and increasing by 0.7 percentage points compared to 2022[48] - J&T Express processed 32.4 billion parcels in Southeast Asia in 2023, leading the market[48] - In China, J&T Express handled 153.4 billion parcels in 2023, ranking sixth with an 11.6% market share[50] - J&T Express increased its market share in new markets from 1.6% in 2022 to 6.0% in 2023, a 4.4 percentage point increase[50] - J&T Express operates in Brazil, Mexico, Saudi Arabia, and Egypt, ranking in the top five by parcel volume in these markets in 2023[50] - J&T Express collaborates with major e-commerce platforms including Shopee, Lazada, TikTok, and Temu, enhancing its logistics service competitiveness[49] - The company’s regional agent model enables efficient network management and rapid market entry, reducing capital expenditure[52] - J&T Express focuses on technology R&D, such as developing an order management system tailored for overseas social e-commerce scenarios[49] - The company’s global network supports cross-border e-commerce by providing last-mile delivery services, leveraging its local infrastructure in Southeast Asia and new markets[51] - Geographic coverage in new markets has reached over 95%, with plans to further deepen and densify network coverage[58] - Focus on entering new markets in the Middle East and Latin America, leveraging existing market knowledge and capabilities[59] Financial Performance - Revenue for 2023 reached $8,849,251 thousand, a significant increase from $7,267,428 thousand in 2022[15] - Gross profit for 2023 was $472,798 thousand, compared to a gross loss of $270,238 thousand in 2022[15] - Operating loss for 2023 was $1,766,550 thousand, an increase from $1,389,565 thousand in 2022[15] - Total assets for 2023 amounted to $6,601,414 thousand, up from $5,935,559 thousand in 2022[15] - Adjusted net loss for 2023 was $432,277 thousand, an improvement from $1,488,297 thousand in 2022[15] - Non-current assets for 2023 were $3,464,108 thousand, up from $3,089,262 thousand in 2022[15] - Current assets for 2023 were $3,137,306 thousand, compared to $2,846,297 thousand in 2022[15] - Total equity for 2023 was $2,479,599 thousand, a significant improvement from a deficit of $4,984,248 thousand in 2022[15] - Revenue for 2023 reached $8,849,251 thousand, compared to $7,267,428 thousand in 2022[62] - Gross profit for 2023 was $472,798 thousand, a significant improvement from a gross loss of $270,238 thousand in 2022[62] - Adjusted EBITDA for 2023 was $146,694 thousand, compared to a loss of $894,090 thousand in 2022[62] - Total revenue increased by 21.8% from $7,267.4 million in 2022 to $8,849.3 million in 2023, driven by growth in express services across 13 countries[65] - Express service revenue grew by 24.7% from $6,483.0 million in 2022 to $8,086.8 million in 2023, with parcel volume increasing by 29.0% from 14.59 billion to 18.81 billion[66] - Southeast Asia revenue increased by 10.6% from $2,381.7 million in 2022 to $2,633.4 million in 2023, with parcel volume rising by 28.9% from 2,513.2 million to 3,240.0 million[71] - China revenue grew by 27.7% from $4,096.2 million in 2022 to $5,229.3 million in 2023, with parcel volume increasing by 27.6% from 12,025.6 million to 15,341.4 million[72] - New markets revenue surged by 299.7% from $81.8 million in 2022 to $326.8 million in 2023, with parcel volume growing by 369.0% from 49.1 million to 230.3 million[72] - Cross-border revenue decreased by 6.8% from $707.8 million in 2022 to $659.8 million in 2023 due to business transformation adjustments[72] - Rental income increased by 23.7% from $44.4 million in 2022 to $54.9 million in 2023, driven by vehicle leasing in Southeast Asia and reusable bag leasing in China[68] - Sales of accessories revenue rose by 39.8% from $23.7 million in 2022 to $33.2 million in 2023, primarily due to increased sales of express-related materials[69] - Other income grew by 70.6% from $8.6 million in 2022 to $14.6 million in 2023, mainly due to increased transportation income[69] - Southeast Asia's single-ticket revenue decreased from $0.95 in 2022 to $0.81 in 2023, attributed to promotional activities and strategic price adjustments[73] - Southeast Asia's single-ticket cost decreased from $0.76 in 2022 to $0.67 in 2023, driven by operational optimizations and leveraging China's express delivery experience[74] - The number of Southeast Asia outlets exceeded 10,600, managing over 2,400 network partners, with single-ticket pickup and delivery costs reduced from $0.43 to $0.40[74] - Southeast Asia's transportation fleet grew to over 3,300 vehicles, with single-ticket transportation costs decreasing from $0.22 to $0.17[74] - China's single-ticket revenue remained stable at $0.34 in 2023, with single-ticket costs dropping from $0.40 to $0.34 due to refined management[76][77] - China's transportation fleet exceeded 