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Global Offering
J&T Global Express Limited
極兔速遞環球有限公司
Stock code : 1519
( A company controlled through weighted voting rights
and incorporated in the Cayman Islands with limited liability )
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Sponsors, Joint Sponsor-Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Overall Coordinator, Joint Global Coordinator, Joint Bookrunner, Joint Lead Manager and Financial Adviser
Joint Bookrunners and Joint Lead Managers
J&T Global Express Limited
極兔速遞環球有限公司


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IMPORTANT: If you are in any doubt about any of the contents of this prospectus, you should seek independent professional advice.
J&T Global Express Limited
ʮ̡
(A company controlled through weighted voting rights and incorporated in
the Cayman Islands with limited liability)
GLOBAL OFFERING
Number of Offer Shares under
the Global Offering
: 326,550,400 Offer Shares (subject to the
Over-allotment Option)
Number of Hong Kong Offer Shares : 32,655,200 Offer Shares (subject to adjustment)
Number of International Offer Shares : 293,895,200 Offer Shares (subject to adjustment
and the Over-allotment Option)
Offer Price : HK$12.00 per Offer Share, plus brokerage of
1%, AFRC transaction levy of 0.00015%,
SFC transaction levy of 0.0027% and Stock
Exchange trading fee of 0.00565% (payable
in full on application in Hong Kong dollars
and subject to refund)
Nominal value : US$0.000002 per Share
Stock code : 1519
Joint Sponsors, Joint Sponsor-Overall Coordinators, Joint Global Coordinators,
Joint Bookrunners and Joint Lead Managers
Overall Coordinator, Joint Global Coordinator, Joint Bookrunner, Joint Lead Manager and Financial Adviser
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Bookrunners and Joint Lead Managers
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsib ility for the contents of this prospectus, make no
representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in “Documents Delivered to the Registrar of Companies and on Display” in Ap pendix VI to this prospectus, has been registered by the Registrar
of Companies in Hong Kong as required by section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32). The Securities a nd Futures Commission and the Registrar of Companies
in Hong Kong take no responsibility for the contents of this prospectus or any other document referred to above.
Applicants under the Hong Kong Public Offering are required to pay, on application, the Offer Price of HK$12.00 per Hong Kong Offer Share, plus brokera ge of 1%, AFRC transaction levy of 0.00015%, SFC transaction
levy of 0.0027% and Stock Exchange trading fee of 0.00565%.
The Overall Coordinators (for themselves and on behalf of the Underwriters), with our consent, may reduce the number of Offer Shares being offered und er the Global Offering and/or the Offer Price stated
in this prospectus at any time on or prior to the morning of the last day for lodging applications under the Hong Kong Public Offering. In such case, notic es of the reduction in the number of Offer Shares
will be published on the website of the Stock Exchange at www.hkexnews.hk and on the website of our Company at www.jtexpress.com as soon as practicable following the decision to make such reduction,
and in any event not later than the morning of the day which is the last day for lodging applications under the Hong Kong Public Offering. Further details are set forth in “Structure of the Global Offering”
and “How to Apply for Hong Kong Offer Shares.”
Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this prospectus, includin g the risk factors set out in “Risk Factors.”
Prospective investors of the Hong Kong Offer Shares should note that the obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Ag reement to subscribe, and to procure subscribers for, the Hong
Kong Offer Shares, are subject to termination by the Overall Coordinators (for themselves and on behalf of the Underwriters) if certain grounds arise prior to 8 a.m. on the Listing Date. Such grounds are set out in
“Underwriting – Underwriting Arrangements and Expenses – Hong Kong Public Offering – Hong Kong Underwriting Agreement – Grounds for Termination.” I t is important that you refer to that section for further details.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws in the United States and may not be off ered, sold, pledged or transferred within the United States or
for the account or benefit of U.S. persons in offshore transactions, except that Offer Shares may be offered, sold or delivered within the United State s to QIBs in reliance on Rule 144A under the U.S. Securities Act or
other exemption(s) from registration under the U.S. Securities Act or outside the United States in reliance on Regulation S under the U.S. Securities Act.
The Company will be controlled through weighted voting rights upon Listing. Prospective investors should be aware of the potential risks of investin g in a company with a WVR structure, in particular that the WVR
Beneficiary, whose interests may not necessarily be aligned with those of our Shareholders as a whole, will be in a position to exert significant influ ence over the outcome of Shareholders’ resolutions, irrespective of
how other Shareholders vote. For further information about the risks associated with our WVR structure, see “Risk Factors – Risks Related to the Globa l Offering.” Prospective investors should make the decision to invest
in the Company only after due and careful consideration.
ATTENTION
We have adopted a fully electronic application process for the Hong Kong Public Offering. We will not provide printed copies of this prospectus or prin ted copies of any application forms to the public in relation to
the Hong Kong Public Offering.
This prospectus is available at the websites of the Stock Exchange at www.hkexnews.hk and our website at www.jtexpress.com . If you require a printed copy of this prospectus, you may download and print from
the website addresses above.
IMPORTANT
October 16, 2023


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IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong Public
Offering. We will not provide printed copies of this prospectus or printed copies of
any application forms to the public in relation to the Hong Kong Public Offering.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “ HKEXnews > New Listings > New Listing
Information ” section, and our website at www.jtexpress.com. If you require a
printed copy of this prospectus, you may download and print from the website
addresses above.
To apply for the Hong Kong Offer Shares, you may:
(a) apply online through the HK eIPO White Form service in the IPO App
(which can be downloaded by searching “ IPO App ” in App Store or Google
Play or downloaded at www.hkeipo.hk/IPOApp or
www.tricorglobal.com/IPOApp )o ra t www.hkeipo.hk ;
(b) apply through the CCASS EIPO service to electronically cause HKSCC
Nominees to apply on your behalf, including by:
(i) instructing your broker or custodian who is a CCASS Clearing
Participant or a CCASS Custodian Participant to give electronic
application instructions via CCASS terminals to apply for the Hong
Kong Offer Shares on your behalf; or
(ii) (if you are an existing CCASS Investor Participant ) giving electronic
application instructions through the CCASS Internet System
(https://ip.ccass.com ) or through the CCASS Phone System by calling
+852 2979 7888 (using the procedures in HKSCC’s “An Operating
Guide for Investor Participants” in effect from time to time). HKSCC
can also input electronic application instructions for CCASS Investor
Participants through HKSCC’s Customer Service Center at 1/F, One &
Two Exchange Square, 8 Connaught Place, Central, Hong Kong by
completing an input request.
We will not provide any physical channels to accept any application for the Hong Kong
Offer Shares by the public. The contents of the electronic version of this prospectus are
identical to the printed prospectus as registered with the Registrar of Companies in Hong
Kong pursuant to Section 342C of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
If you are an intermediary , broker or agent , please remind your customers, clients or
principals, as applicable, that this prospectus is available online at the website addresses
above.
Please refer to the section headed “How to Apply for Hong Kong Offer Shares” in this
prospectus for further details of the procedures through which you can apply for the
Hong Kong Offer Shares electronically.
IMPORTANT


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Y our application through the HK eIPO White Form service or the CCASS EIPO service must
be for a minimum of 200 Hong Kong Offer Shares and in one of the numbers set out in the
table. Y ou are required to pay the amount next to the number you select.
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
HK$ HK$ HK$ HK$
200 2,424.20 6,000 72,726.12 100,000 1,212,102.00 5,000,000 60,605,100.00
400 4,848.41 7,000 84,847.15 200,000 2,424,204.00 6,000,000 72,726,120.00
600 7,272.61 8,000 96,968.15 300,000 3,636,306.00 7,000,000 84,847,140.00
800 9,696.81 9,000 109,089.18 400,000 4,848,408.00 8,000,000 96,968,160.00
1,000 12,121.02 10,000 121,210.20 500,000 6,060,510.00 9,000,000 109,089,180.00
1,200 14,545.22 20,000 242,420.40 600,000 7,272,612.00 10,000,000 121,210,200.00
1,400 16,969.43 30,000 363,630.60 700,000 8,484,714.00 12,000,000 145,452,240.00
1,600 19,393.63 40,000 484,840.80 800,000 9,696,816.00 14,000,000 169,694,280.00
1,800 21,817.83 50,000 606,051.00 900,000 10,908,918.00 16,327,600
(1) 197,907,166.15
2,000 24,242.05 60,000 727,261.20 1,000,000 12,121,020.00
3,000 36,363.05 70,000 848,471.40 2,000,000 24,242,040.00
4,000 48,484.08 80,000 969,681.60 3,000,000 36,363,060.00
5,000 60,605.10 90,000 1,090,891.80 4,000,000 48,484,080.00
(1) Maximum number of Hong Kong Offer Shares you may apply for.
No application for any other number of the Hong Kong Offer Shares will be considered and any
such application is liable to be rejected.
IMPORTANT


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If there is any change in the following expected timetable of the Hong Kong Public
Offering, we will issue an announcement in Hong Kong to be published on our website
www.jtexpress.com and the website of the Hong Kong Stock Exchange at
www.hkexnews.hk .
Hong Kong Public Offering commences ............................. .9:00 a.m. on
Monday, October 16, 2023
Latest time for completing electronic applications
under the HK eIPO White Form service through
one of the below ways: (2)
(1) the IPO App , which can be downloaded by
searching “ IPO App ” in App Store or Google Play
or downloaded at www.hkeipo.hk/IPOApp or
www.tricorglobal.com/IPOApp
(2) the designated website www.hkeipo.hk ........................1 1:30 a.m. on
Thursday, October 19, 2023
Application lists open (3) ......................................... 1 1:45 a.m. on
Thursday, October 19, 2023
Latest time for (a) completing payment for
HK eIPO White Form applications by
effecting Internet banking transfer(s) or PPS
payment transfer(s) and (b) giving electronic
application instructions to HKSCC
(4) ........................... .12:00 noon on
Thursday, October 19, 2023
If you are instructing your broker or custodian who is a CCASS Clearing Participant or a
CCASS Custodian Participant to give electronic application instructions via CCASS
terminals to apply for the Hong Kong Offer Shares on your behalf, you are advised to contact
your broker or custodian for the latest time for giving such instructions which may be
different from the latest time as stated above.
Application lists close
(3) ........................................ .12:00 noon on
Thursday, October 19, 2023
Announcement of the level of indications of interest
in the International Offering, the level of applications
in the Hong Kong Public Offering and the basis of
allocation of the Hong Kong Offer Shares on our
website at www.jtexpress.com and the website of the
Hong Kong Stock Exchange at www.hkexnews.hk
on or before (5)(9) ................................. .Thursday, October 26, 2023
EXPECTED TIMETABLE (1)
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The results of allocations in the Hong Kong Public
Offering (with successful applicants’ identification
document numbers, where appropriate) to be
available through a variety of channels, including:
 in the announcement to be posted on our website
and the website of the Hong Kong Stock Exchange
at www.jtexpress.com and www.hkexnews.hk ,
respectively (9) ................................ Thursday, October 26, 2023
 from “IPO Results” function in the IPO App or
the designated results of allocations website
at www.tricor.com.hk/ipo/result or
www.hkeipo.hk/IPOResult with a
“search by ID” function from (9) .............................. .8:00 a.m. on
Thursday, October 26, 2023
to 12:00 midnight on
Wednesday, November 1, 2023
 from the allocation results telephone enquiry line
by calling +852 3691 8488 between
9:00 a.m. and 6:00 p.m. from
(9) ................. Thursday, October 26, 2023 to
Tuesday, October 31, 2023
(excluding Saturday,
Sunday and public holiday
in Hong Kong)
Share certificates in respect of wholly or partially
successful applications to be dispatched
or deposited into CCASS on or before
(6),(8),(9) ........... Thursday, October 26, 2023
HK eIPO White Form e-Auto Refund payment
instructions/refund checks in respect of wholly or
partially successful applications (if applicable) or
wholly or partially unsuccessful applications to be
dispatched on or around
(7),(8),(9) ...................... Thursday, October 26, 2023
Dealings in the Class B Shares on the Hong Kong Stock
Exchange expected to commence at 9:00 a.m. on (9) ......... Friday, October 27, 2023
EXPECTED TIMETABLE (1)
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Notes:
(1) All dates and times refer to Hong Kong local dates and time, except as otherwise stated.
(2) Y ou will not be permitted to submit your application through the IPO App or the designated website at
www.hkeipo.hk after 11:30 a.m. on the last day for submitting applications. If you have already submitted
your application and obtained an application reference number from the IPO App or the designated website
at or before 11:30 a.m., you will be permitted to continue the application process (by completing payment of
application monies) until 12:00 noon on the last day for submitting applications, when the application lists
close.
(3) If there is/are a tropical cyclone warning signal number 8 or above, a “black” rainstorm warning and/or
Extreme Conditions in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Thursday,
October 19, 2023, the application lists will not open or close on that day. See “How to Apply for Hong Kong
Offer Shares – C. Effect of Bad Weather and/or Extreme Conditions on the Opening and Closing of the
Application Lists.”
(4) Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC
via CCASS or instructing your broker or custodian to apply on your behalf via CCASS should refer to “How
to Apply for Hong Kong Offer Shares – A. Applications for the Hong Kong Offer Shares – 6. Applying Through
The CCASS EIPO Service.”
(5) None of the websites set out in this section or any of the information contained on the websites forms part of
this prospectus.
(6) Share certificates will only become valid at 8:00 a.m. on the Listing Date provided that the Global Offering
has become unconditional and the right of termination described in “Underwriting – Underwriting
Arrangements and Expenses – Hong Kong Public Offering – Hong Kong Underwriting Agreement – Grounds
for Termination” has not been exercised. Investors who trade the Class B Shares on the basis of publicly
available allocation details or prior to the receipt of Share certificates or the Share certificates becoming valid
do so entirely at their own risk.
(7) e-Auto Refund payment instructions/refund checks will be issued in respect of wholly or partially unsuccessful
applications pursuant to the Hong Kong Public Offering. Part of the applicant’s identification document
number, or, if the application is made by joint applicants, part of the identification document number of the
first-named applicant, provided by the applicant(s) may be printed on the refund check, if any. Such data would
also be transferred to a third party for refund purposes. Banks may require verification of an applicant’s
identification document number before encashment of the refund check. Inaccurate completion of an
applicant’s identification document number may invalidate or delay encashment of the refund check.
(8) Applicants who have applied through the HK eIPO White Form service for 1,000,000 or more Hong Kong
Offer Shares may collect any refund checks (where applicable) and/or Share certificates in person from our
Hong Kong Share Registrar, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt
Road, Hong Kong from 9:00 a.m. to 1:00 p.m. on Thursday, October 26, 2023 or such other date as notified
by us as the date of dispatch/collection of Share certificates/e-Auto Refund payment instructions/refund
checks. Applicants being individuals who are eligible for personal collection may not authorize any other
person to collect on their behalf. If you are a corporate applicant which is eligible for personal collection, your
authorised representative must bear a letter of authorization from your corporation stamped with your
corporation’s chop. Both individuals and authorised representatives must produce evidence of identity
acceptable to our Hong Kong Share Registrar at the time of collection.
Applicants who have applied for Hong Kong Offer Shares through the CCASS EIPO service should refer to
“How to Apply for Hong Kong Offer Shares – G. Despatch/Collection of Share Certificates/e-Auto Refund
Payment Instructions/Refund Checks – Personal Collection – If you apply through the CCASS EIPO service”
for details.
EXPECTED TIMETABLE (1)
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Applicants who have applied through the HK eIPO White Form service and paid their application monies
through single bank accounts may have refund monies (if any) dispatched to the bank account in the form of
e-Auto Refund payment instructions. Applicants who have applied through the HK eIPO White Form service
and paid their application monies through multiple bank accounts may have refund monies (if any) dispatched
to the address as specified in their application instructions in the form of refund checks in favor of the
applicant (or, in the case of joint applications, the first-named applicant) by ordinary post at their own risk.
Share certificates and/or refund checks for applicants who have applied for less than 1,000,000 Hong Kong
Offer Shares and any uncollected Share certificates and/or refund checks will be dispatched by ordinary post,
at the applicants’ risk, to the addresses specified in the relevant applications.
Further information is set out in “How to Apply for Hong Kong Offer Shares – F. Refund of Application
Monies” and “How to Apply for Hong Kong Offer Shares – G. Despatch/Collection of Share
Certificates/e-Auto Refund Payment Instructions/Refund Checks.”
(9) In case a typhoon warning signal no. 8 or above, a black rainstorm warning signal and/or Extreme Conditions
is/are in force in any days between Monday, October 16, 2023 to Friday, October 27, 2023, then the day of
(i) announcement of results of allocations in the Hong Kong Public Offering; (ii) despatch of Share certificates
and refund checks/ HK eIPO White Form e-Auto Refund payment instructions; and (iii) dealings in the Shares
on the Stock Exchange may be postponed and an announcement may be made in such event.
The above expected timetable is a summary only. For details of the structure of the Global
Offering, including its conditions, and the procedures for applications for Hong Kong Offer
Shares, see “Structure of the Global Offering” and “How to Apply for Hong Kong Offer
Shares” respectively.
If the Global Offering does not become unconditional or is terminated in accordance with its
terms, the Global Offering will not proceed. In such a case, we will publish an announcement
as soon as practicable thereafter.
EXPECTED TIMETABLE (1)
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IMPORTANT NOTICE TO PROSPECTIVE INVESTORS
This prospectus is issued by us solely in connection with the Hong Kong Public Offering
and the Hong Kong Offer Shares and does not constitute an offer to sell or a solicitation
of an offer to buy any security other than the Hong Kong Offer Shares offered by this
prospectus pursuant to the Hong Kong Public Offering. This prospectus may not be used
for the purpose of, and does not constitute, an offer or invitation in any other jurisdiction
or in any other circumstances. No action has been taken to permit a public offering of the
Offer Shares in any jurisdiction other than Hong Kong and no action has been taken to
permit the distribution of this prospectus in any jurisdiction other than Hong Kong. The
distribution of this prospectus and the offering of the Offer Shares in other jurisdictions are
subject to restrictions and may not be made except as permitted under the applicable
securities laws of such jurisdictions pursuant to registration with or authorization by the
relevant securities regulatory authorities or an exemption therefrom.
You should rely only on the information contained in this prospectus and the GREEN
Application Form to make your investment decision. We have not authorized anyone to
provide you with information that is different from what is contained in this prospectus. Any
information or representation not made in this prospectus must not be relied on by you as
having been authorized by us, the Joint Sponsors, the Overall Coordinators, the Capital
Market Intermediaries, the Joint Global Coordinators, the Joint Bookrunners and Joint
Lead Managers, the Underwriters, any of our or their respective directors or any other
person or party involved in the Global Offering.
Page
EXPECTED TIMETABLE ............................................ i
CONTENTS ....................................................... v
SUMMARY ....................................................... 1
DEFINITIONS ..................................................... 2 8
GLOSSARY OF TECHNICAL TERMS ................................. 4 1
FORWARD-LOOKING STATEMENTS ................................. 4 3
RISK FACTORS ................................................... 4 4
WAIVERS ........................................................ 1 0 0
INFORMATION ABOUT THIS PROSPECTUS AND
THE GLOBAL OFFERING ......................................... 1 1 4
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING ..... 1 1 8
CORPORATE INFORMATION ....................................... 1 2 5
CONTENTS
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INDUSTRY OVERVIEW ............................................. 1 2 7
HISTORY AND CORPORATE STRUCTURE ............................ 1 4 9
BUSINESS ........................................................ 1 8 1
CONTRACTUAL ARRANGEMENTS ................................... 2 6 4
CONTINUING CONNECTED TRANSACTIONS .......................... 2 9 2
DIRECTORS AND SENIOR MANAGEMENT ............................ 2 9 6
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS ........... 3 1 0
SHARE CAPITAL .................................................. 3 1 4
CORNERSTONE INVESTORS ........................................ 3 2 1
SUBSTANTIAL SHAREHOLDERS ..................................... 3 2 8
FINANCIAL INFORMATION ......................................... 3 3 1
FUTURE PLANS AND USE OF PROCEEDS ............................. 4 0 5
UNDERWRITING .................................................. 4 0 9
STRUCTURE OF THE GLOBAL OFFERING ............................ 4 1 9
HOW TO APPLY FOR HONG KONG OFFER SHARES ................... 4 2 8
APPENDIX I ACCOUNTANT’S REPORT .......................... I - 1
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION . II-1
APPENDIX III REGULATORY OVERVIEW ......................... III-1
APPENDIX IV SUMMARY OF THE CONSTITUTION OF
OUR COMPANY AND THE COMPANY LAWS OF
THE CAYMAN ISLANDS .......................... I V - 1
APPENDIX V STATUTORY AND GENERAL INFORMATION .......... V - 1
APPENDIX VI DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND ON DISPLAY .................... VI-1
CONTENTS
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This summary aims to give you an overview of the information contained in this
prospectus. As this is a summary, it does not contain all the information that may be
important to you. You should read the entire document before you decide to invest in the
Offer Shares.
There are risks associated with any investment. Some of the particular risks in investing
in the Offer Shares are set out in “Risk Factors.” You should read that section carefully
before you decide to invest in the Offer Shares.
BUSINESS OVERVIEW
We are a global logistics service provider with the leading express delivery business in
Southeast Asia, a competitive position in China and an expanding footprint in Latin America
and the Middle East. Our express delivery services span 13 countries, which include the largest
and fastest-growing express delivery emerging markets globally. We commenced operations in
2015 in Indonesia, and leveraged our success there to expand into other Southeast Asian
countries, including Vietnam, Malaysia, the Philippines, Thailand, Cambodia and Singapore,
and became the number one express delivery operator in Southeast Asia, with a 22.5% market
share in 2022 by parcel volume, according to Frost & Sullivan. In Southeast Asia, we handled
2,513.2 million domestic parcels in 2022, representing a CAGR of 47.6% from 1,153.8 million
in 2020, and we handled 1,438.3 million domestic parcels in the six months ended June 30,
2023, representing an increase of 18.4% from 1,215.0 million domestic parcels in the six
months ended June 30, 2022. We tapped into the express delivery market in China in 2020, and
handled 12,025.6 million domestic parcels in 2022, achieving a market share of 10.9% by
parcel volume, according to Frost & Sullivan. In China, we handled 6,445.6 million parcels in
the six months ended June 30, 2023, representing an increase of 15.1% from 5,602.3 million
parcels in the six months ended June 30, 2022. As of June 30, 2023, we had full network
coverage across the seven Southeast Asia countries and a geographic coverage of over 99% by
counties and districts in China. We are also the first Asian express delivery operator of scale
to have expanded into Saudi Arabia, UAE, Mexico, Brazil and Egypt, according to Frost &
Sullivan, supporting our e-commerce partners as they expand into new markets. To better
capture cross-border logistics opportunities and enhance the connectivity among the countries
we serve, we have expanded our cross-border logistics services, which include small parcels,
freight forwarding and warehousing solutions.
Indonesia
Brazil
Mexico
Singapore
2015
Vietnam
2018
China
2020
The Philippines
2019
Thailand
2019
2020
Cambodia
2019
2022
2022
UAE
2022
Egypt
2022
2018
Malaysia
Saudi Arabia
2022
SUMMARY
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We provide express delivery services to leading e-commerce platforms, enabling the rapid
development of our partners as they expand into new markets. We have historically helped
e-commerce platforms access regions that were underserved by traditional logistics service
providers. We provide a suite of express delivery services to merchants and consumers on
leading e-commerce platforms, such as Shopee, Lazada, Tokopedia, Pinduoduo, Taobao, Tmall,
Shein and Noon, as well as short video and live streaming platforms which have adopted social
e-commerce services, such as TikTok, Douyin and Kuaishou. As e-commerce continues to
evolve, we believe that we are well positioned to enable further development of the
e-commerce markets in which we operate by leveraging our broad network, extensive
know-how and strong execution capabilities. We expect to provide services to cross-border
logistics with our ever expanding global footprint.
US$7.3Bn Revenue in 2022
117.6% CAGR 2020-2022
14.6Bn Parcels Delivered
in 2022
112.3% CAGR 2020-2022
No. 1 in Southeast Asia
22.5% Market Share,
> 3 Times of No.2(1)
Partnering with Leading
E-commerce Platforms
in Markets where We
Operate
Unique and Highly Scalable
Regional Sponsor Model
with Aligned Interests and
Shared Culture
Proprietary and Innovative
JMS System to Empower
Global Operations
Spanning 13 Countries
Note:
1. By parcel volume in 2022, according to Frost & Sullivan
Southeast Asia, China and the New Markets where we operate present us with significant
growth opportunities:
Southeast Asia China New Markets
E-commerce
Retail
Transaction
Value
Total
Volume of
Parcels
In billion
13.2
23.5
2023E 2027E
CAGR: 15.5%
In US$ billion
E-commerce penetration rate
1,997.4
2,957.2
2023E 2027E
In billion
125.1
188.0
2023E 2027E
CAGR: 10.7%
CAGR: 10.3%
In US$ billion
107.6
243.1
2023E 2027E
In billion
3.7
7.1
2023E 2027E
CAGR: 17.6%
CAGR: 22.6%
In US$ billion
188.6
373.6
2023E 2027E
CAGR: 18.6%
17.9%
 29.8%
 29.1%
 35.6%
 14.6%
 27.5%
Source: Frost & Sullivan
SUMMARY
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Shift to e-commerce. E-commerce retail has seen significant growth in Southeast Asia in terms
of transaction value from US$38.3 billion in 2018 to US$154.8 billion in 2022, representing
a CAGR of 41.8%. Improvements in Internet infrastructure in Southeast Asia will likely further
support the transition from offline to online retail channels. According to Frost & Sullivan,
e-commerce retail transaction value in Southeast Asia is expected to grow from US$188.6
billion in 2023 to US$373.6 billion in 2027, representing a CAGR of 18.6%, with e-commerce
penetration rate increasing from 17.9% in 2023 to 29.8% in 2027. In China, e-commerce retail
transaction value increased from US$1,058.5 billion in 2018 to US$1,777.1 billion in 2022,
representing a CAGR of 13.8%, and is expected to grow from US$1,997.4 billion in 2023 to
US$2,957.2 billion in 2027, representing a CAGR of 10.3%, according to Frost & Sullivan,
with the e-commerce penetration rate increasing from 29.1% in 2023 to 35.6% in 2027. In
addition, we anticipate that the rise of social e-commerce including short video and live
streaming will drive additional e-commerce transactions and demand for cost-effective
logistics services. According to Frost & Sullivan, the social e-commerce retail market in
Southeast Asia grew rapidly from US$9.2 billion in 2018 to US$60.2 billion in 2022,
representing a CAGR of 59.9%, and is expected to reach US$179.8 billion in 2027 from
US$80.7 billion in 2023, representing a CAGR of 22.2% from 2023 to 2027. The social
e-commerce retail market in China also grew rapidly from US$98.5 billion in 2018 to
US$626.5 billion in 2022, representing a CAGR of 58.8%, and is expected to reach US$1,660.4
billion in 2027 from US$839.7 billion in 2023, representing a CAGR of 18.6%. The social
e-commerce penetration rate is expected to reach 48.1% and 56.1% in Southeast Asia and
China in 2027, respectively.
Demand for express delivery services. Benefiting from the significant e-commerce market ,
Southeast Asia and China combined form the largest and fastest-growing express delivery
service market in the world, according to Frost & Sullivan. In Southeast Asia, total volume of
parcels shipped rapidly increased from 3.3 billion in 2018 to 11.1 billion in 2022, representing
a CAGR of 36.0%, and is projected to increase from 13.2 billion in 2023 to 23.5 billion in
2027, representing a CAGR of 15.5%, while in China the volume increased from 50.7 billion
in 2018 to 110.6 billion in 2022, representing a CAGR of 21.5%, and is projected to increase
from 125.1 billion in 2023 to 188.0 billion in 2027, representing a CAGR of 10.7%, according
to Frost & Sullivan.
Demand from the New Markets. In 2022, we strategically expanded into other large and
high-growth markets around the world, including Saudi Arabia, UAE, Mexico, Brazil and
Egypt, which we refer to as the New Markets. These markets have burgeoning e-commerce
industries and are undergoing a pivotal transition as consumer shift from traditional retail to
online shopping. According to Frost & Sullivan, e-commerce retail transaction value of the
New Markets in aggregate reached US$85.7 billion in 2022 at a CAGR of 27.5% from 2018
and is expected to further grow to US$243.1 billion in 2027 at a CAGR of 22.6% from 2023.
Driven by the growth of e-commerce retail markets and e-commerce penetration rate, express
delivery parcel volume in these markets in aggregate reached 3,095.8 million in 2022 and is
expected to further grow to 7,137.7 million in 2027 at a CAGR of 17.6% from 2023.
Demand for cross-border services . Capitalizing on our success in each of the markets in which
we operate, we are developing cross-border services to connect these markets to the global
e-commerce network. In Southeast Asia and China, the total cross-border e-commerce retail
markets by transaction value increased from US$213.8 billion in 2018 to US$492.2 billion in
2022, representing a CAGR of 23.2%, and are expected to increase from US$605.2 billion in
2023 to US$1,257.0 billion in 2027, representing a CAGR of 20.0%, according to Frost &
Sullivan. We believe the rise of the cross-border e-commerce market will drive the growth of
the cross-border logistics market. The global cross-border logistics market is expected to reach
US$680.7 billion in 2027 from US$456.1 billion in 2023, representing a CAGR of 10.5%,
according to Frost & Sullivan.
SUMMARY
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Our success is attributable to our innovative business model. We have built an adaptive
business model by leveraging our partners whom we refer to as our regional sponsors, and we
are currently the only player in Southeast Asia and China that has successfully adopted this
model at scale. By employing this model in geographically diverse countries with unique
operational challenges in each of the countries where we provide express delivery services, we
have expanded rapidly, serving a geographically dispersed base of merchants and consumers
across multiple regions and enabling the growth of e-commerce transactions. Regional
sponsors play an important role by working with our country headquarters to execute our
strategies in various markets. Our regional sponsors typically hold equity interests in our
country headquarters and/or regional operating entities. Our country headquarters formulate
the overall operational strategy and execution plans in each market, including density and
geographic locations of sorting centers, line-haul routes and network capacity, of which
regional sponsors assume the role of managing regional daily operations. Regional sponsors
manage our network partners through the relevant regional operating entities. Regional
sponsors in certain locations also undertake the management of directly operated pickup and
delivery outlets and service stations through the relevant regional operating entities. The
management responsibilities of regional sponsors encompass the set-up of local operations,
sales and marketing, customer service, and employee and network partner training. For more
details of our innovative business model, please see “Business – Our Regional Sponsor Model
– Advantages and Innovations of Our Business Model.”
Directly Operated Outlets
and Service Stations
¾ Regional operating entities
own pick-up and delivery
outlets and service stations
Network Partners
¾ Network partners own
and operate pick-up and
delivery outlets and service
stations
Country Headquarters
• Formulate the overall operational
strategy and execution plans
Regional Sponsors
• Entrepreneurial in nature and the culture carriers
• Local and regional knowledge and business experience
• Alignment of interests including holding equity interests in
headquarters and/or regional operating entities
Strengths of Regional Sponsor Model
/checkbldMaintain long-term cooperation with
regional sponsors to share successes
with various incentive arrangements
based on performanceAligned Interest
and Culture
/checkbldAble to adjust local operations
according to the optimal approach
in each market and successfully
replicated this model in multiple
jurisdictionsHighly Flexible
and Adaptive
/checkbldOvercome multiple operational
challenges specific to each market
together with our global integrated
technology system and enhance
customization of services
Strong
Operational
Control
/checkbldReduce unit costs and increase
operating leverage without the need
to invest a substantial amount of
capital
Lower Cost
and Capital
Requirement
As of June 30, 2023, we had a portfolio of 104 regional sponsors and approximately 8,700
network partners. We operated 265 sorting centers and over 8,400 line-haul vehicles, including
more than 4,400 self-owned line-haul vehicles, with approximately 3,900 line-haul routes, as
well as over 18,600 pickup and delivery outlets as of June 30, 2023. Through collaboration
with international and local partners, we also provide cross-border services across Asia, North
America, South America, Europe, Africa and Oceania.
SUMMARY
–4–


