J&T EXPRESS(1519.HK)：MORE VISIBLE PATH TO ACHIEVE PROFITABILITY; U/G TO BUY-格隆汇

机构：招银国际
研究员：Wayne FUNG

　　J&T achieved net profit of US$31mn in 1H24, a substantial improvement from a loss of US$264mn / US$168mn in 1H/2H23. On the back of on-track cost reduction trend in both SEA and China, we now see a more visible path to achieve sustainable profitability. We revise up our 2024E/25E recurring after tax profit forecast by 12%/7%. While our SOTP-based TP is revised down to HK$10 (from HK$12.8) due to more conservative target multiples following the sector pullback, we see the valuation more reasonable now which presents an entry opportunity. Upgrade to BUY from Hold.
　　SEA: Cost reduction to mitigate ASP pressure. Revenue in 1H24 grew 22% YoY to US$1.52bn, driven by impressive 42% parcel volume growth (to 2bn units) but offset by a 14% ASP decline (to US$0.74). Market share in SEA expanded 2ppt YoY to 27.4%. Driven by a 16% YoY unit cost reduction, the unit gross margin in 1H24 dropped only 8% YoY to US$0.14. We forecast full-year volume growth of 30% YoY with double-digit decrease in ASP.
　　China: Achieved profit on the back of resilient ASP and cost reduction. Revenue in 1H24 grew 36% YoY to US$3bn, driven by 37% parcel volume growth (to 8.8bn units) and a stable ASP (US$0.34). Market share expanded 1.1ppt YoY to 11%. Helped by a 6% YoY decrease in unit cost, the segment achieved unit gross profit of US$0.02. The better-than-expected ASP was driven by an improved customer mix, as well as increases in the proportion of reverse parcels and individual orders. We forecast full-year volume growth of 24% YoY with a relatively stable ASP.
　　New markets: Strong volume growth in 1H24 but expect to slow in 2H. Due to a low base, revenue in 1H24 surged 1.2x YoY to US$292mn, driven by 64% parcel volume growth (to 136mn units) and a 34% ASP increase (to US$2.14). However, we expect the growth rate to slow to mid-teens in 2H24E due to the negative impact on cross-border e-commerce in Brazil (20% tariff on goods 　　Risks: 1) relatively high dependence on the development of the e- commerce industry and key customers; 2) further ASP pressure; 3) fluctuations in foreign exchange rates.