J&T Global Express Limited (1519) Earnings Call Transcript & Summary

Good day, everyone. Welcome to J&T Express 2026 Q2 Operational Results Conference of J&T Express. [Operator Instructions] Now I would like to give the floor to Frank, the moderator of the conference.

Hello, everyone. Welcome to J&T Express 2026 Q2 Operational Results Conference. This is Frank. All the presentation materials for the meeting have been distributed to you via e-mail and uploaded to our website. The management presenting today, including Dylan, CFO of J&T Express; and Haibin, Director of Investment and Capital Markets. The conference will be consisting of 2 sessions. First of all, Haibin will be talking through the company's business performance for the second quarter of 2026, and then we're going to open the floor for Q&A, during which the management will address your questions. Now I give the floor to Haibin.

Hello, everyone. Welcome, everyone, to attend this Q2 of 2026 operational performance announcement of J&T Express. Please allow me to give you the report. The group's total parcel volume reached 9.18 billion pieces in Q2 2026, representing a year-on-year increase of 24.2%. For the first time, we have hit the milestone of handling over 100 million parcels per day on average, making us one of the very few couriers operational operators worldwide with the capacity of consistently processing over 100 million parcels daily, the marks of global expansion. And except for the other markets, you can see that we have been seeing a 32.3% of the percentage against the total in Southeast Asia and other international markets. And now taking a look at the Southeast Asian markets. In total, we've been seeing a kind of daily parcel of 2.75 billion pieces in the second quarter with average daily volume of 30.3 million pieces, a year-on surge of 63.2%. And the key growth drivers behind were, first of all, the e-commerce penetration rate across the Southeast Asia countries is rapidly upward trajectory and the fluctuations of the macro environment has not eased the long-term growth dividend for the e-commerce sector. Second, our e-commerce platform clients kept raising the local investments to the other promotional activities, the free shipping and the others, expanding the very good progress, which drive the e-commerce clients and the companies to achieve the robust growth. Third, we have persisted with the strategy of developing off-platform parcels alongside which the continuous improvement of our product planning capacity is realized and service qualities and brand influence were realized as well. Meanwhile, our platform has raised competitive logic requirement further, leveraging our cost and pricing advantages as well as solid network capabilities, and we have widened the gap against competitors and further elevated our industrial standing. Next, in China, the parcel volume in China reached 6.2 billion pieces in the second quarter with an average daily volume of 68.2 million pieces, representing year-on-year growth of 10.6%. The recovery of our business volume growth were recorded high in Q1 with China with has sustainability. The total year-on-year growth of the domestic courier industry stood at 5% from January to May and growth focus of China courier industry has shifted merely pursuing parcel volume to the sustainable growth feature in coordinating improvement in scale, quality and efficiency. The volume also grow in China has slightly outperformed the industry average, consistent with our guidance that we have issued for the start of the year. And we have consolidated our core logistics network, enhanced timeliness and service quality and cost control capabilities, boost the technology empowerment and also stronger service capabilities and lifted customer satisfaction. At the same time, we've been improving our brand high quality and the other areas as well and driving growth in high-volume parcel growth. For the other markets, the total volume reached 210 million pieces in the second quarter with average daily volume of 2.3 million pieces, representing year-on-year growth of 136.5%. The parcel volume growth in these other markets has accelerated for 5 consecutive quarters, mainly due to the following factors. First of all, the other markets based at the -- both the relatively high per capita GDP and per capita consumption volume and maintain low e-commerce penetration rates with per capita parcel volume far below those of China and Southeast Asia, leaving the potential for development local e-commerce platform. Second, the company continues to export courier operation experience accumulated in China, Southeast Asia and other markets, invested in automated sorting equipment and optimize the overall efficiency and meet the rapid growth of local courier demand and lift the overall efficiency. Third, our service quality and capabilities in Latin America has gained recognition from local clients, and we are gradually deepening our cooperation in the Mercado Libre and largest e-commerce platform in Latin America. Lastly, in other markets, we maintain close global cooperation with the Chinese e-commerce platforms and have achieved a very remarkable growth in investment as well to boost consumption. And also this quarter, we have processed ahead with the global expansion of powered overseas markets with a leading domestic logistics operation experience through multidimensional initiatives, including exporting logistics equipment overseas, replicating the mature business model, potential -- professional talent, leveraging AI capabilities as well. Also in terms of our equipment to export, OSS, the group wholly owned equipment subsidiary, delivers full chain services covering the customized R&D, massive production and on-site installation and commissioning as well as the on-site operation and maintenance and support the upgrading of J&T global network. OSS recently has been seeing very good growth, and we have a project with the Tangerang Network Station in Indonesia. Of the equipment that we put in use, we're going to have the sorting and handling capability improving by roughly 40% with a peak growth to approximately 150%. In capital markets, the company was officially included as the Constitutent Stock of Hang Seng Index in June of 2026, marking J&T successfully entered the rank of Hong Kong-listed blue-chip stocks. Also first, we have attracted buying orders from index tracking ETFs and passing allocation capital with further raised the company's secondary market visibility and liquidity, boost of willingness of overseas sovereign fund and long-term institutional investors to allocate capital and help us to globalize our shareholder structure. Also, in terms of the shareholder returns, the company has continued to reward the shareholders via share buybacks. As June of 30, 2026, the company has repurchased a total of 179 million shares since its IPO with aggregate buyback expenditures reaching HKD 1.39 billion. And also on the June of 2025 -- on [ June of 25, 2026, ] the company announced the approval for a new share buyback performance and raised the total buyback in HKD 2 billion shareholders and also sustained the return to shareholders. At this market, we are finishing this performance announcement for Q2 2026. And now we concern the Q2 financial results. And regarding the financial figures, the company only released semiannual and annual disclosures and generally do not update performance guidance for the quarterly basis. And this exchange is limited to operational data only and no discussion will be held on financial figures. Thank you.

