J&t Global Express Aktie

[Foreign Language]

Thank you, operator. Hello, everyone. Welcome to J&T Express 2026 Interim Results Conference Call. I'm Haibin Chen, Director of Strategic Investment and Capital Market of J&T Express. The company's results and Investor Relations presentation were released earlier today and are now available on the company's IR website at ir.jtexpress.com.

Before we start the call, we would like to remind you that the call may include forward-looking statements, which are underlined by a number of risks and uncertainties and may not be realized in the future for various reasons. Information about general market conditions is coming from a variety of sources outside of J&T. This presentation also contains unaudited non-IFRS financial measures that should be considered in addition to, but not as a substitute for the company's financials prepared in accordance with IFRS.

I have with me J&T Executive President, Steven Fan; Vice President, Charles Hou; and CFO, Dylan Tey. Our management will share strategies, operating highlights and financial performance for the first half of 2026. This will be followed by a Q&A session. Please be noted that we have live slides showing through webcast this time. With that, let me turn the call over to Steven. Steven will read through his prepared remarks in Chinese before I translate for him in English.

[Foreign Language]

[Interpreted] Hello, everyone. Welcome to today's results briefing. On behalf of the company, I would like to express our sincere gratitude for your long-term attention and support. And I'm honored to report on the group's operational and financial performance over the past 6 months. In the first half of 2026, the company achieved 2 milestone breakthroughs in its global express logistics network.

First, in second quarter of 2026, the company achieved average daily parcel volume exceeding 100 million parcels in a single quarter for the first time, making it one of the very few express operations in the world capable of handling 100 million parcels on a normalized basis. Second, the revenue contribution from non-China markets increased to 50% for the first time, marking that the company's vision of becoming one of the world's best express enterprises has entered a new stage of development.

In the first half of 2026, the company delivered an outstanding growth performance with sustained and high-quality growth. The company processed a total of 17.5 billion parcels, representing a year-on-year increase of 25.1%. The company's total revenue reached $7.67 billion, representing a year-on-year increase of 39.5%. The company's global consolidated profitability continued to strengthen with the adjusted net profit of USD 350 million, representing a year-on-year increase of 124.3%. As the proportion of parcel volume from non-China markets increased, the company achieved an adjusted EBIT per parcel of USD 0.0025 (sic) [ USD 0.025 ]. The operating cash flow reached USD 640 million, representing a year-on-year increase of 15.9%.

We observed that in the first half of 2026, the global e-commerce and express market continue to present abundant opportunities in the markets where the company currently operates, annual parcel volume per capita in Latin America is 18 parcels and 48 parcels in Southeast Asia compared with 149 parcels in China, indicating considerable growth headroom. To capture the opportunities arising from the globalization of commerce and logistics, in the first half of 2026, the company accelerated the transfer of China's advanced logistics experience to global markets through multiple dimensions, including global equipment deployment, model enablement, talent proposition and AI-enabled cost efficiency and top efficiency gains, continuously expanding and optimizing its efficient and stable global fulfillment network.

Now I will present the development of each regional business by segment. First, Southeast Asia. In the first half of '26, the company processed a total of 5.52 billion parcels in Southeast Asia, representing a year-on-year increase of 21.2%, achieving exciting growth performance with market share further increasing to 38.1% representing a year-on-year increase of 5.3 percentage points, maintaining a leading market position. The company continues to serve as a core logistics partner for multiple mainstream e-commerce platforms, including TikTok, Lazada, Temu and SHEIN, fully capturing the growth dividends from the e-commerce sector.

The company is further upgrading its service systems across Southeast Asia. Firstly, actively expanding its fulfillment warehouse services to provide customers with supply chain solutions tailored to different industry characteristics, thereby enhancing stickiness between platforms and merchants. Secondly, driving brand image upgrading and rolling out a star rating system for couriers to improve the shipping experience for non-platform customers. Thirdly, simultaneously advancing automation upgrades at sorting centers and service outlets to better meet customer needs for capacity, fulfillment efficiency and scalability.

Second, China. In the first half of 2026, the company processed 11.62 billion parcels in China, representing a year-on-year increase of 9.6%, achieving growth above the industry average in a complex market environment with market share increasing to 11.6%, representing a year-on-year increase of 0.5 percentage points. The company drives quality growth in China through refined operations, strengthening the network foundation by dispatching professional teams to deeply participate in the operational management process of last mile networks, thus to enhance the overall network service level, extending deeper into industrial chain to provide specialized solutions that better match the shipping needs of industry merchants and brand customers and increasing the proportion of technology elements in production and operations with the number of unmanned delivery vehicles deployed across the network significantly increased and AI applications such as AI customer service comprehensively upgraded.

Finally, other markets. In the first half of 2026, the company processed 360 million parcels in other markets, representing a year-on-year increase of 119.9% with market share increased to 8.9%, representing a year-on-year increase of 2.7 percentage points. The company simultaneously deepened cooperation with global e-commerce platforms such as TikTok, SHEIN, Temu, Kwai and Ali Express as well as local e-commerce platforms such as Mercado Libre. The company is advancing expansion of network coverage in other markets. On the one hand, actively investing to boost capacity to meet strong express demand. On the other hand, combining export of proven model with localized innovations to explore and iterate a flexible last-mile fulfillment cooperation system suitable for different markets, achieving synergistic improvements in management efficiency and regional adaptability.

Today marks the company's 11th anniversary. Looking back, the company has delivered on its growth promise with sustained high-quality growth. Looking forward, we remain committed to reinforcing our global network infrastructure, further leveraging China's proven experience to empower our worldwide aspirations and continuously optimizing our end-to-end operational efficiency and customer experience. We believe that only by persisting in doing the difficult but right thing and by taking root and cultivating deeply in every market we serve, can J&T grow into a healthy and long-lasting enterprise and reward the continued support of our investors. Thank you.

Next, I would like to invite CFO, Dylan, to present the financial data for these interim results.

Thank you, Haibin. Thank you, Steven. Thank you all for joining today's conference call. Next, I would like to present the key financial highlights of the group. As always, please note that unless otherwise specified, all the figures are in U.S. dollars and the percentage changes represent year-on-year changes. The group's detailed financials, unit economics, cash flow, capital expenditures, have been -- have all been disclosed on our Investor Relations website. Here, I will only briefly summarize the group's core performance highlights for the first half of 2026.

Now looking at this page, overall, the group's revenue for the first half of 2026 increased from USD 5.5 billion in the same period of 2025 to USD 7.7 billion this year, representing a year-on-year increase of 39.5%. Core express delivery revenue increased from $5.3 billion to $7.5 billion, representing a year-on-year increase of 39.6%. The core driver of the growth was a rapid growth in our parcel volume from non-China market, driving the related revenue contribution for 43% in the first half of 2025 to 50% in the first half of 2026, representing a year-on-year increase of 7 percentage points. This is the first time that our non-China market revenue have reached this historical high of 50%.

In terms of region, the China revenue from the China segment in the first half of 2026 increased from $3.1 billion in the same period of 2025 to $3.8 billion this year, representing a year-on-year increase of 22.4%. Revenue from Southeast Asia segment in the first half of 2026 increased from $2 billion last year to $3 billion this year, representing a year-on-year increase of 53.8%. Revenue from other market segment in the first half of 2026 increased from $0.36 billion to $0.72 billion this year, representing a year-on-year increase of 99.3%.

Next, turning to into our profitability. The group continues to advance its strategic upgrade where we continue to empower our regional business development and centrally coordinate resource allocation and implement centralized management and resource sharing with the aim to unlock economies of scale and enhance the cross-regional synergy. So accordingly, profitability-related metrics have been adjusted to be disclosed at a group level to objectively reflect the overall competitiveness of the group's resources.

The group's profitability continued to strengthen in the first half of 2026. Gross profit was $1.01 billion, representing a year-on-year increase of 88.4% with the gross margin rising from 9.8% to 13.2%, representing a year-on-year increase of 3.4 percentage points. Next, adjusted EBIT. Our adjusted EBIT reaches $430 million, representing a year-on-year increase of 121.7% with an adjusted EBIT margin of 5.7% which is representing a year-on-year increase of 2.1 percentage points compared to last year. Finally, our adjusted net profit. Our adjusted net profit was $350 million for the first half of this year, which represents a year-on-year increase of 124.3% with an adjusted net profit margin of 4.6%, representing a year-on-year increase of 1.7 percentage points.

Next, turning to our UAE. In the first half of 2026, our group's revenue per parcel was $0.44, representing a year-on-year increase of 11.5%. Our adjusted EBIT per parcel was USD 0.025, representing a year-on-year increase of $0.011 or 77.2%. The China market saw more rational competition under the anti-involution policy, while the rapid growth in the parcel volume from our non-China regions with higher profitability contributed to the continued improvement in the group's per parcel profitability in the first half of 2026.

Turning into our balance sheet. In the first half of 2026, our net cash flows from operating activities was $640 million, which represented a year-on-year increase of 50.9% compared to USD 420 million in the same period of 2025. This reflects our significant improvement in our cash generation capability. As of June 30, 2026, the group maintained a strong cash position, which -- with our cash and cash equivalents, restricted cash and bank wealth management products totaled USD 2.91 billion. This represents a year-on-year increase of 64.2% from USD 1.77 billion in the same period last year, which also included $1.25 billion in the bank wealth management products.

Finally, I would like to turn our commitment to shareholders' return. The company has always placed great emphasis on shareholders' return. In the first half of 2026, we completed repurchase of 99.32 million shares, and we canceled 115 million shares on August 12, 2026. On June 25 of this year, we also announced that the Board has approved new share buyback, increasing our repurchase amount to HKD 2 billion. We continue to deliver shareholder returns at the back of our strong financial performance. So all in all, the above are some of the key financial highlights of the group for the period. Thank you for your attention. I turn my time back to Haibin.

Okay. Now we can open the question to the analysts.

[Operator Instructions] Our first question comes from the line of Lu Sijia of Changjiang.

[Foreign Language] Let me translate myself. Congratulations on very strong performance in the first half. My question is on Southeast Asia. We continue to see very strong parcel volume growth in the first half, and the market is quite focused on the sustainability on this growth. How should we think about the parcel volume growth trajectory in the Southeast Asia going forward?

[Foreign Language]

[Interpreted] I'll translate for Charles.Your question is about our Southeast Asia the future growth potential. So Charles was saying that we continue to believe that the e-commerce and express delivery industry in Southeast Asia will continue to remain in a very rapid growth trajectory. And with our e-commerce platforms -- with e-commerce platforms continue to invest very actively into the region. So according to the industry consultants data, both the social e-commerce and the express delivery industry in Southeast Asia would be expected to grow at approximately 35% in 2026 and are also projected to maintain a high double-digit CAGR over the next 5 years. So from a company perspective, we are very confident that we will grow faster than the average industry growth.

We have also observed that alongside the booming and developments of the e-commerce platform, the demand of the logistics service quality, the logistics efficiency, the network stability, the capacity, all these expectations and the demand is also increasing. So leveraging from our robust network capabilities, we continue to benefit from the development of the e-commerce on one hand. And on the other hand, we continue to help our e-commerce customers and platform to expand coverage and also to stimulate online consumption, thereby achieving healthy and sustainable development for the entire express industry in Southeast Asia.

Of course, Charles also emphasized that other than e-commerce, we will continue to actively -- we continue to actively expand our non-e-commerce or we call the non-platform parcels. So the demand exposure for non-platform parcels in the region is still at a very early stage and will serve as an effective supplement to our parcel volume growth over the long term into the future. So that's Charles's response, Sijia.

Our next question will come from the line of Fan Qianlei of Morgan Stanley.

[Foreign Language] So let me translate for myself. Congratulations to the very strong profit growth. So my question is about the CapEx outlook for this year and next few years. Specifically, can you please break down by region when guiding about outlook?

[Foreign Language] So I will use English to respond to your questions. So yes, the CapEx, we have seen an investment CapEx increase in the first half of the year in response to -- in tandem with our expansion and also the high volume growth across our regions. So our CapEx, as everyone knows, is primarily allocated to automated sorting machines, equipment in our sorting centers, vehicles, sorting equipment at our outlet level as well as in terms of IT and AI spending. All this will deliver immediate benefits for our efficiency improvement and cost optimization.

So to your point about the breakdown by regions, obviously, we start with Southeast Asia. Southeast Asia, we continue to see strong demand of our business there, and we have allocated capital expenditure to commensurate with the high growth in this business. So in terms of the geographies that we spend more in Southeast Asia, it will be Thailand and Vietnam, where our parcel volume has grown rapidly over the last few quarters. Next for the other markets, the other markets, we also have seen strong demand, just like what Stephen mentioned, the parcel per capita in the other markets, especially LatAm is still very low. So we continue to invest in our capacity there. And the specific market that we have done quite a bit of CapEx spending is Brazil, where our parcel volume has also grown rapidly in the last few quarters. So that's one area in terms of our demand.

So adding on to that, just to maybe add more color as well for Southeast Asia, other than the sorting centers and the vehicles, we also have continued to build out our last mile automation capabilities in our Southeast Asia, which we now have 38-plus market share. So we are deploying more automated equipment across our outlets, enhancing the efficiency of the couriers, the outlet processing and the management personnel. So among our 10,800 outlets in Southeast Asia, there's -- right now, we have only several dozens of automated equipment that we deploy. Compared to a few thousand in China, there's a significant room for us to invest in this space, and we'll continue to do so over the next few years.

Next, moving on into China, which is another big area where we spend our CapEx. We are focusing on our investments on more advanced sorting centers to drive upgrades and also to refine the density of our network. In the first half of this year, we continue to advance the construction of our new Yiwu, Zhejiang sorting centers. We have benchmarked to our domestic peers in terms of efficiency and service quality, and we continue to upgrade at the critical geographies or hubs in China in building out our own sorting centers and Yiwu is one of them.

So finally, I think for the new markets, I think we have mentioned before that we will use the asset-light operating model in the newly entered countries to manage our return on investment of our investment deck. At this moment, our -- is actually quite low in proportion in terms of the investment at this phase. So overall, our CapEx spend, we are expecting -- this year, we will spend about $800 million to $900 million of CapEx all in all, slightly higher than what we have guided earlier on this year.

Our next questions will come from the line of Steve Qiu of Goldman Sachs.

[Foreign Language] Congrats on the very strong results. My question is on your other markets, especially Latin America. So I understand that your revenue and shipment volume growth remained robust and some innovative initiatives in your business model such as the last mile fulfillment networks in these markets. So could management please explain how this model differs from the approaches that we use in Southeast Asia as well as China and provide an update on our current business progress.

[Foreign Language]

[Interpreted] Steve. Yes, I'll translate for Steven for this question. So I think -- so what Steven was saying that, obviously, we see very clear opportunity in the European and the American markets where the global e-commerce platform, they are also expanding rapidly into the regions, and they bring us very clear and also substantial demand for our services. So at the same time, Europe and America are also the regions with the highest consumption levels globally. The e-commerce logistics there offers a very high profit potential for the future. So through our experience in Southeast Asia and LatAm in the recent years, we have combined basically to combine our model -- business model as well as experience with the localization, and we have came out with this new asset-light operating model as we expand our footprint.

So what we meant is in the early stage of entering -- when we enter into this market, we will choose to cooperate with market players who possess local resources and also operational experience. These partners are familiar with the local market environment and they know the region well, and they can help us and help to rapidly improve our operational efficiency in the new environment so that we can achieve better input and output rhythm as we expand. So we will continue to explore whether this model can help our expansion into these new countries such as Europe or maybe even America.

So in terms of where we are on the status, we have already begun assembling core teams and advancing preparation work or market feasibility studies for our operations in Europe and America. Entering Europe will be similar to our initial entry into Latin America. In terms of the geographies, so Steven mentioned that we will start with the countries such as U.K., France, Germany, Italy and Spain and gradually expand the coverage from the other Europe regions. However, it's not going to be a fast process. He also added that we expect this to take probably another 1 to 2 years before we can see some results, and we will provide timely updates to all of you as we make progress. Steve, we answer your questions.

Our next questions will come from the line of Liu Gangxian of CICC.

[Foreign Language] Congrats on the good results. I'd like to follow up on our progress for non-platform parcels in Southeast Asia and its volume scale growth and also major customers. And if you can share with us more color about where this business stands right now. How big is the already existing demand? And how do we expect for future demand after more...

[Foreign Language]

[Interpreted] I'll translate for Charles. Yes. So Charles was saying that, as mentioned in question one, we continue to develop the non-e-commerce or we call it the non-platform parcels in the region. And -- but he also added that it's not just in Southeast Asia, but also all the countries that we operate, we have also started focusing on this, just as Southeast Asia is slightly more advanced in terms of the development. And I think overall, this is one of our core strategy of the group going forward to improve our long-term overall profitability into the region. So this is going to be a direction that we continue to pursue in the next few years.

So in the first half of 2026, we have worked systematically to advance the improvement of the quality service of this to support our growth in the non-platform parcels. So there are 4 areas. So the first area is in the areas of product planning. So we have further extended our time definite product such as the same-day delivery or the next-day delivery to the non-platform parcels. And we have also developed customized products such as [indiscernible] price guarantee services for -- to enhance our service offering.

Second thing is we continue to optimize our in-store parcel sending experience. So in the first half of this year, we have strengthened our brand image on our street side outlets. We have established standardized parcel sending areas, and we continue to enhance the customer convenience to allow them to drop off their parcel more easily at our outlets. This is also to enhance the overall experience with the experience with us.

Thirdly is the door-to-door pickup. So we have advanced our last mile efficiency improvements and continue to optimize our courier incentive mechanism. So Charles added that it's very important that our couriers, they are motivated to develop this non-platform business as well as delivering this business with high quality and services because they are very essential part of our network.

So last but not least, number 4 is we call the Type B or in China, we call Type B, but outside maybe we can call it monthly settled or periodic settled key accounts. Those key accounts, we -- in the first half of this year, we have also continued to improve their experience with us in the -- starting from contract signing, onboarding, the onboarding experience and also the account receivable, how do we shorten the account receivable cycle such as COD. So how do we have fastest remittance of COD into the hands because -- as Charles mentioned, logistics service is not just about providing logistics, but also to enhance quicker trade flows.

So in the first half of this year, we have spent a lot of effort across our geographies to strengthen our overall onboarding and the customer experience there, and we hope to improve the cash -- the speed and efficiency of the trade flow. Therefore, we can generate more logistics services and also gain more customers, better customer experience with us. So that's the overall reply to your questions. Gangxian, is there anything else?

Our next questions will come from the line of Shi Mufan of JPMorgan.

[Foreign Language] My question is regarding the China market. J&T's first half growth in China outperformed the overall industry. So against the backdrop of anti-involution policy, how shall we think about the volume growth for J&T as well as the overall industry? And if possible, can management share the outlook for the second half of this year and maybe next year?

[Foreign Language]

[Interpreted] I'll translate for Charles. So under the advocacy of anti-involution policy in China, so all the growth pace of the China express industry has becoming more and more healthy and steady. So all the industry players, including the company, we continue to center our core development theme in terms of quality optimization, cost reduction with efficiency improvement, continuously to enhance service quality. All these are centered around the theme of quality growth. So what we are doing specifically for our China headquarter, our China country team, along with the regional sponsors across our China regions, we continue to empower the last mile network buildup. And our team is deeply engaged in the entire process of this management and working very closely with our franchisees to strengthen their operational foundation.

