J&T’s adjusted net profit came in at US$153mn in 1H25 (up 66% YoY), which is a mixed bag as the growth was largely driven by the reduction of expense and finance expense while gross profit was just stable YoY. J&T targets to achieve full-year parcel volume growth of 56%/38% in SEA/New markets, with unit EBIT of US$0.07/0.09 per parcel. We fine tune our earnings forecasts in 2025E-27E by -1 to +2%. Our SOTP-based TP is revised up to HK$13.4 (from HK$10), as we roll over our valuation base to 2026E. We continue to like J&T, due to (1) the unmatched competitive edge and market share gain potential in SEA (32.8% in 1H25), and (2) huge potential in New markets such as Brazil and the Middle- East. We think J&T Express offers a unique growth story that can rarely be found in the sector. Maintain BUY.
　　South East Asia (SEA): Aggressive pricing strategy for substantial market share gains. Revenue in 1H25 grew 30% YoY to US$1.972bn, driven by impressive 58% parcel volume growth (to 3.2bn units) but offset by an 18% ASP decline (to US$0.61). Market share in SEA sharply expanded 5.4ppts YoY to 32.8%, which further outpaced that of Shopee (27.7%). As a result of a 17% YoY unit cost reduction, the unit gross margin in 1H25 dropped 23% YoY to US$0.11. We now model a full-year volume growth of 56% YoY with continuous double-digit decrease in ASP.
　　China: Gross margin under pressure but could be stabilized in 2H25E. Revenue in 1H25 grew only 5% YoY to US$3.1bn, driven by 20% parcel volume growth (to 10.6bn units) but offset by 13% decline in ASP (US$0.3). Market share remained stable at ~11%. Given that the unit cost only dropped 10% YoY, the segment’s unit gross profit declined 46% YoY US$0.01. Going forward, we expect the “anti-involution” campaign will help stabilize the ASP.
　　New markets: On track volume growth with solid pricing; huge potential ahead. Revenue in 1H25 grew 24% YoY to US$362mn, driven by 22% parcel volume growth (to 166mn units) and a 2% ASP increase (to US$2.18). Unit gross margin slightly increased 2% YoY to US$0.26/parcel. This year, J&T started cooperation with Mercado Libre (MELI US, NR), the largest e-commerce platform in Brazil. We are incrementally positive on New markets outlook as more e-commerce platforms are entering the Brazilian market, which will offer more opportunities to J&T.