Welcome to J&T Express Q1 2025 Business Performance Conference Call. I have to remind everyone that during the conference, everyone will be muted. Before the end, we're going to have a Q&A section. If you would like to ask a question, please press star and one and one on the Chinese line. Just to remind you that we're providing recording now. Give the first floor to Sylvia.
Hello. Good day, everyone. Welcome to J&T Express Q1 2025 Business Performance Conference Call. This is Sylvia. The meeting materials have already been distributed by email and uploaded to our IR website. Also, please, I would like to introduce the management. We have Dylan Tey, CFO of J&T Express. Also, we have Simon, Head of Investment and Financing. Today's session, we have two parts.
First of all, Simon will provide an overview of our business performance for the first quarter of 2025. Following that, we are going to open up the floor to questions. During this management team, we'll address your questions and engage in discussions. Now, give the call over to Simon.
Hello, this is Simon. Now, I'll be introducing to you the performance in Q1 of 2025. The group's total parcel volume in Q1 reached 6.6 billion, representing year-on-year growth of 31%. The growth was primarily driven by the operations in Southeast Asia and China. First of all, Southeast Asia, in Q1, region's parcel volume reached 1.5 billion, reflecting 50% year-on-year growth. The growth was primarily attributable to the staggered timing of Ramadan promotions in Indonesia and Malaysia.
In 2025, Ramadan occurred earlier, which is from March the 1st to the 29th, compared to 2024, which is March the 9th to April the 7th. During this 2025 Ramadan period, average daily volume rose to 20.1 million parcels, up 58% year-on-year from 12.73 million in 2024. Our peak daily volume in 2025 during the Ramadan period reached 27.48 million parcels, marking a 63% increase over the 2024 peak of 16.8 million. The key e-commerce platforms, such as TikTok and Temu, continue to exhibit robust growth in 2025, and our company has grown in tandem with these partners. We have been actively developing the non-e-commerce business and also the social commerce, large parcels, and large corporate accounts. The only 10% of the total volume.
Second of all, in China, in Q1, we have been having 5 billion parcels in China, representing 27% year-on-year growth. This growth was driven by the following key factors: outpacing industrial growth. The expressive receptor maintained robust expansion with industry-wide parcel volume growth by 22.4% year-on-year in January and February of 2025, and we continue to deliver growth rates exceeding the industry average. Service quality has been significantly enhanced. Our logistics performance metrics on major e-commerce platforms ranks among the top of the franchise-based operators. The operational excellence, coupled with the elevated brand perception among premium and also those important customers, has translated into high-quality parcel volume growth. We have multiple platforms expanded at the same time, and we increased the market share across core e-commerce platforms.
At the same time, we have also a better quality and also very good development of the proprietary endpoint network, and we are developing a lot of several individual shipments. Finally, the emerging markets. We have recorded a parcel volume in Q1 of 77 million, reflecting 19% year-on-year growth. Also, this new market or emerging market has a transitional phase from these new markets, characterized by the business model adjustments by major e-commerce clients due to the cross-border policy changes and early-stage operations and newly launched sites by some of the e-commerce partners. As these factors temporarily constrain growth visibly for the quarter, we do have actually the confidence that we're going to reach the potential, and also, we are going to have a flat EBITDA this year. This is pretty much about the volume in Q1 of 2025, and I think that everybody is very much interested in understanding the financial performance of 2025 Q1.
As a standard practice, the company only provides the formal financial disclosures on a semi-annual and annual basis, so we are not issuing any updated quarterly guidance at this time, and as the previously disclosed guidance will remain the same. Thank you.
Thank you, everyone. This is the introduction of the performance in Q1 2025, and now we are going to open up the floor to Q&A in the Chinese line. Just to remind everyone that this is the English line for listening only, and if you want to ask a question, please press star one and one on the Chinese line. If you want to cancel, please press star one and one again. Now, we have the very first question coming in. The very first question is from Liu Gangchen from CICC, please.
Hello, everyone. Thank you for taking my question. Thank you, everyone. Congratulations on the very good performance in Q1. I have two questions. The first one is that I would like to know the major drivers behind the growth in Southeast Asian markets. We knew that for the Southeast Asian market, we do not have a statistic from a third-party platform, but we would like to know that from a statistic standpoint, is it because of the overall industrial growth, or is it because of your key focus and also investments in those key markets like Southeast Asia by getting more market share there? Also, in terms of the VAP in Southeast Asia, do you think that the overall guidance remains the same and unchanged? This is my first question.
