CICC (China International Capital Corporation): Maintains outperform rating on J&T EXPRESS-W (01519), target price of 11.1 HKD.

Zhongjin released a research report stating that the profit forecast for J&T EXPRESS-W (01519) in 2025/2026 is 319/470 million US dollars, with the current corresponding P/E ratio of 37/25 times for 2025/2026. The rating is maintained as outperforming the industry. Considering the upward trend in sector valuation, the target price of 11.1 Hong Kong dollars is maintained, corresponding to a P/E ratio of 40/27 times for 2025/2026, with a 9% upside potential from the current price. Recently, the company disclosed 3Q25 operating data: Southeast Asia business volume increased by 79% year-on-year to an average of 21.7 million items per day, China business volume increased by 10% year-on-year to an average of 60.6 million items per day, and new market business volume increased by 48% year-on-year to an average of 1.1 million items per day. The bank believes that the company's Southeast Asia and new market business volumes exceeded the bank's expectations, and is optimistic about the company's international market share expansion progress. Southeast Asia: The order volume may steadily maintain the first market share as it grows with the social e-commerce, and it is reaffirmed that the express delivery landscape optimization in 2025 is expected to reach a turning point, with single ticket EBIT expected to remain stable. The bank believes that the Southeast Asia e-commerce retail market is still in a high-growth stage. On the e-commerce market level, the bank believes that the trend of free shipping for e-commerce deliveries in Southeast Asia this year is expected to further stimulate the development of consumer online shopping habits. Therefore, J&T EXPRESS-W, as the market leader in the express delivery industry, is expected to continue to widen the gap with other third-party logistics companies due to the cost advantages of economies of scale. According to the company's announcement, market share of the fourth and fifth-ranked third-party logistics providers in 1H25 decreased year-on-year by -1.2ppt to 5.5% and -0.9ppt to 4.4%, while J&T EXPRESS-W's market share increased year-on-year by +5.4ppt to 32.8%. In terms of e-commerce market share, social e-commerce platforms like TikTok lead the way in exploring incremental markets due to their natural advantage in content e-commerce. Therefore, J&T EXPRESS-W, as a third-party logistics provider, is expected to gain a larger share of the incremental demand due to its independence. The bank reiterated that the Southeast Asia express delivery landscape is expected to further optimize this year, with J&T EXPRESS-W's business volume expected to grow by over 50% year-on-year, and single ticket EBIT may remain stable with cost optimization. New markets: The industry development is still at an early stage, and the company's parcel volume growth is expected to remain high with the penetration of e-commerce. According to Morningstar Ventures, the GMV of TikTok Shop in Brazil has increased from 1 million US dollars in May to 45 times to 48.135 million US dollars in August. The bank believes that the development of the Latin American e-commerce industry is still in its early stages, and J&T EXPRESS-W, as a third-party logistics supplier for China's outbound e-commerce platform and the local e-commerce platform MercadoLibre, is expected to benefit from the increase in e-commerce penetration, with the parcel volume expected to maintain high growth. China: In the short to medium term, hindered by price wars, the second half of the year may see some easing with the "anti-dulling" measures, and progress in cost optimization is being observed.