Now we are going to have the Q&A. Let's have the first question. The first question is from Fan Qianlei from Morgan Stanley.

I have 2 questions. The first question is about the Southeast Asia, the per unit profit, whether this is impacted by the oil price and ForEx. We know that you don't comment on the financial figures, but whether or not you're going to share with us some of the quantitative figures and comment. Second question is that just now you have mentioned that in those new markets and emerging countries, what about the progress about the second half of the year and also the next year as well? How do you think about this opening of new markets?

Right. Thank you very much. Let's answer the very first question. First is about the oil price. Actually, as you can see that we have been seeing a very good profit growth, which is in line with our guidance provided in the beginning of the year, so that it is quite stable and the local e-commerce market is growing quite well. So overall speaking, we do not have a big impact as well. So in terms of the petrol price, in terms of the overall impact on our profitability and the overall cost, we have already stated the impact to you previously. So the oil price is accounting for a very low percentage of our total cost. We are at the normal stage. We can have increase of our efficiency. And on the delivery side, we're going to see all new energy vehicles adopted. And in different regions, we're going to see the fuel price subsidies. So overall speaking, offset a little bit about this increased oil price. Overall speaking, we are maintaining the guidance not changed. At the same time, in recent years, we have been seeing that for the oil price, the prices have been dropping from the historical high. So I think that with regards to this particular model, we have more mature model to deal with that. And second, the overall impact has already becoming less versus that in April. So the particular impact to operation is quite controllable. In terms of foreign exchange, I think that it is following the same concept. First of all, in different countries, our overall businesses are still done in local markets with the local currency. So this is not impacting too much of our local business. In terms of different countries, the impact of the ForEx will be a little bit different. So probably you can see that Indonesian currency has been depreciating. But in China and Brazil and Mexico, we've been seeing the appreciation of the currency. And in Malaysia, the ForEx is quite stable. So overall speaking, you can see that we can see a very good offset of the ForEx across different countries in the world. So overall speaking, this is also quite controllable.