6,100 vehicles, with single-ticket transportation costs reduced from $0.09 to $0.07[78] - New market single-ticket revenue decreased from $1.67 in 2022 to $1.42 in 2023, while single-ticket costs dropped from $2.05 to $1.41[79][80] - Total operating costs and expenses increased by 21.9% from $8,677.7 million in 2022 to $10,580.0 million in 2023, primarily due to rising fulfillment costs[81] - Fulfillment costs increased by 25.7% from $3,320.2 million in 2022 to $4,172.9 million in 2023, accounting for 45.7% and 47.2% of total operating revenue respectively[82] - Employee costs decreased by 7.5% from $1,290.3 million in 2022 to $1,194.0 million in 2023, primarily due to a decline in share-based compensation expenses[82] - Southeast Asia revenue grew by 13.5% from $1,905.7 million in 2022 to $2,163.1 million in 2023, driven by a 28.9% increase in parcel volume[84] - China revenue increased by 8.6% from $4,760.9 million in 2022 to $5,170.4 million in 2023, with parcel volume rising by 27.6%[85] - New markets revenue surged by 222.5% from $100.8 million in 2022 to $325.2 million in 2023, supported by a 369.0% increase in parcel volume[85] - Gross margin improved from a loss of 3.7% in 2022 to a profit of 5.3% in 2023, marking a turnaround[86] - Adjusted EBITDA turned positive, increasing from a loss of $894.1 million in 2022 to a profit of $146.7 million in 2023[90] - Southeast Asia's adjusted EBITDA rose by 13.3% from $331.6 million in 2022 to $375.7 million in 2023, with margins improving from 13.9% to 14.3%[91] - China achieved its first annual adjusted EBITDA profit of $30.7 million in 2023, compared to a loss of $722.7 million in 2022[91] - Cross-border adjusted EBITDA loss increased to $107.0 million in 2023 from $95.1 million in 2022, primarily due to one-time costs from the shutdown of cross-border parcel business in Q4 2023[92] - New markets adjusted EBITDA loss improved to $81.7 million in 2023 from $73.7 million in 2022, with adjusted EBITDA rate improving from -90.2% to -25.0%[92] - Financial costs remained stable at $80.3 million in 2023 compared to $77.5 million in 2022, mainly due to interest expenses on borrowings[93] - Other income decreased to $46.3 million in 2023 from $98.1 million in 2022, primarily due to policy changes affecting subsidy income[94] - Cash and cash equivalents totaled $1,483.2 million as of December 31, 2023, with operating cash flow of $342.0 million compared to cash used in operations of $519.8 million in 2022[95] - The company's debt-to-asset ratio improved to 62.4% as of December 31, 2023, from 184.0% as of December 31, 2022[95] - Capital expenditures totaled $474.6 million in 2023, down from $580.7 million in 2022[98] - The company acquired Shenzhen Fengwang Information for $63.8 million in May 2023, recognizing goodwill of $33.6 million[100] - The company had 149,186 full-time employees as of December 31, 2023[101] - The company's restricted deposits as collateral amounted to $32.6 million as of December 31, 2023, compared to $41.7 million in the previous year[103] - The company holds convertible bonds issued by Huisen Global Limited with a fair value of approximately $483.5 million, representing 7% of the company's total assets[104] - Huisen Global Limited achieved revenue of RMB 6,960.1 million in 2023, with net assets of RMB 4,037.2 million and current assets of RMB 4,631.8 million as of December 31, 2023[104] - The company recognized a fair value loss of $3.2 million on its investment in Huisen Global Limited's convertible bonds in 2023[104] - Huisen Global Limited plans to expand into new markets including the Philippines, Vietnam, Mexico, and Singapore, in addition to its existing presence in Indonesia and Malaysia[104] - The company has no significant investment or capital asset plans as of December 31, 2023[104] - The company has no significant contingent liabilities as of December 31, 2023[104] - The company raised a net amount of HKD 3,553.50 million from its global offering, with 30% allocated to expanding logistics networks, 30% to entering new markets, 30% to R&D and technological innovation, and 10% for general corporate purposes[161] - As of December 31, 2023, the company had utilized HKD 167.8 million of the net proceeds from the global offering, with HKD 286.5 million remaining unused[162] - The company listed on the Hong Kong Stock Exchange on October 27, 2023, issuing 326,550,400 B shares at HKD 12.00 per share[160] - The company plans to fully utilize the remaining net proceeds from the global offering by the end of 2027[162] Market Trends and Industry Growth - Southeast Asia's nominal GDP reached $3.8 trillion in 2023, with a year-on-year growth of 6.5%[16] - Southeast Asia's social retail total reached $1.0 trillion in 2023, with a year-on-year growth of 5.2%[17] - Southeast Asia's e-commerce retail market