EB SECURITIES: Initial rating of "buy" for J&T EXPRESS-W(01519) - Global growth-oriented logistics enterprise.

EB SECURITIES published a research report stating that it initiated coverage on J&T EXPRESS-W (01519) with a "buy" rating. The company's basic advantage in the Southeast Asia market is highlighted, benefiting from the overseas expansion of Chinese e-commerce platforms such as TikTok Shop, and providing stable cash flow contributions. Emerging markets (Latin America, Middle East) are replicating the successful path of Southeast Asia, becoming the second growth pole; strategic improvements in the Chinese market are expected to boost single ticket revenue, strengthening the trend of profit recovery. The bank predicts that the company will achieve adjusted net profits of 4.12/6.54/8.67 billion US dollars in 2025-2027, with year-on-year growth rates of 105.8%/58.8%/32.4% respectively. The company, as a "global growth logistics target", has a certain scarcity. Main points of EB SECURITIES: A global integrated logistics service provider rising from the Southeast Asian market Founded in 2015, the company has built an express network covering 13 countries and regions including China, Southeast Asia, Latin America, and the Middle East. It is a core logistics partner for top platforms such as TikTok Shop, Pinduoduo (including TEMU), and Taobao. In 2024, the company had a 28.6% market share of parcel volume in Southeast Asia, ranking first; 11.3% market share of parcel volume in China, ranking fifth among companies in the network partner model; and 6.1% market share of parcel volume in new markets. Southeast Asia: Profit base, leading the logistics track with scale effects 1) The high growth of the Southeast Asian e-commerce market is driving parcel volume growth. According to Frost & Sullivan, the total parcel volume of the Southeast Asian express market is estimated to reach 15.98 billion pieces in 2024, a year-on-year increase of 25.2%, with an expected compound annual growth rate of 15.2% from 2025 to 2029. 2) TikTok Shop has grown rapidly in the Southeast Asian e-commerce market, with GMV increasing from about $4.4 billion in 2022 to about $22.6 billion in 2024, a compound growth rate of 127%, ranking second in Southeast Asia's e-commerce platforms and narrowing the gap with the leading platform Shopee. J&T EXPRESS and TikTok are the largest service provider and customer in the Southeast Asian region, with the growth of J&T EXPRESS's parcel volume closely related to the expansion of TikTok Shop in Southeast Asia. 3) J&T EXPRESS's expansion of parcel volume and improvement in profitability in Southeast Asia show high consistency. In the first half of 2025, the company's parcel volume in Southeast Asia increased by 57.9% year-on-year, driving a 65.4% year-on-year growth in adjusted EBIT. New markets: Focus on Brazil, Mexico, benefiting from the accelerated overseas expansion of Chinese e-commerce 1) The Latin American e-commerce space is vast, with TikTok Shop leading in new volume. Compared to Southeast Asia and China, the penetration rate of e-commerce in Latin America is low and the e-commerce platform landscape is more fragmented. In recent years, Chinese e-commerce platforms such as AliExpress, SHEIN, TEMU, and TikTok have successively entered Latin America. 2) In the first half of 2025 and before, J&T EXPRESS's parcels in new markets mainly came from TEMU and SHEIN. In February and May of 2025, TikTok Shop launched in Mexico and Brazil respectively. The bank expects that the share of parcels from TikTok Shop processed by J&T EXPRESS will increase. 3) In the first half of 2025, the adjusted EBITDA in new markets turned from a loss to a profit, and the bank expects that the adjusted EBIT for single parcels in the second half of 2025 in new markets will turn positive for the first time at 9 cents. Intense competition in China, "anti-internal-competition" helps to improve profitability. The long-term price war in the Chinese express delivery industry has kept single ticket revenue under pressure, and under the "anti-internal-competition" policy, industry competition is shifting from "volume for price" to a path of high-quality development focusing on "improving quality and efficiency." Risk Warning Macroeconomic and exchange rate risks, industry competition risks, customer dependence risks, losses in emerging markets and execution risks.