We would like to answer this, and then we're going to give you the second question. Now I'll answer the very first question. As you have mentioned, the major drivers behind the growth in Southeast Asia market. You know that in Indonesia and also Malaysia, we've got also the impact for the Ramadan campaign because in 2025, actually, we've got an earlier Ramadan campaign than 2024. During 2024, you could see that it started from the 9th of March to the 1st of April. In 2025, we had an earlier date on that, so it would impact on that. Second of all, the major customers like TikTok and Temu, they had a very robust growth in 2025. Pretty much, we have been growing together with these fast-growing partners and customers. You could see that for TikTok, for instance, in Southeast Asia market this year, I believe that they had a very good contribution to our overall growth.
The third reason is that still, we are also developing the key accounts and also those other non-e-commerce customers' business and also parcels. The absolute number of these businesses has been growing. That is to say that now we are optimizing our total business structure. Also, you had a question about the overall growth of the industry and also our company's growth. We had a statistic of the monthly growth of the business in the industry on average. Also, we had about 17%-20% of the growth for the industry average for this industry according to the third-party statistics. The whole-year growth in Southeast Asia will remain the same as for the guidance that we have provided by the end of last year. No problem.
Also, for the ASP guidance in Southeast Asia markets, which is pretty much as for the leader e-commerce cross-border platform, we have a very good advantage and also the entitlement of the pricing in the Southeast Asia market. In terms of the overall pricing in this year, we are going to maintain a guidance of a little bit decrease of the ASP. That is to say that in terms of the overall ASP, I think that there is going to be 5%-10% of the reduction happening this year. This marks the answers to your first question.
My second question is also about the Southeast Asia market. Recently, we've been having tariffs and other policies that are geopolitical. We would like to know that also there is a big fluctuation of the forex rates in Southeast Asia as well.
We'd like to know whether there is any impact on your business in the Southeast Asia market given the background of a change in tariffs and volatile forex rate. The second question is that from the foreign exchange standpoint, whether there will be any impact to you from a finance and accounting standpoint. Thank you.
All right. This is Simon again. With regards to your second question, which is about the impact of the tariffs. Now, the trade tariffs war is still ongoing. Also, now you could see that we are paying attention to the timely response from Southeast Asia market and also the gaming between China and the United States. We do not have an affirmative conclusion, but we have two opinions.
First is that impact on the business model of J&T Express because you know that J&T Express is a global local network. We are actually doing the final terminal delivery of each location. Also, we might have the cross-border delivery or the other business, but we merely have any cross-border delivery business even within the countries in Southeast Asia. Be it it's the Southeast Asia to the U.S. or vice versa, in the future, there will be no direct impact because we merely have any cross-border parcel delivery because most of our business or all the businesses are actually coming from each different locality. The impact was quite limited.
My second answer is about the indirect impact. If this particular trade war is still going on, the indirect impact on the overall growth of e-commerce platform business and also does impact on the growth of the parcel volume. Actually, it's difficult for us to make that conclusion because from another standpoint, we already know that the e-commerce penetration is pretty much lower than that of China's. Also, we still have an irreversible trend of increasing parcel volume and also e-commerce penetration, especially during the downward trend. Also, the young population is in favor of the online shopping more. This trend is irreversible. While we have this trend continued, we believe that while we have a consumption downgrade happening and also the impact from the trade tariff business or issue, there will be an offset in between these two.
That is why we believe that the penetration is going to be growing quite rapidly in the Southeast Asia market for the e-commerce business. Still, the second conclusion was quite limited in terms of impact.
Also, let me answer this question. Now we are operating in seven countries in Southeast Asia markets, and the major revenues were driven by the local currency used in those countries. The overall cost was still calculated by the local currency. From a certain standpoint, I believe that there is a little bit of offset. Still, we do have the continuous profitability in Southeast Asia. The major part of the impact will be on the profit. Also, second of all, we do have legal and also legitimate arrangements on taxation and also other spendings.
At the same time, we have also arrangements of the cross-border transactions together with our mother company. This is going to be legitimately handed out by the controlled and holding company. We are going to have certain measures to lower down the forex risk. Also, with different commercial banks and financial institutions, we have been arranging the forex trade and arbitrage activities as well and hedging activities as well. These are some of the countermeasures that we have.
All right. Thank you. It is very clear.
Thank you very much. Now, we are welcoming the second question. We have Liu Sijiao from Changjiang Securities.
Thank you for taking my question. Congrats on such a very strong growth momentum in 2025 Q1. We'd like to ask a question about China region. There are two little questions. First is that we know that there is an enhanced price war in China. We would like to know whether or not the guidance for China market will be updated. My second question is about the details because we know that the overall delivery fee has been reducing quite a lot. Also, as we have already mentioned, that we've been having a lot of development on those delivery local sites. We would like to know whether or not you have any further information about this point.