As everybody knows, it's very important that we have strong franchisee base. So overall, this -- all this stronger network quality has helped us to win new customers in the first half, reduce our customer churn and also increase our customer satisfaction. But this is a collaborative efforts between our China country team as well as regional sponsors as well as our franchisees in China. So other than that, Charles also mentioned that we have -- we continue to strengthen our presence in certain industry focus -- with certain industry focus, providing in addition to general services, we also have targeted certain industry with unique customer needs, and we have tweaked our service delivery model to cater for their needs to make sure we provide solutions which are appropriate and which are also demanded according to their business circumstances. So industries such as beauty and personal care and 3C are some of the examples of our key focus in the first half this year.

All this adds to our -- all these are built on our experience in some of the other industries such as agricultural specialty products, which we have experienced significant growth in the previous years as well. So last but not least, we have also -- so Charles also added that on the ongoing customer -- on the customer diversification point. So other than obviously working our franchisees and also working with the industry groups, industry focus, we also continue to work on higher -- our returns, the business on returns as well as individual parcels. We continue to work with this group and continue to deepen our service offerings and our reach and our operating capabilities in this area, including our brand customers and individual parcels. All this in combined have helped us to deliver a stronger first half against the overall industry growth. As you can see, our market share continued to increase in China as well. So, Mufan, hopefully we have answered the questions.

We will now take the last question from Zhu Yubo of Caitong.

[Foreign Language] Okay. Let me quickly translate that for you. Our group's EBIT per parcel will come in better than the guidance given at the start of the year. How should we view the future trend of group's EBIT per parcel?

So this is a finance question. So I will answer, yes. So as we continue to replicate our experience and our capabilities of our business and our ability in China as we replicate it across our business, we have achieved a refined operation management and improved efficiency across all our regions and enhancing our group's overall resources allocation, cost control and network economy of scale. So in the first half of 2026, as you can see, our parcel volume in Southeast Asia in other markets have grew rapidly.

We've increased -- and it's an increased proportion of the total parcel volume, and this drives our group's EBIT parcel to increase 77% year-on-year to USD 0.025. Yes, so this is really a change of the mix to that as we continue to -- and our non-China parcel volume increase, our overall EBIT parcel will continue to increase. As you can see from growth rate as well, our Southeast Asia growth rate as well as other markets growth rate is a lot higher compared to our China growth rate. So going forward, we expect our group's comprehensive profitability will continue to increase and $0.025 will also gradually increase in the future.

We have no more questions from the line. I'd like to hand the call back to management for closing.

[Foreign Language]

That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.

Good day, everyone. Welcome to J&T Express 2026 Q2 Operational Results Conference of J&T Express. [Operator Instructions] Now I would like to give the floor to Frank, the moderator of the conference.

Hello, everyone. Welcome to J&T Express 2026 Q2 Operational Results Conference. This is Frank. All the presentation materials for the meeting have been distributed to you via e-mail and uploaded to our website. The management presenting today, including Dylan, CFO of J&T Express; and Haibin, Director of Investment and Capital Markets. The conference will be consisting of 2 sessions. First of all, Haibin will be talking through the company's business performance for the second quarter of 2026, and then we're going to open the floor for Q&A, during which the management will address your questions. Now I give the floor to Haibin.

Hello, everyone. Welcome, everyone, to attend this Q2 of 2026 operational performance announcement of J&T Express. Please allow me to give you the report. The group's total parcel volume reached 9.18 billion pieces in Q2 2026, representing a year-on-year increase of 24.2%. For the first time, we have hit the milestone of handling over 100 million parcels per day on average, making us one of the very few couriers operational operators worldwide with the capacity of consistently processing over 100 million parcels daily, the marks of global expansion. And except for the other markets, you can see that we have been seeing a 32.3% of the percentage against the total in Southeast Asia and other international markets.

And now taking a look at the Southeast Asian markets. In total, we've been seeing a kind of daily parcel of 2.75 billion pieces in the second quarter with average daily volume of 30.3 million pieces, a year-on surge of 63.2%. And the key growth drivers behind were, first of all, the e-commerce penetration rate across the Southeast Asia countries is rapidly upward trajectory and the fluctuations of the macro environment has not eased the long-term growth dividend for the e-commerce sector. Second, our e-commerce platform clients kept raising the local investments to the other promotional activities, the free shipping and the others, expanding the very good progress, which drive the e-commerce clients and the companies to achieve the robust growth.

Third, we have persisted with the strategy of developing off-platform parcels alongside which the continuous improvement of our product planning capacity is realized and service qualities and brand influence were realized as well. Meanwhile, our platform has raised competitive logic requirement further, leveraging our cost and pricing advantages as well as solid network capabilities, and we have widened the gap against competitors and further elevated our industrial standing.

Next, in China, the parcel volume in China reached 6.2 billion pieces in the second quarter with an average daily volume of 68.2 million pieces, representing year-on-year growth of 10.6%. The recovery of our business volume growth were recorded high in Q1 with China with has sustainability. The total year-on-year growth of the domestic courier industry stood at 5% from January to May and growth focus of China courier industry has shifted merely pursuing parcel volume to the sustainable growth feature in coordinating improvement in scale, quality and efficiency.

The volume also grow in China has slightly outperformed the industry average, consistent with our guidance that we have issued for the start of the year. And we have consolidated our core logistics network, enhanced timeliness and service quality and cost control capabilities, boost the technology empowerment and also stronger service capabilities and lifted customer satisfaction. At the same time, we've been improving our brand high quality and the other areas as well and driving growth in high-volume parcel growth. For the other markets, the total volume reached 210 million pieces in the second quarter with average daily volume of 2.3 million pieces, representing year-on-year growth of 136.5%.

The parcel volume growth in these other markets has accelerated for 5 consecutive quarters, mainly due to the following factors. First of all, the other markets based at the -- both the relatively high per capita GDP and per capita consumption volume and maintain low e-commerce penetration rates with per capita parcel volume far below those of China and Southeast Asia, leaving the potential for development local e-commerce platform. Second, the company continues to export courier operation experience accumulated in China, Southeast Asia and other markets, invested in automated sorting equipment and optimize the overall efficiency and meet the rapid growth of local courier demand and lift the overall efficiency.

Third, our service quality and capabilities in Latin America has gained recognition from local clients, and we are gradually deepening our cooperation in the Mercado Libre and largest e-commerce platform in Latin America. Lastly, in other markets, we maintain close global cooperation with the Chinese e-commerce platforms and have achieved a very remarkable growth in investment as well to boost consumption. And also this quarter, we have processed ahead with the global expansion of powered overseas markets with a leading domestic logistics operation experience through multidimensional initiatives, including exporting logistics equipment overseas, replicating the mature business model, potential -- professional talent, leveraging AI capabilities as well. Also in terms of our equipment to export, OSS, the group wholly owned equipment subsidiary, delivers full chain services covering the customized R&D, massive production and on-site installation and commissioning as well as the on-site operation and maintenance and support the upgrading of J&T global network.

OSS recently has been seeing very good growth, and we have a project with the Tangerang Network Station in Indonesia. Of the equipment that we put in use, we're going to have the sorting and handling capability improving by roughly 40% with a peak growth to approximately 150%. In capital markets, the company was officially included as the Constitutent Stock of Hang Seng Index in June of 2026, marking J&T successfully entered the rank of Hong Kong-listed blue-chip stocks. Also first, we have attracted buying orders from index tracking ETFs and passing allocation capital with further raised the company's secondary market visibility and liquidity, boost of willingness of overseas sovereign fund and long-term institutional investors to allocate capital and help us to globalize our shareholder structure.

Also, in terms of the shareholder returns, the company has continued to reward the shareholders via share buybacks. As June of 30, 2026, the company has repurchased a total of 179 million shares since its IPO with aggregate buyback expenditures reaching HKD 1.39 billion. And also on the June of 2025 -- on [ June of 25, 2026, ] the company announced the approval for a new share buyback performance and raised the total buyback in HKD 2 billion shareholders and also sustained the return to shareholders. At this market, we are finishing this performance announcement for Q2 2026. And now we concern the Q2 financial results. And regarding the financial figures, the company only released semiannual and annual disclosures and generally do not update performance guidance for the quarterly basis. And this exchange is limited to operational data only and no discussion will be held on financial figures. Thank you.

Now we are going to have the Q&A. Let's have the first question. The first question is from Fan Qianlei from Morgan Stanley.

I have 2 questions. The first question is about the Southeast Asia, the per unit profit, whether this is impacted by the oil price and ForEx. We know that you don't comment on the financial figures, but whether or not you're going to share with us some of the quantitative figures and comment. Second question is that just now you have mentioned that in those new markets and emerging countries, what about the progress about the second half of the year and also the next year as well? How do you think about this opening of new markets?

Right. Thank you very much. Let's answer the very first question. First is about the oil price. Actually, as you can see that we have been seeing a very good profit growth, which is in line with our guidance provided in the beginning of the year, so that it is quite stable and the local e-commerce market is growing quite well. So overall speaking, we do not have a big impact as well. So in terms of the petrol price, in terms of the overall impact on our profitability and the overall cost, we have already stated the impact to you previously. So the oil price is accounting for a very low percentage of our total cost. We are at the normal stage. We can have increase of our efficiency. And on the delivery side, we're going to see all new energy vehicles adopted. And in different regions, we're going to see the fuel price subsidies. So overall speaking, offset a little bit about this increased oil price.

Overall speaking, we are maintaining the guidance not changed. At the same time, in recent years, we have been seeing that for the oil price, the prices have been dropping from the historical high. So I think that with regards to this particular model, we have more mature model to deal with that. And second, the overall impact has already becoming less versus that in April. So the particular impact to operation is quite controllable. In terms of foreign exchange, I think that it is following the same concept.

First of all, in different countries, our overall businesses are still done in local markets with the local currency. So this is not impacting too much of our local business. In terms of different countries, the impact of the ForEx will be a little bit different. So probably you can see that Indonesian currency has been depreciating. But in China and Brazil and Mexico, we've been seeing the appreciation of the currency. And in Malaysia, the ForEx is quite stable. So overall speaking, you can see that we can see a very good offset of the ForEx across different countries in the world. So overall speaking, this is also quite controllable.

Thank you very much. This is Dylan. I will answer the second question. I believe that you should be quite taking care of those markets that we are newly opening in Q2, we are entering to Colombia in starting the operation of courier service. So overall speaking, you can see that the volume is actually growing. We are connecting with some different platforms. So you can see that we have already entered into the local market with the very first cooperator.

In terms of the new markets that we are operational, we have been talking about this in different conferences with everyone. I think that in the South America, this is going to be another Southeast Asia market in the world. So it is quite potential. We're going to enter into Peru and the other Central American countries. So Latin America will become the second Southeast Asia market in our total portfolio. Except for the Latin America, probably you've been paying attention to our progress in U.S. and Europe.

In the United States, at the current stage, we are still planning in the U.S. We have different plans and under assessment and evaluation. But be a which plan that we adopt to enter the U.S., we can guarantee that we are compliant and operating in a low-risk fashion in the United States. In Europe, we are going to have different kinds of ways of entering to Latin America. And in terms of the choices of the country, we've been already upgrading with you that those big countries in Europe are some of our considerations. And at the current stage, you can see that we have a very huge demand that has not been adopted.

And from our perspective, overall speaking, we are now doing the investigation and also starting to plan for Europe. For those newly opened countries, we have certain criteria. When the parcel volume reached to a certain stage and operational for a while, we are going to announce our expectation to everyone. So at the current stage, it takes time for us to have any progress in the Europe. And when we have newly updates, we're going to notify everyone.

Thank you very much. Let's wait for another question. The next question comes [indiscernible] Securities.

My question is about the overall growth rate. In Q2, the growth rate is pretty good. We have been seeing some of the incorrect and imprecise figures during the middle. So I think that this year, in Southeast Asia market and other markets, whether we need to up-regulate the overall growth expectation because in this interim report, this is much better than the announcement made in the beginning of the year. So the second question is that in terms of the momentum and drivers of the growth, this is due to the industry growth and the overall other sectors. So in Southeast Asia and Latin America, what are the key drivers behind the overall growth? If we're looking into the future, next 2 to 3 years and in terms of the overall growth, what do you set this growth drivers and your growth plan? And how do you balance these 2?

Thank you very much for this question. Let's answer the very first question. As we can see that at the current stage, the growth rate is pretty much similar to the guidance provided in the beginning of the year. As we have already stated that we're not going to be talking and discussing about the overall guidance related figures. As for the key update, we are going to give you an announcement and some of the answers during the interim result announcement. So second question is about the key drivers behind the overall growth in Southeast Asia markets and how do we balance in between different factors. As you can see that in the very beginning, we have already illustrated that in Southeast Asia market, we have a very good macro economy, for instance. But overall speaking, the e-commerce platform penetration is not that high. We are going to improve that further.

Second point is about those infrastructure of the e-commerce platforms in Southeast Asia market. And at the current stage, we're at a very fast growth track. And this is providing with us a very good infrastructure support. And third, our customers have invested more and further into this particular area to boost the consumption habit over e-commerce platforms in Southeast Asia. And fourthly, we're talking about the overall cost and efficiency in Southeast market are now outperforming that of our competitors. So while we have a positive growth in Southeast Asian market, we are going to further improve the productivity and focus on high-quality delivery as the key targets. I truly believe that the overall growth in South Asian market will be actually a little bit higher than the industry average.

Right. I would like to supplement on the overall question, which is about the growth rate for the next 2 to 3 years or so. Okay. So in terms of this particular answer, we expect that this particular growth will be actually faster. Of course, in the beginning of the year for the Sullivan industrial data, it mentioned the overall growth rate of the courier service in Indonesia, which is going to be 30% above and double-digit growth for the next 5 years. So that is why we are actually over -- we are very much confident that we are going to outperform that of this expected figures, because we have quite proactive marketing strategies, and we have investment on technologies and infrastructure. Also, we are exploring the non-platform businesses.

So overall speaking, we are very much confident that we are going to outperform that figure. Another one is about the investment from our clients and customer side. As you can see that in TikTok and [indiscernible], Temu and Shein in Southeast Asia markets. And also, we can see that in this particular recent 2 years, they have been investing heavily and continuously into this area. They have different ways of trying to build and nurture people's mindset of consumption online. And at the current stage in Southeast Asia market, we hope that together with our e-commerce key accounts, we are going to further improve the repurchase rate online and help the consumers to actually buy more from e-commerce platforms and help the e-commerce and online shopping penetrating more. This is going to be our future outlook.

Thank you very much for your question. Now let's wait for the next one. So next question comes from Steve Qiu from Goldman Sachs.

Wonderful performance in Q2. My question is a very quick one. As you have already mentioned, you have emphasized on the collaboration in Latin America with Mercado Libre. So I would like to understand the overall kind of platform and how do you actually touch upon and how do you penetrate into those local markets? And my second question is about the considerations of entering into the Europe. As you have said that in Europe, probably you are going to have asset-light fashion to enter the Europe market as you're seeing that in Latin America. I would like to understand the expectation of the long-term profitability in Europe. Do you think that this is pretty much referring to that of Latin America or going to refer more to Southeast Asia in a sense?

Okay. Thank you very much for this question. Let me answer the first question with regards to the collaboration with Mercado Libre. Actually, we have a very close contact with Mercado Libre. As you can see that in recent years, in terms of the kind of logistics, they are paying attention to that in China and set up the offices here in China to actually do some of the support. So be it we are talking about the Southeast Asia -- I mean, South America, we are also emphasizing a lot the collaboration with them. At current stage, Mercado Libre offers over 100,000 pieces to us. And with 200,000 in the peak season, we do see a very potential growth in the future.

While at the same time, we are collaborating with Mercado Libre. And you know that they have a big strategy, which is that they hope to cover more e-commerce customers that are long tail fashioned and in order to have long-term demand acquired. So in local market, our network of service quality as well as the number of the service networks, we are now trying to emphasize on the increase in terms of the numbers. We started to collaborate with Mercado in the mid of last year, and now we are at a very fast ramping up stage. So I believe that at the current stage, the e-commerce platform from China and Asia are now the majority of our contributors to our business, but Mercado Libre is going to be very potential in the near future. We hope that we are going to grow that in the short future.

Thank you very much. And second question is about Europe. We know that in Europe, we are at very early stage. So in terms of the total investment and the other kind of areas, it is still at an early stage. We'll give you a timely update in the future when applies. But still, this is going to be beneficial for us to enter into Europe. First of all, we are going to see a much smaller investment in the future. In terms of the line haul kind of vehicles in Europe is a quite mature market, and we don't need to have a lot of CapEx in Europe. And second is that the launch time will be much quicker and more efficient.

And the most important thing is that in the future, we have a lot of flexibilities in Europe. In the future, we believe that we are going to be very flexible in choosing the franchise model or the other models as well. So this is the overall expectation. But in terms of figures, we don't comment in this meeting. Please bear with us.

Now let's wait for the next question. The next question comes from Liu Gangxian from CICC.

This is Gangxian from CICC. Congrats on another wonderful performance in the second quarter. I have a question which is that -- now this is an AI era, and you have mentioned some of the AI applications in your business. I would like to ask you that in terms of AI, what kind of investments that you had and what kind of achievements that you have had? Second question would be that in terms of the regulation environment in overseas, how do you comment on that? Overall speaking, as we have mentioned that this was brought by the investment from our customers. And of course, that we do have not a very good competitiveness. But overall speaking, in Indonesia, we had some kind of investigations and the U.S. Senators, we have been seeing also some of the investigations going on. So from this, do you think that this is going to be something regular and going to be routine in the future? Or in the future, in terms of the regulation environment, do you think that this is going to be providing some of the turbulence to your business or interference and some of the conflicts may happen? How do you comment on this?

Right. Thank you very much for this question. First of all, I'd like to answer the question with regards to artificial intelligence. As for AI large language model in 2025, while it was already very much popular, and we've been seeing all kinds of different AI applications. So for logistics industry and for J&T Express, definitely speaking, we've been spending a lot of time in trying to research on the possible viable ways of helping us to increase our efficiency and lower down the overall cost with our AI technologies and LLMs as well. So at the current stage, we are going to see that there is going to be a very good improvement and helping us to have expectations of the parcel volume handling, the intelligent systems, intelligent logistics and the intelligent sorting, et cetera. These are all going to help us to increase efficiency and lower down the overall cost.

Secondly, in the all kinds of different groups, we are going to also try to enhance the efficiency of our meetings and communications. As for logistics industry, in AI, we are more a applier and the company of using AI and developing all kinds of different applications on top of the existing technologies. So now at the same time, with our strategic partner, SF Express, we are also communicating with them in terms of the adoption of AI technology. We truly hope that AI is going to be of great help to lower down the overall cost and increase efficiency in this area. This is pretty much about the artificial intelligence.

