(Yicai Global) June 19 -- Indonesian courier giant J&T Express has filed for an initial public offering in Hong Kong three years after entering the Chinese market, a listing that is likely to crank up competition in China’s express delivery sector.

J&T plans to use the proceeds mainly to broaden its logistics network, upgrade infrastructure, strengthen sorting and warehousing capabilities, develop new markets, and invest in technology research and development, according to the initial prospectus filed on June 16. It did not disclose the financing size.

Since entering the Chinese market in 2020, J&T has achieved rapid growth. Its income from the local market rose to USD4.1 billion in 2022 from USD478.8 million in its first year, while total revenue jumped to USD7.3 billion from USD1.5 billion.

Founded in 2015, J&T has not had an operating profit due to high costs, but its operating loss narrowed 15.6 percent to USD1.4 billion last year from 2021. Its net profit stood at USD1.6 billion after accounting for fair value changes in financial assets, the prospectus showed.

After entering the Chinese market, J&T has expanded its business several times through mergers and acquisitions, including buying the domestic express business of Chinese logistics firm Best for CNY6.9 billion (USD968.2 million) in December 2021. 

Last month, Jakarta-based J&T announced that it had agreed to buy Shenzhen Fengwang Information Technology, a unit of Chinese express delivery giant SF Express, for CNY1.2 billion.

Acquiring Fengwang IT will bring J&T a higher valuation, helping with its IPO, Zhao Xiaomin, an expert in the courier industry, told Yicai Global. It will also give it a higher market share in the franchise-based express delivery sector, further intensifying competition among leading players, he added.

J&T has an aggressive low-price strategy in the Chinese market. Its local income was only 34 US cents per parcel last year, compared to 95 US cents in the Southeast Asian market, the IPO prospectus showed.

According to a report by LatePost on June 22, SF Express is negotiating with J&T for the Chinese firm to buy between 1 percent and 2 percent of J&T International Logistics, but neither firm has commented on news.

Editors: Dou Shicong, Martin Kadiev