Everbright Securities has issued a research report initiating coverage on J&T EXPRESS-W (01519) with a "Buy" rating. The brokerage highlights the company's solid foundation in Southeast Asia, which benefits from the expansion of Chinese e-commerce platforms like TikTok Shop and provides a steady stream of cash flow. Meanwhile, operations in emerging markets such as Latin America and the Middle East are replicating the successful Southeast Asian model, emerging as a second major growth driver. In China, strategic improvements and "anti-involution" policies are expected to boost revenue per parcel and strengthen the profit recovery trend. Everbright Securities forecasts that the company will achieve adjusted net profits of USD 412 million, USD 654 million, and USD 867 million for 2025, 2026, and 2027, respectively, representing year-on-year growth rates of 105.8%, 58.8%, and 32.4%. The firm views J&T Express as a relatively scarce "global growth-oriented logistics stock."

Key points from the report are as follows: J&T Express is a global integrated logistics service provider that initially grew from the Southeast Asian market. Established in 2015, the company has built a delivery network spanning 13 countries and regions, including China, Southeast Asia, Latin America, and the Middle East. It serves as a key logistics partner for major platforms such as TikTok Shop, Pinduoduo (including TEMU), and Taobao. Key achievements in 2024 include: a 28.6% market share in parcel volume in Southeast Asia, maintaining the top position; an 11.3% market share in China, ranking fifth among companies utilizing a network partner model; and a 6.1% market share in new markets.

In Southeast Asia, the business serves as a profitable base, leading the logistics sector through scale effects. Firstly, the high growth of the Southeast Asian e-commerce market is driving an increase in parcel volume. According to Frost & Sullivan, the total parcel volume in the Southeast Asian express delivery market reached 15.98 billion in 2024, a year-on-year increase of 25.2%. The industry's parcel volume is projected to maintain a compound annual growth rate of 15.2% from 2025 to 2029. Secondly, TikTok Shop has experienced rapid growth in the Southeast Asian e-commerce market. Its GMV surged from approximately USD 4.4 billion in 2022 to about USD 22.6 billion in 2024, achieving a compound annual growth rate of 127% and rising to become the second-largest e-commerce platform in the region, steadily narrowing the gap with the leading platform, Shopee. J&T Express and TikTok are each other's largest service provider and customer in Southeast Asia, and the growth in J&T's parcel volume is strongly correlated with the expansion of TikTok Shop in the region. Thirdly, the increase in parcel volume for J&T Express in Southeast Asia shows a high correlation with improvements in profitability. In the first half of 2025, the company's parcel volume in Southeast Asia grew 57.9% year-on-year, driving a 65.4% year-on-year increase in adjusted EBIT.

In new markets, the company is focusing on Brazil and Mexico, benefiting from the accelerated overseas expansion of Chinese e-commerce. Firstly, the Latin American e-commerce market offers vast potential, with TikTok Shop leading new growth. Compared to Southeast Asia and China, Latin America has lower e-commerce penetration and a more fragmented platform landscape. In recent years, Chinese e-commerce players like AliExpress, SHEIN, Temu, and TikTok have entered the Latin American market. Secondly, prior to and including the first half of 2025, the majority of J&T Express's parcel volume in new markets originated from Temu and SHEIN. Following the launch of TikTok Shop in Mexico in February 2025 and Brazil in May 2025, the brokerage expects the proportion of parcels from TikTok Shop within J&T's handled volume to increase. Thirdly, adjusted EBITDA for the new markets turned positive in the first half of 2025. Everbright Securities anticipates that adjusted EBIT per parcel in new markets will turn positive for the first time in the second half of 2025, reaching 9 US cents.

In the highly competitive Chinese market, "anti-involution" measures are aiding profit improvement. Long-term price wars in China's express delivery industry have persistently pressured revenue per parcel. Under the "anti-involution" trend, industry competition is shifting from a "volume-for-price" approach to a high-quality development path focused on "enhancing quality and efficiency."

The report also notes risk factors, including macroeconomic and exchange rate risks, industry competition risks, customer concentration risks, as well as losses during the investment phase in emerging markets and execution risks.