IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

J&T Global Express  / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/j-t-global-express" target="_blank" data-smartkarma-citation="entities:36819:1" rel="noopener">J&amp;T Global Express (1936374D CH)</a>, a leading express delivery business in Southeast Asia and China has filed for a HKEx IPO to raise US$1 billion, according to press reports.   </li>
<li>In <em><strong><a href="https://www.smartkarma.com/insights/j-t-global-express-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:104964" rel="noopener">J&amp;T Global Express IPO: The Bull Case</a></strong></em>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The key elements of the bear case rest on organic revenue decline in SEA/China, deteriorating contract liabilities, SEA margin pressure, high cash burn and weak balance sheet.</li>
</ul>



J&amp;T Global Express (1936374D CH), a leading express delivery business in Southeast Asia and China has filed for a HKEx IPO to raise US$1 billion, according to press reports.   
In J&amp;T Global Express IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The key elements of the bear case rest on organic revenue decline in SEA/China, deteriorating contract liabilities, SEA margin pressure, high cash burn and weak balance sheet.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/j-t-global-express" target="_blank" data-smartkarma-citation="entities:36819:1" rel="noopener">J&amp;T Global Express (1936374D CH)</a>, a leading express delivery business in Southeast Asia and China has filed for a HKEx IPO to raise US$1 billion, according to press reports.   </li>
<li>J&amp;T is the number one express delivery operator in Southeast Asia by parcel volume from 2020 to 2022, according to Frost &amp; Sullivan. </li>
<li>The key elements of the bull case rest on large addressable markets, market share gains, robust reported revenue growth and narrowing losses which set a path to profitability.</li>
</ul>



J&amp;T Global Express (1936374D CH), a leading express delivery business in Southeast Asia and China has filed for a HKEx IPO to raise US$1 billion, according to press reports.   
J&amp;T is the number one express delivery operator in Southeast Asia by parcel volume from 2020 to 2022, according to Frost &amp; Sullivan. 
The key elements of the bull case rest on large addressable markets, market share gains, robust reported revenue growth and narrowing losses which set a path to profitability.


APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/j-t-global-express" target="_blank" data-smartkarma-citation="entities:36819:1" rel="noopener">J&amp;T Global Express (1936374D CH)</a> is looking to raise about US$1bn in its upcoming Hong Kong IPO.</li>
<li>J&amp;T Global Express (J&amp;T) is a global logistics service provider. </li>
<li>As per Frost &amp; Sullivan (F&amp;S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.</li>
</ul>



J&amp;T Global Express (1936374D CH) is looking to raise about US$1bn in its upcoming Hong Kong IPO.
J&amp;T Global Express (J&amp;T) is a global logistics service provider. 
As per Frost &amp; Sullivan (F&amp;S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.


Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Thematic (Sector/Industry)

<ul>
<li>Gross margin compression in China's express industry has been going on for years and predates the Covid crisis. But margins have enjoyed a modest recovery since late 2021</li>
<li>Since 2019, margins have fallen and the distribution of profits among China's listed express companies has changed dramatically, with two clear-cut losers</li>
<li>Even though two listed express companies have seen their profitability compressed dramatically, there are no signs of industry consolidation -- and some parties like it that way</li>
</ul>


Gross margin compression in China's express industry has been going on for years and predates the Covid crisis. But margins have enjoyed a modest recovery since late 2021
Since 2019, margins have fallen and the distribution of profits among China's listed express companies has changed dramatically, with two clear-cut losers
Even though two listed express companies have seen their profitability compressed dramatically, there are no signs of industry consolidation -- and some parties like it that way


Chinese Express Consolidation? Lesser Players Battered for Years, But Still No Knockout Punch

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zto-express" target="_blank" data-smartkarma-citation="entities:23628:1" rel="noopener">ZTO Express (ZTO US)</a> parcel volume increased by 20.5% Y/Y in Q1, better than market growth</li>
<li>Unit prices fell by 3.7%, slightly worse than peers in Q1 2023, and Revenue missed consensus</li>
<li>EPS beat expectations on lower unit costs, and management raised full-year volume target</li>
</ul>



ZTO Express (ZTO US) parcel volume increased by 20.5% Y/Y in Q1, better than market growth
Unit prices fell by 3.7%, slightly worse than peers in Q1 2023, and Revenue missed consensus
EPS beat expectations on lower unit costs, and management raised full-year volume target


ZTO Express Q1 Results Surprise: Despite Lower Pricing, Margins Up Y/Y | Mgmt Raises Volume Guidance

Hong Kong

J&T Global Express Limited operates as a global logistics service provider. The Company offers road express delivery, air express transportation, supply chain warehousing, and other value added services. J&T Global Express conducts business in China, Philippines, Malaysia, Thailand, Vietnam, and other countries.

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J&T Global Express (1519 HK)

J&T Global Express IPO: The Bear Case

The key elements of the bear case rest on organic revenue decline in SEA/China, deteriorating contract liabilities, SEA margin pressure, high cash...

Arun George

J&T Global Express IPO: The Bull Case

The key elements of the bull case rest on large addressable markets, market share gains, robust reported revenue growth and narrowing losses which...

Arun George

J&T Global Express Pre-IPO Tearsheet

J&T Global Express (1936374D CH) is looking to raise about US$1bn in its upcoming Hong Kong IPO. J&T Global Express (J&T) is a global logistics...

Clarence Chu

Chinese Express Consolidation? Lesser Players Battered for Years, But Still No Knockout Punch

Margins in China's express sector have been falling for years. However, there are few signs of consolidation: companies remain profitable, and...

Tracking Traffic

ZTO Express Q1 Results Surprise: Despite Lower Pricing, Margins Up Y/Y | Mgmt Raises Volume Guidance

ZTO's Q1 results showed strong volume growth, but also weaker unit pricing and a lack of control over SG&A expenses. We retain our negative view on...

Tracking Traffic

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