Key takeaways from J&T’s prospectus: rapid China growth offsets slowing SEA numbers

J&T Global Express Limited, the logistics service provider that operates under the brand J&T Express (J&T), has released its draft prospectus on June 16 as part of its plans to list on the Hong Kong Stock Exchange.

While heavily redacted, the document provides useful information on the company’s financials, business model, and growth drivers.

Here are our key takeaways.

1. Play on ecommerce in emerging markets

J&T first started operating in Indonesia in 2015, riding on the growth of ecommerce in Southeast Asia’s largest market.

Since then, it has expanded to six other countries in the region, as well as moved into China, the Middle East, and Latin America.

Image credit: Timmy Loen

The markets J&T entered in 2022 are linchpins of their regions. Saudi Arabia, the United Arab Emirates, and Egypt are three of the four biggest economies in the Middle East and North Africa, while Brazil and Mexico are the two countries with the largest gross domestic product in Latin America.

2. Serving the titans of ecommerce

The company’s customers include its network partners, local logistics firms in a specific region that operate their own facilities and handle first-mile pickup and/or last-mile delivery. These firms sign cooperation agreements with J&T, whose regional operating entities provide parcel sorting and line haul services for a fee.

J&T also caters to the merchants and consumers of ecommerce platforms such as Shopee, Lazada, Tokopedia, Pinduoduo, Taobao, Tmall, Shein, and Noon. Short-video and livestreaming platforms like TikTok, Douyin, and Kuaishou work with the firm as well.

However, this model differs throughout regions. In Southeast Asia, for instance, ecommerce sites have significant influence over the shipping method used by merchants on their platform.

These firms enter into direct agreements with express delivery service providers like J&T to purchase their services in bulk. J&T, in turn, negotiates agreements with these ecommerce platforms on a country-by-country basis. In short, these players are the logistics firm’s direct customers and from which it generates a substantial portion of its Southeast Asian revenue.

J&T Express employees prepare packages / Photo credit: J&T Express

In contrast, J&T’s direct customers in China are local logistics companies (its network partners) rather than ecommerce platforms. This is because the ecommerce industry and express delivery services in the country are highly developed and standardized, and merchants can choose their preferred express delivery service providers from a list.

3. Strong revenue figures in China offset sluggish SEA growth

4. Customer-cum-competitor

5. Drivers going forward