Thank you very much. This is Dylan. I will answer the second question. I believe that you should be quite taking care of those markets that we are newly opening in Q2, we are entering to Colombia in starting the operation of courier service. So overall speaking, you can see that the volume is actually growing. We are connecting with some different platforms. So you can see that we have already entered into the local market with the very first cooperator. In terms of the new markets that we are operational, we have been talking about this in different conferences with everyone. I think that in the South America, this is going to be another Southeast Asia market in the world. So it is quite potential. We're going to enter into Peru and the other Central American countries. So Latin America will become the second Southeast Asia market in our total portfolio. Except for the Latin America, probably you've been paying attention to our progress in U.S. and Europe. In the United States, at the current stage, we are still planning in the U.S. We have different plans and under assessment and evaluation. But be a which plan that we adopt to enter the U.S., we can guarantee that we are compliant and operating in a low-risk fashion in the United States. In Europe, we are going to have different kinds of ways of entering to Latin America. And in terms of the choices of the country, we've been already upgrading with you that those big countries in Europe are some of our considerations. And at the current stage, you can see that we have a very huge demand that has not been adopted. And from our perspective, overall speaking, we are now doing the investigation and also starting to plan for Europe. For those newly opened countries, we have certain criteria. When the parcel volume reached to a certain stage and operational for a while, we are going to announce our expectation to everyone. So at the current stage, it takes time for us to have any progress in the Europe. And when we have newly updates, we're going to notify everyone.

Thank you very much. Let's wait for another question. The next question comes [indiscernible] Securities.

My question is about the overall growth rate. In Q2, the growth rate is pretty good. We have been seeing some of the incorrect and imprecise figures during the middle. So I think that this year, in Southeast Asia market and other markets, whether we need to up-regulate the overall growth expectation because in this interim report, this is much better than the announcement made in the beginning of the year. So the second question is that in terms of the momentum and drivers of the growth, this is due to the industry growth and the overall other sectors. So in Southeast Asia and Latin America, what are the key drivers behind the overall growth? If we're looking into the future, next 2 to 3 years and in terms of the overall growth, what do you set this growth drivers and your growth plan? And how do you balance these 2?

Thank you very much for this question. Let's answer the very first question. As we can see that at the current stage, the growth rate is pretty much similar to the guidance provided in the beginning of the year. As we have already stated that we're not going to be talking and discussing about the overall guidance related figures. As for the key update, we are going to give you an announcement and some of the answers during the interim result announcement. So second question is about the key drivers behind the overall growth in Southeast Asia markets and how do we balance in between different factors. As you can see that in the very beginning, we have already illustrated that in Southeast Asia market, we have a very good macro economy, for instance. But overall speaking, the e-commerce platform penetration is not that high. We are going to improve that further. Second point is about those infrastructure of the e-commerce platforms in Southeast Asia market. And at the current stage, we're at a very fast growth track. And this is providing with us a very good infrastructure support. And third, our customers have invested more and further into this particular area to boost the consumption habit over e-commerce platforms in Southeast Asia. And fourthly, we're talking about the overall cost and efficiency in Southeast market are now outperforming that of our competitors. So while we have a positive growth in Southeast Asian market, we are going to further improve the productivity and focus on high-quality delivery as the key targets. I truly believe that the overall growth in South Asian market will be actually a little bit higher than the industry average.

Right. I would like to supplement on the overall question, which is about the growth rate for the next 2 to 3 years or so. Okay. So in terms of this particular answer, we expect that this particular growth will be actually faster. Of course, in the beginning of the year for the Sullivan industrial data, it mentioned the overall growth rate of the courier service in Indonesia, which is going to be 30% above and double-digit growth for the next 5 years. So that is why we are actually over -- we are very much confident that we are going to outperform that of this expected figures, because we have quite proactive marketing strategies, and we have investment on technologies and infrastructure. Also, we are exploring the non-platform businesses. So overall speaking, we are very much confident that we are going to outperform that figure. Another one is about the investment from our clients and customer side. As you can see that in TikTok and [indiscernible], Temu and Shein in Southeast Asia markets. And also, we can see that in this particular recent 2 years, they have been investing heavily and continuously into this area. They have different ways of trying to build and nurture people's mindset of consumption online. And at the current stage in Southeast Asia market, we hope that together with our e-commerce key accounts, we are going to further improve the repurchase rate online and help the consumers to actually buy more from e-commerce platforms and help the e-commerce and online shopping penetrating more. This is going to be our future outlook.