My third question is about the overall cost reduction. Also, we know that the headquarters is reducing cost of about CNY 0.1. Also, on the terminal side, what about the overall measures that you are going to take to reduce the overall cost to a further level?
Let me answer the very first question, which is about the price competition here in China and also whether or not we're going to update the overall guidance for China. The answer is that no. We are still observing what's happening now. We keep an eye on the overall competition and content landscape here in China. If there is any update, we're going to timely notify everyone. The second question is about the delivery charge, right? And also, the proprietary Endpoint Service Network. How do you think about the overall kind of arrangements? Can you share more details about this point? With regards to the delivery charge, as you have observed in the front line, all the other fast delivery companies have been having some changes and adjustments. We do have our countermeasures.
As we have already mentioned, that when the overall volume in China has not reached 50 million -60 million, we're going to have very good management measures in place. Now, we have been already exceeding the threshold of 60 million, and we have enough power to do so. Also, in the beginning of this year, we are also trying our best to take some of the measures for the China market. We're going to have about the year-on-year growth of 80% for the individual parcels deliveries. Also, the reverse business. We had about 1.6 million business in Q1. Throughout the whole year in 2025 versus 2024, I think that versus the same period, we had even doubled this particular part of the business.
The major part of the reason was due to the establishment of the proprietary Endpoint Service Network. We are going to also take some of the other measures like fleets and some of the other measures like the counterparties that are using to reduce the overall cost. For the longer term, the overall objective is that we are going to enlarge the total volume. Hopefully, we are going to increase over 20,000 endpoint service stations to hopefully satisfy the needs of our customers and also finally reduce the overall cost of our delivery charges and deliveries.
The final question is about the overall scope for cost reduction this year. This year, we are going to have about CNY 0.1 difference in terms of the delivery cost. This is pretty much on track. That is why we keep the guidance for China market unchanged.
Thank you very much for this answer. I wish you have a very successful year in 2025 in advance. Thank you.
Thank you very much. Now, we have the next question. The next question is from Zong Feng from Western Securities.
Hello. Thank you for taking my question. This is Zong Feng from Western Securities. I have two quick questions. The first question is that Simon introduced in his presentation. He has mentioned the growth of the e-commerce platforms in Southeast Asia apart from TikTok. We would like to know what is the growth momentum of Temu and also for those service countries that Temu is on, whether there is any contribution from these countries that Temu is operating to your overall business.
All right. Thank you very much, Zong Feng , for this question. Actually, Temu has a very good contribution to our overall growth of the Southeast Asia market business, but still, the other platforms are growing stronger. I think that the other e-commerce platforms are going to be growing more obviously. Temu is still taking a very little proportion out of our overall business in Southeast Asia market.
All right. Understood. My second quick question is, in Q1, we have seen that for the partners and service network stations number has been reducing. There are two little questions. The decreasing number of partners, whether this is decided by the headquarters or the regional franchisee, can actually decide whether or not they are able to cancel that particular service site. Also, we would like to know the reason for the cancellation. Is it because of nonprofit making? That particular service network site has been canceled.
All right. Thank you for this question. Actually, for this year in Q1, comparing with the net of last year, as we have been seeing that we have been reducing 100 service network sites and also reducing 100 franchisees number. This is something that we actively conducted by the China company because we want to have a sorting out and also reshuffling of this service station and also franchisees because we hope that the franchisees are able to deliver very wonderful business here in China. If you're a good performer, you're able to cover more locations and sites with more strength. You're able to have those automated machines installed, and your overall cost could be reduced. This is actually an active campaign that we are doing.
As you can see, those number of franchisees and also the service network number has been reducing also in the past years. This happened before.
Thank you very much for this answer. Thank you for the answers from the management.
Thank you for the question. We have the next question. Aaron Luo from UBS, please.
Hello. Thank you for taking my question. First of all, congrats on such a wonderful performance in Q1 of 2025. I would have a very quick question. Shortly before, we noted that we had adjustment on the collaborations with Shopee in certain regions, and some of the investors are quite paying a lot of attention to this. We would like to know whether there is any impact on the overall business performance and operation and whether there is any kind of a risk in the future.
Also, I would like to have another very quick question. We know that for the emerging markets in Q1, that overall speaking, you had a guidance of 25% on the overall growth in the emerging markets. When a tariff is implemented, whether or not there is any impact on the emerging markets business, and how do you think about this?
