Pre-IPO pedia | Shifting IPO from U.S. to Hong Kong, how will Indonesian startup J&T Express evolve in the future?

According to a new market report published by Transparency Market Research, the market in terms of revenue was valued at USD 8183.46 billion in 2015, and is expected to reach USD 15522.02 billion by 2023, growing at a CAGR of 7.5%.

From 2015 to 2024, the market in terms of volume was valued at 54.69 billion tons in 2015 and is expected to reach 92.10 billion tons by 2024, growing at a CAGR of 6.0% from 2016 to 2024.

J&T Express from Indonesia has grown rapidly during this time. Since its official launch, J&T Express has achieved an incredible growth rate: from 0 to 20 million daily orders in less than a year.

How has J&T Express grown at such an amazing rate? IPO Buzz will take you to the story of J&T Express.

Jet Li, a native from Sichuan province, China, was born in 1967 and graduated from the University of Science and Technology Beijing in 1994 with a degree in marketing.

In 1998, he joined BBK and became a general product salesman. Because of his outstanding ability to talk and sell, he was promoted to the manager of BBK's audio division four years later.

In 2008, Jet Li was brought from BBK to OPPO by Duan Yongping as an OPPO regional general manager. After a period of time, Duan sent him to some remote areas of China to hone his skills.

Since OPPO can not open sales channels in these places, various executives have repeatedly returned without success. However, the next month after Jet Li's arrival, OPPO's sales shot up, and his ability was seen as extraordinary.

In 2013, Jet Li, who was looking for a challenge, learned that OPPO wanted to open up a new market in Indonesia and volunteered to go.

At that time, the situation of lost items and delays in express delivery in Southeast Asia was very serious, which seriously restricted OPPO's sales in Southeast Asia's e-commerce channel.

In Indonesia, there was only one national courier network JNE, whose network was not perfect and the long transportation time had made Jet Li suffer.

In 2015, Jet Li and the OPPO founders Tony Chen co-founded J&T Express to address the delivery chaos in Southeast Asia, taking the company's name from their names' initial letters.

In just two years of existence, J&T Express has become the second-largest single-volume company in Southeast Asia and the number one single-day ticketing company in Indonesia's express industry.

In 2019, J&T Express acquired the China express business license after acquiring Shanghai Longbang Express in China and then renamed it Ji Tu Express, which means "super rabbit" in Chinese.

In March 2020, J&T Express officially entered the Chinese market, triggering a change in the Chinese express industry.

After acquiring Best's domestic courier business in China for RMB 6.8 billion in December 2021, J&T Express has a 15% market share in mainland China.

J&T Express is a technology innovative Internet courier company and the first technology-based courier company in Southeast Asia to focus on Internet delivery as its core business.

Its business covers diverse fields as such as express delivery, express transportation, warehousing and supply chain, with business types covering same-city, cross-province and international shipments.

According to its official website, as of January 2021, J&T Express has more than 240 large transit centers, 600 sets of intelligent sorting equipment and 8,000 own vehicles worldwide, and also operates more than 23,000 outlets, with nearly 350,000 employees.

Nowadays, the business of J&T Express covers Indonesia, Malaysia, Thailand, Singapore and many other countries, and has emerged as the largest e-commerce express company in Southeast Asia.

In Southeast Asia, J&T Express is mainly self-operated, while in China, it has adopted a "direct operation + franchise" operation model for rapid expansion.

With the continuous sale of directly managed outlets, JT's business model has gradually changed to “franchise agent-based, direct store-assisted”

Since its establishment, J&T Express has undergone four rounds of financing, with major investors including Tencent, Temasek, High Tide Capital, Sequoia Capital, and SIG.

J&T Express's valuation has grown since its foundation.

On April 7, 2021, J&T Express received a $1.8 billion investment from Boyu Capital, Sequoia Capital and High Tide Capital, at a post-vest valuation of $7.8 billion.

On November 25, 2021, J&T Express received a $2.5 billion investment, valuing at approximately $20 billion.

In the latest round of funding, Boyu Capital, High Tide Capital, Sequoia Capital, and Tencent all participated.

Some investors are wondering how J&T Express can still get such a high valuation when the market share is gradually taken by the major giants in today's highly competitive courier industry. Mooers, what do you think of this?

J&T Express has not published its financial information, but a look at its operations in the Chinese market gives an indication of its financial situation.

Since entering the Chinese market in 2020, J&T Express has emerged as a strong competitor to other courier companies with its unique low-cost model.

Before J&T Express entered the Chinese market, prices in the Chinese express industry were very stable, with the express giants basically keeping express prices above 1 yuan($0.15).

However, after J&T Express entered the market, it directly made the express price below 1 yuan.

Industry insiders reveals that J&T Express has been in a crazy state of losing 100M RMB ($15M) a day to better enter the Chinese express market.

However, there are serious consequences from price wars.

Even though such ultra-low pricing strategy has allowed its business to expand, such large losses are unsustainable.

Its vicious competition disrupted the entire courier market overnight.

In October 2020, J&T Express was subject to a boycott by many Chinese courier companies.

After raising $1.8 billion last April, there are rumors that J&T Express is planning an IPO in the U.S. of more than $1 billion.

A few months later, sources said J&T Express is considering moving its listing to Hong Kong.

The reason for the company's switch of listing location may be related to regulatory scrutiny of overseas listed companies in China. J&T Express may list in Hong Kong and then list a secondary listing in the U.S.

In response to the rumors, institutions such as J&T Express, Bank of America, CICC, and J.P Morgan declined to comment.

Although J&T Express has now reached the eve of its IPO, the road ahead for J&T Express remains bumpy.

Several investors said that the ultra-low price strategy has no solid and long-lasting future.

J&T Express needs to continuously improve its service quality while it is busy grabbing market share so that it can become more and more recognized after the IPO.

Mooers, have you heard of J&T Express? What do you think of the rapid expansion of J&T Express? Feel free to post comments below.