--- page 15 ---
We have experienced significant growth since we commenced operations in Indonesia in 2015
and over the Track Record Period. In Southeast Asia, we experienced continuous growth in
parcel volume and were able to achieve positive adjusted EBITDA (a non-IFRS measure) from
2020 to 2022 and from the six months ended June 30, 2022 to the six months ended June 30,
2023. We expanded into the China market in 2020 and have been focusing on consolidating our
market position in China. The following table sets forth our revenue, adjusted loss (a non-IFRS
measure) and adjusted EBITDA (a non-IFRS measure) in total amount and by geographic
segment for the periods indicated:
Year ended December 31,
Six months ended
June 30,
2020 2021 2022 2022 2023
(in US$ thousands)
(Unaudited)
Revenue ................ 1,535,425 4,851,800 7,267,428 3,402,543 4,030,439
Southeast Asia ........... 1,046,504 2,377,544 2,381,726 1,177,929 1,246,076
China ................ 478,847 2,181,368 4,096,177 1,960,145 2,203,070
Others (2) .............. 10,074 292,888 789,525 264,469 581,293
Non-IFRS measures
Adjusted loss (a non-IFRS
measure) (1) ............. (475,861) (1,177,666) (1,488,297) (418,983) (264,026)
Adjusted EBITDA (a non-IFRS
measure) (1) ............. (321,163) (794,450) (894,090) (138,725) 39,169
Southeast Asia ........... 266,561 427,436 331,582 156,737 184,060
China ................ (616,227) (1,206,014) (722,658) (222,158) (44,967)
Others (2) .............. 1,652 (14,028) (168,789) (45,613) (66,431)
Unallocated (3) ........... 26,851 (1,844) (334,225) (27,691) (33,493)
Notes:
(1) See “Financial Information – Non-IFRS Measures” for more details.
(2) Includes our cross-border services and domestic express delivery services in the New Markets.
(3) Represents (i) certain expenses, gains and losses, including general and administrative expenses, and exchange
gains and losses incurred at our group and holding company levels, and (ii) fair value change of financial assets
and liabilities of other group entities that will not be re-designated from liabilities to equity upon the
completion of the Global Offering, which amounted to US$301.9 million, US$32.9 million, and US$8.9
million for the year ended December 31, 2022, and the six months ended June 30, 2022 and 2023, respectively.
SUMMARY
–5–


--- page 16 ---
During the Track Record Period, the growth of our parcel volume was primarily driven by the
continued expansion of our network, an increase in the number of merchants on e-commerce
platforms that used our services and the increased demand for express delivery services in the
markets in which we operate. Our global annual parcel volume in 2022 was 14.6 billion,
representing an increase of 39.0% from 10.5 billion in 2021 and an increase of 350.6% from
3.2 billion in 2020. Our global parcel volume in the six months ended June 30, 2023 was
7,967.1 million, representing an increase of 16.7% from 6,825.0 million in the six months
ended June 30, 2022. The table below illustrates the growth in our parcel volume in Southeast
Asia and China for the periods indicated, as well as the 2022 market share in these geographic
segments:
Year ended December 31,
Six months ended
June 30, 2020–2022
CAGR
2022
market
share2020 2021 2022 2022 2023
(in millions)
Southeast Asia. . . 1,153.8 2,160.8 2,513.2 1,215.0 1,438.3 47.6% 22.5%
China ........ 2,083.5 8,334.3 (1) 12,025.6 5,602.3 6,445.6 140.2% 10.9%
Note:
(1) On December 8, 2021, we completed the acquisition of BEST Express China from BEST and consolidated the
results of BEST Express China since December 8, 2021.
We entered into the New Markets in 2022 and had a very limited history of operating in these
markets. We achieved a parcel volume of 49.1 million, with a market share of approximately
1.6% in terms of parcel volume in 2022, according to Frost & Sullivan. We achieved a parcel
volume of 83.2 million in the six months ended June 30, 2023.
OUR STRENGTHS
We believe that the following competitive strengths contribute to our success and differentiate
us from our competitors:
 A global express delivery operator with the leading position in Southeast Asia, serving
largest and fastest-growing express delivery emerging markets;
 Independent e-commerce enabler, connecting marketplaces and merchants to new markets
and consumers;
 Scalable regional sponsor model that promotes rapid penetration and growth in new
markets;
 Adaptive technology system and continued focus on innovation to empower global
operations;
 Quality services catering to regional customer and market needs; and
 Entrepreneurial and experienced management team and regional sponsors dedicated to
cultivating leaders and promoting development of our network.
SUMMARY
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--- page 17 ---
OUR STRATEGIES
To achieve our vision and mission, we intend to pursue the following strategies:
 Solidify our leading position and continue to grow our market share;
 Expand our capacity while enhancing the efficiency and connectivity of our logistics
network;
 Expand into new markets and new service offerings; and
 Invest in innovation, technology and environmental sustainability.
RISK FACTORS
Our operations and the Global Offering involve certain risks and uncertainties, which are set
out in “Risk Factors.” Y ou should read that section in its entirety carefully before you decide
to invest in our Shares. Some of the major risks we face include:
 Our business and growth are highly dependent on the development of the e-commerce
industry in the markets where we operate.
 We face risks in managing global operations, entering into and expanding across a number
of countries.
 We have relied, and may continue to rely, on certain prominent e-commerce platforms.
 We face risks associated with our regional sponsors, unconsolidated regional operating
entities, network partners, and their employees and personnel.
 The possible impairment losses for intangible assets may adversely affect our financial
condition and results of operations.
CONTRACTUAL ARRANGEMENTS
Our Group operates or may operate in certain industries that are subject to restrictions under
the current PRC and Indonesian laws and regulations. In order to comply with such laws and
regulations, while availing ourselves of international capital markets and maintaining effective
control over all of our operations, we control our Consolidated Affiliated Entities through the
PRC Contractual Arrangements entered into on January 18, 2023 and the Indonesian
Contractual Arrangements entered into on March 29, 2022. We do not directly own any equity
interest in our Consolidated Affiliated Entities. Pursuant to the Contractual Arrangements, we
have effective control over the financial and operational policies of our Consolidated Affiliated
Entities and are entitled to all the economic benefits derived from the Consolidated Affiliated
Entities’ operations. We do not maintain any insurance with respect to our Contractual
Arrangements. For further details, see “Risk Factors – Risks Related to Our Corporate
Structure” and “Contractual Arrangements.”
SUMMARY
–7–


--- page 18 ---
The following simplified diagram illustrates the flow of economic benefits from our
Consolidated Affiliated Entities to our Company stipulated under the Contractual
Arrangements:
Our Company
Intermediate holding companies
PRC and Indonesian
WFOEs
The registered shareholders of
each of the PRC and
Indonesian Holdcos
PRC and Indonesian
Holdcos
Other PRC and Indonesian
subsidiaries
Note 2
Note 2
Note 1
legal and beneficial ownership
contractual relationship
Notes:
(1) The PRC WFOE provides technical support, business support and relevant consulting services in exchange for
service fees from the PRC Holdco. See “Contractual Arrangements – Our Contractual Arrangements –
Summary of the agreements under the PRC Contractual Arrangements and other key terms thereunder –
Exclusive Business Cooperation Agreement.” The Indonesian WFOE provides comprehensive management
consulting services to the Indonesian Holdco in exchange for service fees. See “Contractual Arrangements –
Our Contractual Arrangements – Summary of the agreements under the Indonesian Contractual Arrangements
and other key terms thereunder – Exclusive Technical Service Agreement.”
(2) The registered shareholders of the PRC Holdco executed the exclusive option agreement in favor of the PRC
WFOE for the acquisition of all or part of the equity interests in and all or part of the assets in the PRC Holdco.
See “Contractual Arrangements – Our Contractual Arrangements – Summary of the agreements under the PRC
Contractual Arrangements and other key terms thereunder – Exclusive Option Agreement.” The registered
shareholders of the PRC Holdco executed Shareholders’ Rights Proxy Agreement in favor of the PRC WFOE,
for the exercise of all shareholders’ rights in the PRC Holdco. See “Contractual Arrangements – Our
Contractual Arrangements – Summary of the agreements under the PRC Contractual Arrangements and other
key terms thereunder – Shareholder Rights Proxy Agreement.” The registered shareholders of the PRC Holdco
granted security interests in favor of the PRC WFOE, over the entire equity interests in the PRC Holdco. See
“Contractual Arrangements – Our Contractual Arrangements – Summary of the agreements under the PRC
Contractual Arrangements and other key terms thereunder – Equity Pledge Agreement.” The Indonesian
Individual and Corporate Registered Shareholders executed a number of agreements in favor of the Indonesian
WFOE to allow the Indonesian WFOE to consolidate control over the Indonesian Holdco and derive the full
economic benefits from the Indonesian Holdco. See “Contractual Arrangements – Our Contractual
Arrangements – Summary of the agreements under the Indonesian Contractual Arrangements and other key
terms thereunder.”
SUMMARY
–8–


--- page 19 ---
Development in the PRC Legislation on Foreign Investment
On March 15, 2019, the National People’s Congress approved the Foreign Investment Law,
which became effective on January 1, 2020. On December 26, 2019, the State Council
promulgated the Implementation Rules to the Foreign Investment Law, which came into effect
on January 1, 2020. The Foreign Investment Law replaced the Equity Joint V enture Law, the
Wholly Foreign-owned Enterprise Law, and the Cooperative Joint V enture Law to become the
legal foundation for foreign investment in the PRC. The Foreign Investment Law stipulates
certain forms of foreign investment, but does not explicitly stipulate contractual arrangements
as a form of foreign investment. The Implementation Rules to the Foreign Investment Law are
also silent on whether foreign investment includes contractual arrangements.
Therefore, without any other promulgated national laws, administrative regulations,
administrative rules or regulatory requirements prohibiting or restricting the operation of or
affecting the legality of contractual arrangements, the Foreign Investment Law will not have
a material adverse impact on the PRC Contractual Arrangements, and each of the agreements
under the PRC Contractual Arrangements and the legality and validity of the PRC Contractual
Arrangements would not be affected.
For the risks relating to the Contractual Arrangements, see “Risk Factors – Risks Related to
Our Corporate Structure” for further details.
WEIGHTED VOTING RIGHTS STRUCTURE AND OUR CONTROLLING
SHAREHOLDERS
We are proposing to adopt a weighted voting rights structure effective immediately upon the
completion of the Global Offering. Under this structure, our share capital will comprise Class
A Shares and Class B Shares. Each Class A Share shall entitle its holder to 10 votes, and each
Class B Share shall entitle its holder to one vote on each resolution subject to a vote at our
general meetings on a poll, except for resolutions with respect to the Reserved Matters, in
relation to which each Class A Share and each Class B Share shall entitle its holder to one vote
on a poll at a general meeting of the Company.
In recognition of Mr. Li’s continuous contributions to the Group and to ensure further
alignment of Mr. Li’s interests with those of the Company and its shareholders, the existing
Shareholders of the Company unanimously agreed to issue 24,557,934 class B ordinary shares
of par value of US$0.00001 each (the “ Founder Award Shares ”) at par value to Jumping
Summit Limited, a company controlled by Mr. Li, on May 17, 2023. Such class B ordinary
shares of par value of US$0.00001 each will be redesignated to Class A Shares following the
Reclassification, Redesignation and Share Subdivision. Mr. Li has undertaken to
proportionately relinquish the Founder Award Shares (Class A Shares equivalent, assuming
completion of Reclassification, Redesignation and Share Subdivision) if he ceases to serve as
Chairman of the Board, or as the Chief Executive Officer, or such other position equivalent to
the Chief Executive Officer within the four-year period commencing on the Listing Date. See
“History and Corporate Structure – Issuance of Founder Award Shares” for further details.
Immediately upon the completion of the Global Offering, the WVR Beneficiary will be Mr. Li.
Assuming (i) the Over-allotment Option is not exercised and (ii) the Reclassification,
Redesignation and Share Subdivision are completed, (a) Mr. Li will be interested in and will
control, through Jumping Summit Limited, 979,333,410 Class A Shares, representing
approximately 11.11% of our total issued share capital, and approximately 11.11% of the total
voting rights in our Company with respect to the Reserved Matters, and approximately 55.56%
of the total voting rights in our Company with respect to matters other than the Reserved
SUMMARY
–9–


--- page 20 ---
Matters, (b) without taking into account the Founder Award Shares (Class A Shares equivalent,
assuming completion of Reclassification, Redesignation and Share Subdivision), which are
subject to potential relinquishment, Mr. Li will be interested in and will control, through
Jumping Summit Limited, 856,543,740 Class A Shares, representing approximately 9.72% of
our total issued share capital, and approximately 9.72% of the total voting rights in our
Company with respect to the Reserved Matters, and approximately 48.59% of the total voting
rights in our Company with respect to matters other than the Reserved Matters.
Topping Summit Limited, Mr. Li’s wholly-owned entity, holds 5% equity interest and exercises
all the voting rights in Jumping Summit Limited, the remaining 95% equity interest in Jumping
Summit Limited, which do not carry any voting rights, is held by Exceeding Summit Holding
Limited, the entire equity interest of which is held by Vistra Trust (Singapore) Pte. Limited (the
“Trustee ”) as trustee for the family trust established by Mr. Li (as settlor) for himself and his
family (the “ Jet Family Trust ”). Further, as the sole director of Jumping Summit Limited, Mr.
Li is responsible for managing, directing and supervising the operations and affairs of Jumping
Summit Limited pursuant to its articles of association, and thus Mr. Li retains direct control
over Jumping Summit Limited and the voting rights underlying the Class A Shares held by
Jumping Summit Limited. Therefore, Mr. Li, Jumping Summit Limited, Topping Summit
Limited and Exceeding Summit Holding Limited will be a group of Controlling Shareholders
after the Listing.
See “Share Capital – Weighted V oting Rights Structure” and “Relationship with the Controlling
Shareholders” for further details.
Our WVR Structure will enable the WVR Beneficiary to exercise voting control over us
notwithstanding the WVR Beneficiary does not hold a majority economic interest in the share
capital of our Company. This will enable us to benefit from the continuing vision and
leadership of the WVR Beneficiary who will control us with a view to our long-term prospects
and strategy.
Mr. Li founded our Company and currently serves as an Executive Director, Chief Executive
Officer and Chairman of the Board and is responsible for executive decisions, leading our rapid
growth over the years. Mr. Li is a serial entrepreneur with over 20 years of sales and
entrepreneurial experience.
Mr. Li has been integral to our growth and success and has been, and will continue to be,
responsible for leading our strategic direction, business management and development,
commercialization, new business initiatives, corporate culture, publicity, government affairs,
brand, maintenance and development of the our ecosystem, strategic acquisition, finance, legal,
talent acquisition and overseas expansion.
Mr. Li has been the central figure in forming the regional sponsor model. Mr. Li, leveraging
on his experience and insights, first identified, recruited and organized the regional sponsors
who contributed to our success in Indonesia. He further devised the methodology to engage
them to participate in the operations of their respective regions and led the effort to tailor the
model as J&T’s operation expanded into other jurisdictions.
Envisaging the potential markets and demands for reliable, customer-centric logistic solutions
across Southeast Asia markets, Mr. Li promulgated the initiative to expand our global presence,
led the research on the market competitive landscape and made the decisions to enter into other
jurisdictions based on their strategic positions. Mr. Li led the collaboration with major
e-commerce platforms in Southeast Asia. Mr. Li also integrates the cross-border and
international operations under the brand of J&T International.
SUMMARY
–1 0–


--- page 21 ---
We are committed to continuously capitalizing on our innovative business model and leading
position. Under Mr. Li’s innovative vision and leadership, we seek to continue innovating and
remain at the forefront of the industry, expanding logistics access to underserved regions,
becoming the go-to partner for growing e-commerce platforms and implementing new
technologies to transform the landscape of express delivery services in Asia and globally. We
consider that the adoption of the proposed WVR structure to be an integral element to
achieving this vision.
Prospective investors are advised to be aware of the potential risks of investing in companies
with weighed voting rights structures, in particular that interests of the WVR Beneficiary may
not necessarily always be aligned with those of our Shareholders as a whole, and that the WVR
Beneficiary will be in a position to exert significant influence over the affairs of our Company
and the outcome of shareholders’ resolutions, irrespective of how other shareholders vote.
Prospective investors should make the decision to invest in our Company only after due and
careful consideration. For further information about the risks associated with the WVR
Structure adopted by our Company, see “Risk Factors – Risks Related to the WVR Structure.”
PRE-IPO INVESTORS
We received multiple series of equity financing from our Pre-IPO Investors to support our
expanding business operations from 2017 to 2023. Our broad and diverse base of Pre-IPO
Investors consist of, among others, Tencent, Boyu, A TM, D1, Hillhouse, GLP , Sequoia, SF
Express, Dahlia, SAI Growth and CMBI. See “History and Corporate Structure – Pre-IPO
Investments” for more details.
OUR CUSTOMERS AND SUPPLIERS
For our express delivery and cross-border services, our customers include our network
partners, e-commerce platforms, certain enterprise and individual customers, as well as our
unconsolidated regional operating entities. For our cross-border services, our customers also
include freight forwarders who place orders on behalf of their end customers. Our direct
customers are primarily our network partners, unconsolidated regional operating entities,
e-commerce platforms and other enterprise customers and individuals which require
customized express delivery services. Our five largest customers in each of 2020, 2021, 2022
and the six months ended June 30, 2023 contributed to 44.6%, 39.4%, 25.7% and 29.9% of our
total revenue for their respective period. For details, see “Business – Customers.”
During the Track Record Period, our suppliers primarily included service providers of
third-party transportation, human resources services and express delivery services including
our network partners and unconsolidated regional operating entities. Our five largest suppliers
in each of 2020, 2021, 2022 and the six months ended June 30, 2023 accounted for 15.6%,
12.3%, 10.0% and 10.3% of our total purchases for their respective period. For details, see
“Business – Suppliers.”
SUMMARY
–1 1–


--- page 22 ---
OUR TECHNOLOGY
Our success is also attributable to our innovative technologies. In Southeast Asia, our
technology innovations began in 2015 and has introduced market leading technologies that
allow the rapid expansion of our network. In China, we commenced operations in 2020, facing
intense competition from incumbent players but has achieved strong growth and leading market
shares, as backed by our innovations and technologies.
We have developed a global technology platform centered around our proprietary JMS system,
along with our open platform and various applications designed for employees and network
participants. The global technology platform is supported by multiple proprietary technology
platforms that empower multiple key aspects of our operations and enhance our efficiency. We
deployed a hybrid cloud and public cloud infrastructure globally to support our global
technology platform, which is easily scalable, and built a micro-services architecture to power
its modularized functions, features and applications. See “Business – Technology” for more
details.
COMPETITIVE LANDSCAPE
The express delivery industry in Southeast Asia is fragmented and we compete primarily with
express delivery service provided by national postal agencies as well as leading private
domestic express delivery companies in each of the countries in which we operate. We also
compete with international carriers that operate in Southeast Asia and China in connection with
our cross-border services. We believe that our global footprint, innovative regional sponsor
business model, superior operational capabilities and our quality service provide us with a
competitive advantage. While we maintain leading positions in our core markets, certain more
established e-commerce companies may compete with us by building their own logistics
capabilities. Furthermore, certain local players might seek to expand regionally and compete
with us in overlapping geographies. We believe that our core strengths provide us with
competitive advantages over existing and potential competitors. For further details regarding
our industry, see “Industry Overview.”
SUMMARY OF HISTORICAL FINANCIAL INFORMATION
The following tables set forth summary consolidated financial data from our consolidated
financial information for the Track Record Period, extracted from the Accountant’s Report set
out in Appendix I to this prospectus. The summary consolidated financial data set forth below
should be read together with, and is qualified in its entirety by reference to, our consolidated
financial statements in this prospectus, including the related notes. Our consolidated financial
information was prepared in accordance with IFRS.
SUMMARY
–1 2–


