Investment highlights
For the first time, it covered Goku Express-W (01519) to give it an outperforming industry rating. The target price was HK$8.00, based on the SOTP valuation method. The company is a leading express delivery company in Asia with a global business layout (No. 1 in Southeast Asia and No. 5 in China in terms of package volume). Its business covers 13 countries (including Latin America and the Middle East, collectively referred to as new markets below). We are optimistic about the growth prospects brought by the company's perfect network coverage and international perspective. The reasons are as follows:
The global express delivery industry still has potential for growth, and the company's Southeast Asia, China and new markets are at various stages of development. According to Frost & Sullivan data, the number of express shipments in Southeast Asia is expected to increase from 12.8 billion in 2023 to 23.5 billion in 2027 (CAGR is 16.5%); the total number of packages in China will increase from 132.1 billion in 2023 to 201 billion in 2027 (CAGR is 11.1%); and the size of the new market will increase from 3.9 billion in 2023 to 2027 7.1 billion pieces (CAGR is 16.5%). We believe there is still potential for growth in express delivery demand due to factors such as e-commerce development, smaller packages, and increased returns.
Jitu Express is an express delivery company with a global layout: leading in Southeast Asia, strong competitiveness in China, and continuous expansion in new markets (including Latin America and the Middle East). We believe that with its global express delivery network and platform-neutral characteristics, under the operation of an entrepreneurial regional agent model, Jitu is expected to expand globally with diverse e-commerce partners: stabilizing its leading position in Southeast Asia, maintaining competitiveness in China, and expanding rapidly in new markets.
The company's operating leverage gradually became apparent: the Southeast Asian business contributed to steady profit growth, the Chinese region gradually turned losses into profits, and the emerging market business expanded rapidly. In 2023-2025, we expect the company's Southeast Asia, China, and emerging markets business revenue CAGR to be 20.5%, 20.5%, and 43.7%, respectively.
We expect the EBITDA margin in Southeast Asia to stabilize at 14-15%. Operating profit in China will be positive this year, EBITDA in emerging markets will be positive this year, and operating profit may be expected to improve next year.
What is our biggest difference from the market? The market has yet to recognize the company's revenue development potential as a global express delivery company, as well as the company's long-term profit growth potential as operational efficiency improves.
Potential catalysts: China's express delivery competition is evolving towards moderate coexistence, the company's operating efficiency is benefiting from increased scale effects, and revenue growth in new markets has exceeded expectations.
Profit forecasting and valuation
We expect the company's 2024-2025 EPS to be $0.02 and $0.05, respectively. The first coverage was covered using the SOTP valuation method (Southeast Asia business according to 13.6 times EV/EBITDA in 2024; China and other businesses according to the 2024 EV/sales segment valuation) to give GeRabbit Express an outperforming industry rating. The target price was HK$8.0, corresponding to 23 times P/E in 2025. The current price corresponds to 17.1 times PE in 2025, with 31% upside.
risks
The competitive pattern is repeated; demand growth falls short of expectations; overseas policy risks; fuel and labor costs have risen sharply.