Right. Thank you. And let me answer the second question, which is about the potential geopolitical tensions and some of the investigations that might go on. So just now you were talking about this particular kind of event of TikTok in Indonesia. I believe that in the mid of April, we had this kind of investigation going on. But overall speaking, we understood that at the current stage for different customers and also ourselves as well, we are going to make the compliance as a very important red line. So be it you're talking about the local like logistics association or in terms of the communications with the politicians and the local government or some of the regulators, I think that this is a normal behavior at current stage for the key customers, say, TikTok or Temu or Shein, et cetera, in Southeast Asia experiencing any incompliance, no. And second point is about the overall market. As we have already elucidated that before entering into the market, we have to be making sure that we are compliant and we are safe in terms of operation, and please do not worry about this.

Now next question comes from the Changjiang Securities, Lu Sijia.

I would like to ask you the question that in the streamline, I believe that in this quarter, you had actually 30% and 40% of the growth and reached 114 units of the streamlined equipment. So we would like to understand that in the emerging markets, how do you think about this overall CapEx and especially in Latin America? Second is that in the emerging markets, how do you actually comment on the capacity planning? How much of the overall growth you can support with this existing capacity? And third question is that you can see that in Southeast Asia market, in terms of the number of partners, you're optimizing that figure. So how do you actually comment on this particular improvement of your operational efficiency while you are doing integration locally?

Right. Thank you very much. First of all, as we have already witnessed that the network service delivery stations increased, and we have increased 3 units of automation assembly line. And the current stage, it is growing as well in other countries, helping us to boost our parcel volume. And overall speaking, in the second half of the year, when there is actually a much high peak season, we've been seeing positioning upward to increase the coverage rate as well as the readiness of our capacity. In the future, this is going to be the same logic. You can see that the automation lines in Latin America, it is not that rich in Latin America. At the current stage, we have 14 units of automation line, but versus the high growth in Q2, I don't think that this is enough.

In the near future, we're going to see further CapEx on this side. In terms of the overall CapEx, at the current stage, we're going to adjust the guidance of USD 700 million to USD 800 million provided being in the guidance of the beginning of the year. This is not going to be changed covering China, Latin -- the Southeast Asia and other markets. But in terms of other markets, we are really emphasizing a lot on the efficient use of CapEx.

Second question is about the Southeast Asia market and in terms of the overall network number. In the second quarter, as you can see that the overall network number is not changing. So overall speaking, this number is quite small. So that is to say that in Southeast Asian market, we are trying to find more excellent franchisees, only they are going to be helping us to expand the network or service network. And second point is that at the current stage, while we are improving our efficiency and improving the automation level of the different service network in different areas, you can see that we are now updating the processing lines to a automated ones. So in the same service network under the same capacity, we're going to see a better and wider coverage and taking more parcels. This is going to be overall trend. In Southeast Asia market, be it the equipment and the service network, the overall planning is there for the purpose to support the overall growth of our demand from our consumers and satisfying the customers' demand as well.

And now we have the question from [ Jenna Pan ] from [indiscernible].

I have 2 questions from my side. The first one is about the emerging markets and other markets. As you can see that the other markets have been witnessing the acceleration of the growth than the Q1 all the way to 136% of the growth rate. We would like to understand that if we exclude the impact from Middle East, or the Peru and the other countries. So from the standpoint of Latin America as a market, do you think that the overall growth rate will be higher? And do you think that there is any momentum and drivers behind the further growth?

Second question is about the market of China. You can see that China is outperforming a lot versus the industry average, which is 5% to 6%. But in China, you have witnessed a 10% of the growth. I would like to understand that behind this change and improvement, whether you have changed a little bit your competitive edges or strategies? And what are the reasons of having such a sharp change?

All right. Let me answer the very first question. As for other markets, as for Latin America and non-Latin America markets that you would like to understand, right? Okay. So simply put, Latin America should be the actually most potential market and because of the large population base, but low penetration of e-commerce platforms and our key platform accounts have witnessed a lot of investment in this area in Latin America. So most of the growth are actually driven by Latin America. Middle East-wise, we had received a little bit of the impact due to war and conflicts and the other reasons. So we had a single-digit growth in Middle East. But the overall kind of rate and overall growth will be driven by Latin America.

Okay. And let me answer the second question, outperform the industry average. So indeed, you can see that in China market, we have been seeing a lot of works conducted, so while we enter into the China market, we are going to actually see a much better branding capability and the service network quality will be actually enhanced, and we are going to see a much better penetration. The second issue I would like to say is that at the current stage, we do see a kind of shortcomings, and we are going to already mitigate and penetrate. So at the same time, in terms of the overall strength, we are going to further enhance that and helping us to have sustainable growth.

And third question is -- third point is about the capability of acquiring small and medium-sized customers, and we are improving the word of mouth and our overall quality. So overall speaking, this is helping our quality improvement as a whole. We are always saying that in China, the time is a friend of J&T Express. While with time, we are going to further enhance the efficiency, the quality and the overall level of influence and impact. More customers are going to realize that J&T Express is the right choice for them. So overall speaking, this is a very good answers for the overall growth in China market with a very high number.

So another question is that from a platform standpoint, as we can already see that the overall growth of J&T Express, is it actually because of your improvement of market share? Or is it because of the heavy investment of your customers?

Okay. So in China market, I think that most of the customers of small and medium-sized enterprises that they are choosing the courier service delivery company and supplier. So I think that now at the current stage, we are improving the percentage of those excellent customers against our total portfolio of customers, and that's the reason for our growth.

Let's wait for another question. Next question comes from [Lin Chen ] from Huatai Securities.

I would like to have a follow-up question in terms of the positioning in Southeast Asia in the e-commerce area. You can see that for Shopee in certain countries, they had a very good and highlighted performance of the growth of their parcels. So I would like to understand that in the past half year, do you think that for TikTok or Shopee, did you witness some of the changes of the structural changes of number of parcels from these key e-commerce customers? And do you believe that you are going to become the supplier of courier service to Shopee again in the future, while Shopee is improving its overall volume. How do you think about this particular thinking in becoming the service supplier again for Shopee?

All right. Thank you very much for this question. I think that for our peers, it is not convenient for us to comment on the performances. But overall speaking, in Southeast Asia market, the penetration of e-commerce is actually growing at the same time. And this is exactly what we have believed always -- so you can see that in China, we have over 100, and it's only 30 to 40 in the Southeast Asia market. So I think that while we are nurturing the mindset of the consumers to shop more online and using e-commerce platforms, I believe that this is going to be mutually beneficial for both our customers and ourselves as well. And e-commerce logistics is almost all the businesses that we have. As for those e-commerce platforms that are building their logistics by themselves, they only actually have a department supporting them.

And for J&T Express, we actually came back to China a decade ago. And for this logistic models and talent model, we copy that to the Southeast Asian market for the past 5 years, we have advantages in terms of our overall cost and the pricing. And this is exactly going to be our optimization happening for the next half year. It is just like in the first half of the year, in the Southeast Asian market, we had a very thorough investigation and field research and trying to explore those methods in improving our efficiency. So overall speaking, we're going to make full leverage of the fundamental in Southeast Asian market and making us becoming a very excellent courier service provider. In the future, with time, I believe that e-commerce in our positioning in Southeast Asian market is going to be changing. But what to be said, I truly believe that this is a very good opportunity for everyone of us.

Now let's have the next question. Next question comes from [ Limu Jin ] from Citic Securities.

So I have already witnessed that you have delivered a very potential and strong performance. I have 2 questions. First one is about the Southeast Asian market. I would like to say, would you like to provide with the ranking of the growth of the number of parcels in each country? And the second is that, could you actually comment on the status quo of the franchisees in Southeast Asian market? What's the percentage against the total? Do we have expected figures in -- that is going to be witnessed for the rest of the year?

Okay. Thank you very much for this question. As for the first question, in terms of the overall growth of major countries in Southeast Asia, they're actually quite good and quite even. We don't have this particular ranking per se. But if you want to ask me to give you a ranking, we believe that the overall growth in the some of the Southeast Asian countries are going to be pretty good. And second question is about the overall situation of franchisees. And as you may know that in Southeast Asia, used to be direct operational in the Southeast Asian market. But when we entered the China market, we already know and learn the capabilities of using advanced technologies to actually do this. But in Southeast Asian market, it is already 35% or more franchisees with us. But whether it's going to be higher in terms of franchisee model in Southeast Asian market, well, to be honest, that we are the only company that operates both in Southeast Asia and China.

So franchising is important as a business model, but we don't want to do this without any ground because we have to find those franchisees that are having similar brand culture and corporate culture and wish to actually survive with us for a very long time, and we don't need to have local franchisees so that we are going to have a very good network built. So overall speaking, we have to increase the percentage further. And at the same time, we are not stopping for searching the excellent franchisees. This is always going to be a progress.

Next question is from the [indiscernible] Securities.

I am [indiscernible]. First of all, congrats on this wonderful second quarter performance. I have 2 questions. The first one is about the Latin America. As for the quarterly figures of Mercado Libre, you can see that in Latin America, they are actually improving the number of parcels and ASP is also growing as well. So especially in Brazil, I think that they are rising very quickly. So my question is, do you believe that this particular overall trend is going to have excessive growth for you, and it is going to be helpful for J&T Express to outperform the market competitions? My second question is that -- would you like to give us a sharing about the non-platform businesses and how the collaboration is going on with SF Express.

Okay. So let me answer these 2 questions. First one is about the other markets, especially Latin America and Brazil, for instance. We have already mentioned that briefly that last year, we started the collaboration with Mercado Libre in South America. Overall speaking, in this particular new market, we have more diversified customers profiles. But in different countries, our investment intensity should be different. But overall speaking, I think that in Latin America, these are all the platforms that have been already acknowledged and from [indiscernible] from the mid of last year, we had the collaboration with them. And from a long run, I do believe that for these key accounts, the particular competition with the other e-commerce platforms are going to boost the online consumption demand.

And while we are expanding our network coverage, we're going to see more consumers that we are covering, and we are going to collaborate with more e-commerce platforms. So in the plain language, the more severe the competition is, the usage rate and coverage rate and penetration rate of our infrastructure in the local market will become. So in Latin America, this is pretty much like the Southeast Asian market 6 to 7 years ago, pretty much about that in Latin America.

And next question is about the non-parcel volume and non-parcel business. I mean, non-platform business. As you can see that, as we have already stated that we are keeping updating on the particular non-platform business as you can see that for some of the e-commerce and non-e-commerce customers. And overall speaking, we do see the overall growth of these customers, but the overall growth rate is not as fast as that of the platform businesses. So the penetration is only 10%. We have 2 thoughts or several thoughts. First is that in terms of our overall product, we could actually give some of the high-efficient products with arrive on the same day or they arrive in 24 hours. At the same time, we are going to increase our capabilities of the parcel collection and asking our clients to mail the parcel in the network service station.

And thirdly, we are now also enhancing the capabilities of our customers and helping us to do a lot of sales. So this is going to be the key ways for us to acquire those non-platform customers. We are keeping doing that. But overall speaking, the growth rate of the parcel number in those areas is not as fast as that of the e-commerce customers. So it's only 10% in terms of our total percentage against the total.

All right. So due to the limit of time, we're going to give the floor to the last question. Okay. So last question is [indiscernible] Securities.

This is [ Guoching. ] So first of all, thank you very much for this very wonderful performance. And I would like to actually have some of the detailed questions with regards to the performance in Q2. We believe that Q2 was a very special quarter and some general quarter as well. We've been seeing some of the observations and experience in Q2. Would you like to share with us more details in Q2? For instance, in the front and middle segment of Q2, whether there are big fluctuations of the overall demand and whether or not there is any kind of impact to the retailing businesses? And what about the local government policy implementations in Q2? How are you going to plan to actually enhance the cost reduction and efficiency enhancement -- would you like to share with us as many details as possible? And second question is, could you help us to recap that during the COVID-19 period, how measures or what kind of measures that you have taken to overcome the difficulties during the COVID-19 period?

All right. Thank you very much, [ Mr. Guoching ] for this question. I don't know whether I have understood you quite correctly, but I would like to try to answer. The first question is that the oil price increased due to the conflict of the United States and Israel as well as Iraq. And I believe that for this particular war at current stage, and it has a big impact on the overall oil price. So we had a very high oil price as well in Western countries. So I think that for the management, as for this impact to the Southeast Asian market, yes, we -- indeed, we had some of the thoughts. So overall speaking, from a macroeconomic standpoint, in Southeast Asian market, the local governments are doing a lot.

So for instance, the Indonesia is pretty much -- I mean, Vietnam is so much dependent on the importation. So as for Vietnam, they are thinking about all the methodologies. For instance, they are thinking about importing from the United States or Europe like Russia, and that solves the question. And this one is about the overall Thailand. So I think that we have all kinds of different ways of trying to solve the challenges of the raw oil supply. So overall speaking, we have a very good guarantee of the supply of the fuel for some of the oil adding and refilling, we have some limitations. But at the same time, we are being quite persuasive. So this is going to be something that we can guarantee.

Another question is about the oil price. And it used to be above USD 120 per barrel. And I think that the response time was quite different and the way of responding to that was different as well from different countries. And I do believe that overall speaking, the overall service prices keeping rising and dropping without affecting the international market. So as for the logistics company, first of all, the kind of fuel cost and the petroleum cost is not as high as we have expected against the total. And at the same time, you can see that the -- it is pretty much a certain percentage against the total operational cost. So I think that it's only single-digit percentage and not that high.

Second point I would like to say is that you have to think about your own solution. So in terms of this particular market share and increase, we are pretty much designated on this. And the third point is that for the fossil fuel, the overall prices were increasing a lot. So at the same time, we are going to use more the new energy trucks and vehicles and new energy line haul trucks, et cetera. So overall speaking, we're going to see offsetting of the overall higher fuel price. At the same time, we are thinking about the solutions and measurements together with our customers. So as for a commodity, if the price is increasing, I believe that the consumers should have some expectations over the overall price increase. So I do believe that in the past years, we have very, very little impact.

Also, there is another question which shows the concern of some of the investors that if the oil prices are increasing further, the macro economies would be collapsed. So we are not economists, but still you can see that because of this particular war and conflict, we are seeing that -- no, we do see a kind of different impact. And of course, that at the current stage, we are seeing some of the local Southeast Asia countries to actually make more preparations of diversifying their fuel sources. So overall speaking, all the countries are having some of the preplanning. Even if we're talking about the macro situation in China, right, we have fluctuations of macroeconomic development in the past decade in China. In Southeast Asia market, the per capita parcel volume is way less than that of China's. And at the current stage, the macro economy is not that heavily impacted in Southeast Asian market, let alone that we still had a quite performative market.

And second question, as you have mentioned the COVID-19 period, would you like to understand some of the like risk mitigation methodologies or some of the other details?

So yes, I was talking about some of the impact during the COVID-19 period from the outside of your company. And this time, we've been seeing some of the similar conflicts that we are experiencing. So how that you are going to deal with that as you did in the COVID-19 period?

Okay. Thank you very much. First of all, I have to say that during the COVID-19 period, in those days, we had the big growth as well because our overall network has already completed in Southeast Asian market. Back then, a lot of [ leaders ] joined us. So overall speaking, the online shopping was boosting during COVID-19 period. And next is that in Malaysia and Thailand, they also had some of the vouchers delivered to the residents and having some promotional discounts offered to them if they shop online. So the COVID-19 period was actually the period with a lot of growth of e-commerce businesses in the past several years.

And next one is about the advantage of our network capability. So we are going to be quite swiftly responding while the time is difficult. So during COVID-19 period, there was the situation for Southeast Asian market, and that should be the same for China, right, in 2022, we had a lot of guarantees provided. So overall speaking, we organized a kind of a network on the ground. So as long as there is any demand, be it in the conflict or in the war, our network will be of great use. So at current stage, you can see that in the second quarter, we're seeing a lot of investments and by expanding the network coverage and the number of franchisees.

So overall speaking, we're enhancing our network ability in Southeast Asia and other markets in order to be ready for the peak season to arrive in the second half of the year. And this particular expansion of our network is there for the purpose of mitigating the risks during some force majeures.

I truly trust your positioning and your advantages as well. And I wish the company to be better in the future. Thank you.

Thank you very much. All right. So I think that this is the time, and thank you very much for your participation. If you do have any follow-up questions, please contact our team of J&T Express. This is the end of this conference. You may disconnect now. Thank you very much, everyone.

Thank you very much, everyone, and now you're able to disconnect.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Hello and good day. Welcome to J&T Express Q1 2026 Business Performance Announcement. [Operator Instructions]. Now I'll give the floor to Frank.

Hello, everyone, and welcome to J&T Express Q1 2026 Business Performance Briefing. And this is Frank, and materials for today's meeting have been sent to you via e-mail and uploaded to the company's website. Joining us today, we have Dylan, CFO at J&T Express; and Haibin, Director of Investment and Financing. We are going to have 2 parts. First of all, Haibin will present the company's business performance in Q1 2026 and then Q&A, where management will answer your questions.

Hello, everyone. Welcome to attend this 2026 Q1 business performance announcement. This is Haibin. Our group total parcel volume reached 8.33 billion pieces in Q1 2026, up 26.2% year-on-year. The group's growth majorly driven by the Southeast Asia, China and other markets. First of all, Southeast Asia. Parcel volume in Southeast Asia reached 2.77 billion pieces in Q1, up 79.9% year-on-year. The key growth drivers in Southeast Asia remained strong in Q1 2026. First, the e-commerce shopping festival around the Lunar New Year and Ramadan in the Southeast Asia boosted local consumption, driving high growth together with the e-commerce customers in Q1. Second, our e-commerce platform customers increased investment and promotion activities and expanded product categories drove the rapid growth. Third, our non-platform parcels also grew and made a solid contribution to the volume, but the overall growing trajectory is slower than the e-commerce parcels accounting for less than 10%.

Meanwhile, the platforms has raised the comprehensive requirements for logistics. We have seen that small and medium-sized express operators struggle to meet their requirements, but cost and pricing advantages and solid network capabilities of ours have widened the gap with our competitors and further strengthened our industrial positioning. Second of all, for China, the parcel volume in China reached 5.4 billion pieces in Q1, up 8.4% year-on-year, and our business volumes in China rebounded in Q1, supported by the Spring Shopping Festival. The industrial total volume increased by 7% year-on-year in January to February of 2026 and overall growth rate of the express delivery industry rebounded compared with the Q4 of last year.

We also adapted the changes of the policy regulation and industrial competition and actively adjust our strategies, continuously strengthened our network foundation and improved timeless, service quality and cost control capabilities so that we are able to have the high-value customers more serviced and enhance our technology empowerment and sustainable growth. Lastly, the other market, we believe that we have noticed that we have updated volume disclosure term for former new markets and other markets. Other markets refer to J&T operating regions outside of China and Southeast Asia, including the original 5 new countries and further new markets we entered.

In Q1, our parcel and other volumes reached 150 million pieces, up 100.5% year-on-year. The accelerated growth in other markets in Q1 was mainly due to, first of all, the e-commerce penetration in other markets is still low. Per capita parcel volume is much lower than that of China and Southeast Asia, while local per capita GDP is relatively high, leaving large room and potential for e-commerce consumption growth. Second, our key e-commerce customers continue to increase investment in Latin America and achieve stronger growth and the company grow together with our customers. Furthermore, the company continuously exported the express delivery operation experience from China and Southeast Asia to other markets, invested in automated sorting equipments, optimized routing plannings and improved the end pickup and delivery efficiency. Finally, it matched the rapid growth of local demand.

