Shares of Indonesian logistics service provider J&T Express were down upon their first trade on the Hong Kong IPO bourse on Friday. They opened at HK$12 and dipped to HK$11.84, a decrease of 1.33%. According to Irene Chu, Partner of KPMG China, "Q3 continued to be very soft. The Hong Kong market has not bounced back as expected."
Shares of Indonesia's J&T Express experienced a 1.33% decrease when the logistics provider made its debut on the Hong Kong stock exchange on Friday, trading at 11.84 Hong Kong dollars ($1.51) at open and continuing to decline to start the day. The $500 million IPO is the second largest listing in the city this year, following a plunge in ZJLD Group - a Chinese liquor producer backed by KKR - of nearly 18% on April 27. Tencent, Sequoia, Boyu, SF Express and Temasek are amongst the investors in J&T Express.
As the third quarter of 2023 came to a close, the global IPO market remained largely stagnant due to several underlying macroeconomic and geopolitical concerns, including inflation, rising interest rates and the Israeli-Palestinian conflict. This had a direct impact on Hong Kong's world-wide ranking, which fell to eighth place during the period. In an interview with CNBC, Irene Chu, partner at KPMG China, added that the market hadn't recovered as well as anticipated.
The initial plan of the IPO was to raise at least $1 billion, however, due to a lack of investor interest the offer was reduced to half of the goal, as reported by Reuters. This situation emphasizes the need for companies to be more conservative in their pricing, with Ringo Choi, Asia-Pacific IPO leader at EY, noting that the IPO prices have dropped by up to 70%.
J&T's largest market in 2022 was China, where it handled near 83% of its overall parcels. Providing services to online commerce behemoths like Pinduoduo and Alibaba's Taobao and Tmall, the company held a 10.9% market share in terms of parcel volume, as stated in its IPO filing, citing Frost & Sullivan. In May, it acquired Fengwang Express for 1.18 billion yuan from SF Express, the biggest local player, and earlier in 2021 acquired Best's express delivery business. J&T delivered more than 14.5 billion parcels throughout China and Southeast Asia in 2022, an increase from 11.5 billion parcels in 2020. In terms of parcel volume, it is the largest player in Southeast Asia with a 22.5% market share according to Frost & Sullivan data. The firm's clients consist of Alibaba-owned Lazada, GoTo's e-commerce arm Tokopedia, and Sea Limited's Shopee, its IPO filing revealed.
Explore tech and crypto news from CNBC Pro. In the fourth quarter, Bitcoin has limited potential to increase in value, as the possibility of higher rates is ominous for crypto. Mark Mobius, a veteran investor in emerging markets, shared the two tech giants that should be a part of any portfolio. Goldman Sachs anticipates that the stocks of a certain international delivery platform are due to surge by more than 100%. Lastly, here is a list of the most overbought and oversold major stocks, comprising tech and banking firms.
Bitcoin is unlikely to significantly increase in value in the fourth quarter as the potential for higher rates may have an adverse affect on cryptocurrencies. Noted emerging markets investor Mark Mobius has identified two technology giants as being essential components of any portfolio. Investment banking firm Goldman Sachs has suggested that the stocks of a particular worldwide delivery platform are poised to rise by more than 100%. In addition, here are some of the most heavily-traded global stocks, encompassing technology and banking entities, that are either heavily overbought or oversold.
The firm reported a net profit of $1.57 billion in 2022, however it experienced a net loss of $666.8 million in the first half of this year due mainly to gross losses from operations in China and the introduction of new markets. Looking ahead, J&T emphasized in its prospectus that “in the long term, to continue to harness our revenue potential and reach profitability, we intend to expand our parcel volume and market share, maintain a flexible pricing policy, manage costs, decrease gross loss and augment gross margin, and boost operational leverage.”
Analysts warn that the Indonesia ban on TikTok Shop, a feature of the well-known short-video app which allows e-commerce purchases, could affect J&T Express. Momentum Works stated in an October 17 blog post that J&T Express was bearing a large portion of TikTok Shop's numerous daily orders in Indonesia before the ban was put in place, and noted that this could lead to some severe short-term pain for J&T. J&T Express acknowledged in its filing that there are still a great many uncertainties around how the new regulations could affect different e-commerce and social media platforms in Indonesia, noting that some of them are their customers.
The company affirmed that the income from social e-commerce platforms in Indonesia was not significant to their business. J&T stated that from 2022 to the first half of the current year, the revenue from such platforms in Indonesia accounted for only 4% and 6%, respectively. They also said that while the changes in the e-commerce regulation may affect their customer base in Indonesia to some extent in the near term, this would have no major negative effect on their operations or financial performance in the long run.
Comments