1H24 results in line with our expectationsJ&T Global Express announced its 1H24 results: Revenue rose 20.6% YoY to US$4.86bn; gross profit grew 177% YoY to Rmb536mn; adjustedEBITDA increased 796% YoY to US$351mn; adjusted net profit reachedUS$63mn, implying an adjusted net margin of 1.3%, a turnaround from aloss of US$264mn a year earlier. The firm’s 1H24 results were in line withour expectations.
　　In 1H24, revenue from Southeast Asia rose 22.0% YoY to US$1.52bn;revenue from China grew 36.1% YoY to US$3.00bn; and revenue fromemerging markets increased 119.6% YoY to US$292mn.
　　1H24 parcel volume: Total parcel volume rose 38.3% YoY to 11bn units;parcel volume in Southeast Asia grew 42.0% YoY to 2.04bn units; parcelvolume in China increased 37.1% YoY to 8.84bn units; and volume inemerging markets rose 63.8% YoY to 140mn units.
　　Per-parcel data for 1H24: Revenue per parcel in Southeast Asia fell 14.1% YoY to US$0.74, while cost per parcel was US$0.60 (-15.4% YoY). Revenue per parcel in China decreased 0.7% YoY to US$0.34, with cost per parcel at US$0.32 (-8.5% YoY). In emerging markets, revenue per
　　parcel rose 34.0% YoY to US$2.14, while cost per parcel increased slightly by 0.3% YoY to US$1.88.
　　Trends to watch
　　Solid leadership in Southeast Asia; per-parcel cost to continue improving. According to the firm's announcement, its market share in Southeast Asia reached 27.4% in 1H24, an increase of 2ppt from 2023, maintaining the largest market share for the fourth consecutive year. Although the firm's revenue per parcel declined due to competition from e- commerce platforms' self-built logistics services, its gross profit per parcel remained stable at US$0.14 (down US$0.01 YoY and flat HoH) thanks to effective cost reduction and efficiency enhancements. With economies of scale driven by parcel volume growth, we believe the firm will continue to optimize per-parcel costs, unlock pricing potential, gain more marketshare, and solidify its leading position.
　　Adjusted EBITDA in China has turned positive, and bulk orders are likely to continue contributing to the optimization of the business structure. According to the firm's announcement, its market share in　　China rose by 1.1ppt YoY in 1H24, with per-parcel revenue remaining stable YoY and HoH at US$0.34, which we believe indicates that the firm has stabilized its position in China. We expect the firm's leading position in the Chinese market to remain regionally stable, supported by stronger- than-expected demand growth in the express delivery industry (industry parcel volume +23% YoY in 1H24) and business structure optimization driven by bulk orders.
　　We believe the firm will continue on its international development path, with fast-growing emerging markets contributing to revenue growth. We expect its full-year net profit to exceed US$150mn in 2024, achieving profitability for the first time, driven by investments in automation equipment and strengthened economies of scale.
　　Financials and valuation
　　We largely maintain our 2024 and 2025 earnings forecasts. The stock is trading at 19x 2025e P/E. We maintain an OUTPERFORM rating and TP at HK$8.00, implying 23x 2025e P/E and offering 19% upside.
　　Risks
　　Intensifying competitive landscape; weaker-than-expected demand growth; policy headwinds overseas; sharp rise in fuel and labor costs.