All right. Let me answer this question. First of all, about the particular overall announcement of Indonesia regarding Shopee in Indonesia. Actually, we are the biggest 3PL in the Southeast Asia market. I think that according to the overall business volume in Indonesia, originally, it was a very important Shopee in Indonesia. Still, it is actually taking a very little proportion out of our total volume in those countries in Southeast Asia.
While we had the guidance for 2025, actually, at a very early stage, we already got notified notes from Shopee Indonesia. Before, we actually conducted the guidance in 2025. I have to respond that this impact is quite limited because we have already taken that into consideration. Also, with regards to TikTok in Indonesia, it is actually growing quite rapidly. We can see that TikTok is also growing very fast continuously in 2025 in Indonesia. I believe that TikTok's growth is able to offset partially this lost business of Shopee in Indonesia. Also, except for these big platforms' growth, we have also the other non-platform businesses growing a lot. The total number of these non-platform businesses is actually 2x as that of the platform business. This impact from Shopee in Asia is quite limited.
Also, still, we are keeping a very good collaboration continuously with Shopee in other countries, including the emerging markets as well. Overall speaking, the operation is quite stable. I have to say that please do not worry about this impact from this key account, Shopee, in Indonesia.
Your second question is about the overall growth momentum in those new and emerging markets. Actually, I believe that we maintain around 20% of the growth guidance in those newly opened markets. Why we had this precocious guidance in those newly opened markets is because still, we believe that for those customers since last year, they have been adjusting their business models according to the changing policies of cross-border transaction and e-commerce. Also, for some of the big sites like Latin America and Mexico, some of the operating sites were just operational shortly.
Still, we believe that there is going to be a certain time before the final growth rapidly. For Brazil and Mexico, for these two new markets, we have confidence that these two markets are going to fulfill our expectations for the full year of 2025. Also, they are going to be reaching a bit of break-even in 2025. This is our point of view over these newly operated markets.
All right. Understood. Thank you very much. Also, congratulations again on such wonderful performance in 2025 Q1.
Thank you very much for this question. We have a question, which is Mouting Lane from Citi. Please.
Hello, everyone.
Please, you can speak.
All right. Good morning, everyone. Thank you for taking my question. We had already very thorough questions already asked, and I have two little quick questions. The first question is, we'd like to know that for Q1 and also in the forward-looking areas, how do you think about the overall change of ASP in different regions? Can you share a little bit more colors on this? Also, my second question is that for Q2 and Q3, what do you expect the ASP momentum? Also, second, we'd like to know something about the kind of separations of the sporadic shipments or parcels versus the other kind of different types of parcels, return goods parcels.
All right. Let me actually answer the question about the ASP. We know that now we are in the reporting period, so we cannot talk to you about any financial figures, but I can provide some of the colors. First of all, we had expectations on the price competition this year.
ZTO Express is actually initiating, a certain player is actually initiating this price competition. Also, as you can see, the overall price reduction has some impacts and pressures on the other players in this industry. Also, this price competition impact started from the top all the way to the bottom ranked companies. I think that when it's passing through the whole chain, when it gets to the downstream of that particular chain, the impact is going to be very limited. Overall speaking, I believe that overall speaking, it is impacting on our overall business. If we would like to provide an expectation and anticipation for the full year of 2025, it is very difficult for us to make such an anticipation.
We had an intensified price competition going on in the following quarters, but still, we are going to very precociously adjust our own ASP in the full year 2025. We are going to take countermeasures and also make the guidance unchanged.
Let me answer the second question and also supplement the answers to the first question. I believe that everyone is paying attention to the price. Also, for China's price, we are still observing quite actively because actually in China, the overall momentum is quite dynamic. That is why I believe that it is very difficult for us to actually get the very clear and affirmative anticipations of the price. The only answer is that we are going to actively take measures to overcome the difficulties and risks of the price competition in China.
Also, second question, we have already updated the overall particular number of reverse plus sporadic and 3.5 million. So, 1.7 million for the reverse parcels and 1.8 million for the sporadic parcels. These have been growing a lot versus that of last year.
All right. Thank you very much.
We do not have any other further question now. Let's give the call back to management to give a conclusion.
Thank you. Sorry for a lot of technical glitches that happened during this earlier call. Of course, thank you very much for attending our conference call at early 8:30 A.M. in China time. Thank you for your continuous attention. Thank you for your time. Also, on 20th of May, we are going to have the Open Day for Investors in Indonesia, and it is the first time for us to have this Open Day for Investors in Indonesia. Welcome everyone to participate.
Thank you very much, everyone. Now, you may just connect.