IPO | Jitu Express-W is now offering shares and is expected to be listed on October 27

According to Futu News on October 16,$J&T EXPRESS-W (01519.HK)$It was announced that it will issue 326.6 million shares from October 16 to October 19, 2023. The company plans to issue 326.6 million shares, including 32.6552 million shares for public sale and 294 million shares for international sale. The issue price per share is HK$1,200, and each lot is 200 shares. It is expected to be listed on October 27.

Source: Disclosure Yi

Company Overview

Polar Rabbit Express is a global logistics service operator. The express delivery business is in a leading position in Southeast Asia, is competitive in China, and continues to expand to Latin America and the Middle East. Express delivery services span 13 countries, including the largest and fastest growing emerging express delivery market in the world.

The Polar Rabbit Express business began in Indonesia in 2015. With success in Indonesia, it expanded to other countries in Southeast Asia, including Vietnam, Malaysia, the Philippines, Thailand, Cambodia, and Singapore. According to Frost & Sullivan, in terms of package volume in 2022, the company is the number one express delivery operator in Southeast Asia, with a market share of 22.5%.

As of June 30, 2023, the company's business network has fully covered seven countries and regions in Southeast Asia, and the geographical coverage rate of counties and districts in China has also exceeded 99%. According to Frost & Sullivan, Polar Rabbit Express is also the first large-scale express delivery operator in Asia to enter Saudi Arabia, the United Arab Emirates, Mexico, Brazil, and Egypt. It supports these countries as the e-commerce platforms it cooperates with expand new markets.

In order to firmly grasp cross-border logistics opportunities and strengthen ties between countries served by the company, Jitu Express has expanded cross-border logistics services, covering small packages, freight forwarding and warehousing solutions. The company has always helped e-commerce platforms reach regions where traditional logistics service providers lack services, providing supporting express delivery services for leading e-commerce platforms such as Shopee, Lazada, Tokopedia, Pinduoduo, Taobao, Tmall, Shein and Noon, as well as merchants and consumers on short video and live streaming platforms that use social e-commerce services such as TikTok, Douyin, and Kuaishou.

Financial situation

In terms of financial conditions, the revenue achieved by Jitu Express increased by 49.8% from about US$4.852 billion in 2021 to US$7.267 billion in 2022, mainly due to the growth of the company's express delivery services and cross-border express delivery services.

Express delivery service revenue increased 43.6% from US$4.514 billion in 2021 to US$6.483 billion in 2022, mainly due to the company's total package volume increasing 39.0% from 10.5 billion in 2021 to 14.6 billion in 2022. Cross-border service revenue increased 142.5% from US$292 million in 2021 to US$708 million in 2022, mainly due to increased market demand and the company's commitment to business development.

Source: Disclosure Yi

For the six months ended June 30, 2023, Extreme Rabbit Express recorded gross profit of about 194 million US dollars, while in the six months ending June 30, 2022, the company recorded gross loss of 66.1 million US dollars; in the six months ending June 30, 2023, the company's gross margin was 4.8%, while for the six months ended June 30, 2022, the company's negative gross margin was 1.9%.

Industry Overview

According to the value of commodity trade in 2022, China is the world's largest exporter, and China's cross-border e-commerce retail business has a competitive advantage in terms of policy environment, supply chain infrastructure, and supply sources. Driven by the continuous development of China's cross-border e-commerce retail market, the cross-border logistics market is expected to develop rapidly as demand for services increases.

The market size of China's cross-border e-commerce retail market increased from US$201 billion in 2018 to US$442.5 billion in 2022, with a compound annual growth rate of 21.8% from 2018 to 2022. Driven by favorable policies for cross-border e-commerce business, the establishment of cooperation between e-commerce platforms and overseas brands, and the development of international express delivery services, the cross-border e-commerce retail market is expected to reach 1,101.9 billion US dollars in 2027, with a compound annual growth rate of 19.5% from 2023 to 2027.

Source: Disclosure Yi

Global cross-border e-commerce retail industry competitors such as Amazon, eBay, Alibaba, and JD have continued to invest in the Southeast Asian cross-border sector. The cross-border e-commerce retail market is expected to grow from US$64.9 billion in 2023 to US$155.1 billion in 2027, with a compound annual growth rate of 24.3%.

Source: Disclosure Yi

Driven by the rapid development of the e-commerce retail market, the construction of international express delivery services in Southeast Asia, and the continuous development of the Southeast Asia and China Free Trade Zone, the cross-border e-commerce retail market (in terms of transaction volume) has increased from US$12.8 billion in 2018 to US$49.7 billion in 2022. The compound annual growth rate during the period was 40.4%, and is expected to become a growth point for the overall e-commerce retail market in Southeast Asia in the future.

Due to the rapid development of cross-border e-commerce and China's central role as a regional importer and importer, the broad cross-border logistics market in China and Southeast Asia has also experienced significant growth. Looking ahead, the market is gradually returning to normal. Driven by the growth of international trade, the cross-border logistics market is expected to grow from US$260.9 billion in 2023 to US$411.4 billion in 2027, with a compound annual growth rate of 12.1%.

Cornerstone investors

For Cornerstone investors, several Cornerstone investors agreed to subscribe for about 130 million shares at the sale price (assuming no over-allotment rights have been exercised).

Cornerstone investors include:

1. Aspex Master Fund;

2. Jallion Global Limited and Joyous Tempinis Limited;

3. D1 SPV Jupiter (Hong Kong) Limited and D1 SPV Master Holdco I (Hong Kong) Limited;

4. Hidden Hill SPV VIII;

5. SC GGF III Holdco, Ltd. (Sequoia);

6. CELESTIAL OCEAN INVESTMENT LIMITED (by$S.F. Holding (002352.SZ)$indirect wholly-owned);

7. Dahlia Investments Pte. Ltd. (an indirect wholly-owned subsidiary of Temasek);

8. Eternal Earn Holding Limited, Parallel Cluster Investment Limited, and Huang River Investment Limited (by$TENCENT (00700.HK)$wholly-owned);

9. JNRY III HOLDINGS LIMITED (finally managed and controlled by Gao Lin Investment Management Co., Ltd.).

Use of funding

In terms of fund-raising purposes, Extreme Rabbit Express-W expects net proceeds to be approximately HK$3,527.9 billion (assuming no over-allotment rights have been exercised).

According to the prospectus, the company plans to use the net proceeds from the share sale for the following purposes: about 30% will be used to expand the logistics network, upgrade infrastructure and enhance the company's sorting and warehousing capacity in Southeast Asia and other existing markets; about 30% will be used to develop new markets and expand the scope of services; about 30% will be used for R&D and technological innovation; and about 10% will be used for general corporate purposes and operating capital requirements.

Editor/Danial

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