Jet Li, who cofounded delivery firm J&T Express in Indonesia but is now expanding aggressively in his homeland China, has become a billionaire as the company prepares for an initial public offering in Hong Kong.
On Friday, the 48-year-old’s company filed for an IPO that revealed he owns a 11.5% stake. Based on Li’s stake and proceeds of earlier share sales, Forbes estimates his net worth to be $1.3 billion.
A company spokesperson declined to comment. J&T hasn’t specified an amount it wants to raise. A Bloomberg News report said the firm is planning up to $1 billion in share sales, and a listing could happen as soon as this year. Founded in 2015, J&T previously raised almost 10 rounds of financing from blue-chip investors, including Boyu Capital, Hillhouse Capital, Temasek and Tencent.
Li, in the meantime, has come up with a unique business model that involves so-called regional sponsors after previously spending more than 15 years working for Chinese smartphone maker OPPO. The entrepreneur, who holds a bachelor’s degree in marketing from the University of Science and Technology Beijing, was once responsible for OPPO’s global expansion in markets including Indonesia, Malaysia, Japan and Singapore, according to J&T’s prospectus.
It was during those years when Li spotted an opportunity in logistics, as he was unsatisfied with the slow speed of delivery firms in Indonesia, according to Chinese media reports. With the help of OPPO CEO Tony Chen, whose wife Liang Xiaojing is a direct shareholder in the firm (her stake is worth almost $500 million), Li later struck out on his own. Neither Chen nor Liang currently sits on J&T’s board.
J&T outsources part of its work to more than 100 regional partners, which are asked to complete a long list of tasks including deliveries, customer service, parcel pickup as well as working with local courier networks. The company allows its local head offices to formulate a localized expansion strategy and often offers equity interests to incentivize the regional partners. The model allows J&T to minimize capital expenditures and capture market share rapidly, the company said in its prospectus.
Now, J&T is the largest express delivery operator in Southeast Asia, with a 22.5% market share in terms of parcel volume, according to Frost & Sullivan data cited in the prospectus. Customers include Lazada, Tokopedia and Shopee, the prospectus showed.
But Southeast Asia isn’t J&T’s largest source of revenue. The region accounted for 32.8% of the company’s $7.3 billion sales last year, while China contributed $4.1 billion, representing 56.4%. Newer markets such as Latin America and the Middle East made up for the remaining 10.8%.
Kenny Ng, a Hong Kong-based securities strategist at Everbright Securities International, says investors are likely to keenly watch the firm’s progress back home as future growth in Southeast Asia may have become limited. J&T, whose Chinese name Jitu means speedy rabbit, started to expand in Li’s motherland back in 2020.
The company bought Best Express China for $1.1 billion in 2021, and Fengwang Information from billionaire Wang Wei’s delivery giant S. F. Holding for about $170 million in May. The acquisitions, together with a low-cost strategy involving often discounted delivery prices, gave J&T a 10.9% market share in China in terms of parcel volume in 2022, according to Frost & Sullivan data cited in the prospectus. Its customers include Chinese e-commerce giants Alibaba and Pinduoduo.
But unlike the profitable Southeast Asia operation, the company’s China unit is in the red. Thanks to fair value changes of financial assets, the company managed to eke out a profit of $1.6 billion last year. Excluding those, operating loss stood at $1.4 billion.
“The company is still growing fast compared with other delivery firms, and that is its advantage,” says Ng. “But in China, it is sacrificing profit in exchange for market share expansion. In the future, the key is whether the firm can raise prices and manage its operations more efficiently to get profit back.”
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Source: https://www.forbes.com/sites/ywang/2023/06/20/chinese-logistics-entrepreneur-becomes-a-billionaire-as-his-jt-express-gears-up-for-hong-kong-ipo/