Specifically, Brazil and Mexico maintained solid growth. The content e-commerce ecosystem in the Brazilian market is most mature. We then tie up new customers and achieved good growth. This is the business performance of each market in Q1 of 2026, and this briefing is limited to operational data without coverage of the financial figures. Thank you. Right. Now let's have the Q&A.

[Operator Instructions] Now let's have the first question. This is from [indiscernible] Securities.

My question is that still we have a very good growth. I think that everyone could hear me. So the question is that we still have a very good growth and the figures, and everybody pays a lot of attention to the development of the e-commerce business. So for e-commerce as well as the growing global business of e-commerce, we emphasized a lot on the investment increase. So how are we looking ahead in terms of the subsidies from our customers? And at the same time, for Southeast Asia and Latin America market, how do you think about the absolute number of the overall growth?

So you're asking the question related to the market of Southeast Asia?

That's right.

Overall speaking, as we have already disclosed in the annual report, the e-commerce parcel in Southeast Asia is developing very fast. According to our estimation that in 2026, the overall e-commerce business in the Southeast Asia market is going to be growing at 30% and double-digit growth in the next 5 years. As the biggest courier service or express delivery operator in Southeast Asia, because of our investment and overall strategy, I believe that we are going to outperform the industry average.

In Southeast Asia, we have seen the TikTok, Temu, Shein and the other markets and other customers, they have emphasized more their investments in Southeast Asian market as well. So by having different operation and different marketing and campaign and increased the product categories, the overall business has grown.

So overall speaking, as we have already mentioned that the volume share has been increasing in Southeast Asia. And some of our competitors are now exiting from the competition. So be it the pricing or the overall network capability in Southeast Asia market, we are going to have a further upgrade. But of course, we have the market share data updated every half year. So next quarter, we are going to give you the report about the change of market share in South Asia.

Talking to you about the background. So from our standpoint, except for the e-commerce platform parcels, we are also going to increase the percentage of non-e-commerce parcels. And percentage-wise, now this is less than 10% for the other businesses, because we have a very good growth of our e-commerce parcels. So be it from our operational strategy standpoint and the other points, we are going to have a lot of development here in the Southeast Asian market.

Next question is from [indiscernible] from CICC.

[indiscernible] from CICC. So I have 2 questions. The first one is about the Southeast Asian market. We already know that there are news of saying that in Thailand because the oil price is growing, the particular price of express delivery is also increasing. That was the news. We would like to understand the change of ASP in Southeast Asia market, because the overall cost of the petroleum is getting up, what is the overall impact on you?

And second question is about the other markets. And we know and congratulate you on a wonderful growth in other markets. In Q1, in Middle East, probably you had uncertainty about the parcel volume there in Middle East. Would you like to give us further sharing about the overall market growth in Latin America and Middle East as well in other markets?

Right. Thank you, [ Stefan ], for this particular question. Let's have the first answer. With regards to the overall petroleum cost, we have already seen that because of geopolitical tensions, we do have regional conflicts and causing the rising cost of petroleum. At the current stage, with regards to these countermeasures, we do have several of them. First of all, we had a previous storage of petroleum for a short period of time in order to offset the overall impact. And second is that in a lot of countries in Southeast Asia, we do have different situations. Sometimes the government will have subsidy, but we need to be in the line to actually acquire that quota. So we are going to emphasize more on the communications with our customers.

So at the current stage with a very high cost of the fuel oil, we are now going to try our best to try to replace the traditional fuel oil with the new energy and lower down the overall cost and dependency.

And second is that while we increase the overall cost of freight and the other cost, we are going to also pass through up to our suppliers so that at the same time, we are going to tackle against this particular challenge together with our customers and upstream as well. All right. So this is the overall planning. Second question with regards to impact from Middle East because of the regional conflicts happening there. As for J&T Express, we are an international company. So we are now operating in different countries in the world with offsetting risks from different regions and countries. So we are going to remain operational in the Middle East and pay attention to the changes of the national conflicts and trying to have a very flexible strategy in place. Hopefully, that the overall business in Middle East is going to be very sustainable.

Now we have Steve Qiu from GS asking the question.

Congratulations on this very strong performance in Q1 of 2026. I have 2 questions. First of all, in the very beginning, Haibin already mentioned that in Southeast Asia market, we have seen some of the 3PL kind of exiting from a competition and being cleared out. You are now gaining more orders. So we would like to know that when you are getting some of the orders from the 3PL or the major 3PLs and how do you think about this collaboration? In Thailand, Indonesia and other relevant countries, what is the overall trend?

And my second question would be on the China market, not only about the third-party carriers fleet, but also your own proprietary fleet, there is a slight decrease of that number. So what is the reasons behind?

Let's actually answer the first question, and my colleague is answering the second one. So talking about some of the small 3PL players exiting from the market in Southeast Asia, this is something that we are expecting. We always emphasize that they are actually servicing all the platforms because we are a third-party express delivery service provider. I think that this is not a competition between third-party versus [indiscernible], but this is a competition about the overall e-commerce. And at the end of the day, the e-commerce companies are actually selecting the most effective and cost-efficient partners to work with like China, right? I don't need to talk to you about the significance of that further.

And from our standpoint, at this moment, the most important thing that we have to do is that in terms of cost and efficiency as well as the quality, we are going to actually make further advancements. So in the past 10 years, we actually had a very good operation in Southeast Asia. And now we are now expanding our overall business. So to be honest, we have already enhanced our capabilities in the Southeast Asian market. And now also we have a very good market coverage in China. So at the same time, we are now going to provide a better cost effectiveness to our customers in Southeast Asia and also providing better quality services.

So for Thailand and Indonesia, to be honest, not only we are valuing Thailand and Indonesia, but also for the rest of the Southeast Asian market as well. Of course, there is actually a big billion -- like several billion parcels a year in Southeast Asia, but in China, it's tens of billions. So still that there is a large room for further improvement of parcel volume in Southeast Asia. And now we are improving per capita parcel volume as well in Southeast Asia. So we will increase continuously our investment in Southeast Asia market and further enhance our efficiency of the utilization of the capital. So as a third-party logistics provider, we are building our own kind of a business, but also at the same time, we hope that e-commerce platforms are continuously using our business.

All right. So let's answer the second question. In Q1, the number of fleet proprietary owned has been decreased. And there are actually 2 reasons behind. First is that the company is actually increased the overall kind of use of the third-party fleet. And at the same time, we're optimizing the categories like the trucks with the total wheel base of 16.5 meters. And the second part is that in the future, I believe that we do need to have a certain further supply of the additional fleet, and this is not a kind of a quite massive change.

Let's have the next question. [ Sijia Lu ] from [indiscernible].

This is [ Lu, Sijia ] from Changjiang. So I have a question with regards to the Southeast Asia market competition, be it the partners and the number of the service of -- point of service, we are having a very good dynamism here in Southeast Asian markets. We would like to understand if it's the conversion from direct operation to franchisee model, what is the percentage? And in the future, whether you are going to adjust that figure further?

Second point is that the point of service number is not changing in Southeast Asian market, but for proprietary trucks and the overall kind of sorting point number, this is increasing. So does it mean that we have reached a plateau in terms of the expanding of the network points? And what is the strategy for the overall future? How do we actually think about the overall development trend of non-platform business?

Right. Thank you very much. Let's have the answers. First of all, it is actually correct that in current 2026 Q1 in terms of the automation machines and the proprietary fleet, we are now increasing our investment here in Southeast Asian market. This is actually the same as the guidance that we have provided in the beginning of the year. So overall speaking, our business had a very strong and robust growth, and we have to actually increase our GP margin. So we have adjusted the particular kind of network efficiency. And automation machineries that we have invested also help us to improve efficiency and operational capability of the whole network and point of service.

And second part is about the number of franchisees. In 2026, Q1, the number of franchisees flattened. And we are now doing integration of franchisees and enhancing the capability of franchisees and overall speaking, enhancing our own capability. At current stage, the conversion from direct operation to franchisee model is now being promoted. So this could help us to actually lower down the overall cost. And second, the franchisees have their own businesses as well as their own resources in local market. This is going to be helping us to improve our overall efficiency at the same time. So now we are doing more conversion and over -- kind of a little bit over 1/3 of the direct operational point of services are now becoming franchisees.

So in the future, we are going to have a continuous increase of that particular number of the business. But this is not happening that quickly because still we need to find one franchisee after another. And that's part of the question is that at current stage, we are doing further expanding the other non-e-commerce platform businesses like the key accounts. So I think that the overall kind of a definition is quite similar to what we have communicated in the last round. And current stage, it is not that taking a very large proportion. Non-platform business now is only accounted for 10%. But in the future, for non-platform business, this is going to be actually contributing a lot more into our overall top line and bottom line. In 2026 in Q1 in the Philippines, we have already increased more collaborations with the local government and I mean the local customers, and this is the overall trend.

All right. Let's have [indiscernible] from asking the next question.

This is [indiscernible]. First of all, congratulations on such a wonderful performance from the company. And I have 2 questions. The first one is with regards to other markets, we would like to understand that for other markets, as for the contribution from Latin America, what is the overall percentage against the total? And last one is that TikTok and Mercado Libre started to contribute the business since the second half of last year. So now when we have further contribution from these customers, have you actually seen any trend and momentum of the year-on-year growth in the second half of the year?

And the second question is about the other new markets. Would you like to share with us that for those countries that you are now entering like Europe and America and Latin America, for instance, any prioritization that you have for the market? And at the same time, what kind of market competition are you expecting?

All right. Thank you very much, [ Emma ], for this particular question. As we have already said that for the new 5 countries, this includes the Middle East and Latin America. And now we have other markets as well. So at current stage, the overall kind of share of Latin America is quite high and Brazil and Mexico in specific. We have emphasized more investments there in 2 countries in Latin America, increasing the parcel volume there. And we know that we had a figure of the orders from the Mercado Libre from the Mexico in 2025 second half. And also at the same time, we do see a very good business growth of ourselves and the decrease of our competitors. So we are very much confident in developing this business from Southeast Asia, I mean, Latin America. And at the current stage, we are going to see a much better potential in the Latin America business. At the same time, we are very much confident in that market.

So talking about Mercado Libre, we just increased our partnership since last year. And they are now expanding their business in Latin America as a whole, and we are going to have further partnership with them. So we all know that the per capita parcel volume in Latin America is lower than of Southeast Asia. Last year, overall speaking, for the per capita kind of parcel volume in Latin America and Middle East is 11%. And in Southeast Asia and also China market, we can see that this is actually very high. So we do believe that we do have a very large potential there. So the final objective is still the same. We are actually believing that Latin America is really important.

And second question is that the Europe and America and other markets, we are having the paralyzation of this particular answer to every one of you. We are now, at the same time, quite active in preparing our entry into the U.S. and Europe market, and we are defining the final timetable of that. And when that's mature and the answer is ready, we're going to provide that to everyone.

And now we have [indiscernible] asking the next question.

This is my question. For the business volume, I think that this is pretty good and higher than our expectation. The overall momentum is pretty active. So my question is that now until Q2, you are having a collaboration with SF Express. So would you like to tell us more about this collaboration with SF Express? And how do you implement your strategies there?

Right. Thank you very much for your question. Let's actually talk about the update of the like collaborations with SF Express. So as we have already said that we had a kind of a commercial shareholding and strategic collaboration. Now we are establishing a common task force with SF Express. And altogether, we are going to actually see the overall potential of the market. For instance, in China, in the very beginning, we had the parcel delivery at the bottom market and penetrated market. So -- and also parcel collection as well.

So in order to open more markets and trying to get more market share, we are now collaborating with SF Express. Also the overall kind of SF Express is having a very good business of the line haul lines in the overall global market. So now we are pretty much targeting that particular advantage of SF Express and work with them in the international arena as well. So we do have a very good and deep penetration into the strategic collaborations with SF Express. And when everything is getting more clear, we are going to have a timely update to everyone.

So now we have [indiscernible] Securities asking the next question.

This is [indiscernible]. So first of all, congratulations on the wonderful business. I have 2 questions regarding the Southeast Asian market. We actually know that this is actually quite glad for us to see a performance in Southeast Asian market and for [indiscernible] overall growth versus first quarter 2025, we had actually a slowdown, but your growth is actually quite high. So I would like to understand whether or not you have any other new customers gained in China. And next question is that do you actually foresee any kind of changes of your competitors in this market because we know that from the parcel volume of 3PL, now it is quite limited in terms of the scope of selection.

Second question to you is about the machineries and equipment. We have seen that in kind of Southeast Asia, you have actually increased a lot the automated equipment in Southeast Asian market, this is actually creating historical high. So we would like to understand still the number of machineries and equipment is still lacking that of the China market. So how do you actually see this plateau effect of the number of machineries that you have invested in Southeast Asian market? And how do we actually expect the change in terms of the overall cost in the future because the number of equipment already reached a plateau?

So let me answer the questions. The first question is that whether or not we have any new customers in Southeast Asian market and the overall changes of the market. So to be honest with you, for Southeast Asian market, actually, we do not have a lot of new increased key accounts because we have covered almost all the major platforms. But of course, in terms of the overall kind of market share, we do see a certain increase of market share from our certain kind of customers because they have provided this particular customers or this overall business to ours converted from the competitors and because we have a very good cost effectiveness for these new customers.

So for this, we do see a very good increase of our share in that and also for some of the post offices in certain countries or regions. So as for the industrial figures, we are now going to have the update every half a year. So in August, we are going to provide with everyone the overall updated figures in the first half of 2026 and then give you an update of the figures in Southeast Asia market. But according to us, we do not see any kind of a big change happening there in Southeast Asian market because the post offices and post businesses of the Southeast Asian market is not the fast delivery or express delivery, but we are now focusing on express delivery. So there is a difference.

So next is that you asked a question about the overall plateau of your equipment and automated sorting machines in the South Asian market. But still there is a gap versus China, right, because of the volume overall, overall speaking. If you're not reaching to a certain scale, it is not worthwhile for us to invest in those equipments. So at the current stage, we're now increasing our investment in equipment purchasing. In Q1 of 2026, we had increased a lot number of equipment in Southeast Asian market, and this is going to be the overall trend for the next quarters in 2026, because we have our expectations of the CapEx raising.

Another part is about the overall kind of equipment investment for the point of services and network. Still there's a lot of room for the overall improvement of that figure. The current stage is still manual operated or most of the centers or networks have semi-automated equipment available. So now we are going to increase to actually change that situation, increase our investment.

The next question is from [ Rachel ] [indiscernible].

I have a very quick question regarding the reverse parcel. So we'd like to understand that for the reverse parcels in Southeast Asia market and in China, what is the overall percentage of that? And what is about the overall growth? At the current stage, from ASP or from a profitability standpoint, do you think that this is more contributive to the overall business than the normal parcels? We'd like to share with us about the reverse parcels.

All right. Thank you very much, Rachel, for this question. Let me have the answer. Normally speaking, at the current stage, this is less than 10% for the non-platform parcels, but this is actually quite good in terms of the overall growth, but not as good as that of e-commerce. For China, let's actually talk and expand about this point. in 2026 in Q1, the total number of reverse parcels contributed less than 10% of the top line and the overall growth is actually much faster. So overall speaking, in Southeast Asia market and China, I believe that for non-platform parcels and reverse parcels, the particular kind of profitability is actually better than those platform businesses, and this is going to be helping our overall bottom line. So pretty much we are now encouraging this type of business, which remain the same versus the past.

And now we have [indiscernible].

I have 2 quick questions. The first one is about the newly operational market and countries. For instance, when you enter the U.S. and European and other developed market, what kind of collaborations or what kind of business model that you're going to have? Are you going to do business everything by yourself? Or are you going to do M&A there? And second question is about the shareholder return. So this year, except for having the share buyback, any other incentives that you are considering this year?

Thank you very much for this question. Let me actually answer the question about the newly operation market and countries. You know that we are now announcing the 3 countries in EMEA and 2 in Latin America as new 5 countries. At current stage, we're now realizing the profitability in almost all countries. And also new business models have been used in those new countries and quickly helping us to actually ramp up. And now we do have a very good research and survey conducted in those local countries. So at current stage, I think that it's a very good timing. So be it in the Middle East and the other potential overall countries in the next 1 or 2 years of time, we plan to enter in those markets and expand our overall business.

In terms of the business model, this is quite flexible. Of course, first of all, we are going to do 100% proprietary operation and also having some capital and business collaborations with some of our partners and business partners in order to be very flexible. And at the same time, while we are actually preparing for this operational market, we actually were still quite small. So now with the particular increase of our customers' requirements and demands and definitely speaking, we're going to increase our overall investment there. So when the final demand is getting up, we're going to have a much better situation.

Second question is about the shareholder return. So we had actually an incentivized plan announced last year according to the dynamic changes of the overall market, the shareholder return will actually become a very important strategies of our company. So at the current stage, we are at a rising momentum of the rapid expansion. So definitely speaking, we are going to have a very good shareholder return plan in place.

Next, we have [indiscernible] from Changjiang Securities.

This is Hu from Changjiang Securities. I have 2 quick questions with regard to the Southeast Asia market. So first of all, in terms of the parcel volume in Indonesia and Malaysia, from March, it seems that they have a certain decrease and receive some of the negative impact. I understand that -- what were the major reasons behind the overall growth decrease? And from Q1 2026 standpoint, what is the overall trend of the overall growth? And my second question is that we know that now because of the fuel oil cost increase and some of the civil servants started to actually work from home. So we would like to understand that do you think that is going to further stimulate the shopping online as an overall trend?

So let's actually answer the very first question. Normally, we don't pretty much comment too much on the monthly data shown by third-party platform. So we are aware of that. But please pay attention to official data. But if this is the overall trend, actually, the March kind of growth is weaker than the previous 2 months. This is because of mismatch because Ramadan actually start earlier this year. And last year, March was actually better than the previous 2 months of the Q1. So that is to say that we didn't have that much of the impact overall speaking in Southeast Asian market.

All right. So let me answer the second question. Just now you actually talk about the fuel oil cost increase and start to work from home, whether that actually increase the business of e-commerce or not? At the current stage, it is very difficult to actually answer that, but we have seen a mega trend. The per capita parcel volume in Southeast Asia is way lower than our China. So there's still a very high sailing there in Southeast Asian market. So be it the overall fuel cost is increasing or decreasing. So there is big potential for business growth in South Asian market.

Thank you very much. I think that's all for Q&A section. Let's pass the floor back to Frank.

All right. Thank you very much, dear investors and analysts for attending this meeting, and this is already a very good and thorough communication. If you do have any further questions, please contact IR team and stay tuned. Thank you very much, and good bye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good day, and thank you for standing by. Welcome to the J&T Global Express 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Haibin Chen, Director of Strategic Investment and Capital Markets. Please go ahead.

Thank you, operator. Hello, everyone. Welcome to J&T Express 2025 Earnings Conference Call. I'm Haibin Chen, Director of Investment and Capital Markets of J&T Express. The company's results and Investor Relations presentation were released earlier today and are now available on the company's IR website at ir.jtexpress.com.

