Jitu Financial Report: Jitu's total revenue for the full year of 2023 is US$8.849 billion, a year-on-year increase of approximately 22%

The golden age of the express delivery industry is coming to an end. Express delivery companies that used to rely on low-price models to push prices to the extreme are now facing the most severe test. Jitu Express, which has just been listed for less than half a year, handed in its first report card since its listing. The financial report shows that in 2023, the company's total revenue was US$8.849 billion, an increase of about 22% year-on-year from US$7.267 billion in 2022. The company handled a total of 18.8 billion parcels throughout the year, an increase of 29% from 14.6 billion parcels in 2022.

But it is worth noting that despite the increase in business volume and revenue, the net profit suffered a huge loss, with the loss amount reaching US$1.156 billion, or about RMB 8.36 billion.

It is reported that in the same period of 2022, Jitu Express's net profit was US$1.573 billion, or about RMB 11.37 billion. Faced with this "mixed" financial report, Jitu's stock price has already reacted in advance.

For the express delivery industry, low prices are actually not a competitive advantage.

In the middle of last year, the always strong Wang Wei chose to "bow his head" and sold SF Express to Jitu Express for 1.183 billion yuan. It should be noted that in the history of SF Express's development, there are few precedents for selling businesses, either shutting down or internally transferring.

The sale of Fengwang also indicates that the unlimited competition model in the express delivery industry has come to an end. High-end, mid-end and low-end express delivery companies will no longer be able to gain market share through low prices. Even if there were occasional successful models in the past, they will most likely become "losing money to gain publicity" businesses in the end.

For Jitu Express, which started out as an Internet-based company, it is time to end the model of burning money to gain market share and increasing revenue without increasing profits. If calculated from its high point, Jitu's stock price has fallen by more than 30%, and its market value has evaporated by more than HK$44 billion; if calculated from its listing, Jitu has already broken its IPO price.

Moreover, after the new express delivery regulations, express delivery companies with low-price models are being impacted, and the test for Jitu Express has just begun.

The “Fast” of Jitu

Internal fission, followed by entrepreneurship, is the inevitable fate of every Internet company.

In 2015, Li Jie, the former head of OPPO's Indonesian business, founded this express delivery company in Jakarta, the capital of Indonesia.

Fortunately, the company caught the industry's trend right after its establishment. With the rise of Southeast Asian e-commerce companies such as Shopee and Lazada, Jitu Express became the largest express delivery company in Southeast Asia in just five years.

When the business in Southeast Asia grew to a certain scale, Li Jie naturally set his sights on the "fat meat" of the domestic express delivery market, so Jitu Express began to "save the country in a roundabout way."

In 2019, Jitu spent a lot of money to acquire Longbang Express, and obtained the national express business license to officially enter the Chinese market. In order to break through the domestic market, Jitu chose to vigorously acquire.

In March 2020, Jitu, which entered the domestic market, was like a "lone wolf" and single-handedly initiated a price war in the entire industry.

According to media reports, Jitu's early prices per parcel were 1 to 1.5 yuan lower than those of the Tongda Group, and parcels could enjoy a 5 yuan discount on the first-weight parcel in the country, which was half the price of the Tongda Group.

To this end, Jitu has prepared itself to suffer losses for two and a half years. Of course, those who are familiar with Internet entrepreneurship know that spending money to gain market share is the usual strategy of such companies.

In September 2021, Jitu Express acquired and integrated Best Express for 6.8 billion yuan, improving its domestic infrastructure to increase its production capacity and obtain orders from Taobao e-commerce. Since then, Jitu has quickly completed its transformation with the support of emerging e-commerce platforms such as Pinduoduo, Douyin, and Kuaishou.

In November 2022, Jitu Express's daily parcel volume reached 50 million pieces. According to statistics, from 2020 to 2022, the compound annual growth rate of Jitu Express's parcel volume in China reached 140.2%.

All this was achieved thanks to the company's conquest of cities and territories through its low-price model and large-scale mergers and acquisitions.

Since then, Jitu Express, which has been rapidly maturing, has begun to prepare for its listing. In May 2023, Jitu acquired Fengwang, a subsidiary of SF Express, for 1.183 billion yuan.

According to data, on the eve of Jitu Express's IPO, it received a total of US$5.57 billion (approximately RMB 40.3 billion) in financing, and Tencent, Hillhouse Capital, and Sequoia Capital are all its important investors.

On October 27, 2023, Jitu, which had been smooth sailing all the way, was finally listed in Hong Kong with an issue price of HK$12.00 per share, making it the largest IPO in Hong Kong stocks by market value in 2023. By the end of December, it surpassed ZTO Express to become the second largest express delivery company in China after SF Express.

Jitu "Mercury Retrograde"

It is a common problem for many companies to reach the peak as soon as they go public, and Jitu is no exception.

After entering 2024, Jitu began to enter the "Mercury retrograde" period.

On January 26, the official website of the State Post Bureau disclosed that Jitu Express was administratively interviewed by the State Post Bureau due to excessive heavy metal content in its container bags.

In February, because of the Messi incident, Jitu Express was once again caught in the whirlpool of public opinion.

Of course, these are just a microcosm of Jitu’s predicament. What is even more troubling is that in its fourth year of entering the Chinese market, it is still struggling in the quagmire of increasing revenue but not profits.

According to its financial report, from 2020 to 2023, Jitu's net profit attributable to its parent company was -565 million US dollars, -6.047 billion US dollars, 1.656 billion US dollars, and -1.101 billion US dollars, respectively. In other words, Jitu lost 6.057 billion US dollars, or about 43.8 billion yuan, in four years.

The main reason for the loss is that, under its scale, many businesses need to "burn money", and the current situation of Jitu Express's "loss on every delivery" will not change until 2023. The second is Jitu Express's high sales, general and administrative expenses. According to the latest financial report, Jitu's "sales, general and administrative expenses" almost doubled in 2023, from US$1.095 billion to US$2.157 billion.

In terms of major operating regions, the Chinese market, which contributes nearly 60% of revenue, is almost "losing money to gain publicity", with revenue per ticket being $0.34, while the cost per ticket is also $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 cost per ticket.

Self-mockery in finance