2H24 adjusted net profit beats market consensus
　　J&T Global Express announced its 2H24 results: Revenue rose 12% YoY to US$5.40bn, while gross profit surged 94% YoY to US$542mn. Adjusted EBITDA grew 298% YoY to US$427mn, and adjusted net profit reached US$137mn, implying an adjusted net margin of 2.5%. This marks a turnaround from a net loss of US$168mn a year earlier, exceeding market expectations, mainly due to notable cost optimizations in Southeast Asia.
　　By region: Revenue from Southeast Asia rose 23% YoY to US$1.70bn; revenue from China grew 12% YoY to US$3.39bn; and revenue from emerging markets increased 46% YoY to US$284mn.
　　2H24 parcel volume: Total parcel volume rose 26% YoY to 13.63bn units. Parcel volume in Southeast Asia increased 40% YoY to 2.52bn units, while parcel volume in China grew 23% YoY to 10.97bn units. In emerging markets, parcel volume declined 1% YoY to 145mn units.
　　Per-parcel data for 2H24: Revenue per parcel in Southeast Asia was US$0.67, down 12% YoY, while gross profit per parcel was US$0.14, down 1% YoY. In China, revenue per parcel was US$0.31, down 9% YoY, while gross profit per parcel rose 123% YoY to US$0.02. In emerging markets, revenue per parcel was US$1.96, up 49% YoY, while gross profit per parcel declined to -US$0.04 from US$0.17 a year ago.
　　Trends to watch
　　Solid leadership in Southeast Asia; per-parcel cost likely to improve further. According to the firm's announcement, its market share in Southeast Asia reached 28.6% in 2024, up 3.2ppt from 2023, maintaining the largest market share for five consecutive years. Although the firm's revenue per parcel declined in 2H24 due to competition from e-commerce platforms' self-built logistics networks, its gross profit per parcel remained largely flat YoY and HoH at US$0.14, supported by effective cost reduction and efficiency improvements. Benefiting from economies of scale driven by parcel volume growth, we believe the firm will continue to optimize per-parcel costs, unlock pricing upside, gain additional market share, and further strengthen its leading position
　　The firm’s market share in China reached 11.3%, and we expect its leading position to stabilize. According to the firm's announcement, its　market share in China rose by 0.7ppt YoY to 11.3% in 2024, while per-parcel transportation and sorting costs fell by US$0.02 QoQ to US$0.10. We believe this indicates that the cost gap between the firm and its competitors in China is narrowing. Although the Chinese market may face potential competitive changes in 2025, we expect industry demand to maintain double-digit growth and the firm's leading position in China to remain stable.
　　We believe the firm will remain committed to its international development path and that fast-growing emerging markets will continue to drive revenue growth. We expect its full-year adjusted net profit to more than double in 2025, driven by investments in automation equipment and enhanced economies of scale.
　　Financials and valuation
　　Given potential changes in industry competition, we cut our 2025 earnings forecast by 14% to US$347mn and introduce our 2026 earnings forecast of US$535mn. The stock is trading at 19.7x 2025e and 12.9x 2026e P/E. We maintain an OUTPERFORM rating and roll over our valuation to 2025.
　　Given the rising average sector valuation, we maintain our TP at HK$8.00, implying 26x 2025e and 17x 2026e P/E, offering 34% upside.
　　Risks
　　Intensifying competitive landscape; weaker-than-expected demand growth; policy headwinds overseas; sharp rise in fuel and labor costs.