Before we start the call, we would like to remind you that the call may include forward-looking statements, which are underlined by a number of risks and uncertainties and may not be realized in the future for various reasons. Information about general market conditions are coming from a variety of sources outside of J&T. This presentation also contains unaudited non-IFRS financial measures that should be considered in addition to, but not as substitute for the company's financials prepared in accordance with IFRS. I have with me J&T Executive President, Steven San; Vice President, Charles Hou; and CFO, Dylan Tey. Our management will share strategy, operating highlights and financial performance for 2025. This will be followed by a Q&A session. Please be noted that we have mixed slides showing through website -- webcast this time.

With that, let me turn the call over to Steven. Steven will read through his prepared remarks in Chinese before I translate it for him in English.

[Interpreted] Hello, everyone. Welcome to today's results conference. On behalf of the company, I would like to sincerely appreciate your continued interest and support. It is my great honor to report to you on our group's operational and financial performance over the past year. In 2025, the company achieved an inspiring performance growth across global markets. In Southeast Asia, parcel volume growth reached a 4-year high with a significant increase in market share.

Our China business made progress with improvements in both efficiency and service quality. Meanwhile, our New Markets business experienced accelerated volume growth and achieved a turnaround from loss to profit in adjusted EBIT for the first time. In a complex and evolving market landscape, the company has fulfilled its growth commitment through steadfast high-quality growth. In 2025, the company handled 30.1 billion packages, representing a year-on-year increase of 22.2%. Revenue reached USD 12.2 billion, representing a year-on-year increase of 18.5%. With the contribution from non-China business continuing to rise and reach new highs, the adjusted net profit amounted to USD 430 million, representing a significant year-on-year increase of 112.3%.

Next, I will provide an overview of the development of our business across different regions. Firstly, Southeast Asia. In 2025, the company handled 7.7 billion parcels in Southeast Asia, representing a year-on-year increase of 67.8%. Our market share reached 34.4%, representing a year-on-year increase of 5.8 percentage points, maintaining its absolute leading market position. Revenue reached USD 4.5 billion, representing a year-on-year increase of 39.8% and adjusted EBIT was USD 540 million, representing a significant year-on-year increase of 77.5%. Our record profit growth in Southeast Asia is primarily attributable to the following factors: First, we effectively capitalized on the growth opportunities from e-commerce and grew rapidly with our customers.

The company continued to increase its infrastructure investment in Southeast Asia to enhance transportation capacity and sorting efficiency, thereby ensuring smooth network operations even during peak sales periods. Our superior fulfillment capacities have earned the trust of e-commerce customers. At the same time, the company continued to improve its express delivery services to meet the increasing demands of consumers as evidenced by further reduction in average delivery time and sustained decline in loss parcel rates in 2025. Second, our operational efficiency improvement and further cost optimization achieved a virtuous cycle by consistently transferring China's refined operational experience to Southeast Asia.

Our cost per parcel in Southeast Asia decreased by 16% year-on-year in 2025. We have shared the results of cost efficiencies with our customers and create a positive flywheel of cost optimization, business growth, further cost reduction, enabling us to capture increment volumes while fostering a mutually beneficial [indiscernible] and consumers. Third, we successfully expanded our base of non-platform consumers, driving rapid growth in parcel volumes. Non-platform parcels have become an important supplement to our diversified business scenarios. We actively expanded [indiscernible] customers on social media, online business of chain stores, branded customers and individual parcels. These customers offer higher margins, thereby optimizing our customer structure and enhancing our profitability.

Secondly, China. In 2025, the company handled 22.1 billion parcels in China, representing a year-on-year increase of 11.4%. Our market share reached 11.1% adjusted EBIT amounted to USD 94 million. In response to the changing market environment, we proactively adjust our strategies to maintain profit resilience. First, the company actively responded to industry initiatives aimed at curbing tough competition and was committed to continuous improvement of service quality and transition from price-driven competition to value-based competition. The company further shortened the average delivery time and increased the proportion of same-day and next-day deliveries.

The company continued to enrich its product offerings by introducing value-added services tailored to customer needs, expanding its cloud warehousing services, enabling greater coordination between warehousing and distribution and optimizing warehousing and distribution fulfillment timings. Second, the company deepened the penetration of its delivery network into rural areas to enhance the delivery experience for consumers in these regions. The company actively assists e-commerce platforms in developing rural delivery services, which currently have been formally launched in 12 provinces. Our coverage rate of express delivery to villages continue to increase, ranking among the top in the industry. At the same time, the company solved delivery difficulties of agricultural products in rural areas through a variety of projects to assist farmers in facilitating the agriculture products to [indiscernible].

Third, we will continue to optimize costs with the cost per parcel decreasing from USD 0.30 to USD 0.28 in 2025. The Guangzhou, Huadu Sorting Center, our largest self-built logistics hub in the world, officially commenced operations in the fourth quarter of 2025 with the daily processing capacity exceeding 15 million parcels, further optimizing the sorting and transit efficiency across the Great Bay Area, a critical logistics region by continuously benchmarking against the most efficient peer companies in the industry and learning advanced management experience and technology, the company remains confident in further optimizing cost per parcel.

Lastly, New Markets. 2025, we handled 400 million parcels in the New Markets, representing a year-on-year increase of 43.6%. Our market share reached 7.5%, representing a year-on-year increase of 1.4 percentage points. Our adjusted EBIT in new markets achieved a turnaround from loss to profit in the year, making a significant development milestone. This achievement was attributed to our transfer of operational expertise in China and Southeast Asia to new markets. Investment in automated sorting equipment, optimized route planning, enhanced last-mile pickup and delivery efficiency, effective alignment with rapid growing local demand and improvement of overall network efficiency. [indiscernible] represents a real confluence of high GDP, strong per capita consumption and low e-commerce penetration, making it the blue ocean market with immense potential.

In 2025, a number of global e-commerce platforms further expanded into Latin America and promoted its cross-border e-commerce market into a new phase of development, which also brought more growth opportunity to express delivery companies, leveraging its extensive network coverage and superior service capabilities, the company continued to deepen cooperation and trust with cross-border customers while actively expanding its partnerships with leading local e-commerce platforms by capturing the rapid growth momentum of the e-commerce and express delivery industry. The Latin American market is expected to maintain rapid expansion in the coming quarters and emerge as a pivotal engine of J&T's global growth. We are confident in the future growth potential of new markets.

Looking ahead, we will continue to strengthen investment in global network infrastructure and export China's mature operational system and refined management expertise, thus comprehensively upgrading network capabilities and customer experience. Guided by our well-defined long-term global competitive strategy, we will ride on the tide of e-commerce globalization to deepen our presence in core markets, expand incremental opportunities in overseas markets, enhance network efficiency and brand image and steadily reinforce our core competitive barriers. The year 2026 marks the commencement of J&T's new decade. We will continue to unite our efforts to move forward steadily, strive for excellence, exceed ourselves and embark on a broader global journey. In the future, we will remain committed to innovation and prudent operations, create long-term corporate value and write a new chapter of high-quality global growth. Thank you for your support.

Now I would like to invite our CFO, Dylan, to interpret the financial data of our annual results.

Okay. Thank you, everyone, for the call today -- for joining the call today. This is Dylan, and I will take you through our financial highlights. Before I start, note that unless specifically mentioned, all the figures are in U.S. dollars and percentage changes are on a year-on-year basis. Detailed financials, including our financial performance metrics, unit economics, cash flow, capital expenditures are available on our IR website. So here, I will only focus on the key financial highlights. For J&T Express Group overall, we are pleased to report that our group's total revenue increased by 18.5% year-on-year from $10.3 billion in 2024 to $12.2 billion in 2025.

Core express delivery revenue grew by 18.3% year-on-year from $10 billion to $11.8 billion. This growth was primarily driven by strong parcel volume growth in Southeast Asia and our new markets. We successfully captured the opportunities arising from the globalization of e-commerce with the revenue contributions from Southeast Asia and new markets rising meaningfully from 37% in 2024 to 44% in 2025. Total gross profit for the year reached $1.46 billion in 2025, representing a year-on-year increase of 35.7%. Gross margin improved from 10.5% to 12%, up 1.5 percentage points. Importantly, with our new market segments achieving positive adjusted EBIT for the first time, the group adjusted EBIT reached $566 million, up 87.9% year-on-year. Adjusted net profit amounted to $425 million, more than doubling from $200 million in 2024, demonstrating a significant enhancement in our overall profitability.

Next, let me walk you through our segment results one by one. First, Southeast Asia. Revenue in Southeast Asia increased by 39.8% year-on-year from $3.2 billion in 2024 to $4.5 billion in 2025. Gross profit rose from $633 million to $861 million. Our adjusted EBIT grew from 77.5% year-on-year from $303 million to $538 million, with the adjusted EBIT margin improving from 9.4% to 11.9%. This reflects our continued ability to enhance profitability. We shared the benefits of cost, which helped us continuously gain market share. The strong parcel volume growth in turn brought further economies of scale, enabling our Southeast Asia to maintain a healthy and sustainable unit EBIT.

Next, let's move to China. China is a dynamic market. We proactively adjusted our competitive strategy as always. Revenue grew by 5% year-on-year to $6.7 billion. Revenue per parcel declined slightly from $0.32 to $0.30. Price competition was intense in the first half of the year. With the support of the industry's anti-involution policies, pricing stabilized and recovered in the second half. On our cost side in China, cost per parcel decreased from $0.30 to $0.28, benefiting from improved efficiency, greater network stability, continued capital investments, including self-owned line hauls, vehicles and automation in our sorting centers.

So amidst a complex and challenging market landscape, our China business maintained solid profit resilience. The segment recorded an adjusted EBIT of $93.9 million in 2025 compared to $147.2 million in 2024. Looking ahead, as the industry anti-involution policies continue to deepen and as we further enhance our service depth and geographic coverage to strengthen partnerships with all our customers, we are confident that the profitability of our China segment will maintain its resilience going forward.

Now turning to New Markets. We are delighted to share with you that in 2025, our New Markets business achieved positive full year adjusted EBIT for the first time. This is an important milestone for us. Revenue in this segment grew by 51.2% year-on-year from $576 million to $870 million. Our gross profit in the New Markets increased more than 4x from $30 million to $148 million. Adjusted EBIT turned from a loss of $76 million to a profit of $4 million, with the margin improving from minus 13.3% to plus 0.4%. Revenue per parcel in the New Markets rose from $2.05 to $2.15. This improvement was primarily driven by our ongoing business development across the countries where we have been very actively acquiring higher-value customers and dynamically optimizing our parcel volume mix.

Cost per parcel for new markets declined from $1.94 to $1.79, benefiting from the targeted and efficient capacity investments as well as our team's refined operational management, leveraging of our experience gained from China. The advanced technology from our self-developed equipment companies, our valuable overseas expansion experience in Southeast Asia and our mature operational system from China, all this helped to support our rapid development in our new markets. We remain very optimistic about the future potential here, as mentioned by Steven.

Last but not least, our Cross-border business. Following 2 years of business optimization and focus on the B2B sector, profitability continued to improve. In 2025, Cross-border achieved positive full year adjusted EBIT for the first time. Revenue increased slightly by 2.1% year-on-year from $74.5 million to $76.1 million, remaining largely stable. Adjusted EBIT turned from a loss of $39 million to a profit of $4 million with adjusted EBIT margin improving significantly from minus 52.7% to plus 5.2%.

Finally, let me return to our consolidated numbers. Combining all the factors outlined above, our adjusted net profit reached $425 million, which representing a 112% increase from last year. That's non-GAAP. On a GAAP basis, our net profit for the period was $225 million, up 98% from $114 million in 2024. As you can see, these are clear demonstrations of our improved bottom line performance. Turning to our cash flow. We recorded a net cash inflow from operating activities of $1.09 billion in 2025, growing 34.8% year-on-year compared to $807 million in 2024.

If we deduct our capital expenditure, our free cash flow as a group reached $494 million in 2025, representing a 96.1% year-on-year increase from $252 million last year. This is our record. This improvement highlights substantial and enhanced cash generation capabilities. So as of December 31, 2025, we maintained a very solid cash position with total cash and cash equivalents, restricted cash and bank wealth management products amounting to $2.2 billion, up 31% from $1.68 billion at the end of 2024.

Thank you all for listening to my remarks on financials. This concludes my prepared remarks. Thank you.

Thank you, Steven and Dylan. We are now ready to open the call for questions.

[Operator Instructions] We will now take the first question from the line of Lu, Sijia from Changjiang Securities.

[Foreign Language] And then let's translate myself. Question one, our parcel loan growth in Southeast Asia accelerated in the second half of 2025 compared to the first half. Can this accelerating trend be sustained into 2026? And how we expect the pace of our market share gains in Southeast Asia going forward? Question two, what's the current status of non-platform business development in Southeast Asia?

[Foreign Language]

[Interpreted] I'll translate for Charles. Thanks for the question. For your first question, I think Charles' response is that speaking on behalf of our company, we believe that the Southeast Asia e-commerce sector is in a very rapid penetration stage of growth. Major e-commerce platforms, as you know, they are significantly ramping up their investments across this region to further enrich their product offerings, customer shopping experience. And this drives very strong volume momentum for us. According to industry reports, the Southeast Asia e-commerce market is projected to maintain a high CAGR of 15% to 20% from 2026 to 2030.

So placing our express industry there very firmly on a very high growth trajectory. J&T, we continue to scale up capacity investments in the region, Southeast Asia region, growing alongside our e-commerce customers. And at the same time, as mentioned in your second question, we are actively developing non-platform business, which includes social commerce and also includes individual customers, which have continued to make -- or which have started to make meaningful contributions to our overall volume growth there.

So in 2025, Charles added that our market share in Southeast Asia has reached 34.4%. This is an increase of 5.8% compared year-on-year. As you know, as you guys are our old friends, you guys know, we continue to transfer our -- to replicate our China leading experience of operational expertise into Southeast Asia. We believe that by leveraging our robust network capabilities, our high-quality service and our competitive pricing, we'll be able to capture more market share. And we are confident that in our ability to deliver our Southeast Asia market growth. That's your first question, Sijia.

[Foreign Language]

[Interpreted] Okay, I will -- the second question you asked, development of non-platform business in Southeast Asia. So Charles' comments is, of course, other than e-commerce, we continue to actively develop non-platform customers, which include our social commerce as well as B2B customers. While the absolute contribution from these non-platform customers has increased, their growth rate currently still lags behind that of the e-commerce volume because the e-commerce is obviously growing a lot faster. As a result, the non-platform business as a whole is still growing, but it's not growing as meaningfully in our total parcel volume compared to e-commerce.

From a total profitability standpoint, our non-platform customers command higher margins and their profit contributions continue to grow, which is -- which meaningfully outpaced their share of the total volume. So obviously, building -- Charles added that building a strong base of non-platform customers requires substantial time and effort and accumulation and expanding our non-platform segments will remain a long-term and strategic focus for our operation in Southeast Asia as well as new markets and China. In Southeast Asia, we have already secured brand name customers across verticals, including 3C, i.e., consumer electronics, apparel, [indiscernible] and we continue to broaden and deepen our partnerships with both local and international customers, including, but not limited to the small and medium enterprises as well as individual customers. So that concludes the answer to your second question, Sijia.

We will now take the next question from the line of Qianlei Fan from Morgan Stanley.

[Foreign Language] Congratulations to the very strong profit growth as well as free cash flow. I have 2 questions. The first question is about the global expansion strategy. So what's the company's current plan of the business expansion globally, especially considering the most recent geopolitical tension in the Middle East. Do we have any updated plan in entering new markets in new countries? And number two is about CapEx allocation. So we are very encouraged to see that overseas market is a strong growth driver for our businesses. So do we have any updated CapEx plan going forward for the next 2 to 3 years, breakdown by different regions?

[Foreign Language]

[Interpreted] I'm Dylan. I'll translate for Steven for this question. So regarding this question, I think Steven mentioned that it's now becoming very clear for us. The globalization of e-commerce players obviously have deepened in the recent years with platforms such as TikTok, Temu, Shein, AliExpress, they steadily expand their international footprint. This has driven a lot of demand for high-quality and last-mile delivery network, creating a lot of opportunities for players like us, right? So we maintain very close watch on these markets, and we work very closely with our customers to make sure that we can enter into this high-growth potential markets and most importantly, at the right time.

So by working in close partnership with our e-commerce platform customers, we are not only able to support the expansion, but also ensuring that our service capabilities and network, the scale, how we scale our network, are in tandem with their evolving needs. So essentially, you can understand it as we are growing along with our customers. So you mentioned about picking -- how we pick the market. So Steven's comment is that before entering the new markets that we do not have a presence, the company -- we as a company normally conduct assessments, which cover quite a number of factors. So he gave a few examples, for example, population growth, population size, GDP, penetration rate of e-commerce and local business environment.

We will carefully evaluate the suitable business models for each market and tailor-made to make sure that we get the highest ROI as we direct the resources into these promising regions, the most -- and try to direct our resources to the most promising regions. So as everybody know, we already established our strong foundation in Brazil and Mexico. These are the 2 largest markets in Latin America, and we have achieved very strong volume growth in both. Now we are planning to expand into additional markets in Latin America for Colombia, Peru. And our ambition is really to develop Latin America into our next Southeast Asia. We are also actively exploring potential opportunities beyond Latin America into regions such as Europe and North America. That's the response. Yes.

[Foreign Language]

[Interpreted] Yes. Thanks, Charles. I will translate for you. Yes. Thanks, Qianlei, for the second question. So Charles mentioned that, obviously, in our business, we need to plan ahead for capacity. And in response to the rapidly growing parcel volume, we also have commissioned quite a number of capacity expansion in Southeast Asia, both in terms of area as well as in terms of the automated sorting equipment and line haul we deploy in the region. As to how we plan, so we maintain regular communication with our e-commerce and also actually non-e-commerce customers to get more visibility about their volume forecast in the coming months, years so that we can carry out capacity upgrade regularly and also ahead of time.

So as you understand from our industry, we need some lead time to plan for capacity expansion. So we continuously talk to our customers and update our plans. And also just happy to share one of the example, like during the peak season, this [indiscernible] season in Southeast Asia in quarter 1, our daily pickup volume in Southeast Asia have exceeded 40 million parcels, and there were no capacity-related issues. So overall, our capacity in these regions remain at a very healthy level, and we are equipped for our growth.

We will now take the next question from the line of [indiscernible] from GS Securities.

[Foreign Language] I have 2 questions. The first question, what is the company's current approach to shareholder returns? And what is the strategy for shareholder returns going forward? The second question, how has the Southeast Asia market performed in terms of growth so far this year? Has there been any change in the competitive landscape?

[Foreign Language]

Just to save time, I'll answer your question in English, okay? Yes. So the first question you asked about the shareholders' return. So shareholder returns, as we have communicated before, is an important component of our overall capital allocation framework. And we -- in 2025, we have completed cumulative share repurchase amounting to, I think, around HKD 300 million. On August 29 last year, our Board also approved a repurchase mandate for us to do up to HKD 1 billion. So out of this, we have only spent about HKD 110 million so far. So we still have quite a bit of capacity to use for shares repurchase.

So we will execute our share repurchase program when we believe that the market is undervaluing our company's intrinsic value because we really believe that there's a long-term strong fundamentals in our business, right? And obviously, we are a long investment cycle business. So looking ahead, I think the buyback, if we do at all, it will be funded proceeds -- it will be funded through proceeds that we got from the convertible bond that we issued in February as well as our sufficient internal cash generated from our operations. Yes, that's the answer to the first question on returns on shareholders.

