J&T reported an impressive set of operating data in 2Q25, with parcel volume growing at an average of 24% YoY, driven by the robust SEA market (+66% YoY). We revise our earnings forecast in 2025E/26E by +18%/-2%, after revising up our parcel volume forecast with a slightly reduction on pricing assumptions. Our SOTP-based TP is revised up to HK$10 (from HK$6.9). We believe the market share gains story in SEA market makes J&T a unique play in the HK market. Maintain BUY.
　　Key takeaways from 2Q25 call:
SEA volume +66% YoY to 1.69bn units. This is impressive as the growth rate (YoY) accelerated from 50% in 1Q25. Management revealed that it benefited from the strong sales growth of Temu, Shein and TikTok in the region. Management believes that the company has further widened the advantage over the major peers in terms of parcel volume growth.
China volume +15% YoY to 5.6bn units. The growth rate (YoY) slowed from 27% in 1Q24. The largest customer is PDD, followed by Douyin and Alibaba. The reverse parcel and individual orders, which generally carry higher value compared with e-commerce parcels, accounted for 7% of the company’s total volume in China. Management tone was conservative during the call, given the uncertainties arising from the fierce price competition.
New markets volume +24% YoY to 89mn units. The growth was driven by Brazilian market. J&T started cooperation with Mercado Libre (MELI US, NR) this year. Meanwhile, more ecommerce platforms are entering the Brazilian market, which will offer growth opportunities to J&T.
　　Risks: 1) ASP pressure; 2) fluctuations in foreign exchange rates.