--- page 23 ---
Consolidated Income Statements Data
The following table sets forth a summary of our consolidated income statements data for the
periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Revenue ............. 1,535,425 100.0 4,851,800 100.0 7,267,428 100.0 3,402,543 100.0 4,030,439 100.0
Cost of revenue ......... (1,796,913) (117.0) (5,396,544) (111.2) (7,537,666) (103.7) (3,468,602) (101.9) (3,836,899) (95.2)
Gross (loss)/profit ....... (261,488) (17.0) (544,744) (11.2) (270,238) (3.7) (66,059) (1.9) 193,540 4.8
Selling, general and
administrative expenses .... (365,869) (23.8) (1,129,024) (23.3) (1,095,528) (15.1) (526,328) (15.5) (1,767,875) (43.9)
Research and development
expenses ........... (14,129) (0.9) (41,031) (0.8) (44,483) (0.6) (20,912) (0.6) (18,874) (0.5)
Net impairment losses on
financial assets ........ (9,488) (0.6) (41,320) (0.9) (37,219) (0.5) (25,033) (0.7) (11,814) (0.3)
Other income .......... 17,056 1.1 82,542 1.7 98,149 1.4 48,080 1.4 12,228 0.3
Other gains/(losses), net ..... 27,474 1.8 26,370 0.5 (40,246) (0.6) (31,659) (0.9) (43,423) (1.1)
Operating loss ......... (606,444) (39.5) (1,647,207) (34.0) (1,389,565) (19.1) (621,911) (18.3) (1,636,218) (40.6)
Finance income ......... 1,965 0.1 9,476 0.2 22,002 0.3 8,025 0.2 11,367 0.3
Finance costs .......... (13,831) (0.9) (99,077) (2.0) (99,499) (1.4) (44,647) (1.3) (56,002) (1.4)
Finance cost, net ........ ( 1 1,866) (0.8) (89,601) (1.8) (77,497) (1.1) (36,622) (1.1) (44,635) (1.1)
Fair value change of financial
assets and liabilities at fair
value through profit or loss . . – – (4,383,532) (90.3) 3,050,694 42.0 2,028,151 59.6 1,020,747 25.3
Share of results of associates . . (323) (0.0) 1,208 (0.0) (302) (0.0) (222) 0.0 (84) 0.0
(Loss)/profit before
income tax .......... (618,633) (40.3) (6,119,132) (126.1) 1,583,330 21.8 1,369,396 40.2 (660,190) (16.4)
Income tax (expense)/credit . . . (45,530) (3.0) (73,126) (1.5) (10,763) (0.2) 2,876 0.1 (6,579) (0.1)
(Loss)/profit for the
year/period .......... (664,163) (43.3) (6,192,258) (127.6) 1,572,567 21.6 1,372,272 40.3 (666,769) (16.5)
Attributable to:
Owners of the Company ..... (564,836) (36.8) (6,046,983) (124.6) 1,656,168 22.8 1,413,479 41.5 (640,967) (15.9)
Non-controlling interests .... (99,327) (6.5) (145,275) (3.0) (83,601) (1.2) (41,207) (1.2) (25,802) (0.6)
(664,163) (43.3) (6,192,258) (127.6) 1,572,567 21.6 1,372,272 40.3 (666,769) (16.5)
SUMMARY
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Non-IFRS Measures
To supplement our consolidated results which are prepared and presented in accordance with
IFRS, we use adjusted (loss)/profit (a non-IFRS measure) and adjusted EBITDA (a non-IFRS
measure) as additional financial measures, which are not required by, or presented in
accordance with, IFRS. We believe that these non-IFRS measures facilitate comparisons of
operating performance from period to period and company to company by eliminating the
potential impact of items, such as certain non-cash items, transactions and items associated
with the Listing. The use of these non-IFRS measures has limitations as an analytical tool, and
you should not consider them in isolation from, as a substitute for, or superior to, our results
of operations or financial conditions as reported under IFRS. In addition, these non-IFRS
financial measures may be defined differently from similar terms used by other companies, and
may not be comparable to other similarly titled measures used by other companies.
We define our adjusted loss for the year/period (a non-IFRS measure) as (loss)/profit for the
year/period adjusted by adding back (i) share-based payments and expenses, (ii) fair value
change of financial liabilities at fair value through profit or loss, and (iii) listing expenses. We
define our adjusted EBITDA for the year/period (a non-IFRS measure) as (loss)/profit for the
year/period adjusted by adding back (i) share-based payments and expenses, (ii) fair value
change of financial liabilities at fair value through profit or loss which will be converted into
equity upon Listing, (iii) listing expenses, (iv) depreciation and amortization, (v) finance
income, (vi) finance costs, and (vii) income tax expense/(credit). Specifically, (i) fair value
change of financial liabilities at fair value through profit or loss are non-cash in nature, because
all the preferred shares of the Company will be automatically converted into ordinary shares
upon the completion of the Listing, (ii) share-based compensation expenses relating to
employee benefits, share-based payments relating to equity transactions and other share-based
compensation expenses are non-cash expenses, (iii) listing expenses are related to Global
Offering, and (iv) depreciation and amortization, finance income, finance costs and income tax
expense/(credit) are items that we believe should be adjusted for when assessing our
underlying core performance, especially in making period-to-period comparisons of, and
assessing the profile of, our operating and financial performance.
The following table sets forth a reconciliation of our non-IFRS financial measures for the years
ended December 31, 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023
to the nearest measures prepared in accordance with IFRS:
Year ended December 31,
Six months ended
June 30,
2020 2021 2022 2022 2023
(in US$ thousands)
(Unaudited)
(Loss)/Profit for the year/period . . (664,163) (6,192,258) 1,572,567 1,372,272 (666,769)
Add
Share-based payments and
expenses
(1) .............. 188,302 619,012 281,366 260,594 1,426,868
Fair value change of financial
liabilities at fair value through
profit or loss
(2) ........... – 4,383,532 (3,352,590) (2,061,022) (1,029,661)
Listing expenses ............ – 12,048 10,360 9,173 5,536
Adjusted loss for the year/period
(a non-IFRS measure) ...... (475,861) (1,177,666) (1,488,297) (418,983) (264,026)
Notes:
(1) Include share-based compensation expenses related to employee benefits, share-based payments related to
equity transactions and other share-based compensation expenses.
(2) Includes financial instruments which will be converted into equity upon Listing.
SUMMARY
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Year ended December 31,
Six months ended
June 30,
2020 2021 2022 2022 2023
(in US$ thousands)
(Unaudited)
(Loss)/Profit for the year/period . . (664,163) (6,192,258) 1,572,567 1,372,272 (666,769)
Add
Share-based payments and
expenses
(1) .............. 188,302 619,012 281,366 260,594 1,426,868
Fair value change of financial
liabilities at fair value through
profit or loss
(2) ........... – 4,383,532 (3,352,590) (2,061,022) (1,029,661)
Depreciation and amortization . . . 97,302 220,489 505,947 246,512 251,981
Listing expense ............ – 12,048 10,360 9,173 5,536
Finance income ............ (1,965) (9,476) (22,002) (8,025) (11,367)
Finance costs .............. 13,831 99,077 99,499 44,647 56,002
Income tax expense/(credit) ..... 45,530 73,126 10,763 (2,876) 6,579
Adjusted EBITDA (a non-IFRS
measure) ............... (321,163) (794,450) (894,090) (138,725) 39,169
Southeast Asia ........... 266,561 427,436 331,582 156,737 184,060
China ................. (616,227) (1,206,014) (722,658) (222,158) (44,967)
Others
(3) ............... 1,652 (14,028) (168,789) (45,613) (66,431)
Unallocated (4) ............ 26,851 (1,844) (334,225) (27,691) (33,493)
Notes:
(1) Include share-based compensation expenses related to employee benefits, share-based payments related to
equity transactions and other share-based compensation expenses.
(2) Includes financial instruments which will be converted into equity upon Listing.
(3) Include our cross-border services and express delivery services in the New Markets.
(4) Represents (i) certain expenses, gains and losses, including general and administrative expenses, and exchange
gains and losses incurred at the group and holding company levels, and (ii) fair value change of financial assets
and liabilities of other group entities that will not be re-designated from liabilities to equity upon the
completion of the Global Offering, which amounted to US$301.9 million, US$32.9 million, and US$8.9
million for the year ended December 31, 2022, and the six months ended June 30, 2022 and 2023, respectively.
We incurred a net loss of US$664.2 million, US$6,192.3 million and US$666.8 million in 2020,
2021 and the six months ended June 30, 2023, respectively, and had a net profit of US$1,572.6
million in 2022. We incurred net losses during the Track Record Period primarily because of
(i) gross losses with respect to our operations in China and, to a much lesser extent, our
cross-border operations and expansion into the New Markets in 2022, and (ii) non-operating
losses including fair value changes of our convertible preferred shares. We had net profit of
US$1,572.6 million in 2022, primarily because of significant fair value gain of our convertible
preferred shares. On an adjusted non-IFRS basis, we also incurred a net loss in 2022. We had
a gross loss of US$261.5 million, US$544.7 million and US$270.2 million in 2020, 2021 and
2022, respectively, primarily because of the costs we incurred in connection with our entry into
the China market in March 2020, our continued efforts to expand our market shares and our
expansion into the New Markets in 2022. We recorded a gross profit of US$193.5 million in
the six months ended June 30, 2023, as we further improved our economies of scales in China
and Southeast Asia and optimized our operations.
SUMMARY
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In addition, our results of operations in 2021 and 2022 were also impacted by our integration
costs in relation to the acquisition of BEST Express China, which amounted to US$266.3
million and US$387.8 million, respectively. In the six months ended June 30, 2022, we also
incurred integration costs of US$28.9 million. After our integration was completed in 2022, we
stopped incurring such integration costs. The integration costs mainly include (i) certain
severance packages for the employees of BEST Express China as part of the integration plan,
(ii) impairment of property, plant and equipment that are identified as redundant when BEST
Express China became integrated, (iii) impairment of property, plant and equipment that we
have identified as redundant for the same reason, and other impairment of goodwill, property,
plant and equipment and intangible assets, (iv) accrued provision for terminated customers and
legal claims in relation to historical operation of BEST Express China, and (v) other
miscellaneous integration costs. During the Track Record Period, we recorded certain
impairment losses primarily in connection with property, plants and equipment that we
identified as redundant and planned to dispose of in connection with our integration of BEST
Express China. In 2021, in connection with our acquisition of BEST Express China, we
recorded a significant amount of goodwill. In 2022, we recorded certain one-off impairment of
goodwill based on peers’ performance and general industry trend.
During the Track Record Period, we continued to improve our gross margin. We had a negative
gross margin of 17.0%, 11.2% and 3.7% in 2020, 2021 and 2022, respectively. We achieved a
gross margin of 4.8% in the six months ended June 30, 2023. The improved gross margin
reflected the network effects of our global operation and economies of scale.
Consolidated Balance Sheets Data
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Total non-current assets ............ 628,286 3,028,218 3,089,262 3,325,390
Total current assets ............... 1,614,754 3,516,424 2,846,297 2,747,389
Total assets .................... 2,243,040 6,544,642 5,935,559 6,072,779
Total non-current liabilities .......... 1,966,519 10,975,327 9,188,190 9,681,802
Total current liabilities ............. 1,147,020 2,205,739 1,731,617 1,920,567
Total liabilities ................. 3 , 1 13,539 13,181,066 10,919,807 11,602,369
Net current assets ............... 467,734 1,310,685 1,114,680 826,822
Share capital ................... 7 1 4 1 4 1 7
Share premium .................. 33,184 607,734 603,829 598,256
Other reserves .................. (166,468) (525,822) (434,108) (243,798)
Accumulated losses . .............. (625,953) (6,672,936) (5,016,768) (5,657,735)
Equity/(deficits) attributable to owners
of the Company ............... (759,230) (6,591,010) (4,847,033) (5,303,260)
Non-controlling interests ........... ( 1 1 1,269) (45,414) (137,215) (226,330)
Total deficits ................... (870,499) (6,636,424) (4,984,248) (5,529,590)
SUMMARY
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Our net current assets decreased from US$1,114.7 million as of December 31, 2022 to
US$826.8 million as of June 30, 2023, primarily due to (i) a decrease of US$308.8 million in
cash and cash equivalent, (ii) an increase in current liabilities driven by increases in
borrowings, accruals and other payables and lease liabilities, and (iii) an increase of trade
receivables of US$108.6 million.
Our net current assets decreased from US$1,310.7 million as of December 31, 2021 to
US$1,114.7 million as of December 31, 2022, primarily due to (i) a decrease of US$598.4
million in cash and cash equivalents, and (ii) a decrease of US$179.2 million in prepayments,
other receivables and other assets.
Our net current assets increased from US$467.7 million as of December 31, 2020 to
US$1,310.7 million as of December 31, 2021, primarily due to (i) an increase of US$136.8
million in prepayments, other receivables and other assets, (ii) an increase of US$154.1 million
in trade receivables as our business grew, and (iii) an increase of US$1,502.0 million in cash
and cash equivalents. The increases were partially offset by (i) an increase of US$611.0 million
in accruals and other payables because we increased our purchases in line with our expansion,
and (ii) an increase of US$351.6 million in trade payables.
As of December 31, 2020, 2021, 2022 and June 30, 2023, we had net liabilities of US$870.5
million, US$6,636.4 million, US$4,984.2 million and US$5,529.6 million, respectively, due to
(i) the accounting treatment for the changes in the fair values of our convertible preferred
shares driven by the changes in the valuation of our Company, and (ii) to a lesser extent,
changes in equity, influenced by our awards of share-based compensation, repurchase of
ordinary and convertible shares, and dividends paid to shareholders, among other things. For
details, see “Consolidated Statements of Changes in Equity” in Appendix I to this prospectus.
Upon the Listing and completion of the Global Offering, our financial liabilities at fair value
through profit or loss relating to our convertible preferred shares would be re-designated from
liabilities to equity, and our net liabilities as of June 30, 2023 would become net assets
immediately after the Listing.
Consolidated Statements of Cash Flows Data
Year ended December 31,
Six months ended
June 30,
2020 2021 2022 2022 2023
(in US$ thousands)
(Unaudited)
Net cash (used in)/generated
from operating activities ..... (154,700) (967,174) (519,817) (350,120) 2,797
Net cash used in investing
activities .............. (635,086) (1,001,006) (859,757) (551,475) (366,038)
Net cash from financing
activities .............. 1,285,166 3,469,507 881,328 1,000,146 64,171
Net (decrease)/increase in cash
and cash equivalents ....... 495,380 1,501,327 (498,246) 98,551 (299,070)
Cash and cash equivalents at the
beginning of the year/period . . 97,173 600,425 2,102,448 2,102,448 1,504,048
Effects of foreign exchange rate
changes on cash and cash
equivalents ............. 7,872 696 (100,154) (67,768) (9,714)
Cash and cash equivalents at
the end of the year/period. . . 600,425 2,102,448 1,504,048 2,133,231 1,195,264
SUMMARY
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For the six months ended June 30, 2023, our net cash generated from operating activities was
US$2.8 million. We had a loss before income tax of US$660.2 million, which was adjusted by
adding back non-cash items including (i) share-based payments and compensation expenses of
US$1,428.2 million, (ii) depreciation of right-of-use assets and depreciation of property, plant
and equipment of US$134.0 million and US$104.4 million, respectively, incurred in relation to
the optimization of our operations and adjustment of our network, partially offset by items
including fair value change of financial assets and liabilities at fair value through profit or loss
of US$1,020.8 million. The amount was further adjusted by changes in working capital, which
primarily comprised of (i) an increase in trade receivables of US$95.1 million, (ii) placement
of restricted cash of US$16.0 million, offset by (i) a decrease in prepayments, other
receivables, and other assets of US$86.1 million, and (ii) a decrease in accruals and other
payables of US$29.3 million.
From 2020 to 2022, we incurred net operating cash outflows. See “– Business Sustainability
– Our Historical Performance” for more details on reasons for our net operating cash outflows.
In 2022, our net cash used in operating activities was US$519.8 million, which was primarily
attributable to our profit before income tax of US$1,583.3 million in 2022, adjusted by adding
back non-cash items including (i) share-based compensation of US$346.6 million, (ii)
depreciation of right-of-use assets and depreciation of property, plant and equipment of
US$257.2 million and US$227.9 million, respectively, incurred in relation to the optimization
of operation and adjustment of network, (iii) impairment losses on long-term assets of
US$219.1 million, (iv) fair value change of financial assets and liabilities at fair value through
profits or loss of US$3,050.7 million, (v) net loss on disposal of property, plant and equipment
of US$1.9 million, and (vi) impairment losses on financial assets of US$37.2 million, partially
offset by items including finance cost of US$99.5 million and foreign exchange losses of
US$17.3 million. The amount was further adjusted by changes in working capital, which
primarily comprised of (i) an increase in trade receivables of US$191.1 million, (ii) a decrease
in trade payables of US$84.7 million, (iii) a decrease in advances from customers of US$73.6
million, and (iv) an increase in prepayments, other receivables, and other assets of US$42.2
million, offset by (i) an increase in accruals and other payables of US$118.2 million, and (ii)
return of restricted cash of US$45.8 million.
In 2021, our net cash used in operating activities was US$967.2 million, which was primarily
attributable to our loss before income tax of US$6,119.1 million in 2021, adjusted by adding
back non-cash items including (i) fair value changes on convertible preferred shares of
US$4,383.5 million, (ii) share-based compensation of US$619.0 million driven by the increase
in the number of employees to support our global expansion, (iii) depreciation of right-of-use
assets of US$113.9 million, (iv) depreciation of property, plant and equipment of US$104.4
million, and (v) impairment losses on long-term assets of US$250.3 million, partially offset by
items including other income of US$82.5 million and foreign exchange gain of US$19.9
million. The amount was further adjusted by changes in working capital, which primarily
comprised (i) a decrease in trade payables of US$305.4 million, (ii) an increase in
prepayments, other receivables and other assets of US$105.5 million, (iii) an increase in
inventories of US$8.6 million, and (iv) an increase in trade receivables of US$4.3 million,
offset by (i) an increase in accruals and other payables of US$128.3 million, and (ii) an
increase in advances from customers of US$62.8 million.
In 2020, our net cash used in operating activities was US$154.7 million, reflecting our loss
before income tax of US$618.6 million, adjusted by non-cash items including (i) share-based
compensation of US$188.3 million driven by the increase in the number of employees to
support our global expansion, (ii) depreciation of right-of-use assets of US$56.0 million, and
(iii) depreciation of property, plant and equipment of US$39.3 million, offset by the foreign
exchange gains of US$29.4 million. The amount was further adjusted by changes in working
SUMMARY
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capital, which primarily comprised (i) an increase in prepayments, other receivables and other
assets of US$203.9 million, (ii) an increase in trade receivables of US$128.1 million, and (iii)
an increase in inventories of US$9.9 million, offset by (i) an increase in accruals and other
payables of US$324.1 million, (ii) an increase in trade payables of US$189.5 million, and (iii)
an increase in advances from customers of US$68.8 million.
IMPACT OF COVID-19 PANDEMIC ON OPERATIONS
On January 30, 2020, the International Health Regulations Emergency Committee of the World
Health Organization declared the COVID-19 outbreak a public health emergency of
international concern, and on March 11, 2020, the World Health Organization declared the
global COVID-19 outbreak a pandemic. Countries where we have our operations were subject
to the impact of the COVID-19 pandemic and various governmental measures from time to
time. Our offices, sorting centers and outlets closed and opened in accordance with applicable
measures. Our facilities in all Southeast Asia countries were under sporadic closures and
reopening in 2020 and 2021. In addition, our facilities are spread out across China and the
pickup and delivery outlets across cities experienced different levels of labor shortages,
closures or capacity reductions due to the pandemic in many cities from 2020 to 2022. Such
sporadic closures of our facilities and labor shortages did not have any material adverse impact
on our operations. The timelines for business resumption varied across different localities and
countries. On a global level, our business operations started to return to normal levels in the
first quarter of 2023.
The temporary, periodic closure of our facilities, labor shortages or delay in the delivery
process did not have any material adverse impact on our operational results given our vast
network. Despite an initial drop in our business activities at the start of the COVID-19 outbreak
due to restrictive measures across different jurisdictions, many consumers, especially those in
Southeast Asia, started to shop on e-commerce platforms to minimize exposure to public
premises and potential spread of virus during the COVID-19 pandemic. Consequently, we
experienced certain surge in demand for express delivery services across the countries where
we operate. In addition, certain impacts from the COVID-19 pandemic on our financial
performance were one-off and non-recurring. For example, after the COVID-19 pandemic
ends, we are not able to receive benefits from the COVID-19 related government policy
support, such as one-off subsidies for social insurance or tax relief, which we believe are not
material to our business and financial results.
Despite the impact of the COVID-19 pandemic, our revenue increased by 216.0% from
US$1,535.4 million in 2020 to US$4,851.8 million in 2021, and further increased by 49.8% to
US$7,267.4 million in 2022. In addition, our revenue increased by 18.5% from US$3,402.5
million in the six months ended June 30, 2022 to US$4,030.4 million in the six months ended
June 30, 2023. As the COVID-19 pandemic has since subsided, we do not anticipate further
material adverse impact on our business and financial performance.
BUSINESS SUSTAINABILITY
According to Frost & Sullivan, we are the number one express delivery operator in Southeast
Asia by parcel volume in 2021 and 2022, with a market share of 22.5% in 2022, and we are
one of the top players in China with a 10.9% market share by parcel volume for 2022. In 2022,
we further expanded into the New Markets. During the Track Record Period, we incurred gross
loss, operating loss and net operating cash outflow. In the six month ended June 30, 2023, we
achieved a gross profit. We expect that we will continue to record net losses for our results of
SUMMARY
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operations in 2023 as we continue to incur significant non-operating expenses driven by our
share-based payments and compensation expenses, finance costs and other selling,
administrative and general expenses.
Our Historical Performance
We originated in Indonesia in 2015 and entered into the China market in 2020. Our Southeast
Asia operations have been generating profits for us during the Track Record Period and are
expected to maintain healthy margin. Compared to the incumbent players with decades of
accumulated experience, we are a late comer to the China market. Since 2020, we have quickly
ramped up our parcel volume through expansion of our collaboration with e-commerce
platforms, competitive pricing and capital expenditure into infrastructures to build up our
logistics network. In December 2021, we acquired BEST Express China and subsequently
completed the integration of its network in 2022. In connection with the transaction, we
experienced certain fluctuation in our service quality as well as market share in China, and we
also identified certain redundancy of assets including sorting centers, equipment, and vehicles.
Therefore, we incurred gross loss and operating losses for our China operations during the
Track Record Period. The negative gross margin was further exacerbated by the “Others”
segment, as we started the cross-border business in 2021 and entered into the New Markets in
2022, both of which are still in the early stage of development. As of January 1, 2020, we had
accumulated losses as a group, primarily due to our net loss position in 2019, resulting from
our expansion into certain new markets in Southeast Asia and preparation activities in relation
to our expansion into China. As a group, we incurred gross loss and operating losses for China
and other regions, which offset the gross profits and operating profits achieved in Southeast
Asia. Some of the countries in Southeast Asia incurred operating losses due to different
operating environment and countrywide strategies or focuses during the Track Record Period,
but Southeast Asia overall has achieved a healthy margin. We also incurred net operating cash
outflow for each period during the Track Record Period for the aforementioned reasons.
Our Path to Profitability
In the long term, to continue to realize our revenue potential and achieve profitability, we plan
to further (i) grow our parcel volume and market share, (ii) maintain a flexible pricing strategy,
(iii) control costs, narrow gross loss and improve gross margin, and (iv) enhance operating
leverage.
 Grow our parcel volume and market share: We focus on growing our parcel volume to
solidify our market share and leading market positions. In Southeast Asia, we expect to
increase our parcel volume and market share through (i) enhanced collaboration with
existing e-commerce clients and expanding partnerships with more e-commerce
platforms, (ii) continuously improving quality of our regional network and services and
ability to retain existing customers and acquire new customers, and (iii) maintaining our
market leadership to further capture growth. In China, we expect to increase our parcel
volume and market share through (i) strengthened collaboration with existing
e-commerce clients and expanding partnerships with more e-commerce platforms, (ii)
improved and consistent service quality driven by optimized management of network
partners, (iii) diversified sources of parcels from merchants on a wide range of
e-commerce platforms, and (iv) continued efforts in developing non e-commerce
customers to further diversify source of parcels.
SUMMARY
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 Maintain a flexible pricing strategy: We adjust pricing of our services based on the
competitive landscape and operations across the markets in which we operated. In
Southeast Asia, leveraging our leading positions, extensive network and established
infrastructure, we expect to maintain an adaptive and flexible pricing strategy while
growing our parcel volume and increasing market share. In China, we expect to maintain
and improve our pricing terms, driven by our continued efforts to (i) deepen partnership
with various e-commerce platforms, optimize the management of our network partners
and continuously improve service quality across our network, and (ii) diversify customer
base and acquire premium enterprise customers through our enhanced brand image. We
expect to maintain a competitive but sustainable average revenue per parcel.
 Control costs, narrow gross loss and improve gross margin: We focus on controlling our
cost of revenue and decreasing our average cost per parcel to narrow gross loss and
improve gross margin.
o When analyzing our cost per parcel, we also evaluate costs incurred in each process,
including our pickup and delivery cost, transportation cost, sorting cost and other
cost per parcel. For more details on the components of our average cost per parcel,
see “Business – Business Sustainability”.
o In Southeast Asia, we expect our average cost per parcel to decrease as we optimize
operations, increase self-owned fleet capacity and improve technology system.
Specifically, we plan to (i) optimize our pickup and delivery cost per parcel by
selectively engaging network partners to own and operate the pickup and delivery
outlets, which reduces the overall costs associated with us operating an outlet while
maintaining service quality of the overall network, (ii) maintain resilient sorting cost
per parcel by merging certain sorting centers in the Southeast Asia, upgrading
automated equipment, and enhancing the efficiency of staff and external labor at
sorting centers to drive further efficiency gains, and (iii) optimize transportation
cost through selectively utilizing third-party fleets whilst building up our self-
operated fleet, increasing the efficiency of our line-haul trips by optimizing the
coverage arrangement of our sorting centers, and improving the efficiency of
transportation staff as we enhance the efficiency of our fleet with higher capacity
vehicles.
o In China, we expect our average cost per parcel to decrease as we achieve better
economies of scale, increase our self-owned fleet capacity and optimize operating
efficiency of our sorting centers. Specifically, we plan to (i) maintain pickup and
delivery cost per parcel through stable delivery fees paid to network partners as the
scale and density of our parcel volume further increases, (ii) enhance transportation
efficiency by enlarging our self-owned fleet for transportation, especially in terms
of high capacity line-haul vehicles, and optimize transportation routes through better
planning and monitoring of an enlarged network, and (iii) increase efficiency of
sorting centers by further deploying automated sorting equipment, enhancing
management and training of employees and external labor force, and continuously
optimizing planning of sorting center facilities post integration of BEST Express
China.
 Enhance operating leverage: Our operating expenses consist mainly of selling, general
and administrative expenses, and to a lesser extent, research and development expenses.
During the Track Record Period, our operating expenses (excluding share-based
payments), which included impairment of goodwill of US$117.5 million in 2022, as a
percentage of revenue were 12.5%, 11.4%, 11.8%, and 8.9% for the years ended
SUMMARY
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December 31, 2020, 2021 and 2022 and the six months ended June 30, 2023, respectively.
We expect our selling, general and administrative expenses as percentage of revenue to
gradually decline through (i) achieving enhanced economies of scale with increasing
global scale of operations as certain headquarter functions can support our operations in
growth initiatives, and (ii) growing promotion and marketing expenses at a pace slower
than the growth of revenue, as our past strategic marketing events and activities enhances
brand recognition and increases user mindshare. We expect our research and development
expenses as percentage of revenue to remain stable as we carefully expand our research
and development team and selectively invest in technology upgrades.
For detailed strategies and measures we plan to take to achieve profitability, see “Business –
Business Sustainability” for more details.
Working Capital Sufficiency
Taking into account the financial resources available to us, including our cash and cash
equivalents on hand, our available financing facilities and the estimated net proceeds from the
Global Offering, our Directors are of the view that we have sufficient working capital to meet
our present requirements and for at least the next 12 months from the date of this prospectus.
We also proactively review and adjust our cash management policy and working capital needs
according to general economic conditions and our short-term business plans. As of the Latest
Practicable Date, we had unutilized banking facilities of US$27.9 million, which we will be
able to draw down to support our working capital requirements. In addition, in view of our net
cash outflow from operating activities during the Track Record Period, we plan to ensure our
working capital sufficiency by leveraging the above-mentioned measures to narrow down our
net loss and improve our profitability, which will also translate into improved net operating
cash flows. As evidenced by our historical equity financing activities, we have a proven record
of successfully raising funds from renowned investors to finance our business. See the section
headed “History and Corporate Structure – Pre-IPO Investments” of this prospectus. We
believe that potential external financing sources, including those to which we will gain access
after the Global Offering, will provide additional funding to fuel our business operation and
expansion until we achieve profitability and positive operating cash flow.
Taking into account the working capital management policies adopted by us, and the due
diligence work conducted by the Joint Sponsors including but not limited to (i) reviewing the
Accountant’s Report as set out in Appendix I to this prospectus, (ii) the financial due diligence
conducted on our historical financial information during the Track Record Period and
discussions with management on its working capital projections, and (iii) written confirmation
provided by us in respect of working capital sufficiency, nothing material has come to the
attention of the Joint Sponsors that would cast doubt on our conclusion that we have sufficient
working capital to meet our present needs and at least the next 12 months from the date of this
prospectus.
APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We are applying for listing with a WVR structure under Chapter 8A of the Listing Rules and
satisfy the market capitalization requirement under Rule 8A.06(1) of the Listing Rules which
requires that a new applicant seeking a listing with a WVR structure must have a market
capitalization of at least HK$40 billion at the time of listing.
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We are also applying for Listing under Rule 8.05(3) of the Listing Rules and satisfy the market
capitalization/revenue test with reference to (i) our revenue for the year ended December 31,
2022, being approximately US$7.3 billion (equivalent to approximately HK$57.0 billion),
which is significantly over HK$500 million as required by Rule 8.05(3); and (ii) our expected
market capitalization at the time of Listing significantly exceeds HK$4 billion as required by
Rule 8.05(3).
We have applied to the Stock Exchange for the granting of the listing of, and permission to deal
in, the Class B Shares in issue (including the Class B Shares on conversion of the Pre-IPO
Preferred Shares) and the Class B Shares to be issued pursuant to the (i) Global Offering, (ii)
the exercise of the Over-allotment Option and (iii) conversion of Class A Shares into Class B
Shares on a one to one basis and that are issuable upon conversion of the Class A Shares.
RECENT DEVELOPMENTS
We have maintained our growth in parcel volume globally from July to September 2023. In
Southeast Asia, our average daily parcel volume (being the parcel average volume in a given
month divided by the number of days in such month) was 9.7 million, 10.5 million and 10.4
million in July, August and September 2023, respectively, compared to the average daily parcel
volume of 7.1 million, 7.1 million and 6.9 million in the same periods of 2022, respectively.
In China, we achieved an average daily parcel of 43.9 million, 46.0 million and 48.9 million,
respectively, in July, August and September 2023, representing a market share of 12.4% in
August 2023, compared to the average daily parcel volume of 36.2 million, 34.7 million and
36.3 million in the same periods of 2022, respectively. In the New Markets, we achieved an
average daily parcel of 0.8 million, 0.8 million and 0.8 million in July, August and September
2023, respectively, compared to the average daily parcel volume of 0.2 million, 0.2 million and
0.2 million in the same periods of 2022, respectively.
Acquisition of Fengwang Information
On May 12, 2023, we entered into a share transfer agreement with Shenzhen Fengwang
Holdings Company Limited (ʮ̡)( “Fengwang Holdings ”), a subsidiary
of S.F. Holding Co., Ltd. (ʮ̡) (stock code: 002352.SZ), to acquire the
entire equity interest of Fengwang Holdings’ wholly-owned subsidiary, Shenzhen Fengwang
Information Technology Company Limited (ʮ̡)( “ Fengwang
Information ”), at a total consideration of RMB1,183 million. The acquisition was completed
on June 27, 2023. For more information regarding the acquisition of Fengwang Information,
see “History and Corporate Structure – Major Acquisitions, Disposals and Mergers –
Acquisition of Fengwang Information.”
Regulations Relating to Overseas Listing
On February 17, 2023, as approved by the State Council, the CSRC released the Trial
Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies
() and five supporting guidelines, or the
Filing Rules. The Filing Rules, effective on March 31, 2023, require PRC domestic enterprises
that directly or indirectly offer or list their securities in an overseas market to file with the
CSRC within three business days after submitting their listing application documents to the
relevant regulator in the place of intended listing. Pursuant to these regulations, a domestic
enterprise applying for listing abroad shall, among others, complete record filing procedures
and report relevant information to the securities regulatory authority as required. Furthermore,
with respect to the issuers with contractual arrangements, at a press conference held for these
new regulations, officials from the CSRC clarified that the CSRC will seek opinions from
SUMMARY
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relevant government authorities on the contractual arrangements in PRC and allow those
issuers with contractual arrangements as well as being in compliance with relevant regulatory
requirements to file its overseas offering and listing with the CSRC. For details, see
“Regulatory Overview – Regulations Relating to Overseas Listing and M&A” in Appendix III
to this prospectus.
On September 15, 2023, the CSRC issued a notification on our Company’ completion of the
PRC filing procedures for the listing of our Class B Shares on the Stock Exchange and the
Global Offering.
As advised by our PRC Legal Adviser, our Company has completed all necessary filings with
the CSRC in the PRC in relation to the Global Offering and the Listing.
Recent Overseas Regulatory Developments
The Indonesian Ministry of Trade recently promulgated Regulation No. 31 of 2023 on Business
Licensing, Advertising, Training and Supervision of Business Actors in Trades Through
Electronic System (“ MoTR 31/2023 ”), which became effective on September 26, 2023. MoTR
31/2023 places certain restrictions on electronic trade activities occurring on social media
platforms. Pursuant to Article 21 paragraphs (2) and (3) of MoTR 31/2023, “Business Actors”
(as defined in MoTR 31/2023) that conduct trades through an electronic system are prohibited
from acting as manufacturers of products, and social media platforms are also prohibited from
facilitating payment transactions on their electronic systems. While we are not an e-commerce
or a social media platform, we collaborate with a number of e-commerce and social media
platforms in Indonesia. As MoTR 31/2023 was recently enacted, there remain significant
uncertainties on how and the new regulation would impact different e-commerce and social
media platforms in Indonesia, some of which are our customers. For example, according to a
public statement by TikTok, TikTok has halted its facilitation of e-commerce transactions in
Indonesia since early October 2023 and would seek to cooperate with the local government
authorities on a path forward. In 2020 and 2021, our revenue from social e-commerce platforms
in Indonesia was nil and nil, respectively. In 2022 and the six months ended June 30, 2023, our
revenue from social e-commerce platforms in Indonesia represented approximately 4% and 6%
of our Group’s revenue, respectively, which remained immaterial to the Group. We believe that
although MoTR 31/2023 may have an impact on our customer composition in Indonesia in the
near term, this new regulation will not have a material adverse effect on our business
operations and financial performance in the long term. Specifically, we believe that (i) despite
triggering short-term consumer behavior change in Indonesia as online consumption begins to
shift away from social e-commerce platforms to traditional e-commerce platforms, MoTR
31/2023 will not materially affect the overall e-commerce market growth in Indonesia and
Southeast Asia in general given the massive demand and low e-commerce penetration rate; (ii)
as an independent e-commerce enabler that is platform-neutral, we believe that our ability to
serve merchants and consumers will not be impacted even if their choices of retail e-commerce
platforms shift in response to MoTR 31/2023; and (iii) even if merchants choose to build their
own online stores, our advanced IT capability and system integration comparability ensure
merchants can continue to seamlessly access our services.
Please refer to “Risk Factors – Risks Related to Our Business and Industry – Our business and
growth are highly dependent on the development of the e-commerce industry in the markets
where we operate” and “Risk Factors – Risks Related to Our Business and Industry – Our
business and the business of our network partners are subject to a broad range of laws and
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regulations” for a description of the risks. We will continue to monitor the developments in the
implementation and interpretation of MoTR 31/2023, as well as practices adopted by
e-commerce and social media platforms in Indonesia as a result of the issuance of MoTR
31/2023.
No Material Adverse Change
Our Directors confirm that up to the date of this prospectus, there has been no material adverse
change in our financial or trading position, indebtedness, mortgage, contingent liabilities,
guarantees or prospects since June 30, 2023, the end of the period reported on as set out in the
Accountants’ Report included in Appendix I to this prospectus.
FUTURE DIVIDENDS
We are a holding company incorporated under the laws of the Cayman Islands. Any future
decision to declare and pay any dividends will be at the discretion of our Board and will depend
on, among other things, the availability of dividends received from our subsidiaries, our
earnings, capital and investment requirements, level of indebtedness, and other factors that our
Board deems relevant. As advised by our Cayman Islands counsel, under Cayman Islands law,
a position of accumulated losses does not necessarily restrict us from declaring and paying
dividends to our shareholders out of either our profit or our share premium account, provided
that in no circumstances may a dividend be paid if this would result in, immediately following
the date on which the distribution or dividend is proposed to be paid, the company being unable
to pay its debts as they fall due in the ordinary course of business. Investors should not
purchase our shares with the expectation of receiving cash dividends. Dividend distribution to
our shareholders is recognized as a liability in the period in which the dividends are approved
by our shareholders or Directors, where appropriate. We do not have a fixed dividend payout
ratio.
GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part of the
Global Offering. The Global Offering comprises of:
(a) the Hong Kong Public Offering of initially 32,655,200 Class B Shares (subject to
reallocation) in Hong Kong as described below in “Structure of the Global Offering – The
Hong Kong Public Offering”; and
(b) the International Offering of initially 293,895,200 Class B Shares (subject to reallocation
and the Over-allotment Option) (i) in the United States solely to QIBs in reliance on Rule
144A or another exemption from, or in a transaction not subject to, the registration
requirements of the U.S. Securities Act and (ii) outside the United States (including to
professional and institutional investors within Hong Kong) in offshore transactions in
reliance on Regulation S, as described in “Structure of the Global Offering – The
International Offering.”
The Offer Shares will represent approximately 3.71% of the issued share capital of the
Company immediately following the completion of the Global Offering, assuming the
Over-allotment Option is not exercised and the Reclassification, Redesignation and Share
Subdivision are completed.
SUMMARY
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OFFERING STATISTICS
All statistics in the following table are based on the assumptions that (i) the Global Offering
has been completed and 326,550,400 Class B Shares are issued pursuant to the Global
Offering; and (ii) 8,812,166,235 Shares are issued and outstanding following the completion
of the Global Offering.
Based on
Offer Price of
HK$12.00 per
Offer Share
Market capitalization of our Shares (1) HK$105.75
billion
Unaudited pro forma adjusted consolidated net tangible assets per
Share (2)
HK$1.72
(US$0.22)
Notes:
(1) The calculation of market capitalization is based on 8,812,166,235 Shares expected to be in issue immediately
upon completion of the Global Offering (without taking into account Shares that may be issued upon the
exercise of the Over-allotment Option).
(2) The unaudited pro forma adjusted consolidated net tangible assets per Share as of June 30, 2023 is calculated
after making the adjustments referred to in Appendix II to this prospectus and on the basis that 8,780,175,735
Shares (representing 659,017,524 Ordinary Shares and 1,038,105,643 Pre-IPO Preferred Shares as of June 30,
2023 (or 3,295,087,620 Ordinary Shares and 5,190,528,215 Pre-IPO Preferred Shares, respectively, following
the Reclassification, Redesignation and Share Subdivision) and 326,550,400 Offer Shares to be issued upon
the completion of the Global Offering and excluding 6,398,100 ordinary shares (representing 31,990,500
ordinary shares following the Reclassification, Redesignation and Share Subdivision) being issued but
unvested Shares upon the completion of the Global Offering) were in issue, assuming that the Global Offering,
the Reclassification, Redesignation and Share Subdivision and the conversion of the convertible preferred
shares of the Company had been completed on June 30, 2023 but does not take into account any Class B Shares
which may be allotted and issued by the Company pursuant to the exercise of the Over-allotment Option or
any Class B Shares which may be allotted and issued or repurchased by the Company pursuant to the general
mandates granted to the Directors as described in “Share Capital.”
No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to reflect
any trading results or other transactions of the Group entered into subsequent to June 30, 2023.
LISTING EXPENSES
Based on the Offer Price of HK$12.00 per Offer Share, the total estimated listing expenses in
relation to the Global Offering is approximately HK$390.7 million, assuming the Over-
allotment Option is not exercised, and the Reclassification, Redesignation and Share
Subdivision are completed. The total estimated listing expenses will represent approximately
10.0% of the total gross proceeds from the Global Offering of approximately HK$3.92 billion
assuming that Over-allotment Option is not exercised. Listing expenses of US$27.9 million
were charged to our consolidated income statements for the years ended December 31, 2021
and 2022 and for the six months ended June 30, 2023. We estimate that an additional listing
expenses of US$6.6 million will be further incurred by our Group. The balance of
approximately US$15.3 million, which mainly includes underwriting commission, is expected
to be accounted for as a deduction from equity upon the completion of the Global Offering.
These listing expenses mainly comprise professional fees paid and payable to the professional
SUMMARY
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parties for their services rendered in relation to the Listing and the Global Offering and the
underwriting commission and incentive fee payable to the Underwriters in connection with the
offering of Offer Shares under the Global Offering.
The table below sets forth the breakdown of our listing expenses.
Underwriting-related expenses
(including commissions and fees) /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100
HK$137.2 million
Non-underwriting-related expenses /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100HK$253.6 million
– fees and expenses of legal advisors and accountants /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100HK$192.9 million
– other fees and expenses /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100HK$60.7 million
Total/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100HK$390.7 million
USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately HK$3.53 billion from the
Global Offering after deducting the underwriting commissions and other estimated expenses
paid and payable by us in connection with the Global Offering and assuming that the
Over-allotment Option is not exercised. In line with our strategies, we intend to use our
proceeds from the Global Offering for the purposes and in the amounts set forth below:
 approximately 30%, or HK$1,058.4 million, will be used to expand our logistics
networks, improve our infrastructure, and strengthen our sorting and warehouse capacity
and capabilities in Southeast Asia and other existing markets;
 approximately 30%, or HK$1,058.4 million, will be used to expand in new markets and
diverse our service offering;
 approximately 30%, or HK$1,058.4 million, will be used for research and development
and technology innovations; and
 approximately 10%, or HK$352.8 million, will be used for general corporate purposes
and working capital needs.
SUMMARY
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In this prospectus, unless the context otherwise requires, the following expressions have
the following meanings.
“AFRC” the Accounting and Financial Reporting Council of Hong
Kong
“Articles” or “Articles of
Association”
the seventh amended and restated articles of association
of the Company adopted on October 11, 2023, which will
become effective upon the Listing Date, as amended from
time to time, a summary of which is set out in Appendix
IV to this prospectus
“associate(s)” has the meaning ascribed to it under the Listing Rules
“Audit Committee” the audit committee of the Board
“Board” or “Board of Directors” our board of Directors
“Business Day” or “business
day”
a day on which banks in Hong Kong are generally open
for normal banking business and which is not a Saturday,
Sunday or public holiday in Hong Kong
“BVI” the British Virgin Islands
“CAC” Cyberspace Administration of China ( ʕശɛ͏΍ձ਷਷
܃)
CAGR” compound annual growth rate
“Capital Market Intermediaries” the capital market intermediaries as named in “Directors
and Parties Involved in the Global Offering”
“Cayman Companies Act” or
“Companies Act”
the Companies Act, Cap. 22 (Law 3 of 1961, as
consolidated and revised) of the Cayman Islands, as
amended, supplemented or otherwise modified from time
to time
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“CCASS Clearing Participant” a person admitted to participate in CCASS as a direct
clearing participant or general clearing participant
“CCASS Custodian Participant” a person admitted to participate in CCASS as a custodian
participant
DEFINITIONS
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“CCASS EIPO ” the application for the Hong Kong Offer Shares to be
issued in the name of HKSCC Nominees and deposited
directly into CCASS to be credited to your or a
designated CCASS Participant’s stock account through
causing HKSCC Nominees to apply on your behalf,
including by (i) instructing your broker or custodian who
is a CCASS Clearing Participant or a CCASS Custodian
Participant to give electronic application instructions via
CCASS terminals to apply for the Hong Kong Offer
Shares on your behalf, or (ii) if you are an existing
CCASS Investor Participant, giving electronic
application instructions through the CCASS Internet
System (https://ip.ccass.com) or through the CCASS
Phone System at +852 2979 7888 (using the procedures
in HKSCC’s “An Operating Guide for Investor
Participants” in effect from time to time). HKSCC can
also input electronic application instructions for CCASS
Investor Participants through HKSCC’s Customer
Service Centre at 1/F., One & Two Exchange Square, 8
Connaught Place, Central, Hong Kong by completing an
input request
“CCASS Investor Participant” a person admitted to participate in CCASS as an investor
participant who may be an individual, joint individuals or
a corporation
“CCASS Participant” a CCASS Clearing Participant, a CCASS Custodian
Participant or a CCASS Investor Participant
“Class A Shares” class A shares of the Company with a par value of
US$0.000002 each, following the Reclassification,
Redesignation and Share Subdivision, conferring
weighted voting rights in the Company such that each
Class A Share shall entitle its holder to ten votes on each
resolution subject to a vote at the Company’s general
meetings, save for resolutions with respect to any
Reserved Matters, in which case each Class A Share and
each Class B Share shall entitle its holder to one vote on
a poll at a general meeting
“Class B Shares” class B shares of the Company with a par value of
US$0.000002 each, following the Reclassification,
Redesignation and Share Subdivision, such that each
Class B Share shall entitle its holder to one vote on each
resolution subject to a vote at the Company’s general
meetings
“close associate(s)” has the meaning ascribed thereto under the Listing Rules
DEFINITIONS
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--- page 40 ---
“Companies Ordinance” or
“Hong Kong Companies
Ordinance”
the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended or supplemented from time to
time
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance”
Companies (Winding Up and Miscellaneous Provisions)
Ordinance (Chapter 32 of the Laws of Hong Kong), as
amended and supplemented from time to time
“Company”, “our Company”,
“the Company” or “J&T Global”
J&T Global Express Limited (ʮ̡),
an exempted company incorporated in the Cayman
Islands with limited liability on October 24, 2019
“connected person(s)” has the meaning ascribed to it in the Listing Rules
“connected transaction(s)” has the meaning ascribed to it in the Listing Rules
“Consolidated Affiliated Entities”
or “consolidated affiliated
entities”
the entities we control through the Contractual
Arrangements, namely the PRC Holdco and Indonesian
Holdco and their respective subsidiaries. For further
details of these entities, see “Contractual Arrangements”
“Contractual Arrangements” the series of contractual agreements entered into by the
PRC and Indonesian WFOE, the PRC Holdco, the
Indonesian Holdco, the PRC Registered Shareholders and
the Individual and Corporate Registered Shareholders of
our Indonesian Holdcos, details of which are described in
“Contractual Arrangements”
“Controlling Shareholders” has the meaning ascribed to it under the Listing Rules and
unless the context otherwise requires, refers to Mr. Jet Jie
Li, Jumping Summit Limited, Topping Summit Limited
and Exceeding Summit Holding Limited, which are a
group of controlling shareholders of the Company, details
of whom are set out in “Relationship with the Controlling
Shareholders”
“Corporate Governance Code” the Corporate Governance Code set out in Appendix 14 to
the Listing Rules
“Corporate Governance
Committee”
the corporate governance committee of the Board
“CSRC” China Securities Regulatory Commission of the PRC ( ʕ
ึ)
“Director(s)” the director(s) of our Company
“EIT rate” enterprise income tax rate
“ESG” environmental, social and governance
DEFINITIONS
–3 0–