[Foreign Language]

[Interpreted] Okay. So Charles mentioned that this question come a little bit early, and we will be releasing our Q1 operating stats for April. We welcome [ Van Yu ] and all the friends on this call to stay tuned for our Q1 numbers then. But he commented that in January and February this year in Southeast Asia, we have recorded very strong growth, and this is a good start for the year. We continue to follow our neutral, we call it 3PL strategy, to be the strongest third-party logistics company in Southeast Asia. And we continue to deepen and collaborate with all the major e-commerce platforms, and we want to leverage our cost advantage as well as our high-quality services.

Of course, in the meantime, we want to continue to develop and diversify customer base to include the non-platform customers. And we also observed that the e-commerce in Southeast Asia continues to grow rapidly and the platform is becoming more demanding in terms of service quality, in terms of logistic efficiency, the reliability of our network and cost [Foreign Language] more and more and more. Some players, obviously, some of our peers, we have seen that they may find it difficult, right, to meet all these growing demands and requirements.

And it's also not surprising that they start to exit from certain markets. It is also normal for people to come in and go out depending on how the competitive move. I guess this is just business. So -- but this is not what we focus on. So we focus on really our customers and focus on how we can do our job better, how we can create more value for our customers and gain sustainable volume and leading position for -- in the long run. Yes. This is his comment.

We will now take the next question from the line of Steve Qiu from Goldman Sachs.

[Foreign Language] I have 2 questions. My first question is under the current regulatory backdrop of anti-evolution in the industry, how does the company assess the evolution of these policies and the resulting changes in the competitive landscape?

My second question is, in this context, how is the company positioning its future strategy in China? Specifically, how do you think about the balance between volume growth and profitability improvement?

[Foreign Language]

[Interpreted] I'll translate for Charles, this one. So since the various government agencies, including the State Post Bureau have been really promoting -- have really actively promoted they call the anti-involution policy. This has received a very broad and societal level positive response. So management believe that all this is really driving towards quality improvement, cost reduction as well as operational efficiency as compared to just pure price competition, right? So the whole industry focus is really shifting towards service quality, network reliability, cost optimization and all these are really helping to build a sustainable and a long-term healthy express sector in China. So the anti-involution policy has really provided some kind of pricing support for our industry.

As a company, we continuously will optimize our customer mix by developing higher-quality customers and also continue to deepen our efforts into reverse logistics and individual customers. So if one observed from our financial report, our revenue per parcel in the second half of 2025 improved modestly compared to our first half. Anti-involution policy, we believe that in this year, we continue because it's also echoing from the -- is one of the key topics at the 2 sessions that just passed. So protecting the right of welfare of the workers in the form of employment is also a priority. We will stick and align with the industry policy direction, and we'll adjust our strategy with agility in responding to the market developments alongside with our peers.

Okay. As for the second part of your question, Steve, so Charles commented that balancing volume versus margin, right? So other than when we first started out in China, we use a rather different competitive dynamics. Actually, for the last few years, we have been focusing on high-quality growth. So high-quality growth in a few areas. One, we continue to deepen our collaboration with our e-commerce customers, all e-commerce customers actually to enhance the consumer experience. Two, we have to focus more on our capacity, building up the right network at the sorting center level, our network delivery level with our [indiscernible]. We continuously refine our business operation to make sure that we have a very good and efficient network to support our growth.

Finally, I think we need -- we talk about the synergy and our customer segments. We need to also focus on the product -- the different product categories and the specific underserved markets, which we didn't cover before. So all this, it will be a balance. In short, it will be a balance between value and growth. It's difficult, but it is something that we will continue to do, Steve.

We will now take the next question from the line of Brian Gong from Citi.

[Foreign Language] I'll translate myself. We have noted a meaningful decline in cost per parcel in New Markets in 2025. What specific cost reduction initiatives has the company implemented in those markets?

[Foreign Language]

Brian, I'll just answer your question in English, right, just to save time. Yes, you're right. In 2025, our revenue -- sorry, our cost per parcel in New Markets, it was about $1.79 compared to $1.94 in 2024. This represents about 7.7% year-on-year decrease. To summarize, I think the improvement was driven by 2 factors. One is really the scale, the economy of scale benefit from our very fast and rapid volume growth. We continue to transfer our expertise and experience from China and Southeast Asia into this New Markets. And we actually did quite a number of things, right? I mean it's a combination of all those -- all our cost reduction initiatives.

Let me give you a few examples. For example, in Brazil, we drive the improvement of our labor productivity at our inbound processing stations through a combination of automated equipment upgrades and also refined operation management, reducing our sorting cost per parcel. In Mexico, as you know, we have moved from direct management into franchise model. So we continue to optimize our franchise model policies to reduce or to actually have a scale rate for our pickup and delivery activities, reducing our pickup and delivery cost per parcel in Mexico. So in Middle East, obviously, this is before the recent conflict. This was last year. In last year, we expanded our scale and improved the operational efficiency of our self-operated line-haul fleet.

We continue to optimize our transportation capacity to lower our transportation cost per parcel. Yes. So these are some examples, right? It's obviously -- there's a lot of things that we do in total that we bring down the cost. But overall, we remain very highly optimistic that our new -- our long-term growth in our New Markets will be very strong. And we'll continue to invest in our infrastructure therein to improve our local efficiency. And as mentioned earlier by Steven that New Markets, we believe that we will build one, if not more, Southeast Asia from our New Markets. Yes, Brian.

I would now like to turn the conference back to Haibin Chen for closing remarks.

[Foreign Language]

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Good day. Welcome to the conference call for J&T Express 2025 Q4 Operating Performance Announcement Call [Operator Instructions] Just remind everyone that this is going to be recorded, and this is the English line for listening only. Now I'll give the call back to the management.

Hello, everyone. Welcome to the conference call of J&T Express 2025 Q4 Performance Announcement. This is Frank. Today, the materials have been disseminated through e-mails to everyone and updated to our website. Today, we have CFO of J&T Express, Dylan; and Haibin, Director of Strategic Investment and Capital Markets. We're going to have 2 parts for this meeting.

First of all, Haibin will be introducing the company performance in 2025, Q4 and then moving to Q&A section, where the management will answer your questions. Haibin, please.

Hello, everyone. This is Haibin. It's very glad for us to give you an announcement of our performance in 2025 Q4. The parcel volume reached 8.46 billion pieces, representing year-on growth of 14.5%. Total parcel volume for the entire year amounted to 30.13 billion, year-on increase of 22%. The growth mainly driven by Southeast Asia, China and new markets.

First of all, the Southeast Asia. In Q4, the parcel volume reached 2.44 billion pieces with an increase of 73.6%. The full year performance amounted to 7.66 billion pieces show a year-on-year increase of 67%. The key drivers behind are follows. First of all, the e-commerce platforms have increased their investment through performance activities and the continuous enrichment of product categories, we have driven the rapid growth of the business volume.

Also in 2025, Q4, we've been seeing a very good maintenance of the growth of major clients of e-commerce. And nonperformance -- non-platform parcels have also reached a very good growth, marking significant contribution to the total parcel volume. And also at the same time, we've been seeing a higher requirements of the logistics service and widen the gap with our competitors by the virtue of our cost and the price advantages as well as the solid network capabilities.

And next, let's talk about the China. In Q4, the parcel volume in China reached 5.8 billion pieces with a year-on-year performance of flat performance. And the total full year volume reached 22.07 billion, showing yearly increase of 11.4%. The business development of China region in Q4 was categorized by following aspects. The industry growth has slowed down in October and November and industrial grew by 8% and 5%, respectively.

It is expected industrial growth in December may slow down further compared with November. Also, we have proactively adjusted our strategies, strengthen the foundation of our network and pursue high-quality growth. The company ranked high in logistics index for franchise system and maintain on the mainstream e-commerce platforms. The brand image has been improved in the minds of high-quality clients, and this has brought us in more high-quality parcel volume.

Now the emerging markets. In Q4, the parcel volume in new markets reached 130 million pieces with a year-year increase of 79.7%. And 2025 volume was 400 million pieces with a year-year increase of 43%. The following reasons contribute to that. The e-commerce penetration rate in new markets is still low, per capita parcel volume is much lower than that of China and Southeast Asia, giving room for further development.

Next, we have continued to improve the express delivery network, enhancing operational efficiency and service quality. And we can see that we do have very good growth in Mexico and Brazil and the e-commerce ecosystem in Brazilian market is more mature. And within the entire new clients, the company has achieved a very favorable growth. This is the operating performance of our markets in Q4.

We understood that you are very concerned about the financial performance in Q4 2025 regarding financial figures. The company currently only discloses the semiannual and annual financial data. Therefore, company generally does not update the performance guidance on a quarterly basis and specific guidance for 2026 will release simultaneously after the annual results announcement in March. This concludes the announcement. And now we're going to open up the questions to the floor and welcome everyone to ask questions.

[Operator Instructions] Now we are going to take the first question from [indiscernible].

[indiscernible]. So today, I have 2 minor questions to ask. The first one is on the operation in Southeast Asian market. We could see that in Q4 and also the previous quarters, the network collaborators and the number of point of service had the divergence trend. For instance, the number of partners has been decreasing, but the number of point of service is increasing. So I would like to ask the reasons behind. Is it because that you are doing integration or any other reasons? This is my first question.

All right. So thank you very much for this particular question. Just now you have asked the reason that we have actually a different trend for the number of franchisees and the number of the point of service. So in Southeast Asia market, right, yes.

Okay. Thank you for the clarification. In Southeast Asian market, we have a lower number of franchisees around 300, but we have 1,000 point of service. The reason is that we have very strong growth in Southeast Asian market. So with this very strong growth, we have to further increase the density, increasing efficiency and productivity. This is a number of reason for us to increase the point of service. And for the franchisees, we're doing integration of franchisees further.

And we know that we are promoting the particular kind of transformation from self-operating to franchisee model. So we are increasing our efficiency and quality of our service provision. This is the reason for us to have divergence trend between these 2.

And the second question is around the China market. We know that in the second half of the year, we had a lot of changes happening to the logistics and quick express market in China. We would like to ask you that on this current backdrop, how do you think about the 2026 strategies and your key indicators of performance? Also, could you share with us about your overall outlook of the overall pricing more happening probably in 2026 first half?

Right. Indeed, we know that in China market in 2025, throughout the whole year, we had fluctuations a lot and probably you have experienced that in the beginning of the year, we had the pricing war. During the middle of 2025, the government had the anti-involution policies, which lasted for about half a year. And then as for the anti-involution policy, we have maintained our unanimous attitude, which is precautiously positive in terms of the duration and the strength and depth of anti-involution policies, we cannot control these factors.

So our strategies will be adjusted dynamically according to the situation. As for China market, we always believe that we have to be steady and with a very good growth against the stability. And in that whole process, we are going to also increase the quality of the parcel delivery, not only focusing on quantity and also in China for the high-priced parcel and the reverse parcel and individual parcel numbers will be increasing. As for our investment in China, our position is a follower.

So as for 2026, we are continuously having the same strategies, which is maintaining our positioning and focusing on good quality, finding good strategic opportunities and realize our growth in China. Another point, which has always been said by us is that in China market, this is actually a very good fundamental for us to expand in the rest of the global markets.

In emerging markets in terms of technologies, human resources and resources are distributed by China. We are exporting those things to or from China and bringing a very robust and healthy growth in the rest of the markets in the world.

Next question is from Julie [indiscernible] from Taicang Securities.

All right. Can everyone hear me?

Yes. No problem for that.

You can see that in Q4 of 2025, you have maintained a very robust growth, and this is pretty good. So you could see that the Southeast Asian market is pretty good. And the investors are actually caring about the notion that how do you think about the overall growth expectation of 2026? This is the only question that I have, especially for overseas markets. For instance, the Latin America and the other foreign markets, e-commerce growth and the other industrial growth. Any new guidance that you're able to provide to us?

So first of all, very quickly recap. Just now you asked us about the expectation of 2026. So this year, we're announcing the 2025 figures. So we would like to actually reiterate that taking a look back at the performance of the last year interim results and to expect the new growth. So we actually expect to have 74% of the growth. Several reasons.

First is that for the major e-commerce clients, especially TikTok, Meituan and Shein have invested heavily and also increasing the number of categories and further penetrate in the Southeast Asian market. At the same time, we -- under the heavy competition of the e-commerce platforms, this also promoted the development of the express industry. But also the logistic cost is increasing at the same time.

So for Q4, you could see that for some of our third-party logistics companies cannot satisfy the needs and demands of the e-commerce platforms and quit the market due to certain reasons. So we have a very good cost advantage. We are also increasing our competitive advantages on the platforms.

You can see that we have increased non-platform parcels, but this is not that contributed to the overall revenue because it's accounting for less than 10% of the total. And another question is about the outlook of Southeast Asian market in 2026. Overall speaking, we are quite positive to the growth further in 2026 because for these e-commerce customers, we could see that they have a very good customer conversion. And in 2026, this momentum will be continued, which is something that we firmly believe.

But of course, if we have 70% of the growth in Southeast Asian market in 2026, this is pretty much confident for us to actually maintain that. This is pretty much about the Southeast Asian market. Another foreign market is the other emerging markets. As we have discussed in last quarter, while in 2025, we have collaborated with Mercado Libre and the TikTok in Latin America. We have been actually increasing the collaborations.

At current stage, we have a very good divergence -- I mean, diversity of the customer base. So in the emerging markets in 2026, overall speaking, we have some of the figures of showing the penetration still, which is quite potential for us. And these figures are way lower than the Southeast Asian market in China. So from our standpoint, there is a huge potential for further growth in the emerging markets.

And emerging markets, we're going to perfect our network connection and increase our quality of service and increasing the investment to improve the productivity. So overall speaking, the emerging markets are still at an early stage, and there's a huge room for further growth.

So last year, in 2025 first half, we had a low base in this market. And because of the low base number, we believe that we're going to have a very good growth in 2026 first half. But in the second half of 2026, we have to actually take a look at the performance from those platform and non-platform businesses. But still overall speaking, we are quite optimistic. The penetration and the number of parcels in the emerging markets are way lower than that of China and Southeast Asian market. We would like to actually regard the emerging market as a third country for growth.

Next question is from Liu Gangxian from CICC.

This is Liu Gangxian from CICC. I have also 2 minor questions. The first one is that with regards to the emerging markets, we know that we have been investing and investigating in Southeast Asian market, and we know a lot about this. But for Mexico and Brazil, we are quite strange to that.

So would you like to comment on the e-commerce and the logistics, what is about the overall landscape as well as the ecosystem as well as the models? Could you have more details? For instance, e-commerce, what are the differences and comments versus China and Southeast Asian market? What about the difficulties and also the competitive edges that you have in terms of logistics service? This is my first question.

Second question is about the China. We know that in China, we have industrial reasons and also we have our active adjustments as well happening in China. So against that backdrop, how do we think about the economy of scale because you had a quick growth in the previous years. And now you're slowing down in China, probably you're going to be exiting in terms of the resources and the human resources as well.

So if we are not considering price, if we only consider about the cost, how do you think about the competitive landscape here in China?

Let me answer this question, and Haibin will be introducing China. So first of all, just now, you have asked about the Mexico and Brazil, right? So Latin America. First of all, I would like to say that in Latin America, we are still at the first cycle of our development. So with our key accounts in e-commerce, we actually are planning to expand according to the volumes that they have. So this is the first stage of the development. And now you can see that the Southeast Asian market is more mature than the Latin America from this standpoint.

In Southeast Asian market, we have been actually growing a lot in a year. So in terms of the brand image and in terms of the adoption and the mindset of our customers in Latin America, this is actually growing and rising a lot. So still there is a very huge room for further improvement in Latin America. We concern is that we have to provide a very good quality of service to e-commerce customers because there is actually a huge demand of e-commerce platforms in Latin America.

And locally, some of the local players in terms of the service is not that good, giving you a simple example. say, 365 by '24. This is not actually going to be the case. There is no such kind of a service model happening from the other express delivery platforms. And next is about the express delivery. We know that for e-commerce platform customers, they choose the express delivery to enter the market.

And now we are at a very high growth from this standpoint. And those players are setting up the warehouses and delivering their goods and importing the products from Asia and other markets to Latin America. So be it the cross-border or local like local to local service we are very clear about the business models, right, be which model that we're talking about. As long as this model need the delivery, our global network coverage and national coverage could have a very good service quality match.

So we are also going to provide a lot of differentiated strategies locally. But of course, not only in terms of these factors, if you're taking a look at the trajectory of our development in Southeast Asia and also in China, we do a lot of mergers and acquisitions. We believe that we have advantage as well in Latin America.

For instance, together with our e-commerce customers, we're going to establish the warehouses or we're going to take the parcels from the local warehouse or we could collaborate with the merchants and also penetrate our service into theirs. So we do have a lot of APIs available for that from a system standpoint. So this is going to be really good. You could see that we are able to compete in a very highly efficient way.

At the same time, we are always investing in the emerging markets. You could see that in Latin America, be it the fleet investment and the equipment, we are increasing those investments at the same time. So these are going to be the backdrop for our further growth. In terms of the differentiation, I think that as we have already introduced, that we do have the experience from China, and we are going to have a systematic copy and paste to the local market in Latin America. But the other competitors do not have the capabilities like we do.

Then this is Haibin, and let me answer the question about the China market. Actually, for China market, as we could see that after years of the growth, this is a huge market. In around 2020, we actually entered the China market in 5 years. Now we are having such a market share as of Q4 of 2025. And this bigger 5 years of development equals to 20 years of development of our competitors' arrivals.

So as far as we have very good strategies. But of course, at the same time, we have a very good internal capabilities that we could deliver in 2025 October, we have actually announced a new transportation center in Guangzhou. And this is actually going to be the biggest center here in China or even the biggest in Asia or in the world.

So this is actually showing that we are actually dedicated to further increase and also to further increase our penetration in China market. And we believe that in China, even if actually the particular kind of growth has been slowing down. But overall speaking, the potential is pretty good. And you could see that China is a huge market.

So this is definitely going to be a very, very important market of -- especially strategic market for us. We're going to increase our efficiency of operation, lowering down the cost, and this is going to be our focus here in China.

Right. If possible, I can have a follow-up question on the tariff issue in Mexico. This is already taken into effect. We would like to understand that in Q4, whether or not you had certain issues before the tariff adding. And after the tariff adding, what is the particular competitiveness of those e-commerce customers in Latin America?

Right. Thank you very much for this question. I think that in a short period of time, the tariff is actually having some impacts on the e-commerce customers. But also, you know that we have the local-to-local service model. This is actually going to enhance because of the tariff. And of course, we have a lot of sellers, right? If we cannot have the cross-border business done in a very cost-efficient way, we're able to do the other business models.

So in a short period of time, the penetration of e-commerce customers will be actually hinted by the tariff policy. But still, we could see that we are going to have very good growth on local-to-local business, which is going to be offsetting the impact from tariff and policies.

So in Q4, the performance is actually lower than our expectation, but still we had a growth, right, in Q4 in the Latin America. So in the long run, if we have those platform business and the local to local, we are actually more advantageous even than the other rivals. And sometimes you know that this is a quite easy business model because it's happening in the port and airport. So while we have actually a very good local-to-local business, this requires a lot of the network coverage, which is something that we already had.

