Everbright Securities: Initiates Coverage on S.F. Express-W with "Buy" Rating - Global Growth-Oriented Logistics Enterprise

Everbright Securities releases research report, initiating coverage and giving J&T Express-W (01519) a “Buy” rating. The company’s Southeast Asia business fundamentals are becoming more prominent, benefiting from the China e-commerce outbound dividends of TikTok Shop and others, continuously contributing stable cash flow; emerging markets (Latin America, Middle East) are replicating Southeast Asia’s successful path and becoming the second growth engine; strategic improvements in the Chinese market, with policies to “counter internal competition” expected to boost per-ticket revenue and strengthen profit recovery trends. The bank forecasts that from 2025 to 2027, the company will achieve adjusted net profits of $412 million, $654 million, and $866 million, respectively, with year-over-year growth rates of 105.8%, 58.8%, and 32.4%. As a “global growth-oriented logistics asset,” the company possesses certain scarcity.

Everbright Securities’ main points are as follows:

A global integrated logistics service provider rising from Southeast Asia

Founded in 2015, the company has built a courier network covering China, Southeast Asia, Latin America, and the Middle East, across 13 countries and regions. It is a core logistics partner for top platforms like TikTok Shop, Pinduoduo (including TEMU), and Taobao. By 2024, it achieved a 28.6% market share of parcels in Southeast Asia, maintaining the top position; 11.3% in China, ranking fifth among network cooperation model companies; and 6.1% in new markets.

Southeast Asia: Profitability driven by scale, leading in logistics

1. The high growth of the Southeast Asian e-commerce market drives parcel volume increases. According to Frost & Sullivan, the total parcel volume in Southeast Asia’s express delivery market will reach 15.98 billion parcels in 2024, a 25.2% YoY increase. The industry is expected to grow at a CAGR of 15.2% from 2025 to 2029, maintaining rapid growth. 2) TikTok Shop’s growth in Southeast Asian e-commerce is rapid, with GMV rising from about $4.4 billion in 2022 to approximately $22.6 billion in 2024, a CAGR of 127%. It has become the second-largest e-commerce platform in Southeast Asia, with the gap to leading platform Shopee narrowing continuously. J&T Express and TikTok Shop are the largest service provider and customer in Southeast Asia, respectively, and parcel volume growth at J&T Express is strongly correlated with TikTok Shop’s expansion. 3) The expansion of parcel volume and profitability in Southeast Asia at J&T Express show high consistency, with a 57.9% YoY increase in parcels in the first half of 2025, driving a 65.4% YoY growth in adjusted EBIT.

New markets: Focused on Brazil and Mexico, benefiting from China’s accelerated e-commerce outbound

1. Latin America has vast e-commerce potential, with TikTok Shop leading new growth. Compared to Southeast Asia and China, Latin American e-commerce penetration is low, and the market landscape is more fragmented. Recently, Chinese e-commerce platforms like AliExpress, SHEIN, Temu, and TikTok have entered Latin America. 2) In the first half of 2025 and earlier, parcels in new markets mainly came from Temu and SHEIN. TikTok Shop launched in Mexico in February 2025 and in Brazil in May 2025. The bank expects the share of TikTok Shop parcels handled by J&T Express to increase. 3) Adjusted EBITDA in new markets turned profitable in the first half of 2025. The bank forecasts that the per-ticket adjusted EBIT in these markets will turn positive for the first time in the second half of 2025, reaching 9 cents.

Intense competition in China, “countering internal competition” to boost profitability. Long-term price wars in China’s express delivery industry have kept per-ticket revenue under pressure. Under the “counter internal competition” policy, industry competition is shifting from “price to gain volume” to a high-quality development path focused on improving quality and efficiency.

Risk warnings

Macroeconomic and exchange rate risks, industry competition risks, customer dependency risks, losses during the investment period in emerging markets, and execution risks.