transaction volume grew by 22.6% YoY to $189.74 billion in 2023, with e-commerce penetration reaching 18.2%, up 2.6 percentage points[18] - Social e-commerce in Southeast Asia reached $81.95 billion in 2023, accounting for 43.2% of the total e-commerce retail market, with a YoY growth of 36.2%[18] - Southeast Asia's express delivery market handled 12.75 billion parcels in 2023, a YoY increase of 14.4%, with a projected CAGR of 15.0% from 2024 to 2028[19] - China's GDP exceeded RMB 126.1 trillion in 2023, growing by 5.2% YoY, with consumption contributing 82.5% to economic growth[20] - China's e-commerce retail market reached RMB 13.0 trillion in 2023, with a YoY growth of 8.4% and an e-commerce penetration rate of 27.6%[21] - China's social e-commerce market grew from $163.79 billion in 2019 to $742.67 billion in 2023, with a CAGR of 45.9%[21] - China's express delivery industry handled 132.07 billion parcels in 2023, a YoY increase of 19.4%, with service quality improving significantly[22] - New market nominal GDP grew by 8.0% YoY in 2023, reaching $5.9 trillion, with a projected CAGR of 5.1% from 2024 to 2028[23] - New market e-commerce retail transaction volume reached $109.96 billion in 2023, a 27.1% YoY increase, with a projected CAGR of 21.3% from 2024 to 2028[24] - New market express delivery parcel volume reached 3.87 billion in 2023, a 25.0% YoY increase, with a projected CAGR of 18.3% from 2024 to 2028[25] - The global e-commerce retail transaction volume is projected to grow at a CAGR of 9% from 2024 to 2028, with the company's 13 markets exceeding this growth rate[57] - Southeast Asia e-commerce and express delivery market projected to grow at a CAGR of 17.7% and 15.0% respectively over the next five years[58] Operational Efficiency and Cost Management - The company's average single-ticket cost in Southeast Asia decreased by 11.8% YoY to $0.67 in 2023 from $0.76 in 2022[33] - Adjusted EBITDA in Southeast Asia reached $375.7 million in 2023, a 13.3% YoY increase, with an adjusted EBITDA margin of 14.3%, up 0.4 percentage points from 13.9% in 2022[34] - The company's average delivery time in Southeast Asia decreased by 6.5% YoY in 2023, while customer complaint rates continued to decline[32] - The company's cost reduction strategy in Southeast Asia, driven by operational optimization and leveraging China's experience, enabled

Investment Rating - Maintained "Overweight" rating for J&T Express-W (01519) [1] Core Views - J&T Express continues to experience high growth in business volume, with a clear growth trajectory [1] - The company's domestic and cross-border business expansion, coupled with cost optimization, supports its growth potential [6] Business Performance - In 2023H2, J&T Express achieved a domestic business volume of 8.896 billion parcels, a YoY increase of 38.49% [2] - Southeast Asia and new markets saw business volumes of 1.802 billion and 147 million parcels, respectively, with YoY growth of 38.78% and 255.31% [2] - In 2024Q1, the company's total business volume reached 5.032 billion parcels, a YoY increase of 48.5%, with Southeast Asia, China, and new markets contributing 1.026 billion, 3.942 billion, and 64 million parcels, respectively [3] - Market share in Southeast Asia, China, and new markets reached 25.4%, 11.6%, and 6.0% in 2023, with YoY increases of 2.9pcts, 0.7pcts, and 4.4pcts, respectively [2] Financial Performance - In 2023, the domestic segment achieved an adjusted EBITDA of $31 million, turning positive for the first time [5] - Southeast Asia's adjusted EBITDA reached $376 million, a YoY increase of 13.3%, while the new market segment recorded an adjusted EBITDA loss of $82 million [5] - Revenue for 2024-2026 is forecasted at $11.509 billion, $14.033 billion, and $16.558 billion, respectively [6] - Net profit is expected to improve significantly, with forecasts of -$441 million, $173 million, and $342 million for 2024-2026 [6] Cost Optimization and Network Expansion - Unit costs in Southeast Asia, China, and new markets decreased by 11.96%, 14.87%, and 31.25% YoY in 2023 [5] - The company operates over 6,100干线 vehicles in China, including 3,700 self-owned vehicles, and 3,300干线 vehicles in Southeast Asia, with 1,300 self-owned vehicles [5] - Sales, administrative, and general expenses as a percentage of revenue decreased by 6.64pcts to 8.08% in 2H2023 [5] Market Data - Current stock price: HKD 10.50 [3] - 52-week price range: HKD 9.80-16.54 [3] - Market capitalization: HKD 92.52775 billion [3] - Average daily trading volume: HKD 170.05 million [3] Growth Prospects - The company's innovative agent model and cost optimization in domestic markets, combined with overseas market红利, are expected to sustain growth [6] - Deepening cooperation with cross-border e-commerce platforms like SHEIN is likely to drive further business volume growth [6]