Express delivery overseas is the general trend. Southeast Asia and emerging express delivery markets have broad prospects; Jitu Express has strong channel advantages in terms of international layout, and there is broad room for growth.
Jitu Express is working on both domestic and foreign channels, and its diverse layout opens up room for growth. Jitu Express was founded in Indonesia in 2015, and expanded its business layout to Vietnam, Malaysia, the Philippines, Thailand, and Cambodia in 18-19. The company officially entered the Chinese market in '20 and completed the acquisition of Baishi Express in '21, achieving a leap in business volume and production capacity; the subsequent company acquired Fengwang in May '23, strengthened cooperation with SF Express and laid a good foundation for the subsequent internationalization process. Jitu Express also continues to speed up the pace of going overseas. In 2022, it began operating an express delivery network in Saudi Arabia, the United Arab Emirates, and Latin America; in June of the same year, Jitu Express officially operated in Egypt and began leveraging the African market.
In terms of package volume in 2022, Jitu Express became the number one express delivery operator in Southeast Asia with a market share of 22.5%. In the same year, Jitu Express's market share in China reached 10.9%. Following the narrowing of losses in the Chinese market and the continued contribution of the Southeast Asian business to profit, the company changed its adjusted EBITDA from US$894 million in 2022 to US$39 million in 2023H1, turning a loss into a profit.
It has a strong shareholder background and a strong channel advantage in terms of international layout. In addition to Li Jie, the controlling shareholder, the major shareholders include many well-known institutional investors such as Tencent, Boyu Capital, and ATM Capital, which have strong financing capabilities. In terms of operating models, Jitu Express has pioneered a highly scalable regional agency model. As of June 2023, Jitu Express has 104 regional agents and about 8,700 network partners. At the same time, thanks to the fact that OPPO and VIVO Group accumulated a large number of international channels in the early stages of overseas travel, the localized network system developed rapidly.
Express delivery overseas is the general trend, and the prospects for Southeast Asia and the emerging express delivery market are broad. Driven by factors such as the demographic dividend, the expansion of the scale of foreign investment, and policy support, the Southeast Asian market and emerging markets, demand in the e-commerce market continues to grow, and there is plenty of room for future growth. The Southeast Asian market is expected to have a compound annual growth rate of 15.5% in the 2023-2027 period. The express delivery markets in Saudi Arabia, the United Arab Emirates, Mexico, Brazil and Egypt are expected to develop further from 2023 to 2027, with compound annual growth rates of 20.6%, 21.0%, 18.7%, 16.1% and 15.3%, respectively.
Investment advice: Jitu Express has a strong channel advantage in terms of international layout. At the same time, along with the increase in business volume, the scale effect of the company is expected to be reflected. We are optimistic about turning a loss into a profit in the next 2 years. Net profit for 23-25 is expected to be -10.7/-6.9/$0.95 billion. For the first time, coverage gave a “Highly Recommended” rating.
Risk warning: There is a risk of macroeconomic decline, intense price war in the express delivery industry, international layout falling short of expectations, and large fluctuations in stock prices.