Southeast Asia And Emerging Markets Will Unlock Long-Term Value

Key Takeaways

• Expansion into technology-driven last-mile logistics and new international markets is enabling diversification and supporting long-term revenue growth.
  
• Focus on operational efficiency, automation, and value-added services is strengthening profit margins and enhancing competitiveness.
  
• Sustained price competition, heavy investment in loss-making new markets, vulnerability to regulatory shocks, client concentration risk, and overcapacity threaten profitability, growth, and margin stability.

Catalysts

An investment holding company, offers integrated express delivery services in the People’s Republic of China, Indonesia, the Philippines, Malaysia, Thailand, Vietnam, Saudi Arabia, the United Arab Emirates, Mexico, Brazil, and Egypt.

• Sustained global growth in e-commerce, especially in Southeast Asia, is driving robust volume expansion (e.g., 41% YoY parcel growth in SE Asia, 29% in China), positioning J&T to capture long-term revenue growth as online commerce penetration deepens in core and new markets.
  
• Accelerating urbanization and digital economy adoption are expanding addressable demand for efficient, tech-enabled last-mile logistics, evidenced by investments in sorting automation and technology-driven efficiency gains, supporting further volume growth and enhanced margins.
  
• Ongoing geographic expansion into emerging markets (Latin America, Middle East), supported by localized network investments and partnerships (e.g., TikTok Shop in Mexico), provides new growth vectors and revenue diversification, with breakeven expected for new markets by 2025 to drive future earnings improvement.
  
• Continuous operational optimization, scale benefits, and cost reductions (14.9% decrease in cost per parcel in SE Asia, self-owned automation in China) enable J&T to maintain competitive pricing while expanding gross profit and EBIT margins, supporting sustainable earnings growth.
  
• Strategic shift to higher-value, non-platform parcels and value-added services (e.g., reverse logistics, B2B cross-border, fulfillment), combined with leading market share in SE Asia, sets up further ARPU and margin improvement, creating potential upside for both revenue and net margins over the medium to long term.

J&T Global Express Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming J&T Global Express's revenue will grow by 14.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from 1.0% today to 4.8% in 3 years time.
• Analysts expect earnings to reach $751.2 million (and earnings per share of $0.09) by about July 2028, up from $100.6 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $898.6 million in earnings, and the most bearish expecting $493 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 17.6x on those 2028 earnings, down from 109.1x today. This future PE is greater than the current PE for the HK Logistics industry at 12.1x.
• Analysts expect the number of shares outstanding to grow by 0.67% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.06%, as per the Simply Wall St company report.

J&T Global Express Future Earnings Per Share Growth

Risks

• Intensifying price competition in both the China and Southeast Asia markets is resulting in continuous declines in revenue per parcel, with management guiding to 5-10% annual parcel price decreases in Southeast Asia over the next 2-3 years; this creates persistent margin pressure and presents a risk to maintaining or growing net margins and long-term earnings if cost reduction cannot keep pace.
  
• Rapid expansion into new and unproven geographies-including the Middle East and Latin America-entails heavy ongoing investment, and the company's new markets segment remains loss-making; if breakeven is delayed or market conditions worsen (such as due to cross-border policy fluctuations or regulatory barriers), this could weigh down group earnings and drag on group profitability for years.
  
• Cross-border logistics and B2C business retrenchment, highlighted by an 88.7% year-on-year revenue decline in 2024 after abandoning certain business lines, suggests vulnerability to regulatory shocks and lack of resilience in key international corridors, potentially limiting revenue diversification and future growth prospects.
  
• The business relies significantly on large e-commerce clients and platform partnerships for parcel volume growth; any shift in contract terms or client strategies (e.g., major platforms in-sourcing logistics or redirecting volume to competitors) would directly threaten revenue stability and growth.
  
• Structural overcapacity and continued entry of local logistics providers in core Asian markets drive sustained downward pricing pressure and inefficient asset utilization, undermining gross profit growth and limiting returns on invested capital-posing a risk to long-term free cash flow and shareholder value.

Valuation

• The analysts have a consensus price target of HK$9.082 for J&T Global Express based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of HK$11.38, and the most bearish reporting a price target of just HK$6.51.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $15.5 billion, earnings will come to $751.2 million, and it would be trading on a PE ratio of 17.6x, assuming you use a discount rate of 8.1%.
• Given the current share price of HK$9.68, the analyst price target of HK$9.08 is 6.6% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.