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“ESG Committee” the environmental, social and governance committee of
the Company
“Extreme Conditions” extreme conditions caused by a super typhoon as
announced by the government of Hong Kong
“GDP” gross domestic product
“GDP per capita” a country’s GDP divided by its population
“Global Offering” the Hong Kong Public Offering and the International
Offering
“GREEN Application Form(s)” the application form(s) to be completed by the HK eIPO
White Form Service Provider designated by our
Company
“Group”, “our Group”, “the
Group”, “we”, “us”, or “our”
our Company, its subsidiaries and consolidated affiliated
entities, or where the context so requires, in respect of the
period before our Company became the holding company
of our present subsidiaries and consolidated affiliated
entities, the subsidiaries and consolidated affiliated
entities as if they were the subsidiaries and consolidated
affiliated entities of our Company at the time
“Group entities” our subsidiaries and consolidated affiliated entities
“HK$” or “Hong Kong dollars”
or “HK dollars” or “cents”
Hong Kong dollars and cents respectively, the lawful
currency of Hong Kong
“HK eIPO White Form ” the application for Hong Kong Offer Shares to be issued
in the applicant’s own name, submitted online through
the IPO App or the designated website at
www.hkeipo.hk
“HK eIPO White Form Service
Provider”
the HK eIPO White Form service provider designated
by our Company as specified in the IPO App or on the
designated website at www.hkeipo.hk
“HKSCC” Hong Kong Securities Clearing Company Limited, a
wholly-owned subsidiary of Hong Kong Exchanges and
Clearing Limited
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary
of HKSCC
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the
PRC
DEFINITIONS
–3 1–


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“Hong Kong Offer Shares” the 32,655,200 Class B Shares initially offered by our
Company for subscription pursuant to the Hong Kong
Public Offering (subject to adjustments as described in
“Structure of the Global Offering”)
“Hong Kong Public Offering” the offer of the Hong Kong Offer Shares for subscription
by the public in Hong Kong at the Offer Price on the
terms and conditions described in this prospectus and the
GREEN Application Form
“Hong Kong Share Registrar” Tricor Investor Services Limited
“Hong Kong Stock Exchange”
or “Stock Exchange”
The Stock Exchange of Hong Kong Limited
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering listed
in “Underwriting – Hong Kong Underwriters”
“Hong Kong Underwriting
Agreement”
the underwriting agreement dated October 13, 2023
relating to the Hong Kong Public Offering and entered
into among our Company, Morgan Stanley Asia Limited,
Merrill Lynch (Asia Pacific) Limited, China International
Capital Corporation Hong Kong Securities Limited, UBS
AG Hong Kong Branch, CCB International Capital
Limited and the Hong Kong Underwriters as further
described in “Underwriting – Underwriting
Arrangements and Expenses – Hong Kong Public
Offering – Hong Kong Underwriting Agreement”
“Huisen Global” Huisen Global Limited, an exempted company
incorporated in the Cayman Islands with limited liability
on April 16, 2021
“IDR” Indonesian Rupiah, the lawful currency of Indonesia
“IFRS” International Financial Reporting Standards, amendments
and interpretations issued by the International
Accounting Standards Board
“independent third party(ies)” or
“Independent Third Party(ies)”
any entity or person who is not a connected person of our
Company or an associate of such person within the
meaning ascribed to it under the Listing Rules
“Indonesian Legal Adviser” Hutabarat Halim & Rekan, acting as legal counsel as to
Indonesian law to our Company
“Indonesian Postal Law” Law of the Republic of Indonesia No. 38 of 2009
regarding Post, dated October 14, 2009, as amended by
the Job Creation Law, as amended
DEFINITIONS
–3 2–


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“Indonesian WFOE” PT. Cahaya Global Berjaya, a limited liability company
incorporated under the laws of the Republic of Indonesia
on June 11, 2021 and our wholly-owned subsidiary
“International Offer Shares” the 293,895,200 Class B Shares, being initially offered in
the International Offering together with, where relevant,
any additional Shares which may be sold pursuant to the
exercise of the Over-allotment Option (subject to
adjustments as described in “Structure of the Global
Offering”)
“International Offering” the offer and sale of the International Offer Shares by our
Company through the International Underwriters at the
Offer Price in offshore transactions outside the United
States in accordance with Regulation S under the U.S.
Securities Act and within the United States to QIBs as
defined in Rule 144A under the U.S. Securities Act or any
other available exemption from registration under the
U.S. Securities Act, as further described in “Structure of
the Global Offering”
“International Underwriters” the international underwriters for the International
Offering, that are expected to enter into the International
Underwriting Agreement to underwrite the International
Offering
“International Underwriting
Agreement”
the underwriting agreement expected to be entered into
on or around Thursday, October 19, 2023 by, among
others, our Company, Morgan Stanley Asia Limited,
Merrill Lynch (Asia Pacific) Limited, China International
Capital Corporation Hong Kong Securities Limited, UBS
AG Hong Kong Branch, CCB International Capital
Limited and the International Underwriters in respect of
the International Offering, as further described in
“Underwriting – Underwriting Arrangements and
Expenses – International Offering – International
Underwriting Agreement”
“IPO App ” the mobile application for the HK eIPO White
Form service which can be downloaded by searching
“IPO App ” in App Store or Google Play
or downloaded at www.hkeipo.hk/IPOApp or
www.tricorglobal.com/IPOApp
“J&T Acme” J&T Express (Shanghai) Acme Supply Chain
Management Co., Ltd. (ʮ
̡)
DEFINITIONS
–3 3–


--- page 44 ---
“J&T Express China” J&T Express China Co., Ltd. (ʮ̡), a
limited liability company incorporated under the laws of
the PRC on September 29, 2007 and a consolidated
affiliated entity of our Company
“J&T International Logistics
China”
J&T International Logistics China Co., Ltd. (ي
ʮ̡), a limited liability company incorporated
under the laws of the PRC on January 10, 2018 and our
subsidiary
“Joint Bookrunners” the joint bookrunners as named in “Directors and Parties
Involved in the Global Offering”
“Joint Global Coordinators” the joint global coordinators as named in “Directors and
Parties Involved in the Global Offering”
“Joint Lead Managers” the joint lead managers as named in “Directors and
Parties Involved in the Global Offering”
“Joint Sponsors” Morgan Stanley Asia Limited, Merrill Lynch (Asia
Pacific) Limited and China International Capital
Corporation Hong Kong Securities Limited
“Latest Practicable Date” October 6, 2023, being the latest practicable date prior to
the printing of this prospectus for the purpose of
ascertaining certain information contained in this
prospectus
“Laws” all laws, statutes, legislation, ordinances, rules,
regulations, guidelines, opinions, notices, circulars,
orders, judgments, decrees, or rulings of any
Governmental Authority (including, without limitation,
the Stock Exchange and the SFC) of all relevant
jurisdictions
“Listing” the listing of our Class B Shares on the Main Board of the
Stock Exchange
“Listing Date” the date, expected to be on or about Friday, October 27,
2023 on which dealings in the Shares first commence on
the Stock Exchange
“Listing Rules” the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited (as amended,
supplemented or otherwise modified from time to time)
DEFINITIONS
–3 4–


--- page 45 ---
“Main Board” the stock market (excluding the option market) operated
by the Stock Exchange which is independent from and
operated in parallel with the Growth Enterprise Market of
the Stock Exchange
“Memorandum” or
“Memorandum of Association”
the seventh amended and restated memorandum of
association of our Company, adopted on October 11,
2023, which will become effective upon the Listing Date,
as amended from time to time, a summary of which is set
out in Appendix IV to this prospectus
“MIIT” Ministry of Industry and Information Technology of the
PRC (ʷ௅)
“MOC” or “MOFCOM” Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷ਠਕ
௅)
“Mr. Li” Mr. Jet Jie Li ( ҽ௫), our Chairman of the Board of
Directors, executive Director and Chief Executive
Officer
“MYR” Malaysian Ringgit, the lawful currency of Malaysia
“NDRC” National Development and Reform Commission of the
PRC (ึ
“New Markets” Saudi Arabia, UAE, Mexico, Brazil and Egypt
“Nomination Committee” the nomination committee of the Board
“Offer Price” HK$12.00 per Offer Share (exclusive of brokerage of 1%,
AFRC transaction levy of 0.00015%, SFC transaction
levy of 0.0027% and Stock Exchange trading fee of
0.00565%)
“Offer Share(s)” the Hong Kong Offer Shares and the International Offer
Shares together with, where relevant, any additional
Shares to be offered pursuant to the exercise of the
Over-allotment Option
DEFINITIONS
–3 5–


--- page 46 ---
“Over-allotment Option” pursuant to the International Underwriting Agreement,
the option to be granted by the Company to the
International Underwriters, exercisable by the Overall
Coordinators (for themselves and on behalf of the
International Underwriters), pursuant to which the
Company may be required to allot and issue up to an
aggregate of 48,982,400 additional Class B Shares at the
Offer Price to cover, among other things, over-allocation,
if any, in the International Offering. For further details,
see “Structure of the Global Offering”
“Overall Coordinators” the overall coordinators as named in “Directors and
Parties Involved in the Global Offering”
“PH GJE” PH Global Jet Express Inc., doing business under the
name and style of J&T Express, a limited liability
company incorporated under the laws of the Philippines
on September 14, 2018 and our subsidiary
“PHP” Philippine Peso, the lawful currency of the Philippines
“PRC”, “Mainland China”
or “China”
the People’s Republic of China, but for the purposes of
this prospectus only (unless otherwise indicated)
excluding Hong Kong, the Macau Special Administrative
Region and Taiwan
“PRC Legal Adviser” DaHui Lawyers, acting as legal counsel as to PRC law to
our Company
“PRC WFOE” or “Chongqing
Y unqing”
Chongqing Y unqing Supply Chain Management Co.,
Ltd. (ʮ̡), a limited liability
company incorporated under the laws of the PRC on April
22, 2020 and our wholly-owned subsidiary
“Pre-IPO Share Incentive Plan” the Network Partners Equity Incentive Plan, as adopted
by our Shareholders on February 26, 2022 and amended
by way of Directors’ resolutions dated May 31, 2023
“Pre-IPO Investments” the investments made by the Pre-IPO Investors, the
principal terms of which are summarized in “History and
Corporate Structure – Pre-IPO Investments”
“Pre-IPO Investor(s)” the investors in our Company prior to the Global Offering
as described in “History and Corporate Structure —
Pre-IPO Investments”
DEFINITIONS
–3 6–


--- page 47 ---
“Pre-IPO Preferred Shares” or
“preferred shares”
collectively, Series Pre-A1 Preferred Shares, Series
Pre-A2 Preferred Shares, Series A Preferred Shares,
Series B Preferred Shares, Series B+ Preferred Shares,
Series C1 Preferred Shares, Series C2 Preferred Shares
and Series D Preferred Shares, with a par value of
US$0.00001 each
“prospectus” this prospectus being issued in connection with the Hong
Kong Public Offering
“PT GJE” or “Indonesian Opco” PT Global Jet Express, a limited liability company
incorporated under the laws of Indonesia, which obtained
its legal entity status on May 21, 2015 and a consolidated
affiliated entity of our Company
“QIBs” qualified institutional buyers within the meaning of Rule
144A
“Reclassification, Redesignation
and Share Subdivision”
(i) the reclassification and redesignation of 195,866,682
class B ordinary shares of a par value of US$0.00001
each held by Jumping Summit Limited into class A shares
of a par value of US$0.00001 each and the subdivision of
each such issued class A shares of a par value of
US$0.00001 each into five Class A Shares of a par value
of US$0.000002 each; (ii) the reclassification and
redesignation of all of the issued and unissued class A
ordinary shares of a par value of US$0.00001 each and
Pre-IPO Preferred Shares of a par value of US$0.00001
each of the Company into class B shares of a par value of
US$0.00001 each and the subdivision of each such issued
and unissued class B shares of a par value of US$0.00001
each into five Class B Shares of a par value of
US$0.000002 each
“Regulation S” Regulation S under the U.S. Securities Act
“Remuneration Committee” the remuneration committee of the Board
“Reserved Matters” those matters with respect to which each Class A Share
and each Class B Share shall entitle its holder to one vote
on a poll at general meetings of the Company pursuant to
the Articles of Association, being: (i) any amendment to
the Memorandum or Articles, including the variation of
the rights attached to any class of shares, (ii) the
appointment, election or removal of any independent
non-executive Director, (iii) the appointment or removal
of the Company’s auditors, or (iv) the voluntary
liquidation or winding-up of the Company
DEFINITIONS
–3 7–