Right. Understood. Indeed, local to local is a very good positive news to J&T Express. But still, the particular delivery upon arrival is going to be quite challenging, but local-to-local business is pretty advantageous to us.

Next, we have [ Georgene ] from Senior Securities.

This is [ Georgene]. I have 2 minor questions. The first one is a follow-up on the business growth in Southeast Asian market in 2025 because of a very good growth and also strategies, you had a very good performance. 2025 is already over. If you're talking about the commercialization and monetization, we do have a lot of factors.

But if you want to have a priority for those industrial factors, what about the ranking? For instance, the increasing capability of logistic efficiency and the platform resources investment, et cetera, et cetera. So we would like to ask the company that how do you think about these industrial factors?

And in the next 2, 3 years of time, how do you plan to commercialize upon those industrial factors? Some of the values may not be reflected right now, but we are expecting them very much. So we would you like to have an answer for this.

Right. This is a very big question. Let me try to answer this question properly. Of course, I may have a quite subjective answer to this in terms of the priority ranking. First one is that the changes of the offline retail changes. This is actually growing a lot in Southeast Asian market. Last quarter, you could see the changes in Thailand and Vietnam.

Now the free delivery threshold has always been lowering continuously. And the VIP service of e-commerce platforms, we are going to actually make sure that more buyers are able to actually enjoy cheaper price of the logistics and some of the other benefits of buying goods online.

So offline to -- online to offline, this is actually accelerating in terms of the overall trend. That is to say that the offline retailing is actually developing quite fast. This is actually quite obvious trend. Second point is -- and this is actually something quite dependent on our investment to the e-commerce customers from those e-commerce customers. You could see that in Southeast Asian market, the e-commerce customers are increasing their investments a lot, right?

And the third point, I would like to illustrate. If you're talking about the ranking, first trend is that increasing online to offline and the second is investment increasing by e-commerce customers. And third, industrial factor would be the increasing of our penetration rate and market share and exiting of the medium and small size of players. These 3 changes are quite core to us.

The second question is about the continuability and the sustainability. I think that the first and second factors are going to be still playing their roles. We know that for e-commerce customers they are actually trying to cultivate the habits of those buyers buying from online. This is not going to be the strategy that they want to bring the profit for only a year, but they are having a very long-term strategy in place.

So as we have already mentioned that the first trend, the online to offline and second is that more investments from e-commerce customers. These 2 trends are going to be really continuous in the 2026 and the marginal effects are going to show gradually, but there is a 4-factor, which is the acquisition of the non-platform parcels.

In 2024, we started to actually have those non-platform parcels and starting to build a brand image and started to have a designated local business development team and trying to find new mechanisms of operation. The reason is that we want to actually acquire more platform parcels because you know that we have a very good mature network, and we will be actually trying to actually collect the parcels as well upon doorstep.

If you place the order, our delivery guidance will pick up. It should have been the case long ago. And in Southeast Asian market before we did, it was already like this, but the other players do not have this particular kind of network density to actually realize the efficiency of picking up the parcels within 1 to 3 hours. In most of the cases, they just deliver upon the other sites. So we do also have another factor, which is really, really important for us.

So the second question is actually more financial related. So I think that this also includes the China and Southeast Asian market. We know that in 2025, you have been increasing a lot of investments to buying the automation equipment and the seaborne transportation was one of the highlights. But if you buy more automated equipment, you are going to actually lower down the amortized cost.

So in 2026, as for China business, is it also visibility for us to have a prediction that the overall operational cost will be lowered further in China. In Southeast Asian market, we have actually paying attention to the average price of the industry and the ASP has been reducing in Southeast Asian market. So whether or not the average weight will be also reducing at the same time?

Also, if you take a look at the China, if the average weight has been lowering, the overall operational cost will be performed better. So whether in Southeast Asian market, you're going to see the similar trend. This is pretty much financial-related questions.

Thank you very much for this question. The operational cost. We know that we are keeping investing in China market. As we have already mentioned, the CapEx, it is very strong in China. It's not quite long for us to enter the China market, but be it from the logistics architecture standpoint or the kind of investment, we are a very strong player in China.

The purpose of having those investments is to actually further support our further sustainable growth. So we are really confident on the China market performance. So we will be further focusing on our enhancement of our management experience and cost reduction methodologies. You could see that the kind of operation enhancement and the optimization will be really important for us.

Also just now, we have mentioned the industrial differentiation. This is going to increase to a certain extent. But overall speaking, we are able to actually cover the overall growth of our operation. And overall speaking, we are quite positive to the future. As for Southeast Asian market, probably you have noticed that in Southeast Asian market, we in terms of ASP and cost per parcel, they have been enhancing and optimizing.

While we are optimizing the overall cost, which is going to be taking gradual step, we are going to have a much better situation in the future. And number of franchisees has been decreasing as we have already illustrated and the investment on buying the automated equipment. These are all the strategies that we focus on Southeast Asian market.

So in the future, we're going to have more equipment bought, and we are very much confident that in the near future, we are going to actually maintain a 5% to 10% of the growth on an annual basis in the next several years in Southeast Asian market.

Next question is from [ Huizhen Wen ] from [indiscernible] Securities.

I have 2 questions. First one is that previously, you had a survey in Thailand, which was quite surprising. But only you are actually collaborating with those e-commerce customers, but also you're upgrading your products on social media. So we would like to ask you that would you like to actually help us to have a differentiation of the e-commerce platform business versus the social media business?

Social media business is actually going to be a very strong driver, right? And my second question would be that -- what is actually the following steps after you have been integrating your securities and equities. As for new assets, you have consolidating them, more equities are now in the profitability of the mother company. So in the future, whether you have any new adjustments on those points as well?

All right. Let me answer the first question, which is the mix of platform parcel versus non-platform parcels. Now you can see that this is a single digit for the non-platform business. In the Southeast Asian market, this is actually the case. But for the e-commerce growth, this is pretty good. So we have to increase a lot of the e-commerce business in Southeast Asian market in specifics.

But in the long run, we are aiming to have more high-value customers acquired and also increasing the profitability of our franchisees. So we have a lot of business to do in Southeast Asian market. First is that expanding our network coverage and increasing our investments on the e-commerce platforms and acquiring non-e-commerce businesses and also giving benefits back more to the franchisees.

As for franchisee model, they are actually going to help us to acquire new customers and helping us to service in a much better way. In the long run, this is actually going to be a healthier business model. So this is something that we are actively doing right now.

Second one is about the equities. Thank you for this question. In the new markets, we always tell through the announcement that at current stage, we are going to do -- we are doing some of the share buybacks. And first of all, thank you for asking this question. But still, we are going to have all kinds of different supports in different markets. In emerging markets, we are meeting our expectation. We are very grateful to our investors on this.

So we are going to further having this equity manipulations. And also at the same time, we are pretty much showcasing our confidence in the new markets, and we are very grateful to the support from our investors. This is going to be really important to us. Also, at the same time, we're going to give good benefits back to our investors. So while we are going to further explore the new markets, we are going to have a very mature market performance as well and business model.

So at the same time, in Indonesia, for instance, we want to further increase the non-parcel volume. At the same time, we also wish that we could have more regions helping us to achieve that so that we're going to have a true global coverage and also further enhancing our competitive advantages.

The next question is from Guangdong Development Securities, [indiscernible].

Congratulations on a wonderful performance achieved. You could see that in 2024, Q4, you had a high base in Southeast Asian market. Still, you had 74% of the growth in 2025, Q4. This was actually the achievement on the base of the high number. It's very surprising.

And for the previous question, I would like to have a supplementation. If you want to further explore new markets, would you actually continue with the same strategy, working with the capital further? Or you're going to use the listed co to be the company in 100% to explore the new markets?

Right. So it would be the listed co that doing business development in the new markets. Let me give you the backdrop. Why we actually used the previous way because what we are preparing for new markets in China market, we were still in loss-making situation. So we used our subsidiary to do that business.

And in 2021, at the same time, e-commerce cross-border business was just developing, but it wasn't that clear. So as an investment from a company or investors, they were actually really looking forward to our future capabilities and wish to collaborate with us.

So in the overall sense, I believe that this is the reason that they actually trusted us. But this happened in 2021 when that's over, we were listed in 2023. And now our global businesses are all profit making. So I think that overall speaking, we don't need the subsidiary anymore to do that business.

The second question is that you know that in 2020, you have achieved the parcel pickup of 1.1 billion. So we would like to know that in new markets, you could see that TK has been increasing their guidance on the Latin America on TMV. So we would like to know that the new markets in 2026 or 2027, which year is going to be the year that you are going to be hitting the number of 1.1 billion. So we would like to know that in the emerging markets, when you are going to reach the total volume of 1.1 billion a year.

Right. First of all, I didn't know that whether or not the guidance was official or not. We had some information online that probably from our customers. So we cannot answer the questions on behalf of our customers or we cannot validate the data and figures from a third party. So timetable-wise, to be honest, we don't have a clear answer, but we know that the trend is quite obvious. And we do have several.

So first is that the particular base number of new markets is no lower than that of the Southeast Asian market. If you take a look at the potential of the possible market and Colombia, Chile, Argentina and Peru, if you added all the markets in Latin America, the number of population is around 600 million. It's quite potential. And also the average GDP, right, per capita GDP, this is actually also higher than that of the Southeast Asia market. So the market potential is really huge.

At the same time, the kind of penetration of the e-commerce is really low in those markets. And of course, the kind of habit of purchasing is just not there. So in the long run, the Southeast Asian market will be as mature as that of -- the Latin America will be as mature as that of the Southeast Asian market. But in which year it is very difficult for me to predict.

At current stage, we believe that this is not going to be happening naturally. We need to invest. At the current stage, the positive thing is that South America is more positive than we thought at current stage, the Shopee is doing a lot of investments in the Southeast Asian market. But in Latin America, we had TikTok investing a lot, but Shein and Temu already invested in the Latin America market.

And Kuaishou is also increasing their investment as well. This is actually a very good thing. Another very good thing is that we have collaborated with Mercado Libre, which is a local company in Latin America. So with the help of the e-commerce platform from China and Mercado Libre, we will be increasing our business of the e-commerce platform in Latin America.

And let me have the very last question, not necessarily -- you know that in U.S. is actually having the geographic attention raised because of this attack to Venezuela. So whether or not this is impacting your exploration in the South America market.

So geopolitical reasons, yes, this is quite impactful. And we know that we are the company that explore the markets in the world, say, Middle East, right? Last year, we also had some of the wars happening in Middle East. But still, we overcome the difficulties.

So we actually believe that in Latin America, what we are doing is for the well-being of the public and citizens. So I don't think that this will be impacted that much. And in the future, of course, that we are going to actually further pay attention to this and further enhancing and optimizing our network coverage and the infrastructure, further making Latin America as the next Southeast Asia market for us.

Right. I think that this is going to be something beneficial to you because when you have that, you have to increase the investment on infrastructure of livelihood issues.

So definitely speaking, we are going to be quite precautious in dealing with those impacts because of the geopolitical tensions. But we are not alone, I believe. We do have some of the enterprises that are collaborating with us in local market.

Now we are going to take the very last question from online is from [indiscernible].

This is from [ Shein ] Securities. We would like to ask you that in Southeast Asian market, you had such a high growth. So we would like to know that if you're talking about the absolute growth of the number of parcels in the quarter, you had 1.03 billion parcels increase, and that means 27 million pieces increased today.

So we'd like to have a breakdown that on TikTok, Shopee, Temu and non-platform parcels, would you like to have a further breakdown in terms of the contribution?

We know that Mercado Libre is the biggest market, biggest company in Latin America. And at the current stage, we are now further focusing on the development. So at the same time, in Mercado Libre, this is actually the biggest company in Latin America before we enter into the market. So while we actually further increase our investment there in Latin America, this is actually bringing up a lot of other sellers to sell their products in Latin America.

And you can see that there are more merchants now operating on Mercado Libre, which is going to be a very good thing driven by our performance. So for instance, the automotive in China, some of the like phone case players are performing quite well. But when they actually enter the Southeast Asian market, they are going to be working with Mercado Libre.

And at the current stage, this is already the case. And next, Mercado Libre is now increasing their investments in China. In December, I think that they have opened a dedicated account in China to sell some products to China market. So with that particular strength, we are seeing a very good performance. And at the same time, I think that they have a very big room for further improvement.

We always believe that in the future, Mercado Libre will be bringing with us more contributions from the increase of the number of parcels in Latin America.

Thank you very much for the questions. Now I hand over the call back to the management to giving you the closing remarks.

Thank you very much, all the analysts and dear investors for your answers. This is the end of this performance announcement call.

This is the end. Thank you, and you may disconnect. Thank you very much for your participation.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Hello, everyone, and good day. Welcome to join J&T Express Q3 2025 Business Performance Meeting Announcement. [Operator Instructions]

Now I would like to hand the call over to the moderator, Sylvia Yang.

Hello, everyone. Welcome to J&T Express Q3 2025 Business Announcement Meeting. I'm Sylvia. The meeting materials have been updated and e-mailed to everyone and updated to our IR website. Today, the management attending today's meeting is CFO of J&T Express, Dylan; and Head of Strategic Investment and Capital Markets, [ Hai Bing ]. The meeting will be divided into 2 parts. First, Hai Bing will provide an overview of company's Q3 2025 business performance, and then we are going to start the Q&A section where management will answer your questions.

First, give the floor to Hai Bing.

Hello. This is Hai Bing. I'm very honored to introduce to you the third quarter performance of 2025. Overall speaking, the parcel reached 468 million pieces, 31.8% of the increase. And in total, a year-on-year increase of 25.6% of the parcel volume in 9 months of data reached. The gross market was mainly Southeast Asia and China and New Markets.

First Southeast Asian market, we've been seeing a year-on-year increase of 78.7%. For 9 months to date, the parcel volume in South Asia reached 586 million pieces, increasing by 63%. The major reason for the growth is that, first, the e-commerce platform customers increased their investment and promoted rapid growth of business volume through promotional activities and continued arrangement of categories. And the e-commerce customers, TikTok, Temu and Shein continue to increase their investment and also having more promotional activities and this drive to grow.

The third point is that the non-platform shipments are also growing and have an absolute contribution to order volume, but not as far as the e-commerce shipments accounted for less than 10%. At the same time, we've seen the gap between us and competitors is widening. Our competitors already withdrawn from express delivery markets in a single country. So we see that the market is also slowing consolidating.

China, we already seen a 5.5 billion pieces of the third quarter, year-on-year increase of [ 47% ]. At the end of the 9 months, we had a year-on-year increase of 16.5% of the business growth. for the top 9 months. The major reasons are that, first of all, in July and August of 2025, we had another growth of industrial growth, expected that the growth rate in September will further slow down compared with August. The company's Q3 performance is the same as in-store growth rate. The service quality has been steadily improving. Our logistics index of the mainstream e-com platforms ranking among high franchisees. The brand image is significantly improved in minds of high-quality customers and brain the high-quality orders.

And then New Markets, the volume reached to a level of 47.9% of the increase from 9 months to date. We have already having 270 million pieces of parcels from New Markets, an increase of [ 16% ]. And Mexico tariff again in August slow cross-border parcel volume growth. However, Brazil saw a strong growth due to the entry of new customers, resulting to fast quarter-by-quarter increase in parcel volume in our New Markets.

This is performance of the third quarter of 2025. You are interested to know the Q3 financial results. Regarding the financial figures, we only currently disclose the semi-annual and annual figures. Therefore, the company generally does not update the performance guidance on a quarterly basis and currently maintains the guidance provided in August. The discussion will be limited to operating data level and will not discuss financial figures. Thank you.

Operator, please open the online questioning channel.

[Operator Instructions] The first question comes from Brian Gong from Citi.

2 quick questions. The first is that in New Markets and South Asian markets in Q3, the growth rate is better than the guidance and still accelerating. So I would like to ask you that how do you think about the trend in Q4? Do you think that we can keep the momentum or even getting quicker?

Second question is that for China market. Recently, we've been seeing a lot of price increase for the whole industry. So how do you think about the profitability in the second half of the year? And as for the second half of the year, what is your expectation to the profitability?

Right. Thank you very much, Brian, for this question. with regards to the Southeast Asian market, which is a core market of us, at the current stage, we have a higher performance than the guidance, but still there are differences. The first one is that in Southeast Asian markets, even if in Q4 of 2025, I think that even if we are keeping the same growth of the first half of the year, the overall growth rate is going to be higher than the guidance. So our conclusion is that the overall half year, especially second half of the year growth rate will be higher than the guidance, and we are going to make efforts to meet your expectation.

But this particular high growth does not necessarily mean that we were conservative while providing the guidance in the beginning of the year because we were neutral by then. So more, we are saying that the e-commerce market in the Southeast Asian market is pretty much competitive and dynamic. So be it for our customers of all platforms or for a company, it is very difficult for us to have a very precise expectation and prediction of the order growth. For instance, at the current stage, we have 70% of the growth rate. And the guidance for the second half of the year growth rate is about 55%, and there is around 20% gap. So if you calculate that to the unit, it is about 3 million orders. If you actually further distribute it to other 5 economies in Southeast Asia, as for each and every country, I think that this is only about hundreds of thousands of orders more than the budget. So for a single country, this is not that large gap. It's just that for each country, we had outperforming the expectation.

So overall speaking, there's outperforming the expectation in Southeast Asian market. This explains the very good data in Q3. In the Southeast Asia market, we have alpha and beta customers. So this explains. In New Markets, there are differences. In New Markets, the major growth are from the new customers. For instance, as we always talked to you about that for TikTok in the second half of the year, the Brazil and Mexico, and we work with Mercado Libre. So in the New Markets, we do have challenges from Mexico. Now they do have more tariff. And also in August, they have raised the tariff to about 30%. So in Q4 and also the next year, we are going to see impact to cross-border business. So even if we had high growth in Q3, but in Q4, I believe that there might be a little bit challenge to Mexico market. In New Markets, we will maintain the guidance to 40% growth as it was.

So in New Market, the Brazil is performing quite well. And in the first half of the year, we had TikTok enter the Brazil, several thousand orders in the beginning and now hundreds of thousands of orders already. So for Brazilian markets, the high growth will be a little bit supplementing the challenge that we had in Mexican markets. So overall speaking, for the New Markets, the second half of the year guidance, which is 40% of the growth rate is quite neutral and appropriate.

So your second question was on the China market. What do we expect for the second half of the year, whether it is becoming more optimistic? I want to explain this from 2 sides. First is about the growth. The second is profitability. In August and July, you can see that the overall industrial growth has been slowing down 12% in August. And in September, this has further slowed down. And in Q4 versus Q3, we are going to see a further slowdown of the business growth. So you can see that the industry is increasing the price and causing the slowdown of the industrial development. This is going to be quite stressful to our overall cost. So I think that for the single ticket revenue and profit, if you can see that Q3 and Q4 might be increasing in terms of that figure versus the first half of the year, but still there is a stress for cost. So we are holding neutral or a little bit neutral towards positivity attitude than the overall budget. So no change versus the guidance.

We're going to have the next question. Liu Gangxian from CICC.

