A huge loss of 8.36 billion, and more dangerous signals were exposed
The golden age of the express delivery industry is coming to an end.
In the past, relying on the low-price model, the price of the extreme express company, is suffering the most severe test.
On March 22, J&T Express, which had just been listed for less than half a year, handed over its first report card since its listing, and the financial report showed that in 2023, the company's total revenue will be US$8.849 billion, a year-on-year increase of about 22% compared with US$7.267 billion in 2022. The company handled a total of 18.8 billion parcels for the year, up 29% from 14.6 billion parcels in 2022.
However, it is worth noting that despite the increase in business volume and revenue, the net profit has suffered a huge loss, with a loss of 1.156 billion US dollars, or about 8.36 billion yuan.
It is reported that in the same period of 2022, the net profit of J&T Express will be 1.573 billion US dollars, or about 11.37 billion yuan. In the face of this "mixed" financial report, J&T's stock price has reacted in advance.
For the express delivery industry, in fact, low prices are not competitive.
In the middle of last year, Wang Wei, who has always been strong, chose to "bow his head" and sold Fengwang to J&T Express for 1.183 billion yuan. You must know that there are few precedents in the history of SF's development to sell its business, either shutting down or merging internally.
The sale of Fengwang also indicates that the unlimited competition model of the express delivery industry has come to an end. High, medium and low-end express delivery companies are no longer able to conquer the city through low prices, even if there was an occasional successful model in the past, there is a high probability that it will eventually become a "loss-making" business.
For J&T Express, which started in the Internet model, it is time to end the model of burning money for the market and increasing income without increasing profits. If calculated from the high, J&T's share price has fallen by more than 30%, and its market value has evaporated by more than 44 billion Hong Kong dollars;
And after the new regulations on express delivery, the low-price mode of express delivery companies are being impacted, and the test of J&T Express has just begun.
The "fast" of the pole rabbit
Internal fission, followed by entrepreneurship, is the fate that every Internet company cannot avoid.
In 2015, Li Jie, the former head of OPPO's Indonesian business, established this express delivery company in Jakarta, the capital of Indonesia.
Fortunately, this company has just caught the wind of the industry. With the rise of Southeast Asian e-commerce companies such as Shopee and Lazada, J&T Express has become the largest express delivery company in Southeast Asia in just five years.
When the business in Southeast Asia became large-scale, Li Jie naturally focused on the "fat" of the domestic express delivery market, so J&T Express began to "save the country by curve".
In 2019, J&T spent a lot of money to get the national express business license for Longbang Express and detour, and officially entered the Chinese market. In order to break through in the domestic market, J&T chose to vigorously merge and acquire.
In March 2020, J&T, which entered the domestic market, was like a "lone wolf", provoking a price war for the entire industry by itself.
According to media reports, in the early days, J&T could be 1 to 1.5 yuan lower per ticket than the Tongda Department, and the first 5 yuan discount in the country was sent, which was half cheaper than the Tongda Department.
For this reason, J&T is ready to lose money for two and a half years, of course, those who are familiar with Internet entrepreneurship know that burning money for the market is the consistent way of this type of enterprise.
In September 2021, J&T Express acquired and integrated Best Express for 6.8 billion yuan, improving its domestic infrastructure, thereby increasing the upper limit of production capacity and obtaining orders for Tao e-commerce. Since then, J&T, with the blessing of emerging e-commerce platforms such as Pinduoduo, Douyin, and Kuaishou, has rapidly completed its transformation.
In November 2022, J&T Express's single-day parcel scale reached 50 million pieces. According to statistics, from 2020 to 2022, the compound annual growth rate of J&T Express's parcel volume in China reached 140.2%.
And all this is due to the low-price model of land grabbing and large-scale mergers and acquisitions.
Since then, the rapidly maturing J&T Express has begun to prepare for the listing in full swing. In May 2023, J&T acquired Fengwang, a subsidiary of SF Express, at a price of 1.183 billion yuan.
According to the data, on the eve of the IPO of J&T Express, it received a total of 5.57 billion US dollars (about 40.3 billion yuan) in financing, and Tencent, Hillhouse, and Sequoia are all important investors.
On October 27, 2023, J&T, which had a smooth journey, was finally listed in Hong Kong with an issue price of HK$12.00 per share, making it the largest IPO in Hong Kong in 2023. By the end of December, it surpassed Zhongtong Express to become the second largest express company in China after SF.
J&T "Water Reversal"
The high point of listing is a "common problem" of many companies, and J&T has not been exempt from vulgarity.
After entering 2024, J&T will begin to enter the "water reversal" period.
On January 26, the official website of the State Post Bureau disclosed that J&T Express was administratively interviewed by the State Post Bureau due to the problem of excessive heavy metals in container bags.
In February, because of the Messi incident, J&T Express was once again involved in the whirlpool of public opinion.
Of course, these are just a microcosm of the dilemma of J&T, and what is more troublesome is that it is still struggling in the quagmire of increasing revenue but not increasing profits in the fourth year of its entry into the Chinese market.
According to its financial report, from 2020 to 2023, J&T's net profit attributable to its parent company will be -565 million US dollars, -6.047 billion US dollars, 1.656 billion US dollars, and -1.101 billion US dollars. In other words, J&T lost 6.057 billion US dollars, or about 43.8 billion yuan, in four years.
The main reason for the loss, the first is that under its scale, many businesses need to "burn money", and the status quo of J&T Express's "sending a single loss and losing a single order" will begin to change in 2023. According to the latest financial report, J&T's "selling, general and administrative expenses" will almost double in 2023, soaring from $1.095 billion to $2.157 billion.
From the perspective of the main business regions, the Chinese market, which contributes nearly 60% of the revenue, is almost "losing money and making money", with a single ticket income of US$0.34 and a single ticket cost of US$0.34. In the Southeast Asian market, which contributes about 30% of revenue, the decline in revenue per ticket is significantly faster than the decline in the cost of a single ticket.
In addition, a more dangerous signal is that J&T's current share price has broken down, and if buybacks and reclassifications are not considered, domestic and foreign star institutional investors such as Hillhouse Capital, Sequoia China, Boyu Capital, Tencent Investment, D1 Capital and Temasek, which participated in Series A and subsequent rounds, have all lost money. In the future, if these shareholders sell if the ban is lifted, the impact on J&T's stock price is bound to be very large.
According to the transaction data, at present, because the shares of many shareholders are still in the lock-up period, the average daily transaction volume of J&T Express fluctuates around 50 million Hong Kong dollars, which is obviously not enough to reflect the company's current situation for a 100-billion-level listed company.
Referring to other Hong Kong listed companies, the lifting of the ban will generally cause sharp fluctuations in stock prices, including Baiguoyuan, Hongjiu Fruits, Keep, Feitian Yundong and other companies have fallen sharply because of the lifting of the ban, with the six-month lifting period approaching, the danger of J&T Express is approaching, whether it can escape this "curse", it still needs time to verify.