--- page 48 ---
“RMB” or “Renminbi” the lawful currency of the PRC
“Rule 144A” Rule 144A under the U.S. Securities Act
“SAFE” State Administration of Foreign Exchange of the PRC ( ʕ
̮ි၍ଣ҅)
“SAIC” State Administration for Industry and Commerce of the
PRC (၍ଣᐼ҅)
“SA T” State Taxation Administration of the PRC ( ʕശɛ͏΍ձ
೼ਕᐼ҅)
“SEA entities” the 25 Indonesian unconsolidated regional operating
entities and the 13 Thailand unconsolidated regional
operating entities which we acquired in 2021
“SFC” the Securities and Futures Commission of Hong Kong
“SFO” or “Securities and Futures
Ordinance”
the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended or supplemented from
time to time
“Shanghai Jiexiao” Shanghai Jiexiao Information Technology Co., Ltd. ( ɪऎ
ʮ̡)
“Shanghai Yishangshiye” or
“PRC Holdco”
Shanghai Yishangshiye Co., Ltd. (ʮ
̡), a limited liability company incorporated under the
laws of the PRC on April 8, 2014 and a holding company
of certain PRC subsidiaries
“Share(s)” or “Ordinary Share(s)” the Class A Shares and/or Class B Shares in the share
capital of our Company, as the context so requires
“Shareholder(s)” holder(s) of our Shares
“Shareholders Agreement” the Fifth Amended and Restated Shareholders Agreement
dated May 17, 2023 entered into, amongst others, the
Company and its Shareholders
“Shenzhen Y unlu” Shenzhen Y unlu Information Technology Co., Ltd ( ଉέ
ப΂ʮ̡)
“Sponsor-Overall Coordinators” the sponsor-overall coordinators as named in “Directors
and Parties Involved in the Global Offering”
“Stabilizing Manager” Morgan Stanley Asia Limited
DEFINITIONS
–3 8–


--- page 49 ---
“State” the central government of the PRC, including all
governmental subdivisions (including provincial,
municipal and other regional or local government
entities) and its organs or, as the context requires, any of
them
“State Council” the State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫)
“subsidiary” or “subsidiaries” has the meaning ascribed to it under the Companies
Ordinance
“substantial shareholder” has the meaning ascribed to it in the Listing Rules
“Takeovers Code” the Hong Kong Code on Takeovers and Mergers
“THB” Thai Baht, the lawful currency of Thailand
“Track Record Period” the period comprising the three financial years ended
December 31, 2020, 2021 and 2022 and the six months
ended June 30, 2023
“UAE” United Arab Emirates
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
“United States” or “U.S.” the United States of America, its territories, its
possessions and all areas subject to its jurisdiction
“US$”, “USD” or “U.S. dollars” United States dollars, the lawful currency for the time
being of the United States
“U.S. Securities Act” the U.S. Securities Act of 1933, as amended and
supplemented or otherwise modified from time to time,
and the rules and regulations promulgated thereunder
“V A T” value-added tax
“VIE” or “VIEs” variable interest entity or variable interest entities
“VND” Vietnamese Dong, the lawful currency of Vietnam
“Winner Star” WINNER STAR HOLDINGS LIMITED, a limited
company incorporated in Hong Kong on April 2, 2015
with limited liability and a holding company of our
foreign subsidiaries
DEFINITIONS
–3 9–


--- page 50 ---
“WVR” or “weighted voting
rights”
has the meaning ascribed to it in the Listing Rules
“WVR Beneficiary” has the meaning ascribed to it under the Listing Rules and
unless the context otherwise requires, refers to Mr. Jet Jie
Li, being the beneficial owner of the Class A Shares,
entitling him to weighted voting rights, details of which
are set out in “Share Capital”
“WVR Structure” has the meaning ascribed to it in the Listing Rules
In this prospectus, the terms “associate”, “close associate”, “connected person”, “core
connected person”, “connected transaction”, “controlling shareholder” and “substantial
shareholder” shall have the meanings given to such terms in the Listing Rules, unless the
context otherwise requires.
Certain amounts and percentage figures included in this prospectus have been subject to
rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic
aggregation of the figures preceding them. Any discrepancies in any table or chart between the
total shown and the sum of the amounts listed are due to rounding.
For ease of reference, the names of the PRC established companies or entities, laws or
regulations have been included in this prospectus in both the Chinese and English languages.
In the event of any inconsistency, the Chinese versions shall prevail.
DEFINITIONS
–4 0–


--- page 51 ---
This glossary of technical terms contains explanations of certain technical terms used in
this prospectus. As such, these terms and their meanings may not correspond to standard
industry meanings or usage of these terms.
“API” application programming interface
“CGU” cash-generating unit, the smallest group of assets that
independently generates cash flow and whose cash flow
is largely independent of the cash flows generated by
other assets
“COD” cash on delivery, when a recipient pays for the goods at
the time of delivery
“Complaint rate” the units of parcels for which the express delivery
operators receive complaints from customers per million
units of parcels, which is one of the indicators for service
quality of express delivery operators
“Cost per parcel” total cost of revenue of an applicable period divided by
total parcel volume during the same period
“Effective complaint rate” the number of complaints in which the authorities have
attributed the major responsibility to express delivery
operators per million units of parcels
“First-mile pickup” initial collection of a package and transport to the local
pickup outlet
“GFA” gross floor area
“ISV” independent software vendor
“JMS system” J&T Information Management System
“Last-mile delivery” transportation of a package from the local pickup outlet
to the final delivery destination
“Network partners” business partners that own and operate pickup and
delivery outlets in our network within their respective
designated geographic regions
“Parcel volume” the number of parcels delivered during an applicable
period
“Pickup and delivery outlets” operation sites that perform pickup and/or delivery
services
GLOSSARY OF TECHNICAL TERMS
–4 1–


--- page 52 ---
“Regional sponsors” individuals authorized by our Company to assist in
operating local delivery networks in their respective
designated geographic regions
“Revenue per parcel” total revenue of an applicable period divided by total
parcel volume during the same period
“Sorting centers” transshipping and operating centers that connect
transportation resources including for centralized parcel
sorting, distribution and transshipment
“Transaction value” transaction value of all orders actually sold through
certain channels, excluding virtual products, unsettled or
returned orders
“unconsolidated regional
operating entities”
regional operating entities that are owned and operated
by regional sponsors under our brand, typically during
the ramp up period when we enter into new markets
GLOSSARY OF TECHNICAL TERMS
–4 2–


--- page 53 ---
This prospectus includes forward-looking statements. All statements other than statements of
historical facts contained in this prospectus, including, without limitation, those regarding our
future financial position, our strategies, plans, objectives, goals, targets and future
developments in the markets where we operate or are seeking to operate, and any statements
preceded by, followed by or that include the words “believe,” “expect,” “estimate,” “predict,”
“aim,” “intend,” “will,” “may,” “plan,” “consider,” “anticipate,” “seek,” “should,” “could,”
“would,” “continue,” or similar expressions or the negative thereof, are forward-looking
statements. These forward-looking statements involve known and unknown risks, uncertainties
and other factors, some of which are beyond our control, which may cause our actual results,
performance, achievements or industry results, to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking statements.
These forward-looking statements are based on numerous assumptions regarding our present
and future business strategies and the environment in which we will operate in the future.
Important factors that could cause our actual performance or achievements to differ materially
from those in the forward-looking statements include, among other things, the following:
 our business and prospects;
 future developments, trends and conditions in the industry and markets in which we
operate;
 our strategies, plans, objectives and goals;
 general economic conditions;
 changes to regulatory environment in the industry and markets in which we operate;
 our business model;
 our ability to control or reduce costs;
 our dividend policy;
 the amount and nature of, and potential for, future development of our business;
 capital markets developments;
 the actions and developments of our competitors; and
 certain statements in “Financial Information” with respect to trends in prices, volumes,
operations, margins, overall market trends, risk management and exchange rates.
Additional factors that could cause actual performance or achievements to differ materially
include, but are not limited to, those discussed in “Risk Factors” and elsewhere in this
prospectus. We caution you not to place undue reliance on these forward-looking statements,
which reflect our views only as of the date of this prospectus. We undertake no obligation to
update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur. All forward-looking statements contained
in this prospectus are qualified by reference to the cautionary statements set out in this section.
FORWARD-LOOKING STATEMENTS
–4 3–


--- page 54 ---
An investment in our Shares involves significant risks. You should carefully consider all
of the information in this prospectus, including the risks and uncertainties described
below, before making an investment in our Shares. The following is a description of what
we consider to be the material risks. Any of the following risks could have a material
adverse effect on our business, financial conditions and results of operations. In any such
case, the market price of our Shares could decline, and you may lose all or part of your
investment.
These factors are contingencies that may or may not occur , and we are not in a position
to express a view on the likelihood of any such contingency occurring. The information
given is as of the Latest Practicable Date unless otherwise stated, will not be updated
after that date, and is subject to the cautionary statements in “Forward-looking
Statements.”
Risks Related to Our Business and Industry
Our business and growth are highly dependent on the development of the e-commerce
industry in the markets where we operate.
We generate a significant portion of our parcel volume by serving e-commerce platforms and
merchants who conduct business on such e-commerce platforms, who rely on our services to
fulfill orders placed by consumers on such platforms.
Our business and growth are highly dependent on the viability and prospects of the e-commerce
industry in the markets where we operate. The development of the e-commerce industry is
affected by a number of factors, most of which are beyond our control. These factors include:
 the consumption power and disposable income of e-commerce consumers, as well as
changes in demographics and consumer tastes and preferences;
 the growth of broadband and mobile Internet penetration and usage;
 the selection, price and popularity of products offered on e-commerce platforms;
 the popularity of smartphones and other mobile devices and the cost of Internet access,
mobile data, and the trust and confidence level of e-commerce sellers and consumers in
countries where we operate, particularly in those developing countries where Internet
penetration is relatively low;
 the development of fulfillment, payment and other ancillary services associated with
e-commerce;
 changes in laws and regulations, government policies that govern the e-commerce
industry and changes in practices by e-commerce players as a result of such changes in
laws and regulations;
 the emergence of alternative channels or business models that better suit the needs of
consumers; and
 changes of macroeconomic conditions, including inflation and deflation, fluctuation of
currency exchange rate, tax rates and other government policies and changes in
unemployment rate.
RISK FACTORS
–4 4–


--- page 55 ---
In addition, in some regions where we operate, e-commerce is relatively new, and only recently
did certain regional e-commerce companies become sizable. Future developments of the
e-commerce industry, to a significant extent, would depend on improvements in transportation
and logistics infrastructure, developments of electronic payment system, government policies
that govern the e-commerce industry including the social e-commerce sector, and other factors
that are beyond our control.
We face risks in managing global operations, entering into and expanding across a number
of countries.
We have made, and expect to continue to make, significant investments to expand our global
presence and international operations and compete with local competitors. Conducting our
business internationally, particularly in countries in which we have limited experience, subjects
us to a number of risks, including:
 operational challenges caused by distance, language, and cultural differences;
 investment of resources required to localize our business, such as the translation of our
operating system into foreign languages and the adaptation of our operations to local
practices, laws and regulations;
 underdeveloped logistics, delivery and digital payment landscape and lack of
infrastructure support;
 compliance with laws and regulations, including laws and regulations governing
competition, pricing, payment methods, data protection, privacy, Internet activities,
transportation services, logistics services, real estate tenancy, tax and social security,
employment and labor, foreign ownership, and other activities important to our business;
 difficulties in applying our business model into new markets, as well as difficulties in
identifying, attracting and retaining regional sponsors with entrepreneurial and industry
expertise and local knowledge;
 competition with existing players or other services providers in adjacent industries;
 different levels of Internet and e-commerce penetration across regions;
 exposure to business cultures in which improper business practices may be prevalent;
 difficulties in managing, growing, and staffing international operations;
 difficulties in cultivating and maintaining productive relationships with business partners;
 import and export restrictions and changes in trade regulations; and
 geopolitical events, including pandemic, war and terrorism.
In addition, we have introduced our regional sponsor model across different markets, and we
expect to expand our global footprint under the same or similar business model. The success
of our business is dependent on our ability to identify, attract and retain regional sponsors with
entrepreneurial and industry expertise and local knowledge. There is no assurance that we will
be able to localize our operations and business model or find capable regional sponsors
candidates in these markets.
RISK FACTORS
–4 5–


--- page 56 ---
We have relied, and may continue to rely, on certain prominent e-commerce platforms.
Collaboration with major e-commerce platforms has been one of our key strategies to reach and
expand our customer base. During the Track Record Period, we generated a majority of our
parcels from or through e-commerce platforms for each period. Some of the e-commerce
platforms have significant influence on how transactions take place, including how purchase
orders are fulfilled by indicating the preferred express delivery companies for each order. To
maintain and foster our cooperation with these e-commerce platforms, we may have to
accommodate their demands and requirements, and provide customized value-added services,
which may increase the cost of our operations. We cannot assure you that we are able to
maintain our relationships with these e-commerce platforms in the future. We may not be able
to successfully extend or renew our current arrangements with these e-commerce platforms on
commercially reasonable terms, or at all, upon expiration or early termination of the current
arrangements. If we are unable to retain our status as a preferred service provider for
e-commerce platforms and the merchants on these e-commerce platforms, our business volume
may decrease significantly, which could adversely affect our business and results of operations.
In Southeast Asia, due to market practice, e-commerce platforms typically have significant
influence over the shipping method for items sold on their platforms, and they enter into
agreements with express delivery service providers like us to procure express delivery services.
Therefore, e-commerce platforms are treated as our direct customers, and we generated a
significant portion of our revenue from a number of major e-commerce platforms during the
Track Record Period. In 2020, 2021, 2022 and the six months ended June 30, 2023, revenue
generated from our largest customer, a major e-commerce platform, amounted to US$543.0
million, US$1,715.4 million, US$1,231.3 million and US$446.2 million, respectively,
representing 35.4%, 35.4%, 16.9% and 11.1% of our revenue, respectively. Revenue
contribution from this customer, as a percentage of our total revenue, has been declining as we
expanded our operations and diversified our customer base, and is expected to continue to
decline in the future. Therefore, we do not have any material reliance on any single
e-commerce platform and a single e-commerce platform will not have any material and adverse
impact on our results of operations and financial performance. However, if any major
e-commerce platform customers, including our largest customer during the Track Record
Period, terminates its business relationship with us or significantly reduces the demand for our
services, or if any of them subject to investigations and proceedings by governmental
authorities for alleged infringements of laws and regulations or experience any difficulty in
their operations, we may not be able to find replacement customers in the near term and our
results of operations could be materially and adversely affected. In China, express delivery
services providers need to be connected to such platforms’ systems before they can start
providing services to merchants and consumers on such platforms. Major e-commerce
platforms typically maintain a list of approved express delivery service providers, and
merchants on these platforms can choose from these service providers. Even though
e-commerce platforms in China are not our customers, we need to maintain our status as an
approved service provider across platforms to compete with our peers, and we need to acquire
merchants who sell goods on such e-commerce platforms. We cannot assure you that we are
able to maintain as an approved service provider on these e-commerce platforms. We may not
be able to successfully renew our current arrangements with e-commerce platforms or extend
such arrangements to other e-commerce platforms on commercially reasonable terms, or at all.
RISK FACTORS
–4 6–