This is Liu Gangxian from CICC. I have 2 minor questions. The first question is about the Southeast Asia market in terms of the growth rate. Just now you have mentioned that it is growing quite fast. And my question is for the overall e-commerce, do you think that this is actually the overall kind of organic growth from the Southeast Asian market itself or you had a different strategics and different investment strategy, whether you are going to update anything on this point?

The second question is about Southeast Asia market as well. We could see that recently, there is a news say they've been having the approval of the [ pork ] operation in Indonesia, and it has been resumed, which is a good news. I would like to know that for these merchants and in terms of their operations, whether there is any impact.

Thank you for this wonderful question. First one is about the Southern Asian market in terms of the growth rate. We are very glad to see that in Q3, our growth was higher than expectation and the guidance, the major reasons are that, first of all, the Southern Asian market, the e-commerce penetration is increasing. And more importantly is that one of the key accounts have been investing more in Southern Asian market. So I believe that they are bringing more parcels to us. So this is the very reason why we are going to have the growth better than expectation.

Then the second question, the answer is that as you are seeing an [indiscernible] fluctuation in Indonesia, as you said that the current stage, this has been resolved quite fairly. Of course, this happened quite shortly. So this impact was quite limited. And another thing is that for some of the e-commerce platforms, they do have hiccups while operating in South Asia market. But overall speaking, there was merely any impact. So this is going to be a new normal, but we have been actually resolved this quite wonderfully.

And one thing to add, as for the first question, I think that for the Southeast Asia market, the out of expectation growth are due to the market performance there dynamically or this part of the reason would be to the express delivery industry. First of all, the overall beta has been developing quite well for the whole market and like the shipment and the penetration of the e-commerce. And second is that the free delivery fee for TikTok in Southeast Asian market, and we have followers of the other competitors. So at the current stage, there are more fierce competition of e-commerce companies. So overall, e-commerce industry is growing very fast.

And second point I would like to say is that as for the Korea and also as for the commitment and cost, this is getting higher and higher. And at the same time, as for the price or as for the quality, there is a higher requirements and higher bars. So in certain countries, some of the small vendors, they are not going to be compliant with the requirements of the e-commerce platform and they're exiting from the market. So J&T Express because of a very good quality of our service, we've been increasing our penetration among certain accounts. This is another reason explains the out of expected growth in Southeast Asia market.

Understood. Indeed, as you have already stated that the e-commerce business is growing quite well in the Southeast market and the market is consolidating very quickly. I hope that J&T Express will get a further improvement in Southeast Asian market.

The next question is from [indiscernible] from Haitong Securities.

I am [indiscernible] from Haitong Securities. First of all, I want to congratulate for another wonderful performance of the company. The question from my side is about the development capability. We could see that we are accelerating our growth in overseas. So could you help us to understand the drivers behind? And what is about the major trend of the platform and the whole market?

And second is that how do you think about the future potential of the market growth in the overseas? Second point is that we have observed that some of your peers are developing in overseas as well in Cambodia and Middle East. So actually, there are a lot of same phenomenon happened in the history, but still you are the best one in overseas market, and you were not impacted even if the others are going out. So I think that I want to ask you that what is the core competitiveness, for instance, in local operation? How do you think about your competitive edges versus your competitors?

Right. I think that this is a very good question. The first question is you want to gain more color about the potential growth in overseas. There are actually 2 regions, the Southeast Asia market, the major trend is the buy-one-getting-free-delivery. So you could see that in the second half of the year, we are seeing more things happening in Thailand and Vietnam, the biggest e-commerce platform is actually having promotional activity as well. And also the other e-commerce platforms are doing the same thing as for the exemption from postage.

I think that at the same time, in China, we've been actually seeing this particular trend and phenomenon happened before. At the current stage, this helped to drive more orders from different price ranges. And at the same time, we are seeing a more competitiveness among the sellers or the merchants and also competition in between different platforms. The differences of the e-commerce customer is that we are a third-party logistics. The major strategy -- strategic positioning is that we want to actually have as many parcels taken from as many e-commerce platforms as possible and also to have a very good operational capability and to lower down our overall cost. But of course, under this particular background of the exemption from the express delivery fee, this drives the growth of the parcel number, and this requires a higher quality of shipment capabilities. So that is actually also driving the exiting of a lot of other small-sized competitors. We could see that we've been seeing some of the competitors that are withdrawing from express delivery market in a single country.

So as for the development capability of J&T Express, we are going to be upholding our overall capability and our value proposition. Hopefully, that we are going to increase our penetration among the e-commerce platforms. But I'm talking about every e-commerce platform that you can think of. And I hope that one day, we are able to help them to grow at the same time.

So I believe that we are actually a third-party logistics company. So from a development potential standpoint, this is very good. And also, in Latin America and Middle East, we are not seeing this particular trend of the express fee covered by the purchase. And we are seeing actually 2 major trends in new merchant markets. First is that for some of the e-commerce customers, they are investing more, especially in Middle East and Latin America. And another trend is that we are doing a lot of the local-to-local business. You know that for cross-border e-commerce, there are a lot of pressures from the dynamic tariff. So a lot of -- I mean, e-commerce platforms are now doing local-to-local business. So this is actually truly important for us to consider, happening in mature markets and also happening in the emerging markets as well. So this is a very important trend, which is more local-to-local business. So I believe that we have to pay attention to this. And this is actually the major reason for us to have a higher growth rate than the industry for the emerging markets.

And another question from you is about the competitive edges. I believe that as for us, we really welcome more competitors joining us in getting to overseas altogether. And everybody knows that in China, we are a new company, and we're still learning from the other competitors and peers. Hopefully, that we are able to gain a much better capability and knowledge know-how in China, be it it's the operation or business model or talent recruitment, et cetera. We want to do better than ourselves.

So you could actually change your angle and perspective while viewing this particular question. Everyone joins the local country so that we could expand the pie larger altogether. This is quite significant, and we see it from a positive standpoint.

The next question is from [indiscernible] from Changjiang Securities.

I want to congratulate on the company in achieving very good performance. I have 2 questions. The first one is about the overseas markets and New Markets. You could see that TikTok and Temu are accelerating their expansion plan in the new markets, Temu and TikTok in Brazil had a very good quarter-by-quarter growth of the number of visits. So I would like to know that for China, how do you think about the overall impact?

And the second point I would like to ask you is about the China market. Now we could see that under the backdrop of anti-involution campaign, whether or not you are going to adjust your strategy here in China further?

Right. Thank you very much for your question. Let me answer the first question. As for overseas, especially those major e-commerce platforms going global. Probably you have seen this data from someone else from J&T Express standpoint, we have also our strategy. You could see that in Latin America, they [ arised ] there is a very good growth. And this is going to be a very encouraging figure to us. And I believe that they are one of the key accounts of us in Brazil and Latin America as a whole. But of course, we don't only doing business with them. We also have other potential customers and e-commerce partners as well or even local e-commerce platforms. Altogether, they are building the whole pie of our business in Latin America. Of course, for those mainstream e-commerce platforms going global, I definitely believe that this is going to make the whole industrial grow much better in Latin America and also in the Middle East as well.

And second question you asked me is about the strategy for China. Actually, for Chinese market, we've been actually seeing some kind of incidents happening. The first one is about the price competition in the first half of the year and also anti-involution in the second half of the year. This was a little bit impacted the overall market performance. And in China market, we are still a follower and a learner. So we are still having a little bit gap versus the top companies. So based on that, we are going to work on our own organic capability to grow. We are going to regard the China operation as a very important training camp for J&T Express. We are going to further recruit the talents and further increase the overall operational efficiency in the emerging markets and to optimize as well as innovate on our business models and try to copy our strategy from the rest of the market to China and also the other countries as well.

Next question is from [indiscernible] from [indiscernible] Securities.

I have a question that in the Southeast Asia, be it in the number of point of services and also the number of fleets, you were investing continuously. I would like to know that which countries are you talking about in Southeast Asia for those investments? And with this further investment upon those hardware, how do you think that your delivery time and the efficiency could be improved?

The second question is that which Southeast Asia countries are going to receive more investments from you in the future?

Right. Thank you very much. I am from the IR team. Let me answer the question. In Southeast Asia market, the fleet and also equipment investment is very good. You can see that the number of parcels in the Southeast Asia market is growing very steadily and in a high pace. At current stage, we have 60% of the growth for the top 9 months. So we have to actually invest more to increase our capacity. We are going to update that gradually. So on the fleet, be it the self-owned or outsourced fleet, there are a lot of improvements.

Second point is that we are actually updating and also we are rebuilding our facilities. And now we have around 120 centers in Southeast Asia for the shipping center, but only 60 have automation capabilities. In major economies, we are achieving a very high growth rate. And this is due to the very good positioning of automated device and equipment use.

And another part of the story is that in the future, we are going to see a gradual implementation of those new equipments and the more number of fleets. So while you are going to see an increased parcel number, we are going to see further investment to buy new vehicles in the fleet or to upgrade our facilities. And this incremental part can be reflected in emerging markets. And for instance, that in one country, we have been investing in 11 automated lines so that while we are taking orders from new customers, we can have a very good bargaining power, and we can provide a very excellent service to our customers. Any further questions?

No further question from myself.

Next question is Fan Qianlei from Morgan Stanley.

This is Tenny from Morgan Stanley. I have 2 questions relating to China market. The first one is about the ASP in China. In the second half of the year because of anti-involution, this ASP could be improving month-by-month or quarter-by-quarter. But still according to some of the other figures, I think there are differences in terms of the year-on-year growth of the ASP. I'd like to understand what is the level of J&T Express and in between franchisees and headquarters, how do you distribute the price increase, whether you can have more details sharing with us?

The second quick question is about the impact to the number of parcels. We can see that when the ASP is increasing, actually, this is dragging the development of the parcel number increase. So I'd like to know that whether or not the impact of the parcels among different customers, they might be different. For instance, for some high-end customers, this impact is going to be merely little or in which e-commerce platforms, you are going to see a kind of a different impact because of this increased ASP.

Right. Thank you very much, Tenny, for this wonderful question. As for your first question with regards to the Q3 ASP of China market, the overall trend we've been seeing, especially in September, there was actually a very big increase of the total price and the overall trend is still quite similar to that of the whole industry or the other peers in the industry. But we are not disclosing any financial data for this round. So at the current stage, we're not going to give you the figures about the year-on-year or quarter-by-quarter growth, but the overall trend is the same.

As for the profit -- profitability because of ASP increase and distribution between the headquarters and the franchisees at the current stage, we're talking about different regions and for different franchisees, we have actually a different policy. So I cannot give you one size-fits-all answer, say it's half or 1/3 to each. But the overall strategy is that we are hoping that our franchisees are going to become more capable. So in certain regions, we are going to tend to work with the franchisees because as for our competitors, right, in J&T Express, we actually operate the shortest here in China. And also in terms of the overall kind of quality of the franchisees, this is not as good as the other express delivery companies. So I hope that definitely speaking, we're going to see better profitability of the franchisees, which is going to be sustainable and scientific.

The second question to your second -- second answer to your second question is that actually, whether there is any kind of impact from a slowing down of part number increase due to ASP increase? How do you think about the difference among competitors? The answer would be that, yes, we've been seeing a lot of difference. For instance, for the first round of ASP increase in Guangdong province, there was a lot of decrease of the business. For instance, there were a lot of low profit margin customers like selling the smartphone case, and they cannot tolerate this particular price increase and they exited from the market. So the first round impact was to those low valuable kind of customers. So for branded customers, as for the big customers, as for the express delivery price, they were not that sensitive towards the price change. So merely any impact.

As for J&T and also as for the rest of the other industry, we are sharing the same momentum and also the overall trend.

Right. I would like to have a follow-up question, whether or not there is any difference across different platforms for the impact to the number of parcels?

Right. Answer would be that I think that we are seeing the same trend as you did like for the kind of customers with the low DOV, not only they are going to be selling on one e-commerce platform, but all the customers' platforms. So for those customers of low DOV, they were the major driver of the impact. This impact is not attributable to only a single platform.

Now let's have the next question from [ Guangdong Development Securities ], [indiscernible].

You've been achieving a much better growth for your business, which is our expectations. So I would like to ask you that for the next several years, in Southeast Asian market and the emerging markets, how potential you are for the future? So according to the growth rate that we have, would you like to have more visibility about your predictive value from 2025 to 2028? At the current stage, I went to Indonesia in the October national holiday, I found out that their overall parcel number per capita was quite low, and they had the low income level. So for Indonesia, I think that you're having a big investment there. And I would like to ask you how potential the Southeast Asian market is in the future?

The second question is about your customers. So at the current stage, we are seeing a lot of growth. So we want to ask you that you're having a better overall growth rate than that of Q2, which is 20% gap. So definitely, you are gaining support and help from emerging customers. In terms of the development and exploitation on the new platforms, whether you have any updated information and details to be shared with us?

Right. Thank you very much for this question. Are you able to see the presentation PowerPoint that I presented?

Yes.

Actually, as for the growth rate in Southeast Asia market, definitely, we had our expectation growth in Q3. As for us, this is a new normal. Sometimes we are having only the kind of a price. And in Southeast Asia market, in the future, this is going to be a big driver for the growth of e-commerce and e-commerce express delivery as well. So sometimes you can see that if we're taking a look at the transaction volume and the parcel volume, as for the whole Southeast Asian market, it is already gaining additional 20% of the growth rate. In the near future, we're going to maintain that particular momentum in Southeast Asia market in specific. So in the future, we are having our confidence that we will perform much better. So for Southeast Asian market, we are maintaining the guidance as it was.

The second point, as you mentioned, was about the major accounts in Southeast Asian markets. Definitely speaking, a major reason for us to grow in Southeast Asian market is that they have their customers and further penetration of e-commerce platforms. And also at the same time, we are further optimizing our overall cost and operational cost specifics. So for other peers, they are exiting their business from some single country. This helped to increase our penetration in that market. In Southeast Asian market, we're going to keep investment and maintaining our competitive positioning in that market.

And I would like to give you an example. Most of our customers are from the mainstream e-commerce platforms from China. So of course, I hope that those new and some of the smaller local Southeast Asian platforms could be doing business with us further. And next is that we are doing the -- a lot of non-platform parcels, reverse parcels, commercial parcels and some of the others. So at the current stage, we are making a very good improvement.

Next question is Guo [ Yixue].

I have 2 questions. I am from Nomura. As you have mentioned that because of a raising tariff in Mexico, you've been seeing the less number of parcel cross-border. So could we understand that for those going global e-commerce platforms, some of them are having cross-border parcels partially and also local parcels. So tariff increase reduced the parcel delivery. So this is weaker, of course, in terms of the overall impact than our expectation. Is that the case?

My second question I want to ask you is about the China market. Would you be upholding the guidance that you provided for China market? As for the parcel volume, the growth rate should be exactly the same as the industrial level. And also as for the single parcel parameters, we've been seeing a very good quarter-by-quarter growth. So in the second half of the year, you could see that parcel number growth is the same as the industrial number. And also the parcel kind of order number will also be improving versus the industrial average, right?

Right. Thank you very much, Rachel, for the 2 questions. The first question is that you have a correct understanding. For instance, for Latin American customers, their overall business model is that they are doing partially the business of local-to-local and cross-border business. If this is a cross-border business, they're going to be impacted by the tariff and fluctuated a lot.

A very good trend is that for our customers, especially in the past 1 or 2 years where we had fluctuated and volatile kind of tariff, they've been actually already notifying this particular problem. So they are now spending more investments in building the local supply chain in those different local countries. So surely, if they had the tariff increase, they were going to divert more traffic to the local customers and local buyers as well. So this is going to be their method in coping with the impact from the tariff. So from a longer standpoint, I think that this particular impact of the tariff will be forcing our e-commerce platform customers in actually giving more resources to the local supply chain. This is benefiting the local business.

The second part of your question about clarification is about China. Actually, as of the end of Q3 for J&T Express, our overall growth rate is a little bit lower than the industry average. And in Q4, our strategy is that we want to keep flat versus the industrial growth or getting a little bit low because the overall strategy for us is not try to hit a very high level of the growth rate. But in recent 2 years, we want to do restructuring actively, and we are going to give the more resources in getting those medium-sized to large size of accounts, right, that we always wanted to have. So we want to have more high-quality customers that could help us to improve our profitability in China. This is the strategy that we have here in China.

That explains the reason why we're having the same or a little bit lower than the industry average growth rate for J&T Express. But still, the overall trend, I have already explained that in the short period. But for the short medium of the time, in the next 3 to 5 years of time, what is our strategy here in China? In terms of the penetration and market share, we want to get bigger. But still in China market, there are a lot of competitions. So periodically, we are going to do the restructuring or the shifting of strategies.

The second point is about the ASP. At the current stage, the ASP is increasing quarter-by-quarter. This is the same as the industry average. And at the same time, the kind of profitability per parcel also increased at the same time.

Now let's have the next question. [indiscernible] from DSB.

I have 2 questions about the operational capability. First is that you were talking about the cost reduction measures. So having franchisee-ship in Southeast Asia. Would you explain on that?

Second point is that we'll be seeing 2 interesting things. First is that for China region, you have actually a reduction of the point of sales. And in emerging markets, you have been adding 9 more. So what is your strategy thinking behind?

Right. Thank you very much, Mr. [indiscernible]. The first question is that as for the progress in Southeast Asia market, so actually, the whole progress is pretty similar to our expectations from direct operating to franchisee model. This is the strategy that we have to uphold for a long term in Southeast Asia market. So if you're talking about a single quarter, we're not going to see a very big and obvious increase, but this is an unchanging kind of increase.

And also second is the sorting center number. In New Markets in terms of sorting center, we adjust that in Mexico and Brazil. Now we can see that because the parcel is increasing quite fastly, we are dynamically adjusting the number of our sorting centers. So be it for the sorting center or the number of point of service, we are actively shifting our strategies there.

Right. For the 9 new sorting centers, they are in Brazil, right?

Right. And the automation equipment investments are also one of our focuses in Southeast Asia -- I mean, in the South American markets. For the new 9 sorting centers, we have conducted the preliminary analysis. If the capacity is increasing, we're going to position that further. At the current stage, the whole resources, especially the sorting center number is still less than abundant.

[Audio Gap]

So against that backdrop, what is the ratio of reverse parcels versus the normal parcels in your individual parcel business?

Right. Thank you very much, Mr. Ling, for this wonderful questions. First is about the CapEx increase in South Asian market. Actually, you could see that our growth rate is actually quite good in Southeast Asian market. At current stage, there is no problem for that. But still, we're actively optimizing on our operational efficiency, around USD 1 billion of CapEx each year for that market -- Sorry, it is USD 600 million in Southeast Asia market.

Next, Sylvia will answer your second question.

Right. Thank you very much. As for Q3, overall speaking, the reverse parcel, 2.2 million and the non-reverse individual parcels, 2.4 million. In total, we had 4.6 million parcels. This is accounting for about 7.7% of the total parcel and business. If you compare that with 2024, this has been improved a lot. Last year, the whole percentage was about 6%. That is to say that you could see that the individual parcel business is growing quite rapidly.

Thank you very much. There is no further questions from the line. I would like to hand the call over back to the management to give a conclusion remark.

First of all, I want to thank everyone for this participation in the Q3 2025 business announcement meeting. If you have any questions, please contact the e-mail of the IR team. Thank you very much, everyone. You are now able to be disconnected. Thank you. See you next time.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]