Core Viewpoint - Jitu has managed to turn a profit in China despite a 7% decline in average order value, highlighting the intense competition in the express delivery market and the challenges faced by other companies in achieving profitability [3][4]. Group 1: Market Dynamics - The express delivery market in China is characterized by fierce competition, with Jitu entering during a period of intense price wars and emerging as a strong player [3][4]. - In 2024, Jitu's delivery volume in China exceeded that of Southeast Asia by 15.2 billion packages, yet its adjusted EBITDA was significantly lower than that of competitors [3][6]. - The express delivery market has seen a massive increase in volume, with 1.745 billion packages delivered in 2024, quadrupling since 2017, indicating ongoing growth potential [12]. Group 2: Profitability Challenges - The profitability of express delivery companies varies significantly, with Jitu's EBITDA at 3.14 billion yuan compared to SF Express's 32.7 billion yuan, illustrating the challenges of maintaining margins in a low-price environment [6][12]. - The market is heavily influenced by e-commerce, with over 80% of express deliveries linked to online retail, which has led to aggressive price competition [8][12]. - The cost structure of express delivery is highly dependent on volume, with costs per package decreasing significantly as daily volumes increase [11]. Group 3: Competitive Landscape - The express delivery sector is divided into two main categories: time-sensitive deliveries dominated by SF Express and e-commerce deliveries primarily handled by the Tongda system [6][8]. - The anticipated consolidation of the market has not materialized as expected, with the number of major players remaining high despite expectations of a reduction [14][16]. - The entry of new players like Jitu has further complicated the competitive landscape, leading to a situation where the market has not stabilized as hoped [16][20]. Group 4: Role of E-commerce - E-commerce platforms like Pinduoduo have significantly influenced the express delivery market, contributing to a substantial increase in order volume and altering competitive dynamics [22][23]. - The dependency of express delivery companies on e-commerce platforms has created a complex relationship, where platforms can exert significant influence over pricing and service standards [23][24]. - Jitu's rapid growth has been facilitated by its strategic partnerships with e-commerce platforms, allowing it to offer competitive pricing and gain market share quickly [22][25].

Core Insights - The logistics industry in China is experiencing rapid growth driven by e-commerce and consumption upgrades, yet SF Express, the industry leader, is facing significant challenges due to high costs and low margins [2] Group 1: Financial Performance - In 2023, SF Express reported total revenue of 258.4 billion yuan, a year-on-year increase of 6.2%, but net profit fell by 12% to 6.2 billion yuan [3] - The company's operating costs accounted for 88% of total revenue, significantly higher than competitors like Zhongtong and YTO, which range from 75% to 80% [3] Group 2: E-commerce Market Challenges - SF Express's market share in the e-commerce segment declined from 10.2% in 2021 to 8.5% in 2023, while competitors hold over 50% of the market [4] - The average revenue per package for SF Express dropped by 8% to 5.3 yuan, narrowing the price gap with competitors [4] Group 3: International Business Struggles - SF Express's international business accounted for only 6% of total revenue in 2023, with a growth rate of less than 5%, lagging behind competitors like JD Logistics [6] - The company's international network covers only about 50 countries, compared to DHL's presence in 220 countries [6] Group 4: New Business Ventures - SF Express's same-city delivery service generated 6.4 billion yuan in revenue, a 28% increase, but still incurred a loss of 320 million yuan [8] - In the cold chain logistics sector, SF Express's revenue grew by 18% to 9.5 billion yuan, but it holds less than 10% market share, trailing behind JD Logistics and Cainiao [9] Group 5: Strategic Transition - SF Express is attempting to shift from a heavy asset model to an ecosystem-based approach, which poses significant internal challenges [10][11] - The company's traditional management culture may struggle to adapt to the collaborative nature required for an ecosystem strategy [12]