--- page 57 ---
We face risks associated with our regional sponsors, unconsolidated regional operating
entities, network partners, and their employees and personnel.
Regional sponsors play an important role by working with our country headquarters to execute
our strategies in various markets, and assume the role of managing regional daily operations.
Regional sponsors manage our network partners through the relevant regional operating
entities. Our network partners and their employees carry out a significant amount of direct
interactions with our end customers, and their performance directly affects our brand image. As
of June 30, 2023, we had a portfolio of 104 regional sponsors and approximately 8,700 network
partners.
We do not fully supervise the daily operations of certain regional operating entities, as the
commercial arrangements between us and our regional sponsors vary across regions. During
the ramp-up period after we enter into new markets, certain regional operating entities, which
we refer to as our “unconsolidated regional operating entities,” are wholly owned and operated
by the relevant regional sponsors. We enter into cooperation agreements to allow these
unconsolidated regional operating entities to operate under our brand in their respective
jurisdictions. However, we do not control these unconsolidated regional operating entities and
do not directly supervise their day-to-day operations. We may not be able to manage these
regional operating entities and their employees and personnel as effectively as if we had full
ownership of them. Furthermore, our regional sponsors or unconsolidated regional operating
entities may fail to implement sufficient control over the performance of their employees and
personnel, such as proper collection and handling of parcels by pickup and delivery personnel.
We do not directly supervise the day-to-day operations of our network partners. Contractual
agreements between our network partners and us provide for performance incentives along
with periodic evaluations. We may not be able to manage the network partners, their pickup and
delivery outlets and service stations and their employees and personnel as effectively as if we
had full ownership of them or operated their business directly. Although we have established
and distributed service standards across our network and provide training to the employees and
personnel of our network partners from time to time, we may not be able to successfully
monitor, maintain and improve them. Their failure to provide satisfactory services may
adversely impact our reputation and brand image. Furthermore, our network partners may fail
to implement sufficient control over the performance of pickup and delivery personnel, such
as proper collection and handling of parcels and delivery service fees, adherence to customer
privacy standards and timely delivery of parcels. We and our network partners may suffer
financial losses, incur liabilities and suffer reputational damages in the event of theft or late
delivery of parcels, embezzlement of delivery service fees or mishandling of customer privacy.
Suspension or termination of the services of our network partners in a particular geographic
area may cause interruption to or suspension of our services in the corresponding geographic
area. Our network partners may suspend or terminate their services voluntarily or involuntarily
due to various reasons, including disagreement or dispute with us, failure to make a profit,
failure to maintain requisite approvals, licenses or permits or to comply with other
governmental regulations, and events beyond our or their control, such as inclement weather,
natural disasters, transportation interruptions or labor unrest or shortage. Due to the intense
competition in the express delivery industry, our existing network partners may also choose to
discontinue their cooperation with us and work with our competitors instead. We may not be
able to promptly replace our network partners or find alternative ways to provide services in
a timely, reliable and cost-effective manner, or at all. As a result of any service disruptions
associated with our regional operating entities and network partners, our customer satisfaction,
reputation, operations and financial performance may be materially and adversely affected.
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We cannot assure you that disputes will not arise between us and our regional sponsors,
unconsolidated regional operating entities or network partners, or that our regional sponsors,
unconsolidated regional operating entities and network partners will not breach their
obligations to us. Their failure to provide satisfactory services may adversely impact our
reputation and brand image.
The possible impairment losses for intangible assets may adversely affect our financial
condition and results of operations.
We recorded intangible assets of US$6.0 million, US$1,129.2 million, US$963.6 million and
US$982.0 million as of December 31, 2020, 2021 and 2022 and June 30, 2023, respectively,
which mainly represented goodwill, customer relationship and others including software and
trademarks and licenses. Goodwill and intangible assets that have an indefinite useful life are
not amortized, but are tested for impairment annually, or more frequently if events or changes
in circumstances indicate that it might be impaired, and is carried at cost less accumulated
impairment losses. Other intangible assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of
disposal and value in use. Adverse change in the future may result in decreases in the value of
our intangible assets and goodwill, which in turn would result in an impairment loss. In
addition, we make certain assumptions when assessing the value of our intangible assets,
including assumptions on their useful lives. There are inherent uncertainties relating to these
assumptions. We cannot assure you that our assumptions will prove to be correct. Any such
change in our assumptions may require us to re-evaluate our intangible assets, which may in
turn result in impairment losses. Significant impairment losses on intangible assets may have
a material adverse effect on our financial condition and results of operations and may limit our
ability to obtain financing in the future.
We may be exposed to impairment loss risks associated with our trade receivables,
prepayments, other receivables and other assets.
Our prepayments, other receivables and other assets primarily consist of deposits, prepaid
taxes, receivables from our issuance of convertible preferred shares consideration, loans to
related parties, loans to third parties, prepaid expenses and others. Our prepayments, other
receivables and other assets were US$745.4 million, US$882.2 million, US$703.0 million and
US$801.8 million as of December 31, 2020, 2021 and 2022 and June 30, 2023, respectively.
Our trade receivables primarily represent the amounts due from customers for goods sold or
services performed. Our trade receivables were US$180.8 million, US$334.9 million,
US$514.0 million and US$622.6 million as of December 31, 2020, 2021 and 2022 and June 30,
2023, respectively. We made provisions for impairment for trade receivables of US$6.3
million, US$44.6 million, US$47.2 million and US$44.1 million as of December 31, 2020,
2021 and 2022 and June 30, 2023, respectively. Such impairment in 2021 and 2022 mainly
consisted of impairment on trade receivables in relation to certain terminated network partners
and impairment losses that were consolidated into our balance sheets primarily in connection
with the acquisition of BEST Express China. Going forward, we cannot assure you that we will
be able collect all of our receivables due to a variety of factors, some of which are out of our
control. For example, if our relationship with our customers deteriorates or terminates, or if any
of them experiences any difficulty in their operations or a decrease in their business or
financial performance for any reasons, our customers may delay or default in their payment.
If the relevant parties fail to provide relevant products or services in relation to our
prepayments, or fail to perform their payment obligations to us in a timely manner or at all in
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relation to our trade receivables, we may be exposed to prepayment default risk and impairment
loss risk in relation to the prepayments and trade receivables, which may in turn materially and
adversely affect our business and financial position.
We have a history of gross losses and net losses and negative cash flows from operating
activities, which may continue in the future. Our limited operating history and evolving
business model also make it difficult to evaluate our business, financial performance and
prospects.
We recorded a gross loss of US$261.5 million, US$544.7 million and US$270.2 million in
2020, 2021 and 2022, respectively. We achieved a gross profit of US$193.5 million for the six
months ended June 30, 2023. We incurred a net loss of US$664.2 million, US$6.2 billion and
US$666.8 million in 2020, 2021 and the six months ended June 30, 2023, respectively, and a
net profit of US$1.6 billion in 2022. We incurred net profit in 2022 mainly due to the fair value
gain of financial liabilities at fair value through profit or loss. In addition, our net cash used
in operating activities was US$154.7 million, US$967.2 million and US$519.8 million in 2020,
2021 and 2022, respectively, and our net cash generated from operating activities was US$2.8
million in the six months ended June 30, 2023. Our revenue is driven by parcel volume and
revenue per parcel. These components are affected by the various factors driving the growth
of e-commerce industry in countries where we operate, our ability to scale up our network to
meet increases in demand and the ability of us and our network partners to provide high-quality
services to end customers. We expect our costs and expenses to increase in absolute amounts
due to (i) the continued expansion of our network, (ii) the continued investments in innovation
and technology, (iii) our expansion into new markets and countries, and (iv) expansion of our
service offerings. Our ability to achieve and maintain profitability depends on our ability to
enhance our market position, maintain competitive pricing, replicate our successful business
model, and increase our operational efficiency. These are affected by many factors which may
be beyond our control. As a result of the foregoing and other factors, we cannot assure you that
we will not continue to incur gross losses and cash outflow from operating activities in the
future.
We commenced our operation in 2015 and thus have a limited operating history, which makes
it difficult to evaluate our future prospects and performance. We have experienced significant
growth and expansion since our inception and over the Track Record Period. Our total parcel
volume grew by 224.2% from 3.2 billion in 2020 to 10.5 billion in 2021, and further by 38.5%
to 14.6 billion in 2022, and grew by 16.9% from 6.8 billion in the six months ended June 30,
2022 to 8.0 billion in the six months ended June 30, 2023. Due to our limited operating history,
our past revenues and historical growth rate may not be indicative of our future performance.
In 2021, we acquired the SEA entities and also BEST Express China. In May 2023, we further
entered into a share transfer agreement with Fengwang Holdings to acquire Fengwang
Information. See “History and Corporate Structure – Major Acquisitions, Disposals and
Mergers – Acquisition of Fengwang Information.” As a fast-growing company with a relatively
limited operating history, particularly in the current consolidated form, our financial statements
may not be indicative of our future performance and financial results.
Rather than relying on our historical operating and financial results to evaluate us, you should
consider our business prospects in light of the risks and difficulties we may encounter as an
early-stage company expanding globally. Our continued growth will depend on many factors
and endeavours that will require substantial management efforts and are beyond our control.
Our organizational structure is complex and will continue to grow as we involve additional
network partners, line-haul vehicles, employees, products and offerings, and technologies, and
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as we continue to expand globally. All of these endeavours involve risks and difficulties. We
may not be able to successfully address risks and difficulties, which could significantly harm
our business, results of operations and financial condition.
We face intense competition which could adversely affect our results of operations and
market share.
The express delivery industry in most countries where we operate is fragmented. In these
countries, we compete primarily with express delivery service provided by national postal
agencies as well as leading domestic express delivery companies in each of the countries where
we operate. We compete with them based on a number of factors, including business model,
operational capabilities, service quality and cost control. In particular, we have historically
experienced declines in the express delivery service market prices and may face downward
pricing pressure again. If we cannot effectively control costs to remain competitive, our market
share and revenue may decline. Additionally, if we have to subsidize our network partners to
increase our competitiveness, our results of operations and financial conditions may be
adversely affected.
Certain of our current and potential competitors may have broader services or network
coverage, stronger brand recognition, greater capital resources and longer operational histories
than we do. In addition, our competitors may reduce their prices to gain business, especially
during times of slowed market demand growth, and such reductions may limit our ability to
maintain or increase our prices and operating margins or achieve growth of our business. Our
competitors may also establish collaborative relationships or strategic alliances to improve
their ability to address the needs of customers. We may not be able to successfully compete
against current or future competitors, and such competitive pressures may have a material and
adverse effect on our business, financial condition and results of operations.
In addition, major e-commerce platforms may choose to build or further develop their
respective in-house delivery capabilities to serve their logistics needs and compete with us,
which may significantly affect our market share and total parcel volume. As we diversify our
service offering and further expand our customer base, we may face competition from existing
or new players in new business that we choose to expand. In particular, we and network
partners may face competition from existing or new first-mile pick up and last-mile delivery
service providers which may expand their service offerings to include express delivery or adopt
a business model disruptive to our business and compete with our regional operating entities
and network partners for delivery personnel. Similarly, existing players in an adjacent or
sub-markets may choose to leverage their existing infrastructure and expand their services to
serve our customers. If these players succeed in doing so, our market share may suffer and our
business and financial performance may be significantly and adversely affected.
Our pricing strategy may not meet our clients’ price expectations or result in profitability.
We operate in a highly competitive industry. We compete with other express delivery
companies based on a number of factors, including network, business model and competitive
pricing. Our competitors’ pricing and marketing strategies are beyond our control and can
significantly impact the results of our pricing strategies. We have historically experienced
declines in the delivery service market prices in certain jurisdictions where we operate, and
may continue to face downward pricing pressures. We may also need to proactively adjust our
pricing strategies to maintain the growth of our market share in the markets where we operate.
Our competitors may adopt more aggressive pricing strategies and reduce their prices to gain
business and market share, especially during times of slowed market demand growth, and such
reductions may limit our ability to maintain or increase our prices and operating margins or
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achieve growth of our business. While we provide guidance on the pricing strategies, we do not
control the pricing strategies of our network partners, which could affect our parcel volume and
our ability to effectively compete with other express delivery service providers in certain areas.
If we and our network partners cannot effectively control our costs to remain competitive, our
market share, revenue and profitability may decline. If we continue to implement our pricing
strategies, our profitability in certain regions may not be sustainable and may deteriorate or we
may continue to incur net losses.
Our pricing strategy and policy may not be effective in maintaining our financial performance
and any unfavorable changes of market conditions may have a material adverse effect on our
operations, financial condition and profitability. See “Business – Our Services – Service
Pricing” for details of our pricing policy. As a result of the foregoing and other factors, we
cannot assure you that we will successfully maintain the growth and profitability of our
business in the future.
Any service disruption experienced by our sorting centers or the pickup and delivery outlets
may adversely affect our operations.
Our daily operations heavily rely on the orderly performance of our sorting centers and the
pickup and delivery outlets managed by our regional operating entities and network partners.
Our sorting centers or the pickup and delivery outlets may experience service disruptions due
to failure in their automated facilities, under-capacity during peak parcel volume periods, force
majeure events, third-party sabotage, dispute between us, and network partners or any third
party, employee delinquency or strike, governmental inspection of properties or governmental
orders that mandate any service halt or temporary or permanent shutdown that would adversely
impact our operations. The outbreak of a pandemic, such as the COVID-19, may also cause
disruption to our business. If we are required by governmental authorities to implement
emergency measures and temporarily close our facilities or service stations, our and our
network partners’ operating costs may increase as a result. In the event of any service
disruption, sorting, pickup and delivery of parcels at the relevant sorting centers or pickup and
delivery outlets may be delayed, suspended or stopped. Parcels will need to be redirected to
other nearby sorting centers or pickup and delivery outlets, and such rerouting of parcels will
likely increase risks of delay and mishandling during delivery. At the same time, increased
operational pressure on nearby sorting centers or pickup and delivery outlets may negatively
impact their performance and adverse effects across our network. Any of the foregoing events
may result in significant operational interruptions and slowdowns, customer complaints and
reputational damage.
Our technology system is critical to our operations and growth prospects.
The satisfactory performance, reliability and availability of our technology system are critical
to our ability to provide high-quality services. We rely on our centralized IT systems to
efficiently manage and operate our network. The maintenance and processing of various
operating and financial data are essential to the day-to-day operation of our business and
formulation of our development strategies. Any system interruptions caused by
telecommunications failures, errors encountered during system upgrades or system expansions,
computer viruses, hacking or other attempts to harm our systems that result in the
unavailability or slowdown of our technology systems, degraded order fulfillment
performance, or additional shipping and handling costs may, individually or collectively,
materially and adversely affect our business, reputation, financial condition and results of
operations.
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As our business grows, we expect to continue to invest in and implement upgrades to our
information technology systems and infrastructure. However, we cannot assure you that we
will be successful in executing these system upgrades and improvement strategies. In
particular, our systems may experience interruptions during upgrades, and the new
technologies or infrastructures may not be fully integrated with the existing systems on a
timely basis, or at all. In addition, the upgrade and improvement of our information technology
systems and infrastructure may require us to commit substantial financial, operational and
technical resources, with no assurance that our business will increase. If we fail to respond to
technological change or to adequately maintain and upgrade our systems and infrastructure in
response to changing business needs in a timely, effective and cost-efficient fashion, our
business could be adversely affected.
Our long-term growth and competitiveness are highly dependent on our ability to control
costs.
Our results of operations are affected by our ability to control costs including labor,
transportation and lease costs, which may be subject to factors, including, among other things,
fluctuations in wage rates, fuel prices, toll fees, and leasing costs. Effective cost-control
measures have a direct impact on our financial condition and results of operations. Our fleets
use large quantities of fuel to operate vehicles and pay toll fees along their routes. The
availability and price of fuel and third-party transportation capacity are subject to political,
economic, and market factors that are beyond our control. We also incur a significant amount
of costs in relation to transportation and labor. Any unexpected increase in these costs, which
is subject to factors beyond our control, could adversely impact our profitability. We have
adopted, and expect to adopt, additional cost control measures. However, the measures we have
adopted or will adopt in the future may not be as effective as expected. If we are not able to
effectively control our costs and adjust the level of network transit fees based on operating
costs and market conditions, our profitability and cash flow may be adversely affected.
Fluctuations in exchange rates could adversely affect our financial condition, results of
operations and cash flows.
We operate in multiple jurisdictions, which exposes us to the effects of fluctuations in currency
exchange rates. Our subsidiaries and consolidated affiliated entities operate in functional
currencies other than the U.S. dollar, including Renminbi, Indonesian Rupiah, Vietnamese
Dong, Malaysian Ringgit, Philippine Pesos, Thai Baht, Singapore Dollars, Brazilian Real or
Mexican Peso among other currencies. For each Group entity, items included in its financial
statements are generally measured with the currency of the country where such Group entity
operates. Our financial information as expressed in U.S. dollars may be significantly affected
by fluctuations in foreign exchange rates, and the figures may be substantially higher or lower
than would be the case if exchange rates were to be stable. Therefore, our results of operations
as expressed in U.S. dollars may be significantly affected by fluctuations in foreign exchange
rates. There is no assurance that movements in foreign currency exchange rates will not have
a material adverse effect on our results of operations in future periods. We may enter into
derivatives transactions and incur relevant costs from time to time to manage our exposure to
exchange rate risk. Such derivatives transactions, while intended to be non-speculative, are
designed to protect us against increases or decreases in exchange rates, but not both. See
“Financial Information – Foreign Currency Fluctuations.”
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We rely on third-party service providers in relation to certain aspects of our operations.
We depend on certain third-party service providers for transportation, supplies of equipment
and other services. The supplier base providing logistics equipment is relatively concentrated,
which has resulted in a limited number of suppliers for certain types of equipment and supplies,
while the market for third-party transportation services is fragmented, which have different
standards of operations and internal control procedures. There is no assurance that (i) these
service providers would operate in accordance with our instructions, policies and business
guidelines, or that their service quality will not materially deteriorate, (ii) we can maintain
good relationships with our third-party service providers, (iii) they will not unilaterally
increase their service prices, or (iv) there will not be any wrongdoing or misconduct by their
employees or by them which would materially and adversely affect their services. There is no
assurance that we can find reliable service providers who can meet our standards at scale as
we continue to expand globally. Decreased availability or increased costs of logistics,
transportation and supply chain service and equipment provided by third parties could impact
our cost of operations and our profitability.
In addition, we also engage third-party human resources agencies to provide labor forces to
supplement our capacity at different network facilities. The outsourcing activities and
agreements are subject to local laws and regulations. Even if we may have contractual
protection against claims from outsourced personnel, in the event that the outsourcing firms
violate any relevant labor laws and regulations or their employment agreements with the
outsourced personnel, such personnel may file a claim against us as they provide their services
at our network facilities. As a result, we may incur legal liability, and our reputation, brand
image as well as our business, financial condition and results of operations could be materially
and adversely affected.
We face challenges in diversifying our service offerings and expanding our customer base.
We intend to further diversify our service offerings and expand our customer base to add to our
revenue sources in the future. New services or new types of customers may involve risks and
challenges we do not currently face. Such new initiatives may require us to devote significant
financial and managerial resources and may not perform as well as expected. We may not be
able to successfully address customer demands and preferences, and our existing network and
facilities may not be adaptable to the new services or customers. In addition, we may not be
able to assure adequate service quality and may receive complaints or incur costly liability
claims, which would harm our overall reputation and financial performance. We may also
selectively invest in emerging business opportunities in adjacent logistics market. We may not
be able to achieve profitability or recoup our investments with respect to any new services or
new types of customers in time or at all.
Our business and results of operations may be materially and adversely affected if we are
unable to provide high-quality service.
The success of our business largely depends on our ability to maintain and further enhance our
service quality. Together with our regional operating entities and network partners, we provide
complete door-to-door express delivery services to our end customers. If we, our regional
operating entities or our network partners are unable to provide express delivery services in a
timely, reliable, safe and secure manner, our reputation and customer loyalty could be
negatively affected. If our customer service personnel fail to satisfy customer needs or respond
effectively to customer complaints, we may lose potential or existing end customers and
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experience a decrease in customer orders, which could have a material adverse effect on our
business, financial condition and results of operations. See also “– We face risks associated
with our network partners and their employees and personnel.”
It is difficult to forecast customer demand accurately, and as a result we may be unable to
make planning and spending decisions to match customer demand.
We make planning and spending decisions, including capacity expansion, procurement
commitments, personnel needs and other resource requirements based on our estimates of
customer demand. The parcel volume we generate from end customers can vary significantly
and unexpectedly, reducing our ability to accurately estimate future customer demand. In
particular, we may potentially experience capacity and resource shortages in fulfilling
customer orders during peak season of e-commerce consumption or following special
promotional campaigns on any e-commerce platforms. Failure to meet customer demand in a
timely fashion or at all may adversely affect our financial condition and results of operations.
Our results of operations are subject to fluctuations due to seasonality and other events
beyond our control.
Our results of operations are affected by seasonal patterns and other events peculiar to the
jurisdictions where we operate. Our results of operations may vary and may not be comparable
from months to months. Our parcel volume was typically lower in the first quarter of each year
as a result of regional holidays, including the Lunar New Y ear, during which demand for
express delivery services is typically lower. In Southeast Asia, our parcel volume is also
impacted by holidays such as Ramadan, as well as regional promotion periods such as the
September 9 and October 10 sales promotion periods, during which we typically experience an
increase in parcel volume and temporary shortage of labor. In addition, timing of certain major
holidays such as Ramadan, as well as the associated promotional events from e-commerce
platforms, may vary from year to year and is uncertain. In China, we typically experience
higher parcel volume in the fourth quarter of the year due to various holidays and promotional
events offered by e-commerce platforms, for example, the November 11 and December 12 sales
promotion periods, see “– We have relied, and may continue to rely, on certain prominent
e-commerce platforms.” Our financial condition and results of operations for future periods
may continue to fluctuate. As a result, our results of operations and the trading price of our
Shares may fluctuate from time to time due to seasonality, and comparisons of revenue and
results of operations between different periods within a single financial year, or between
different periods in different financial years, cannot be relied on as indicators of our
performance.
Failure to renew our current leases or locate desirable premises for our facilities could
materially and adversely affect our business.
We lease properties for our facilities including offices and sorting centers. Some of our
regional operating entities and network partners lease properties for offices, pickup and
delivery outlets and service stations that they directly operate. We and our network partners
may not be able to successfully extend or renew such leases upon expiration of the current term
on commercially reasonable terms or at all, and may therefore be forced to relocate the affected
operations. This could disrupt our operations and result in significant relocation expenses,
which could adversely affect our business, financial condition and results of operations. As our
network scales up, we may need additional space for our sorting centers to meet our expansion
demands. We compete with other businesses for premises at certain locations or of desirable
sizes, and it can be difficult to find suitable premises to meet our standards. Even if we are able
to extend or renew our leases, rental payments may significantly increase as a result of the high
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demand for the leased properties. In addition, we may not be able to locate desirable alternative
sites for our facilities as our business continues to grow and failure in relocating our affected
operations could adversely affect our business and operations.
 unanticipated issues in integrating logistics, information, communications and other
systems;
 unanticipated changes in applicable laws and regulations affecting the acquired
business;
 operating risks inherent in the acquired business;
 diversion of the attention and resources of management;
 consumers’ failure to accept product offerings by us or our licensees;
 assumption of liabilities not identified in due diligence; and
 other unanticipated issues, expenses and liabilities.
In addition, there is no guarantee that once such process has been completed we will operate
in a manner that is more efficient, organized, effective and competitive as a whole.
We may, however, fail to realize these anticipated synergies or they may be less significant than
expected, which could adversely affect our business, financial condition or results of
operations.
Overall tightening of the labor market, increases in labor cost or any possible labor unrest
may affect our business as we operate in a labor-intensive industry.
Our business is labor-intensive and requires a substantial number of personnel. Any failure to
retain stable and dedicated labor by us, our regional operating entities and network partners
may lead to disruption to or delay in our services provided to end customers. We usually need
to hire additional or temporary workers to handle the significant increase in parcel volume
following special promotional events or during peak seasons of e-commerce. We may be
subject to temporary labor shortage during major holiday seasons. We have observed an overall
tightening and increasingly competitive labor market. We have experienced, and expect to
continue to experience, increases in labor costs due to increases in salary, social benefits and
employee headcount and changes in regulatory environment. We and our network partners
compete with other companies in our industry and other labor-intensive industries for labor,
and we may not be able to offer competitive salaries and benefits compared to them. In
addition, some of our employees in the Philippines are unionized. Labor unions in the
Philippines that have been certified as sole and exclusive bargaining agents may request
management of companies to enter into collective bargaining agreements, negotiate
employment terms on behalf of relevant employees and demand higher salaries and benefits,
which could increase our labor costs.
We and our network partners have been subject to labor disputes initiated by our or their
employees and personnel from time to time, although none of them, individually or in the
aggregate, had a material adverse impact on us. We expect to continue to be subject to various
legal or administrative proceedings related to labor dispute in the ordinary course of our
business, due to the magnitude of labor force involved in our network. Any labor unrest
directed against us, our regional operating entities or our network partners could directly or
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indirectly prevent or hinder our normal operating activities, and, if not resolved in a timely
manner, lead to delays in fulfilling our customer orders and decreases in our revenue. We, our
regional operating entities and our network partners are not able to predict or control any labor
unrest, especially those involving labor not directly employed by us. Further, labor unrest may
affect general labor market conditions or result in changes to labor laws, which in turn could
materially and adversely affect our business, financial condition and results of operations.
Our business is dependent on the transportation, telecommunication and Internet
infrastructure in countries and regions where we operate.
Our business depends on the performance and reliability of the transportation,
telecommunication and Internet infrastructure in countries and regions where we operate.
Our network covers regions that have historically been underserved by logistics service
providers and often present unique operational challenges, such as underdeveloped
infrastructure or island archipelagos. The expansion of our network in these regions is, to a
significant extent, dependent on the availability and proper operations of transportation
infrastructure. We face operational challenges including, among others, unanticipated closure
of airport, rail limitations due to unavailability of railcars and adverse weather condition, and
delay in barge shipments caused by high or low seawater levels.
Our business depends on the performance, reliability and security of the telecommunications
and Internet infrastructure in regions where we operate. We may not have access to alternative
networks in the event of disruptions, failures or other problems with the telecommunication
and Internet infrastructure. The failure of telecommunication and Internet network operators to
provide us with the requisite bandwidth could also interfere with the speed and availability of
our platforms. Any of such occurrences could delay or prevent our platform users from
accessing our online platforms and mobile applications, and frequent interruptions could
frustrate customers and discourage them from using our services, which could cause us to lose
customers and harm our results of operations. In addition, we have limited control over the
service fees charged by telecommunication and Internet operators. If the prices we pay for
telecommunications and Internet services rise significantly, our results of operations may be
materially and adversely affected.
We are exposed to fair value changes of financial liabilities at fair value through profit or
loss.
Since our inception, we have completed several rounds of financing by issuing different classes
of convertible preferred shares. We accounted the preferred shares as financial liabilities at fair
value through profit or loss. The convertible preferred shares are typically recognized at fair
value, and subsequent to the initial recognition, the preferred shares are carried at fair value,
with changes in fair value recognized in the consolidated income statements. As these
instruments are not traded in active markets, their fair values have been determined by using
applicable valuation techniques, which involve a significant degree of management judgment
and are inherently uncertain. As of December 31, 2020, 2021 and 2022 and June 30, 2023, we
recorded financial liabilities at fair value through profit or loss of US$1,812.9 million,
US$10,487.3 million, US$7,765.1 million and US$8,261 million, respectively. The
determination of the fair value changes requires us to make significant estimates, which may
be subject to material changes, and therefore inherently involves a certain degree of
uncertainty. The fair value change of financial liabilities at fair value through profit or loss was
nil in 2020. We recorded a fair value loss of financial liabilities at fair value through profit or
loss of US$4,383.5 million in 2021 and a fair value gain of financial liabilities at fair value
through profit or loss of US$3,086.7 million in 2022. We also recorded a fair value gain of
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financial liabilities at fair value through profit or loss of US$1,027.5 million for the six months
ended June 30, 2023. We cannot assure you that we can recognize comparable fair value gains
in the future and we may on the contrary recognize fair value losses, which would affect our
results of operations. Factors beyond our control can significantly influence and cause adverse
changes to the estimates we use and thereby affect the fair value of such assets and liabilities.
Any of these factors, as well as others, could cause our estimates to vary from actual results,
which could materially and adversely affect our results of operations and financial condition.
We had net liabilities position and net operating cash outflows in the past and may not be
able to achieve or maintain net assets and net current assets position in the future.
We had net liabilities of US$870.5 million, US$6,636.4 million, US$4,984.2 million and
US$5,529.6 million as of December 31, 2020, 2021 and 2022 and June 30, 2023, respectively,
primarily due to the significant amounts of convertible preferred shares and accounts payable
recorded as liabilities. Our convertible preferred shares will be re-classified and re-designated
from liabilities to equity as a result of the automatic conversion into ordinary shares upon the
Listing, after which we do not expect to recognize any further gain or loss on fair value changes
from convertible preferred shares and will return to a net assets position from a net liabilities
position. However, there can be no assurance that we will not record net liabilities in the future.
We had net operating cash outflows of US$154.7 million, US$967.2 million and US$519.8
million for the years ended December 31, 2020, 2021 and 2022, respectively, and net cash
generated from operating activities of US$2.8 million for the six months ended June 30, 2023.
If we fail to generate sufficient cash flow from our operations, or if we fail to maintain
sufficient cash and financing, our liquidity position may be adversely affected. If we do not
have sufficient cash flows to fund our business, operations and capital expenditure, our
business and financial position will be materially and adversely affected.
Our business and the business of our network partners are subject to a broad range of laws
and regulations.
Our business is subject to governmental supervision and regulation by the relevant
governmental authorities. These governmental authorities promulgate and enforce regulations
that cover many aspects of our day-to-day operations such as providing trainings to employees
and preparing various technical and safety plans, and we may fail to fully comply with these
regulations at all times. We are subject to various restrictions in markets in which we operate,
which may limit our ability to replicate our success under the regional sponsor model. See “–
Any lack of requisite approvals, licenses, permits or filings applicable to the business operation
of ours or our network partners may have a material and adverse impact on our business,
financial condition and results of operations.” and “Regulatory Overview” in Appendix III to
this prospectus.
The PRC Postal Law indicates that express delivery companies cannot engage in “posting and
mail delivery business exclusively operated by postal enterprises”, which are not clearly
defined under the PRC law. If the parcels delivered by us fall into the aforementioned category,
we may be considered in violation of the PRC Postal Law. Noncompliance with new applicable
laws, regulations and policies, or amendments to existing laws, regulations and policies, may
subject us to administrative proceedings, fines or other penalties, and materially and adversely
impact our business, reputation, financial condition and results of operations. In addition, in
the PRC, each of the vehicles used for road freight transportation must have a Road
Transportation Certificate and the drivers of these vehicles must have corresponding
qualification certificates unless these vehicles are ordinary freight vehicles with a total mass
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of 4.5 tons or less. Although we have established an internal control system to help ensure our
compliance with relevant laws and regulations, to renew our permits and obtain qualification
certificates as required, we cannot ensure that we can fully comply with any new requirement
all the time considering the periodic renewal requirements, the employee mobility, and the
expansion of our business. If we fail to comply with these regulations, the competent
government authorities may order us to rectify such violations, impose fines on us, revoke our
permits, or suspend our business.
In addition, our value-added services, such as our COD services, are subject to various rules,
regulations and requirements, regulatory or otherwise, governing electronic funds transfers,
which could change or be reinterpreted in the future to make it difficult or costly, for us to
comply with. If we fail to comply with these rules or requirements, we may be subject to fines
and higher transaction fees and become unable to accept credit and debit card payments from
our customers, process electronic funds transfers or facilitate other types of online payments,
and our business, financial condition and results of operations could be materially and
adversely affected.
Our network partners have broad discretion over their daily operations and make localized
decisions with respect to their facilities, vehicles and hiring and pricing strategies. Their
operations are regulated by various laws and regulations, including local administrative
rulings, orders and policies that are pertinent to their localized express delivery business. Local
regulations may specify the models or types of vehicles to be used in parcel pickup and
