Share swap with SF to help expand new markets

Shareswap with SF to helpexpandnewmarkets Target PriceHK$13.40Up/Downside14.1%Current PriceHK$11.74 J&T andSF (6936 HK / 002352 CH, NR)announced a share-swap agreementthis morning. We believe itis an important strategic co-operationthatallowsboth companies to leverage their valuable resources to achieve synergies.Management arranged a conference call this morning.Key takeaways:Inoverseasmarkets, J&T can leverage SF’s first-mile,cross-border line haul,warehousesand parcel lockerstofurther growits express delivery network intheemerging marketsas well asopen up opportunitiesin Europe and the USmarket.In terms of products, J&T will be able to expand its offerings on time-definite products in the SEA.In Chinamarket,J&T’s non-ecommerce deliveryproductscan be expanded through leveraging SF’s parcel pick-up pointnetwork. China LogisticsWayne FUNG, CFA(852) 39000826waynefung@cmbi.com.hk Stock Data Subscription of SF sharesby J&T:J&T will subscribe 225.9mn H-sharesissued by SF at a price of HK$36.74/shr (totalconsideration: HK$8.3bn).The subscription price representsa3.9% premium to the closing price on14 Jan.The subscription price is equivalent to ~13x 2026E P/E(based onBloomberg consensusearningsfor SF).Upon completion, J&T will own4.29% of the total o/s shares (enlarged) of SF. Shareholding Structure Subscription of J&T shares by SF:SF willsubscribe 822mn B sharesissued by J&Tat a price of HK$10 (~14.8% discount to the closing price on14 Jan).Based on our earnings forecast, the subscriptionpricerepresents~19x 2026E P/E.Upon completion, SF’s holdings in J&T total shares willincreaseby8.45pptsto 10%. Long lock-up period.Both companies agreed on a five-year lock-upperiod. We think the long lock-up period reflects the strongcommitment fromthe two companies, whichwillofferthemarket withconfidence. Maintain BUY withunchangedSOTP-basedTPofHK$13.4.We continueto like J&T, due to (1)itsunmatched competitive edge and market sharegain potential in SEA (32.8% in 1H25), (2) good potential in new marketssuchas Brazil and the Middle East,and(3)potential new businessopportunities arising from theco-operation with SF.We have left our modelunchangedfor now as the share-swap agreement is subject toshareholders’ approval. Related reports: J&T Express (BUY)–Takeaways fromBangkok investor call–12 Dec 2025 (link) J&T Express (BUY)–Parcel growth inSEA further accelerated in 3Q25–14 Oct2025 (link) J&T Express (BUY)–1H25profit a mixedbag but growth story well intact–1 Sep2025 (link) J&T Express (BUY)–Impressive parcelvolume growth in SEA–9 Jul 2025 (link) Valuation Weapply different EV/EBITDA multiples for different markets to better reflect theirrespective growth outlook.Wemaintainour SOTP-based TPofHK$13.4. SEA:Weassignatarget multipleof14x, which is~80% premiumtotheaverageofglobal integrated logistics operators (7.7x). Ourlarger targetpremium is to reflectJ&T’sstrong pricing power and continuousmarket share gainsin the region. China:Weassign atargetmultiple of 6.5x,in line with themajor peers.We expectthe “anti-involution” campaign will lend support to the valuation. New markets:We assign a targetmultiple unchanged at 20x.Our valuationpremium is to reflect the strong growth potential in the Latin America and the MiddleEast markets. Disclosures& Disclaimers Analyst CertificationThe research analystwho is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personalviews about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issue of thisreport; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock withpotential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expectedto perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 monthsCMB InternationalGlobal MarketsLim