Thank you very much for your question. Now let's wait for the next one. So next question comes from Steve Qiu from Goldman Sachs.

Wonderful performance in Q2. My question is a very quick one. As you have already mentioned, you have emphasized on the collaboration in Latin America with Mercado Libre. So I would like to understand the overall kind of platform and how do you actually touch upon and how do you penetrate into those local markets? And my second question is about the considerations of entering into the Europe. As you have said that in Europe, probably you are going to have asset-light fashion to enter the Europe market as you're seeing that in Latin America. I would like to understand the expectation of the long-term profitability in Europe. Do you think that this is pretty much referring to that of Latin America or going to refer more to Southeast Asia in a sense?

Okay. Thank you very much for this question. Let me answer the first question with regards to the collaboration with Mercado Libre. Actually, we have a very close contact with Mercado Libre. As you can see that in recent years, in terms of the kind of logistics, they are paying attention to that in China and set up the offices here in China to actually do some of the support. So be it we are talking about the Southeast Asia -- I mean, South America, we are also emphasizing a lot the collaboration with them. At current stage, Mercado Libre offers over 100,000 pieces to us. And with 200,000 in the peak season, we do see a very potential growth in the future. While at the same time, we are collaborating with Mercado Libre. And you know that they have a big strategy, which is that they hope to cover more e-commerce customers that are long tail fashioned and in order to have long-term demand acquired. So in local market, our network of service quality as well as the number of the service networks, we are now trying to emphasize on the increase in terms of the numbers. We started to collaborate with Mercado in the mid of last year, and now we are at a very fast ramping up stage. So I believe that at the current stage, the e-commerce platform from China and Asia are now the majority of our contributors to our business, but Mercado Libre is going to be very potential in the near future. We hope that we are going to grow that in the short future.

Thank you very much. And second question is about Europe. We know that in Europe, we are at very early stage. So in terms of the total investment and the other kind of areas, it is still at an early stage. We'll give you a timely update in the future when applies. But still, this is going to be beneficial for us to enter into Europe. First of all, we are going to see a much smaller investment in the future. In terms of the line haul kind of vehicles in Europe is a quite mature market, and we don't need to have a lot of CapEx in Europe. And second is that the launch time will be much quicker and more efficient. And the most important thing is that in the future, we have a lot of flexibilities in Europe. In the future, we believe that we are going to be very flexible in choosing the franchise model or the other models as well. So this is the overall expectation. But in terms of figures, we don't comment in this meeting. Please bear with us.

Now let's wait for the next question. The next question comes from Liu Gangxian from CICC.

This is Gangxian from CICC. Congrats on another wonderful performance in the second quarter. I have a question which is that -- now this is an AI era, and you have mentioned some of the AI applications in your business. I would like to ask you that in terms of AI, what kind of investments that you had and what kind of achievements that you have had? Second question would be that in terms of the regulation environment in overseas, how do you comment on that? Overall speaking, as we have mentioned that this was brought by the investment from our customers. And of course, that we do have not a very good competitiveness. But overall speaking, in Indonesia, we had some kind of investigations and the U.S. Senators, we have been seeing also some of the investigations going on. So from this, do you think that this is going to be something regular and going to be routine in the future? Or in the future, in terms of the regulation environment, do you think that this is going to be providing some of the turbulence to your business or interference and some of the conflicts may happen? How do you comment on this?