delivery services or require our network partners to implement heightened parcel safety
screening procedures, which could materially drive up the operating costs and delivery
efficiency of the pickup and delivery outlets.
New laws and regulations may be enforced from time to time. Adjustments and changes exist
regarding the interpretation and implementation of current and any future laws and regulations
applicable to our businesses. For example, in Vietnam, the Law on Competition 2018 allowed
relevant authority to prohibit anti-competition agreements. However, the applicable authority,
the Viet Nam Competition Commission, has just been formed since April 1, 2023, and the
corresponding regulations have not been formed as of the date of this prospectus. Therefore,
there are still significant uncertainties with respect to the type of contractual provisions that
may be prohibited under the Law on Competition 2018. We cannot assure you that provisions
in our existing agreements – including our cooperation agreements with network partners – will
not be deemed as “anti-competition agreements” as prohibited under the Law on Competition
2018. See also “Regulatory Overview – Laws and Regulations in Relation to Our Business in
Vietnam” in Appendix III to this prospectus. Furthermore, MoTR 31/2023 promulgated by the
Indonesian Ministry of Trade places certain restrictions on electronic trade activities occurring
on social media platforms. Pursuant to Article 21 paragraphs (2) and (3) of MoTR 31/2023,
“Business Actors” (as defined in MoTR 31/2023) that conduct trades through an electronic
system are prohibited from acting as manufacturers of products, and social media platforms are
also prohibited from facilitating payment transactions on their electronic systems. While we
are not an e-commerce or a social media platform, we collaborate with a number of
e-commerce and social media platforms in Indonesia. As MoTR 31/2023 was recently enacted,
there remain significant uncertainties on how and the new regulation would impact different
e-commerce and social media platforms in Indonesia, some of which are our customers. For
example, according to a public statement by TikTok, TikTok has halted its facilitation of
e-commerce transactions in Indonesia since early October 2023 and would seek to cooperate
with the local government authorities on a path forward. During the Track Record Period, our
revenue from social e-commerce platforms in Indonesia remained immaterial to the Group. We
expect the restrictions set forth by MoTR 31/2023 will not materially affect consumer demand
for online purchases and the overall e-commerce market growth. We believe that the new
regulation will not have a material adverse effect on our business operations and financial
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performance in the long term. These social e-commerce platforms restrictions may trigger
changes to our customer composition in Indonesia and changes in consumer behaviors towards
making purchases from social media platforms, which may have an adverse impact on our
business operations and financial performance in the near term.
If relevant authorities promulgate new laws and regulations that require additional approvals
or licenses or imposes additional restrictions on our business and operations, they may have the
authority, among other things, to levy fines, confiscate income, revoke business licenses, and
require us to discontinue our relevant business or impose restrictions on the affected portion
of our business. Any of these actions by governments in the jurisdictions where we operate may
have a material and adverse effect on our results of operations. If our regional operating entities
or network partners are found to be in violation of any applicable laws or regulations then in
effect, such regional operating entities or network partners may be subject to similar penalties
or administrative orders and may not be able to continue to deliver satisfactory services or at
all. As a result, we may suffer reputational damages due to negative publicity or compromised
service quality.
Any lack of requisite approvals, licenses, permits or filings applicable to the business
operation of ours or our network partners may have a material and adverse impact on our
business, financial condition and results of operations.
We are required to hold a number of licenses and permits in connection with our operation. For
example, in China, a company that provides express delivery services needs to obtain a Courier
Service Operation Permit ( Ҟ჈ุਕ຾ᐄ஢̙ᗇ) and make filings with relevant postal
authorities to expand its regions of operation under such permit. Failure to make such filings
may result in a correction order or fines. Companies are also subject to certain capacity
requirements, such as the adequacy of delivery personnel, under the Courier Service Operation
Permit. If any of our Group entities or network partners in the PRC is found to have failed to
meet these requirements, such entity may be subject to a fine up to RMB30,000, its Courier
Service Operation Permits may be revoked, and it cannot re-apply to obtain the permit for a
period of three years. A company with the Courier Service Operation Permit is also required
to maintain its express delivery operations during the validity of such permit. If the permit
holder fails to initiate its operation within six months after obtaining the permit, or if the permit
holder suspends its operations for more than six months without authorization, relevant
authority may cancel the Courier Service Operation Permit. We are currently not aware of any
such cancellation or notice of cancellation.
In Thailand, we cooperate with our network partners to provide express delivery services.
Under Thai laws, a provider of transport management service is subject to the transport
management license regime. The Department of Land Transport explicitly stated in its ruling,
confirming its position that a transport management license is not required in the absence of
any ministerial regulations. As of the date of the prospectus, the Department of Land Transport
has not published any ministerial regulations on the criteria and procedures for obtaining a land
transport management license yet. However, we cannot assure you that we will not be deemed
a provider of transport management service and be required to obtain a transport management
license if and when the ministerial regulations are published. Failure to obtain such license in
time, or at all, may materially and adversely affect our business, financial condition and results
of operations. The interpretation and application of laws and regulations, including the Land
Transport Act and the V ehicle Act B.E. 2522 (1979), remain are still uncertain and evolving.
We may be required to make filings with respect to our cooperation with network partners in
jurisdictions where we operate. As we frequently add new network partners to expand our
network or terminate under-performed network partners, the pool of network partners is
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constantly changing, and we cannot assure that such filing are always completed or update to
date. For example, in China, commercial franchising refers to the business activities where an
enterprise that possesses the registered trademarks, enterprise logos, patents, proprietary
technology or any other business resources allows such business resources to be used by
another business operator through a contract and the franchisee follows the uniform business
model to conduct business operation and pay franchising fees according to the contract. We and
our network partners in China are subject to regulations on commercial franchising, and we are
therefore required to file the cooperation arrangements with network partners with the Ministry
of Commerce or its local counterparts. Otherwise, we may be required to file our commercial
franchising agreements with the Ministry of Commerce or its local counterparts within a
specified time limit and be subject to fines, and if we fail to make the filing within certain
prescribed period, the relevant authority may issue a public announcement. In Malaysia, an
enterprise is required to complete a registration process to allow third parties to use its name
and logos as a franchise. We are required to complete such registration with respect to our
cooperation with network partners in Malaysia. We have submitted the registration application
and expect to complete the procedure in due course.
Our network partners also need to obtain necessary licenses and permits to operate express
delivery and transportation business in jurisdictions such as Thailand, the Philippines,
Indonesia, Vietnam and the PRC. We can provide no assurance that all of our network partners
have obtained all of the licenses and permits necessary for their business. For example, certain
of our network partners carry out their express delivery services while they are still in the
process of obtaining Courier Service Operation Permits in the PRC, and we may be subject to
fines or order of rectification as a result. Failure to obtain such licenses and permits may result
in suspension of operation, and in some jurisdictions, fines or other penalties by government
authorities. Any of these actions by relevant governments may have a material and adverse
effect on our results of operations. See also “Regulatory Overview” in Appendix III to this
prospectus. Our consolidated regional operating entities are also subject to similar license and
permit requirements under applicable laws. As of June 30, 2023, we only had one
unconsolidated regional operating entity.
We are also subject to a number of requirements with respect to updating our licenses and
certificates, implementing of rules and controls, as well as provisions of trainings applicable
to express delivery service as well as road freight transportation. We cannot guarantee that we
are in full compliance with all such requirements at all time. During the Track Record Period,
information contained in certain licenses, certificates and permits that we obtained has not been
updated in a timely manner, such as the basic corporate information or details of directorship.
We are still in the process of fulfilling such requirements, and failure to complete the
registration update in a timely manner may cause administrative fines and penalties.
Although our Group, including our consolidated regional operating entities, and, to the best of
our knowledge, our unconsolidated regional operating entity, have obtained all material
permits or licenses required for conducting our business in all jurisdictions where we operate,
we cannot assure you that we will be able to renew or maintain all necessary permits for our
existing operations or obtain licenses we need for new service offerings or expansion into new
markets. As we grow and expand, we continue to apply for new licenses and certificates, as
well as renew our existing ones. Some of our filings or application with respect to applying or
renewing some of the licenses are still under review. There is no guarantee that we will be able
to obtain such license. If any government of any other jurisdictions in which we operate (i)
considers that we historically operated, or are operating without proper or adequate approvals,
licenses or permits, (ii) promulgates new laws and regulations that require additional approvals
or licenses or impose additional restrictions on the operation of any part of our business, or (iii)
considers that we have not duly renewed these licenses in a timely manner, it has the power,
among other things, to levy fines, confiscate our income, revoke our business licenses, and
require us to discontinue our relevant business or impose restrictions on the affected portion
of our business. In particular, legal systems vary in different jurisdictions in which we operate.
The interpretation and implementation of relevant laws and regulations and the enforcement
practices by relevant governmental authorities are still in development. As a result, there may
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be significant changes regarding the interpretation and implementation of current and any
future laws and regulations applicable to our businesses. Any of these actions by relevant
governments may have a material and adverse effect on our results of operations.
We are subject to risks inherent in the logistics industry, including personal injury, product
damage, and transportation-related incidents.
We handle a large volume of parcels across our network, and face challenges with respect to
the protection and examination of these parcels. Parcels in our network may be stolen, damaged
or lost for various reasons, and we, our regional operating entities and/or our network partners
may be perceived or found liable for such incidents. We may fail to screen parcels and detect
unsafe or prohibited/restricted items. Hazardous items, such as flammables and explosives,
toxic or corrosive items and radioactive materials, may damage other parcels in our network,
injure recipients and harm our personnel and assets as well as those of our regional operating
entities and/or network partners. Furthermore, if we fail to prevent prohibited or restricted
items from entering into our network and if we participate in the transport and delivery of such
items, we may be subject to administrative or even criminal penalties, and if any personal
injury or property damage is concurrently caused, we may be further liable for civil
compensation.
The delivery of parcels also involves inherent risks. We constantly have a large number of
vehicles and personnel in transportation. We are subject to risks associated with transportation
safety, and the insurance maintained by us may not be sufficient to fully cover the damages
caused by transportation-related injuries or loss. From time to time, our vehicles and personnel
may be involved in transportation accidents, and the parcels carried by them may be lost or
damaged. In addition, frictions or disputes may occasionally arise from the direct interactions
between our pickup and delivery personnel with parcel senders and recipients. Personal injuries
or property damages may arise if such frictions or disputes escalate.
Any of the foregoing could disrupt our services, cause us to incur substantial expenses and
divert the time and attention of our management. We, our regional operating entities, whether
consolidated or unconsolidated, and our network partners may face claims and incur significant
liabilities if found liable or partially liable for any of injuries, damages or losses. Claims
against us may exceed the amount of our insurance coverage, or may not be covered by
insurance at all. Governmental authorities may also impose significant fines on us or require
us to adopt costly preventive measures. Furthermore, if our services are perceived as insecure
or unsafe by our end customers, e-commerce platforms and consumers, our parcel volume may
be reduced, and our business, financial condition and results of operations may be materially
and adversely affected.
The assessment of impairment losses involves a significant degree of management judgment as
well as estimates in determining the key assumptions. Therefore, there is uncertainty on the
prediction of the movement of impairment of prepayments, other receivables and other assets
and trade receivables.
Damages to brand image and corporate reputation could materially and adversely impact our
business.
We believe our brand image and corporate reputation will play an increasingly important role
in enhancing our competitiveness and maintaining business growth. Many factors, some of
which are beyond our control, may negatively impact our brand image and corporate
reputation. These factors include our ability to provide services to our customers, successfully
conduct marketing and promotional activities, manage relationship with and among our
regional sponsors and network partners, address complaints and events of negative publicity,
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maintain positive perception of us, our peers and the express delivery industry in general. Any
actual or perceived deterioration of our service quality, which is based on an array of factors
including customer satisfaction, rate of complaint or rate of accident, could subject us to
damages such as loss of important customers.
Negative publicity about us, including our services, management, business model and
practices, compliance with applicable rules, regulations and policies or our network partners
may materially and adversely harm our brand and reputation and have a material adverse effect
on our business. There is no assurance that we will be able to mitigate the impact of such
negative publicity within a reasonable period of time, or at all. Additionally, allegations,
directly or indirectly against us, may be posted on the Internet by anyone on a named or
anonymous basis, and can be quickly and widely disseminated. Information posted may be
inaccurate, misleading and adverse to us, and it may harm our reputation, business or
prospects. The harm may be immediate without affording us an opportunity for redress or
correction. Our reputation may be negatively affected as a result of the public dissemination
of negative and potentially inaccurate or misleading information about our business and
operations. Negative publicity against us or our peers could cause damages to our corporate
reputation and changes to the government policies and regulatory environment. If we are
unable to promote our brand image and protect our corporate reputation, we may not be able
to maintain and grow our customer base, and our business and growth prospects may be
adversely affected.
We may not be able to maintain our corporate culture, which has been a key to our success.
Since our inception, our corporate culture has been defined by our values, and we believe that
our culture has been critical to our success. In particular, our corporate culture has helped us
serve our customers, and attract, retain and motivate employees, regional sponsors and network
partners. We face a number of challenges that may affect our ability to maintain our corporate
culture, including:
 failure to identify and promote people to leadership positions in our organization who
share our culture and values;
 the increasing number and geographic diversity of our regional sponsors and network
partners;
 competitive pressures to move in directions that may divert us from our values;
 the continued challenges of an ever-changing business environment;
 the potential pressure from the public markets to focus on short-term results instead of
long-term value creation; and
 the increasing need to develop expertise in new areas of business that affect us.
If we are not able to maintain our corporate culture or if our culture fails to deliver the
long-term results we expect to achieve, our business and prospects may be materially and
adversely affected.
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We face risks related to severe weather conditions and other natural disasters, health
epidemics and other outbreaks, such as the COVID-19 pandemic, which could significantly
disrupt our operations.
Severe weather conditions and other natural or man-made disasters, including storms, floods,
fires, earthquakes, typhoons, epidemics, pandemics, conflicts, unrest, or terrorist attacks, may
disrupt our business and result in decreased revenues. Customers may reduce their demand for
logistics services or shipments, or our costs to operate our business may increase, either of
which could have a material adverse effect on us. Any such incidents could materially and
adversely affect our ability to source services and supplies from our suppliers or to distribute
packages throughout our markets.
The COVID-19 pandemic has resulted in significant disruptions in the global economy. We
temporarily closed our branch offices, sorting centers and pickup and delivery outlets in the
first quarter of 2020. Since the second quarter of 2020, the markets where we have our core
operations continue to be subject to the impact of COVID-19 pandemic. The timelines for
business resumption varied across different localities and countries. Our branch offices, sorting
centers and pickup and delivery outlets closed and opened in accordance with measures
adopted by their respective local government authorities.
Due to the surges in the number of cases of COVID-19 in December 2022 and January 2023
in China, we experienced temporary labor shortage, which has caused delays in our express
delivery service. We did not experience any major parcel delivery delay during the Track
Record Period and up to the Latest Practicable Date. However, our operations, results of
operations and financial condition could be further adversely affected if a wide spread of
COVID-19 pandemic happens again in the locations where we have operations.
We have made, and may need to continue to make, substantial capital expenditures, and we
will face risks that are inherent to such investment.
To carry out our strategies and expansion plan, we have incurred, and may continue to incur,
capital expenditures on acquisition of land use rights, construction of facilities and investment
in delivery infrastructure in connection with the consolidation and organic growth of our
business. We paid an aggregate of US$257.7 million, US$513.7 million, US$573.2 million, and
US$249.5 million in 2020, 2021, 2022 and the six months ended June 30, 2023, respectively,
for purchase of property, plant and equipment. To facilitate our future expansion, we may need
to continue to make substantial capital expenditures.
Significant capital expenditures are associated with certain inherent risks. We may not have the
resources to fund such investment. Even if we have sufficient funding, assets that best suit our
needs may not be available at reasonable prices or at all. We may also incur capital
expenditures earlier than all of the anticipated benefits, and the return on these investments
may be lower, or may be realized more slowly, than we expected. The carrying value of the
related assets may be subject to impairment, which may adversely affect our financial
condition and operating results.
We may not be able to obtain additional capital when desired, on favorable terms or at all.
We may require additional cash capital resources in order to fund future growth and the
development of our businesses, including investments in equipment, land, facilities and
technological systems to remain competitive. If our cash resources are insufficient to satisfy
our cash requirements, we may seek to issue additional equity or debt securities or obtain new
or expanded credit facilities. Our ability to obtain external financing in the future is subject to
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a variety of uncertainties, including our future financial condition, results of operations, cash
flows, share price performance, liquidity of international capital and lending markets,
governmental regulations over foreign investment and the e-commerce industry. In addition,
incurring indebtedness would subject us to increased debt service obligations and could result
in operating and financing covenants that would restrict our operations. There can be no
assurance that financing will be available in a timely manner or in amounts or on terms
acceptable to us, or at all. Any failure to raise needed funds on terms favorable to us, or at all,
could severely restrict our liquidity as well as have a material adverse effect on our business,
financial condition and results of operations. Moreover, issuance of equity or equity-linked
securities could result in significant dilution to our existing shareholders.
We may fail to successfully make necessary or desirable strategic alliances, acquisitions or
investments, and we may not be able to achieve the benefits we expect from the alliances,
acquisition or investments we make.
We may pursue selected strategic alliances and potential strategic acquisitions that are
complementary to our business and operations, including opportunities that can help us further
expand our service offerings and enhance our research and development and technology
innovations.
Strategic alliances with third parties could subject us to a number of risks, including risks
associated with sharing proprietary information, non-performance or default by counterparties,
and increased expenses in establishing these new alliances, any of which may materially and
adversely affect our business. We may have limited ability to control or monitor the actions of
our strategic partners. To the extent a strategic partner suffers any negative publicity as a result
of its business operations, our reputation may be negatively affected by virtue of our
association with such party. To expand, consolidate and optimize our delivery capacity in key
geographic areas, we conducted certain acquisitions during the Track Record Period and in
2023. See “History and Corporate Structure.” If our investments do not subsequently generate
the anticipated financial performance, we may need to revalue or write down the value of
goodwill and other intangible assets in connection with such acquisitions, which would harm
our results of operations.
In addition, we may fail to achieve the anticipated synergies and other benefits from
acquisitions, which may adversely impact our business and results of operations.
From time to time, we make acquisitions as we expand. For example, we completed the
acquisitions of the SEA entities and BEST Express China in December 2021. See “History and
Corporate Structure – Major Acquisitions, Disposals and Mergers.” In addition, we also
completed the acquisition of Fengwang Information in June 2023. We could assume unknown
or contingent liabilities and be exposed to claims and disputes by third parties. There could be
unknown or undisclosed risks or liabilities in relation to such acquisition, and there is no
assurance that we will be fully or sufficiently indemnified. Our future success, including the
anticipated benefits and cost savings, depends, in part, on our ability to integrate the acquired
business and optimize our operations. The potential difficulties of integrating the operations of
an acquired business and realizing our expectations for an acquisition, including the benefits
that may be realized, include, among other things failure to implement our business plan for
the combined business, delays or difficulties in completing the integration of acquired
companies or assets, and higher than expected costs, lower than expected cost savings or a need
to allocate resources to manage unexpected operating difficulties.
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Our business depends on the continuing efforts of our management and our ability to attract,
train and retain qualified personnel.
Our business depends on the continuing efforts of our management. In particular, Mr. Li, our
executive Director, Chief Executive Officer, chairman of the Board and our Controlling
Shareholder, has been crucial to the development of our culture and strategic direction. If one
or more of our management members were unable or unwilling to continue their employment
with us, we may not be able to replace them in a timely manner, or at all. Members of our senior
management team or other key personnel may also resign and join a competitor or form a
competing company. Regional sponsors who help execute our regional strategy may also
terminate their relationships with us voluntarily or involuntarily. The loss of qualified
executives, regional sponsors and employees, or an inability to attract, retain, and motivate
high-quality executives and employees required for the planned expansion of our business, may
harm our operating results and impair our ability to grow.
We intend to hire and retain additional qualified employees to support our operations and
planned expansion. Our future success depends, to a significant extent, on our ability to attract,
train, retain and motivate qualified personnel, particularly management, operational personnel
and regional sponsors with expertise in the express delivery industry, the e-commerce industry
or markets that we plan to expand into. Our experienced mid-level managers are instrumental
in executing our business plans, implementing our business strategies and supporting our
operations and growth, and we cannot assure you that we will be able to attract or retain these
qualified personnel.
We have granted, and may continue to grant, share incentives, which may result in increased
share-based compensation expenses, dilution of our shareholders’ shareholding interest and
negatively impact our results of operations.
We adopted certain share incentive schemes for the purpose of granting share based
compensation awards to employees, directors, consultants, regional sponsors and network
partners to incentivize their performance and align their interests with ours. In 2020, 2021,
2022 and the six months ended June 30, 2023, we recorded share-based compensation expenses
related to employee benefits of US$161.1 million, US$382.6 million, US$244.1 million and
US$10.3 million, respectively. We believe the granting of share-based compensation is of
significant importance to our ability to attract and retain key personnel, parties and employees,
and we will continue to grant share-based compensation awards in the future. As a result, our
expenses associated with share-based compensation may increase, which may have an adverse
effect on our results of operations. Any newly granted RSUs, options, or any other share-based
compensations that we may grant from time to time may result in an increase in our issued
share capital when vested, which in turn may result in a dilution of our shareholders’
shareholding interests in our Company and a reduction in earnings per share.
We may not be able to prevent others from unauthorized use of our intellectual property,
which could harm our business and competitive position.
We regard our trademarks, domain names, trade secrets, proprietary technologies and other
intellectual property as critical to our business. We rely on a combination of intellectual
property laws and contractual arrangements to protect our proprietary rights. It may be difficult
to register, maintain and enforce intellectual property rights in some of the markets where we
operate. The interpretation and implementation of relevant laws and regulations and the
enforcement practices by relevant governmental authorities are still in development.
Confidentiality agreements and license agreements may be breached by counterparties, and
there may not be adequate remedies available to us for any such breach. Accordingly, we may
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not be able to effectively protect our intellectual property rights or to enforce our contractual
rights in all markets where we operate. Policing any unauthorized use of our intellectual
property is difficult and costly and the steps we have taken may be inadequate to prevent the
misappropriation of our intellectual property. In the event that we resort to litigation to enforce
our intellectual property rights, such litigation could result in substantial costs and a diversion
of our managerial and financial resources. We can provide no assurance that we will prevail in
such litigation. In addition, our trade secrets may be leaked or otherwise become available to,
or be independently discovered by, our competitors. Any failure in protecting or enforcing our
intellectual property rights could have a material adverse effect on our business, financial
condition and results of operations.
We may be accused of infringing the intellectual property rights of others.
From time to time, third parties may claim that we have infringed their intellectual property
rights. Although we take steps to avoid knowingly violating the intellectual property rights of
others, third parties may nonetheless claim infringement. Existing or future infringement
claims against us, regardless of their validity, may be expensive to defend and may divert the
attention of our management away from business operations. If a claim of infringement brought
against us is successful, we may be required to pay substantial penalties or other damages and
fines, enter into license agreements which may not be available on commercially reasonable
terms or at all or be subject to injunctions or court orders.
We have limited insurance coverage which could expose us to significant costs and business
disruption.
We maintain various insurance policies to safeguard against risks and unexpected events, such
as insurance over the equipment in our sorting centers as well as accident insurance. We have
purchased compulsory motor vehicle liability insurance and commercial insurance such as
automobile third-party liability insurance, vehicle loss insurance and driver/passenger liability
insurance. We also provide social security insurance under applicable laws, including pension
insurance, unemployment insurance, work-related injury insurance and medical insurance for
our employees. We do not maintain business interruption insurance nor do we maintain product
liability insurance or key-man insurance. Sometimes, relevant insurance policies may not be
available even if we are willing to procure additional insurance. We cannot assure you that our
insurance coverage is sufficient to prevent us from any loss or that we will be able to
successfully claim our losses under our current insurance policies on a timely basis, or at all.
If we incur any loss that is not covered by our insurance policies, or the compensated amount
is significantly less than our actual loss, our business, financial condition and results of
operations could be materially and adversely affected. Furthermore, our claim records may
affect the premiums which insurance companies may charge us in the future. We may not be
able to maintain insurance of the types or at levels which we deem necessary or adequate or
at rates which we consider reasonable, in particular in case of significant increases in premium
levels upon the renewal of our insurance policies.
We are subject to anti-corruption, anti-bribery, governmental economic sanctions and other
laws and regulations, and third party payment channels we cooperate with are subject to
anti-money laundering laws.
We are subject to anti-corruption, anti-bribery, economic and trade sanctions laws and other
relevant laws and regulations in various jurisdictions. For example, U.S. economic sanctions
prohibit the provision of products and services to countries, governments, and persons targeted
by U.S. sanctions. United Kingdom financial sanctions and European Union sanctions also
have similar regime to prohibit the provision of products and services to countries,
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governments and persons on their respective target list. Although we perform compliance
processes and maintain internal control systems, we may be subject to investigations and
proceedings by governmental authorities for alleged infringements of these laws and
regulations if our processes or systems are not conducted or are not operating properly. These
proceedings may result in fines or other liabilities and could have a material and adverse effect
on our reputation, business, financial condition, results of operations and prospects. If any of
our subsidiaries, employees or other persons engage in fraudulent, corrupt or other unfair
business practices or otherwise violate applicable laws, regulations or internal controls, we
could become subject to one or more enforcement actions or otherwise be found to be in
violation of such laws and regulations, which may result in adverse media coverage,
investigations, severe administrative, civil and possibly criminal sanctions, penalties, fines and
sanctions and in turn adversely affect our reputation, business, financial condition, results of
operations and prospects.
In addition, we currently cooperate with third party payment channels to process payments for
us. These third party payment channels are subject to anti-money laundering obligations under
applicable anti-money laundering laws and regulations, which require them to comply with
certain anti-money laundering requirements, including the establishment of a customer
identification procedure, the monitoring and reporting of suspicious transactions, the
preservation of customer information and transaction records, and the provision of assistance
to the public security department and judicial authority in investigations and proceedings in
relation to anti-money laundering matters. If a third-party payment channel fails to perform its
anti-money laundering obligations, it may be subject to fines or other proceedings in
accordance with the relevant regulations. If any of our third-party payment channel fails to
comply with applicable anti-money laundering laws and regulations, our reputation could
suffer and we could become subject to regulatory intervention, which could have a material and
adverse effect on our business, financial condition, results of operations and prospects.
Our business and reputation may be harmed by unethical or anticompetitive business
conduct within or in connection with our network.
There has been and may continue to be unethical or anticompetitive conduct, misconduct or
unlawful behavior by our network partners and, in some cases, our employees within, or in
connection with, our network, such as with respect to the procurement of resources and the
pricing of delivery service charges. Such conduct may include placing fabricated orders,
mishandling of funds, accepting unlawful kick-backs during our raw material or equipment
procurement. For example, we acquired J&T Express China, formerly known as Shanghai
Longbang Express Delivery Co., Ltd. (ʮ̡)( “ Shanghai Longbang ”) in
2020. We are aware that, prior to the acquisition in 2019, certain e-commerce merchants placed
fabricated orders, such as parcels with valueless content, to themselves or to their designated
parties with the intent to generate inflated sales records and consumer reviews and create
perceived popularity among online consumers. We did not record revenue from fabricated
orders identified by us and there was no overstatement of our revenue due to these fabricated
orders. These fabricated orders do not directly impact our revenues as our regional operating
entities and network partners are generally able to collect service charges from these
merchants. We have implemented a series of internal control measures to identify and prevent
placement of fabricated orders. For example, we request network partners and regional
operating entities to inquire the shippers on content and check the package by weight to ensure
it is not a fabricated order upon pickup and encourage network partners and regional operating
entities to report any fabricated orders. We also impose penalties on the behavior of placing
fabricated orders. Our Directors are of the view that these measures are adequate and effective,
and the fabricated orders and unethical or anticompetitive conduct do not have a material and
adverse effect on our business, financial condition and results of operations. Other than the
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Longbang incident stated above, we were not aware of any material fabricated order issue and
were not subject to any administrative penalty, government inquiries or correspondence from
relevant authorities of similar nature with respect to fabricated orders during the Track Record
Period. It is difficult for us, our regional operating entities and our network partners to
distinguish these orders from genuine orders through the ordinary parcel screening procedures.
However, we do not have control over the behavior of all parties, including e-commerce
merchants who may be attempted to engage in such actions, and we cannot assure you that our
policies and efforts will be successful in fully eliminating such actions. We may be subject to
heightened compliance costs or loss of business due to reduced e-commerce business volume
if any government cracks down on these unethical practices. We also have little control over
third parties involved in unethical or anticompetitive business conduct targeted at or in
connection with our network, such as non-compliance with laws, third-party sabotage or
allegations intended to harm us, our regional operating entities, or our network partners. We
may incur substantial monetary losses and our reputation may suffer as a result of such
conduct. We may also incur significant liabilities and penalties arising from such unethical
conduct and may be required to allocate significant resources and incur material expenses to
prevent such unethical or anticompetitive conduct in the future.
We, our directors, senior management and our regional sponsors, regional operating entities
and network partners may be subject to claims, lawsuits and other legal proceedings that may
adversely affect our reputation, business and results of operations.
We may be, and in some instances have been, subject to claims, lawsuits including class actions
and individual lawsuits, government investigations, and other proceedings relating to
intellectual property, consumer protection, privacy, labor and employment, import and export
practices, competition, securities, tax, marketing and communications practices, commercial
disputes, and other matters. The number and significance of our legal disputes and inquiries
have increased as we have grown larger, as our business has expanded in scope and geographic
reach, and as our services have increased in complexity. For example, in December 2021 and
January 2022, two independent third parties claimed that they were entitled to certain equity
interest in one of our controlled affiliated entities in the PRC. We have obtained final and
binding judgments denying their requests for transferring equity interest in June 2023, and we
have fully paid monetary damages in the judgments. The claims did not have a material and
adverse effect on our business, financial condition and results of operations. As of the Latest
Practicable Date, our Group, including our consolidated regional operating entities, and, to the
best of our knowledge, our unconsolidated regional operating entity, were not subject to any
material claims, arbitrations and other legal proceedings. However, we cannot assure you we
will not be subject to claims of similar or greater significance in the future, or if we will be
able to successfully defend ourselves in those actions. In addition, there may be changes
regarding the scope and application of many laws and regulations that we are subject to, which
increases the risk of claims alleging violations of those laws and regulations.
Regardless of outcome, legal proceedings may have a material and adverse impact on us due
to their costs, diversion of our resources, and other factors. We may decide to settle legal
disputes on terms that are unfavorable to us. Furthermore, if any litigation to which we are a
party is resolved adversely, we may be subject to an unfavorable judgment that we may not
choose to appeal or that may not be reversed upon appeal. In addition, the terms of any
settlement or judgment in connection with any legal claims, lawsuits, or proceedings may
require us to cease some or all of our operations, or pay substantial amounts to the other party
and could materially and adversely affect our business, financial condition and results of
operations.
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Our use of certain leased properties could be challenged by third parties or governmental
authorities, which may cause interruptions to our operations.
In general, we conduct customary due diligence on relevant real estate properties before
entering into the lease agreements in accordance with local market practice. Nevertheless, we
cannot assure you that our reviews, surveys or inspections would have revealed all defects or
deficiencies affecting our leased properties, including the titles thereof. Neither can we assure
you that the lessors have taken all necessary actions to perfect their titles, ensure mandatory
fire-control and explosion insurance, file fire-control registration or satisfy relevant
requirements under applicable laws and regulations. If (i) our lessors are not the owners of the
properties and they have not obtained consents from the owners or their lessors or permits from
the relevant governmental authorities, or (ii) our lessors have granted certain security or
encumbrances over the properties and they are in default, causing the lease property to be
executable by the authorities, our leases could be invalidated. In the event that our use of
properties is successfully challenged or that our leases are found invalid, we may be subject
to fines and forced to relocate from the affected properties. In addition, we may become
involved in disputes with the property owners or third parties who otherwise have rights to or
interests in our leased properties. We cannot assure you that we will be able to find suitable
replacement sites on terms acceptable to us on a timely basis, or at all, or that we will not be
subject to material liability resulting from third parties’ challenges on our use of such