Right. Thank you very much for this question. First of all, I'd like to answer the question with regards to artificial intelligence. As for AI large language model in 2025, while it was already very much popular, and we've been seeing all kinds of different AI applications. So for logistics industry and for J&T Express, definitely speaking, we've been spending a lot of time in trying to research on the possible viable ways of helping us to increase our efficiency and lower down the overall cost with our AI technologies and LLMs as well. So at the current stage, we are going to see that there is going to be a very good improvement and helping us to have expectations of the parcel volume handling, the intelligent systems, intelligent logistics and the intelligent sorting, et cetera. These are all going to help us to increase efficiency and lower down the overall cost. Secondly, in the all kinds of different groups, we are going to also try to enhance the efficiency of our meetings and communications. As for logistics industry, in AI, we are more a applier and the company of using AI and developing all kinds of different applications on top of the existing technologies. So now at the same time, with our strategic partner, SF Express, we are also communicating with them in terms of the adoption of AI technology. We truly hope that AI is going to be of great help to lower down the overall cost and increase efficiency in this area. This is pretty much about the artificial intelligence.

Right. Thank you. And let me answer the second question, which is about the potential geopolitical tensions and some of the investigations that might go on. So just now you were talking about this particular kind of event of TikTok in Indonesia. I believe that in the mid of April, we had this kind of investigation going on. But overall speaking, we understood that at the current stage for different customers and also ourselves as well, we are going to make the compliance as a very important red line. So be it you're talking about the local like logistics association or in terms of the communications with the politicians and the local government or some of the regulators, I think that this is a normal behavior at current stage for the key customers, say, TikTok or Temu or Shein, et cetera, in Southeast Asia experiencing any incompliance, no. And second point is about the overall market. As we have already elucidated that before entering into the market, we have to be making sure that we are compliant and we are safe in terms of operation, and please do not worry about this.

Now next question comes from the Changjiang Securities, Lu Sijia.

I would like to ask you the question that in the streamline, I believe that in this quarter, you had actually 30% and 40% of the growth and reached 114 units of the streamlined equipment. So we would like to understand that in the emerging markets, how do you think about this overall CapEx and especially in Latin America? Second is that in the emerging markets, how do you actually comment on the capacity planning? How much of the overall growth you can support with this existing capacity? And third question is that you can see that in Southeast Asia market, in terms of the number of partners, you're optimizing that figure. So how do you actually comment on this particular improvement of your operational efficiency while you are doing integration locally?

Right. Thank you very much. First of all, as we have already witnessed that the network service delivery stations increased, and we have increased 3 units of automation assembly line. And the current stage, it is growing as well in other countries, helping us to boost our parcel volume. And overall speaking, in the second half of the year, when there is actually a much high peak season, we've been seeing positioning upward to increase the coverage rate as well as the readiness of our capacity. In the future, this is going to be the same logic. You can see that the automation lines in Latin America, it is not that rich in Latin America. At the current stage, we have 14 units of automation line, but versus the high growth in Q2, I don't think that this is enough. In the near future, we're going to see further CapEx on this side. In terms of the overall CapEx, at the current stage, we're going to adjust the guidance of USD 700 million to USD 800 million provided being in the guidance of the beginning of the year. This is not going to be changed covering China, Latin -- the Southeast Asia and other markets. But in terms of other markets, we are really emphasizing a lot on the efficient use of CapEx.

Second question is about the Southeast Asia market and in terms of the overall network number. In the second quarter, as you can see that the overall network number is not changing. So overall speaking, this number is quite small. So that is to say that in Southeast Asian market, we are trying to find more excellent franchisees, only they are going to be helping us to expand the network or service network. And second point is that at the current stage, while we are improving our efficiency and improving the automation level of the different service network in different areas, you can see that we are now updating the processing lines to a automated ones. So in the same service network under the same capacity, we're going to see a better and wider coverage and taking more parcels. This is going to be overall trend. In Southeast Asia market, be it the equipment and the service network, the overall planning is there for the purpose to support the overall growth of our demand from our consumers and satisfying the customers' demand as well.