properties. Also, in the event that the actual use of our leased properties is inconsistent with
the designated use specified by relevant authorities or our leased properties are on allocated
land ( ྌᅡɺή), the competent authorities may require the lessors to return the land and
impose fines on the lessors, or confiscate the proceeds from the leasing of the properties and
impose fines on the lessor if such properties are leased without their consent or require the
lessors to hand in such income, as applicable. Therefore, the relevant lease agreements may be
deemed to be in breach of the law and therefore be void. Certain lessors of our leased properties
in Malaysia have not provided us with certain certificates under applicable laws or leased the
properties to us in contravention of permitted category of land use for such properties. Further,
we have not obtained certain business premises licences from the relevant local councils and
authorities in accordance with the Local Government Act 1976 and the relevant by-laws and
regulations for certain material premises we rent in Malaysia. Pursuant to Malaysian laws, a
Certificate of Completion and Compliance or Certificate of Fitness for Occupation should be
obtained before a building can be occupied. Certain lessors of the leased properties that we
deem important to our operation in Malaysia have not provided us with these certificates under
applicable laws. Lack of such certificate may subject us to a fine of up to RM1.25 million
(approximately US$27,000). For certain leased properties that we plan to move out from soon,
including a leased property in Malaysia, we do not have all necessary registration, filings,
proof of underlying title or the most up-to-date premise-specific business certificate. As of the
Latest Practicable Date, no penalty or enforcement action had been imposed on the properties
we occupy or us by Malaysian authorities in relation to the outstanding certificates for certain
properties or the outstanding business premises licences. In addition, some of our leasehold
interests in leased properties have not been registered with the relevant PRC governmental
authorities as required by relevant PRC laws. As of the Latest Practicable Date, some of the
lessors of our leased properties had not provided us with their property ownership certificates
or other documentation proving their right to lease those properties to us. Some of our leased
properties in certain jurisdictions in which we operate do not have title certificates or approvals
and the owner or lessor of such property may not have the right to lease such property to us.
As of the Latest Practicable Date, we identified 152 leased properties in aggregate with certain
defects and the maximum penalties that may be imposed amount to approximately
US$493,803. We do not believe that the defective leased properties will, individually or in the
aggregate, have a material adverse effect on our business operations.
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To our knowledge, for the pickup and delivery outlets operated by our network partners, some
of the lessors of the leased pickup and delivery outlets have not provided our network partners
with their property ownership certificates or other documentation proving their right to lease
those properties. If our network partners were to find replacement premises for their outlets due
to any lease deficiencies, the daily operations of such outlets may be negatively affected.
A severe or prolonged economic downturn in any countries or regions where we operate or
globally could materially and adversely affect our business and our financial condition.
The success of our business depends, to a significant extent, on the development of
e-commerce industry and the level of consumer demand and discretionary spending in the
markets where we operate. Even before the outbreak of COVID-19 pandemic, the global
macroeconomic environment was facing numerous challenges. There is considerable
uncertainty over the long-term effects of the expansionary monetary and fiscal policies which
had been adopted by the central banks and financial authorities of some of the world’s leading
economies. Additionally, constant changes in global trade practices and foreign policies, such
as trade protectionism and ongoing trade disputes, including tariff actions by major countries
such as the United States, may further affect the global economy and markets, including
markets where we operate. We do not believe that changes in global trade practices and foreign
policies will have any material adverse impact on our operations and financial performance
because we primarily generate our revenue from domestic express delivery services, which are
not materially sensitive to such changes. For our cross-border operations, which contributed to
a rather insignificant portion of our revenue during the Track Record Period, we cover a vast
number of different routes and geographic regions, and therefore changes in the trade practices
and foreign policies in one or two particular country are not expected to have a material impact
on our operations. Trade restrictions, including tariffs, quotas, embargoes, safeguards and
customs restrictions, could restrict e-commerce merchants’ and our clients’ abilities to source
products and sell products to other markets and thus negatively impact our results of
operations. Moreover, regional political and trade tensions could reduce levels of investments,
trades and other economic activities, which would have a material adverse effect on global
economic conditions and the stability of global financial markets. Unrest, terrorist threats and
the potential for war in the Middle East and elsewhere may increase market volatility across
the globe. Economic conditions in markets where we operate are sensitive to global economic
conditions, as well as changes in economic and political policies and the expected or perceived
overall economic growth rate in markets where we operate. Any severe or prolonged slowdown
in the economy may materially and adversely affect our business, results of operations and
financial condition.
We collect, process and use data, some of which contains personal information. Any privacy
or data security breach could damage our reputation and brand and substantially harm our
business and results of operations.
We have access to a large amount of confidential information in our day-to-day operations.
Each waybill contains the names, addresses, phone numbers and other contact information of
the sender and recipient of a parcel. The content of the parcel may also constitute or reveal
confidential information. The proper use and protection of confidential information are
essential to maintaining customer trust and confidence in us.
Our technology system also processes and stores a significant amount of confidential
information and data for the proper functioning of our network. Security breaches and hackings
to our system might result in a compromise to the technology that we use to protect confidential
information. We may not be able to prevent third parties, especially hackers or other
individuals or entities engaging in similar activities, from illegally obtaining the confidential
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information. Such individuals or entities may further engage in various other illegal activities
using such information. On the other hand, as each parcel moves through our network from
pickup to delivery, a large number of personnel handle the parcel and have access to the
relevant confidential information. Some of them may misappropriate the confidential
information, although we have adopted security policies and measures. Most of the delivery
and pickup personnel are not our employees, which makes it more difficult for us to implement
sufficient and effective control over them.
Practices regarding the collection, use, storage, transmission and security of personal
information have recently come under increased public scrutiny. Relevant regulatory
frameworks worldwide are rapidly evolving and are likely to remain uncertain for the
foreseeable future. Government bodies and agencies in Indonesia, Thailand, the Philippines,
the PRC and Vietnam have in the past years adopted, and may in the future adopt, new laws
and regulations on data protection and data privacy, all of which may subject us to additional
compliance costs, divert management attention and adversely impact our results of operations.
For example, in Thailand, on May 27, 2019, the Personal Data Protection Act B.E. 2562 (2019)
(the “ PDPA”) was published on the national gazette. After publication, there is a transition
period of one year following publication in the national gazette for key provisions under the
PDPA to become enforceable, enabling enterprises to prepare to be in compliance with the
PDPA. The transition period was extended until May 31, 2022, and the PDPA has become
effective on June 1, 2022. In Vietnam, with the recent passage of Decree No.53/2022/ND-CP
(taking effect from October 1, 2022), the Vietnamese Government requires that personal data
belonging to internet users in Vietnam, certain data generated by internet users in Vietnam and
data on such users’ relationships (such as friends and groups with whom such users interact),
of regulated entities be stored in Vietnam. The increased focus, scrutiny and enforcement,
including more frequent inspections, could increase our compliance costs and subject us to
heightened risks and challenges associated with data security and protection. In Indonesia, the
Indonesian Government promulgated Law of the Republic of Indonesia No. 27 of 2022 on the
Protection of Personal Data (“ PDP Law ”), which came into force on October 17, 2022. The
controller, processor and other parties related to the processing of Personal Data must comply
to the provisions of the PDP Law at the latest within 2 years of the promulgation of the PDP
Law, i.e. no later by October 17, 2024. The PDP Law also provided that additional provisions
on certain technical matters will be regulated in the implementing regulations (government
regulation) of the PDP Law, which would cover among others: (i) filing on the objection of
automatic personal data processing; (ii) violation on personal data processing as well as its
compensation procedures; (iii) rights of a personal data subject to use and circulate personal
data; (iv) implementation of personal data processing; (v) notification procedures on the
storing, transfer, deletion, or destruction of personal data; (vi) personal data protection officer;
(vii) transfer of personal data; and (viii) administrative sanctions. However, until the Latest
Practicable Date, the Indonesian Government has not issued any further government
regulations to serve as the implementing regulations to the PDP Law. If we fail to comply with
any of these laws, regulations, standards, or other obligations, or such public representations,
or are alleged to have done so, we may be subject to investigations, enforcement actions, civil
litigation, fines, and other penalties, all of which may generate negative publicity and have a
negative impact on our business.
Furthermore, as the interpretation and application of many laws and regulations relating to
privacy, data protection, and data security, along with industry standards, are subject to
changes, it is possible that these laws and regulations may be interpreted and applied in a
manner that is inconsistent with our existing data management practices or the features of our
products, and we could face fines, lawsuits, regulatory investigations, and other claims and
penalties, and we could be required to fundamentally change our products or our business
practices, which could have an adverse effect on our business. Any inability to adequately
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address privacy, data protection, and data security concerns, even if unfounded, or any actual
or perceived failure to comply with applicable privacy, data protection, and data security laws,
regulations, and other obligations, could result in additional cost and liability to us, damage our
reputation, inhibit sales, and adversely affect our business. Privacy, data protection, and data
security concerns, whether valid or not valid, may inhibit market adoption of our products. If
we are not able to adjust to changing laws, regulations, and standards related to these matters,
our business may be harmed.
Complying with evolving laws and regulations regarding cybersecurity, information security,
privacy and data protection and other related laws and requirements may be expensive and
may force us to make adverse changes to our business. Many of these laws and regulations
are subject to changes, and any failure or perceived failure to comply with these laws and
regulations could result in negative publicity, legal proceedings, suspension or disruption of
operations, increased cost of operations, or otherwise harm our business.
Laws and regulations governing cybersecurity, information security, privacy and data
protection, the use of the Internet as a commercial medium, the use of data in artificial
intelligence and machine learning, and data sovereignty requirements are rapidly evolving,
extensive and complex. When providing express delivery services, we have access to various
operational and other data of shippers, buyers on e-commerce platforms, employees and others.
If we are deemed to be a critical information infrastructure operator, we would be required to
follow applicable cybersecurity review and/or extra mandatory protective procedures. During
such procedures, we may be required to suspend providing any existing or new services to
customers and/or experience other disruptions of our operations, and such review could also
result in negative publicity with respect to us and diversion of our managerial and financial
resources.
On June 10, 2021, the Standing Committee of the National People’s Congress of China
promulgated the PRC Data Security Law, which became effective in September 2021. The PRC
Data Security Law provides for data security and privacy obligations on entities and
individuals carrying out data processing activities, introduces a data classification and
hierarchical protection system based on the importance of data in economic and social
development, as well as the degree of harm it will cause to national security, public interests,
or legitimate rights and interests of individuals or organizations when such data is tampered
with, destroyed, leaked, or illegally acquired or used, provides for a national security review
procedure for those data activities which may affect national security and imposes export
regulations on certain data and information.
On November 14, 2021, the CAC commenced to publicly solicit comments on the Regulations
on the Administration of Cyber Data Security (Draft for Comments) ( ၣഖᅰኽτΌ၍ଣૢԷ
(ᅄӋจԈᇃ)) (“ Draft Data Security Regulations ”). The Draft Data Security Regulations
differentiates “listing in Hong Kong” from “listing in a foreign country,” the latter of which
was mentioned in the Review Measures (as defined below). According to the Draft Data
Security Regulations, data processors shall, in accordance with relevant state provisions, apply
for cybersecurity review when carrying out the following activities: (i) the merger,
reorganization or separation of Internet platform operators that have acquired a large number
of data resources related to national security, economic development or public interests, which
affect or may affect national security; (ii) data processors that handle personal information of
more than one million people contemplating to list its securities on a foreign stock exchange;
(iii) data processors contemplating to list its securities on a stock exchange in Hong Kong,
which affects or may affect national security; and (iv) other data processing activities that
affect or may affect national security. According to the PRC National Security Law ( ʕശɛ͏
جnational security refers to a status in which the regime, sovereignty, unity,
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territorial integrity, welfare of the people, sustainable economic and social development, and
other vital interests of the state are relatively not in danger and not threatened internally or
externally and the ability to maintain a sustained security status. However, the criteria for
determining “affect(s) or may affect national security” as stipulated in the Draft Data Security
Regulations, are still subject to further clarification by the CAC.
On December 28, 2021, the CAC, the NDRC, the MIIT, and several other administrations
jointly promulgated the Cybersecurity Review Measures (جor the Review
Measures, which became effective on February 15, 2022. According to the Review Measures,
(i) if a critical information infrastructure operator purchases network products and services or
an online platform operator conducts data processing, either of which affects or may affect
national security, a cybersecurity review shall be carried out according to the Review
Measures; (ii) an issuer who is a Internet platform operator holding personal information of
more than one million shall file for a cybersecurity review with respect to its proposed listing
on a foreign stock exchange; and (iii) the relevant PRC governmental authorities may initiate
cybersecurity review if such governmental authorities determine that the issuer’s network
products or services, or data processing activities affect or may affect national security. These
and other similar legal and regulatory developments could affect how we design our IT
systems, how we operate our business, how our business partners and shippers process and
share data, how we process and use data, and how we transfer personal data from one
jurisdiction to another, which could impact demand for our solutions. We may incur relative
costs to comply with such laws and regulations, to meet the demands of our customers relating
to their own compliance with applicable laws and regulations, and to establish and maintain
internal compliance policies.
On July 7, 2022, the CAC promulgated the Data Outbound Transfer Security Assessment
Measures (جthe “ Security Assessment Measures ”), which took effect
on September 1, 2022. The Security Assessment Measures require that any data processor that
processes or exports personal information exceeding certain volume threshold under such
measures shall apply for security assessment by the CAC before transferring any personal
information outbound. The security assessment requirement also applies to any transfer of
important data outside of China. For details, see “Regulatory Overview – Regulations Relating
to Data Security” in Appendix III to this prospectus. Although J&T International engages in the
cross-border logistics business, J&T International only processes certain business, non-
personal information such as the names, addresses and contact information of the business
entities. Based on a consultation meeting with the State Post Bureau of the PRC, such
information shall be excluded from the category of personal information. In addition, J&T
International has conducted a self-assessment, based on which J&T International concluded
that no cross-border transfer of personal information takes place in its business operations with
reference to its consultation with the State Post Bureau of the PRC. Upon a review of the
self-assessment report, the Cyberspace Administration of Guangdong Province, as the
responsible authority to accept filings for data cross-border transfer security assessment, has
no objection to such conclusion. As advised by the PRC Legal Adviser, pursuant to Article 10
of the Critical Information Infrastructure Security Protection Regulations, the authority
in-charge of the security protection of critical information infrastructure should promptly
notify the relevant entities which are identified as a critical information infrastructure operator.
As of the Latest Practicable Date, we have not received any official notification from relevant
authorities that any of our PRC entities are considered as a critical information infrastructure
operator. In addition, as further advised by the PRC Legal Adviser, the regulatory authority of
a specific sector and the local government authority shall determine the types of “important
data” according to the Data Security Law and, as of the Latest Practicable Date, none of the
effective “important data” categories is applicable to our business. Therefore, as we do not
process any important data under the relevant PRC laws and regulations, we do not fall into
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any of the circumstances listed in the Security Assessment Measures. On February 24, 2023,
the CAC published the finalized Measures on Standard Contract for the Outbound Cross-
Border Transfer of Personal Information () (the “ Standard
Contract Measures ”), which became effective on June 1, 2023, with a built-in six-month
grace period (i.e., up to December 1, 2023). Under the Standard Contract Measures, handlers
of personal information (“ PI”) that do not meet the threshold requirements under the Security
Assessment Measures and have not obtained a PI protection certification from a qualified
certification institution designated by the CAC, but that nevertheless engage in the transfer of
PI out of China based on contractual arrangements must (1) execute standard form contracts
that strictly comply with the “Standard Contract” published by the CAC with the overseas
recipients of the PI that the PI handlers transfer out of China; (2) complete PI protection impact
assessments; and (3) file the relevant standard contracts and PI protection impact assessments
to their provincial CAC branch within 10 business days of the taking effect of each standard
contract. We have been conducting internal assessments in accordance with the Standard
Contract Measures to identify whether a standard contract is required for any potential
outbound cross-border transfer of PI. We would cause the relevant PRC entities to comply with
the Standard Contract Measures by taking proper measures including executing standard
contracts with the overseas recipients of PI upon the expiry of the six-month grace period when
necessary. However, since the Security Assessment Measures and the Standard Contract
Measures were newly promulgated, there may be changes from time to time as to their
interpretations and applications. In the event if the regulatory authorities deem certain of our
activities as a cross-border data transfer, we will be subject to the relevant requirements.
Complying with new laws and regulations may substantially increase our costs or require us
to change our business practices. Despite our continuous efforts to comply with all applicable
data protection laws and regulations and the absence of any material data breach or similar
incidents, any failure or perceived failure to comply with applicable laws, regulations or policy
may result in inquiries, proceedings or actions against us, as well as negative publicity, each
of which could damage our reputation, influence our corporate image, and have a material
adverse impact on our business and results of operations.
Risks Related to Our Corporate Structure
In certain jurisdictions, we are subject to restrictions on foreign ownership.
The laws and regulations in many markets place restrictions on foreign investment in, control
over, management of, ownership of and ability to obtain licenses for entities engaged in a
number of business activities.
PRC
Under the current PRC laws and regulations, foreign enterprises or individuals may not invest
in or operate domestic delivery services of letters. According to the Negative List, foreign
investment is prohibited in the establishment of any postal enterprise and in provision of any
domestic mail delivery services. Postal enterprises refer to the China Post Group and its wholly
owned enterprises or controlled enterprises that provide postal services and other services,
including but not limited to mail delivery, postal remittances, savings and issuance of stamps
and production and sale of philatelic products.
We are a Cayman Islands exempted company, and our PRC subsidiaries are considered
foreign-invested enterprises. Accordingly, none of our PRC subsidiaries is eligible to operate
domestic delivery services of letters in China. It is also practically and economically not
possible to separate the delivery of letters from the delivery of non-letter items in our
day-to-day services. To ensure strict compliance with the PRC laws and regulations, we
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conduct such business activities through Shanghai Yishangshiye (the “ PRC VIE ”), our PRC
consolidated affiliated entity, and its subsidiaries. Chongqing Y unqing Supply Chain
Management Co., Ltd. (“ PRC WFOE ”), our wholly owned subsidiary in China, has entered
into a series of contractual arrangements with our PRC VIE and its shareholders, which allows
us to (i) exercise effective control over our PRC VIE, (ii) receive substantially all of the
economic benefits of our PRC VIE, and (iii) have an exclusive option to purchase all or part
of the equity interests and assets in our PRC VIE when and to the extent permitted by the PRC
laws and regulations. Because of these PRC Contractual Arrangements, we have control over
and are the primary beneficiary of our PRC VIE and hence consolidate its financial results as
our variable interest entity under IFRS. For a detailed discussion of these PRC Contractual
Arrangements, see “Contractual Arrangements.”
In the opinion of our PRC Legal Adviser, DaHui Lawyers, (i) the ownership structures of our
WFOE and our consolidated affiliated entities in China, currently and immediately after giving
effect to this Global Offering are not in violation of any explicit provisions of the PRC laws
and regulations currently in effect; and (ii) the PRC Contractual Arrangements between our
PRC WFOE, our PRC VIE and its shareholders governed by the PRC laws are valid, binding
and enforceable against each party thereto in accordance with their terms. However, we have
been further advised by our PRC counsel that the interpretation and application of current and
future PRC laws, regulations and rules are evolving, which may also be revised from time to
time. Thus, the PRC regulatory authorities may take a view different from the opinion of our
PRC legal counsel.
Indonesia
Indonesian laws and regulations impose certain restrictions on foreign investment. In
particular, under the Indonesian Postal Law and Law No. 25 of 2007 on Investment as partially
amended by the Job Creation Law (Law No. 25 of 2007 as amended, the “ Indonesian
Investment Law ”), a 49% foreign investment limit is imposed on companies engaged in
courier services. Furthermore, under the Indonesian Postal Law, a foreign postal company (as
defined in the Indonesian Postal Law) may subscribe for equity interest in an Indonesian Postal
Services Company, provided that such Indonesian Postal Services Company does not engage
in any operations outside provincial capitals in Indonesia. Because it is practically and
economically impossible to separate our operations among provincial capitals from operations
outside provincial capitals, we conduct our business through our Indonesian consolidated
affiliated entity, the Indonesian Holdco and its subsidiaries in Indonesia. We have entered into
a series of contractual arrangements with the Indonesian Holdco, the Indonesian Corporate
Registered Shareholders and the Indonesian Individual Registered Shareholders, which enable
us to (i) exercise effective control over our Indonesian consolidated affiliated entities; (ii)
receive substantially all of the economic benefits of the Indonesian consolidated affiliated
entities; and (iii) have an exclusive option to purchase all or part of the equity interests in the
Indonesian consolidated affiliated entities when and to the extent permitted by Indonesian
laws.
We have engaged Hutabarat Halim & Rekan as our legal counsel in Indonesia, and they are of
the opinion that the Indonesian Contractual Arrangements that we adopted in Indonesia are
legally binding and enforceable on the Indonesian Holdco, the Indonesian Corporate
Registered Shareholders and the Indonesian Individual Registered Shareholders, respectively,
and comply with all relevant laws and regulations of Indonesia.
If the authorities of PRC or Indonesia find that our Contractual Arrangements do not comply
with their prohibition or restrictions on foreign investment, or if the relevant government
authorities otherwise find that we or any of our subsidiaries are in violation of the relevant laws
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or regulations or lack the necessary registrations, permits or licenses to operate our businesses
in such jurisdictions, they would have discretion in dealing with such violations or failures
according to relevant laws and regulations, including, without limitation:
 revoking the business licenses and/or operating licenses of such entities;
 discontinuing or placing restrictions or onerous conditions on our operations through any
transactions between our subsidiaries and consolidated affiliated entities;
 imposing fines, confiscating the income from our subsidiaries or consolidated affiliated
entities, or imposing other requirements with which such entities may not be able to
comply;
 requiring us to restructure our ownership structure or operations, such as terminating the
Contractual Arrangements with our consolidated affiliated entities and deregistering the
equity pledges of consolidated affiliated entities, which in turn would affect our ability
to consolidate, derive economic interests from, or exert effective control over our
consolidated affiliated entities;
 restricting or prohibiting our use of the proceeds of any of our financing outside relevant
jurisdiction to fund our business and operations; and/or
 taking other regulatory or enforcement actions that could be harmful to our business.
Any of these actions could cause significant disruption to our operations and severely damage
our reputation, which could in turn materially and adversely affect our business, financial
condition and results of operations. If any of these occurrences results in our inability to direct
the activities of our consolidated affiliated entities that most significantly impact its economic
performance, and/or our failure to receive the economic benefits from our consolidated
affiliated entities, we may not be able to consolidate the entity in our consolidated financial
statements in accordance with IFRS.
In addition, we have not purchased nor do we maintain any insurance policy to cover any of
the risks relating to our Contractual Arrangements. In the event that our Contractual
Arrangements are held or declared to be illegal, invalid or not legally binding, or if we fail to
enforce our rights under our Contractual Arrangements, or if we fail to seek remedies against
the relevant registered shareholders under our Contractual Arrangements, we may not be
adequately compensated for our losses, which may materially and adversely affect our
business, results of operations and financial condition.
Thailand
Thai laws and regulations impose certain prohibitions and restrictions on foreign participation
in certain businesses in Thailand. In particular, the Land Transport Act imposes foreign
ownership restrictions on companies that provide land transportation services. In addition,
under the Thai Foreign Business Act B.E. 2542 (1999) (the “ FBA”), foreigners are restricted
from engaging in a number of businesses, which broadly include service businesses that J&T
entities in Thailand operate. In Thailand, direct foreign ownership in each Thai company
operating any foreign restricted business under the FBA cannot exceed 49% of the total
outstanding shares, and genuine Thai shareholder(s) should own at least more than 50% of the
total outstanding shares. Under the FBA, it is unlawful for a Thai national or entity to hold
shares in a Thai company on behalf of a foreigner to circumvent the foreign ownership
restrictions.
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We primarily conduct our operations via Global Jet Express (Thailand) Co., Ltd. (“ GJE
Thailand ”). GJE Thailand is structured as a majority Thai-owned company with the use of
preference shares and ordinary shares with different voting rights and economic benefits at the
level of the ultimate Thai holding company, under which the Thai shareholder receives a fixed
rate of dividends, if distributed, based on its then paid-up capital contribution, and has less
voting rights than the foreign shareholder.
We have obtained confirmations from the Thai Ministry of Commerce (“ MoC”), with respect
to the Foreign Business Act, that the shareholding structure adopted by GJE Thailand and its
shareholder would not cause GJE Thailand to be considered as a foreign company under the
FBA. According to the letters from the MoC, we believe that our current operations in Thailand
does not require approval under the FBA and the current shareholding structure of GJE
Thailand does not violate the FBA.
Based on our assessment and opinions of our Thai counsel Weerawong, Chinnavat & Partners
Ltd., we believe our shareholding structure in Thailand is in compliance with applicable local
laws and regulations. However, local or national authorities or regulatory agencies in Thailand
may conclude that our arrangements are in violation of local laws and regulations, and GJE
Thailand may be ordered to cease their businesses. Nonetheless, to date there are no cases in
which MoC or the Thai Police Department has taken any action at Thai courts against any
company adopting a similar shareholding structure and it would take approximately three to
four years before a final court judgment is rendered. Our Thai legal counsel has advised that
it would be possible to restructure our Thailand operations during the investigation or court
proceedings in order to minimize the risk of a court order being issued for the cessation of the
businesses of our Thai subsidiaries. Nonetheless, if we were not able to restructure our
shareholding in a timely manner, or at all, we may also be subject to decisions or orders that
require us to cease business operations or to dissolve. Any of the foregoing would materially
and adversely affect our business, financial condition and results of operations.
Malaysia
The Malaysian Communications and Multimedia Commission (“ MCMC ”) is the regulatory
body for courier services in Malaysia under the Postal Services Act 2012. The MCMC has
proposed to implement a new courier service licensing regime for Malaysia by December 2022.
Under the new framework, the MCMC proposed to introduce, among others, (i) a new licensing
structure, (ii) new licensing criteria and scope of services, (iii) a new annual license fee model,
(iv) new license conditions, and (v) mapping and migration processes. There are three new
classes of courier service license proposed, namely N-Courier (National Delivery Service),
U-Courier (Urban Delivery Service) and I-Courier (Pickup Drop Off Points (PUDO) and
Intermediary Service). In the public consultation paper issued by the MCMC, special
conditions on shareholding structure may be imposed for N-Courier license holders, being
foreign shareholding must not exceed 49%. The consultation paper provides that no
shareholding restriction is applicable for U-Courier or I-Courier licensee holders. As the
framework is still under consultation and has not been adopted, it remains unclear whether the
formal version adopted in the future will have any further material changes, and it is uncertain
how the measures will be enacted, interpreted or implemented and how they will affect us. If
the MCMC promulgates new laws and regulations that require additional approvals or licenses
or imposes additional conditions or restrictions on our daily operations and we are unable or
delay or fail to comply, the MCMC may have the authority, among other things, to levy fines,
revoke business licenses, and requires us to discontinue our relevant business or imposes
restrictions on the affected portion of our business. Any of these actions by the MCMC may
have a material and adverse effect on our results of operations.
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If government authorities in any countries in which we may establish entities in the future
believe that our ownership of, or arrangements with respect to, relevant entities do not comply
with applicable laws and regulations, including requirements, prohibitions or restrictions on
foreign investment in our lines of business or with respect to necessary registrations, permits
or licenses to operate our businesses in such jurisdictions, they would have discretion in
dealing with such violations or failures, including imposing civil or criminal sanctions or
financial penalties against us, deeming our arrangements void by law and requiring us to
restructure our ownership structure or operations, revoking our business licenses and/or
operating licenses, prohibiting payments from and funding to our entities or ordering us to
cease our operations in the relevant jurisdictions.
Our Contractual Arrangements may not be as effective in providing operational control as
direct ownership.
Since PRC and Indonesian laws and regulations impose certain restrictions on foreign
investment, we operate our business in China and Indonesia through our consolidated affiliated
entity, in which we have no ownership interest and rely on a series of contractual arrangements
with our consolidated affiliated entities and their respective equity holders to control and
operate these businesses. Our revenue and cash flow from our business are attributed to our
consolidated affiliated entities. The Contractual Arrangements may not be as effective as direct
ownership in providing us with control over our consolidated affiliated entities. Direct
ownership would allow us, for example, to directly or indirectly exercise our rights as a
shareholder to effect changes in the boards of directors of our consolidated affiliated entities,
which, in turn, could effect changes, subject to any applicable fiduciary obligations at the
management level. However, under the Contractual Arrangements, we rely on the performance
by our consolidated affiliated entities and their shareholders of their obligations under the
contracts to exercise control over our consolidated affiliated entities. In the event we are unable
to enforce these Contractual Arrangements or we experience significant delays or other
obstacles in the process of enforcing these Contractual Arrangements, we may not be able to
exert effective control over our consolidated affiliated entities and may lose control over the
assets owned by our consolidated affiliated entities. As a result, we may be unable to
consolidate our consolidated affiliated entities in our consolidated financial statements, which
could materially and adversely affect our financial condition and results of operations.
Any failure by our consolidated affiliated entities in the PRC or Indonesia or their
shareholders to perform their obligations under our Contractual Arrangements with them
would have a material and adverse effect on our business.
If our consolidated affiliated entities or their shareholders fail to perform their respective
obligations under the Contractual Arrangements, we may have to incur substantial costs and
expend additional resources to enforce such arrangements. We may also have to rely on legal
remedies under laws of each jurisdiction where we operate, including seeking specific
performance or injunctive relief, and contractual remedies, which we cannot assure you will be
sufficient or effective under relevant laws. For example, if the shareholders of our consolidated
affiliated entities were to refuse to transfer their equity interests in or assets of relevant
consolidated affiliated entities to us or our designee when we exercise the purchase option
pursuant to these Contractual Arrangements, or if they were otherwise to act in bad faith toward
us, then we may have to take legal actions to compel them to perform their contractual
obligations.
All the agreements under our Contractual Arrangements are governed by local laws of the
jurisdictions where we operate, and such agreements provide for the resolution of disputes
through arbitration in relevant jurisdictions. Accordingly, these contracts would be interpreted
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in accordance with local laws, and any disputes would be resolved in accordance with legal
procedures stipulated in each jurisdiction. The legal systems in many jurisdictions in which we
operate are different from some other jurisdictions. As a result, differences and future changes
in these legal systems could limit our ability to enforce these Contractual Arrangements. See
“– Risks Related to Doing Business in Jurisdictions in Which We Operate – There may be
changes from time to time with respect to the legal systems of certain markets where we
operate, and any failure to comply with laws and regulations could adversely affect us.”
Meanwhile, there are limited precedents as to how Contractual Arrangements in relation to
consolidated affiliated entities structures should be interpreted or enforced under relevant laws.
In addition, all the agreements under our Contractual Arrangements in the PRC are governed
by PRC law and provide for the resolution of disputes through arbitration in China. Under PRC
law, rulings by arbitrators are final. Parties generally cannot appeal the arbitration results in
courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time
limit, the prevailing parties may only enforce the arbitration awards in PRC courts through
arbitration award recognition proceedings, which may cause additional expenses and delays in
enforcement. Meanwhile, the Indonesian Contractual Arrangements are governed by the laws
of the Republic of Indonesia, and provide the resolution of disputes through arbitration in Hong
Kong International Arbitration Centre. Under the Indonesian laws, arbitration rulings are final
and binding to the parties, and the parties cannot appeal the arbitration rulings in the
Indonesian courts. However, since the agreed arbitration location is in Hong Kong
(international arbitration ruling), in order for the ruling to be executable and enforceable in
Indonesia, such ruling must be recognized and acknowledged by Central Jakarta District Court
through ratification. The execution may then be carried out by the district court of the relevant
jurisdiction. In the event we are unable to enforce these Contractual Arrangements, or if we
suffer significant delay or other obstacles in the process of enforcing these Contractual
Arrangements, we may not be able to exert effective control over our consolidated affiliated
entities, and our ability to conduct our business may be negatively affected.
The interests of the direct or indirect shareholders of our consolidated affiliated entities in
the PRC and Indonesia may have actual or potential conflicts of our interests.
The interests of the direct or indirect shareholders of our consolidated affiliated entities may
differ from our interests as what is in the interests of the shareholders of our consolidated
affiliated entities, including matters such as whether to distribute dividends, may not be in the
best interests of ours. The shareholders of our consolidated affiliated entities may breach, or
cause our consolidated affiliated entities to breach the existing Contractual Arrangements with
us, which would have a material and adverse effect on our ability to effectively control our
consolidated affiliated entities and receive economic benefits from them. For example, these
shareholders may be able to cause our agreements with our consolidated affiliated entities to
be performed in a manner adverse to us by, among other things, failing to remit payments due
under the Contractual Arrangements to us on a timely basis. We cannot assure you that when
conflicts of interest arise, any or all of these shareholders will act in our best interests or such
conflicts will be resolved in our favor. If we cannot resolve any conflict of interest or dispute
between us and these shareholders, we would have to rely on legal proceedings, which could
result in disruption of our business and subject us to substantial uncertainty as to the outcome
of any such legal proceedings.
If we exercise the exclusive right to acquire equity ownership of Shanghai Yishangshiye, the
ownership transfer may subject us to certain limitations and substantial costs.
Pursuant to the PRC Contractual Arrangements, we have the exclusive right to purchase all or
any part of the equity interest in Shanghai Yishangshiye and from Shanghai Yishangshiye all
or any part of the assets of Shanghai Yishangshiye and its subsidiaries at any time in our
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absolute discretion to the extent permitted by the PRC laws. The equity transfer may be subject
to approvals from and filings with the relevant authorities. In addition, the equity transfer price
may be subject to review and tax adjustment by the relevant tax authority. Such tax amount
could be substantial and as a result, our financial condition may be adversely affected.
There are restrictions for us to exercise our rights to transfer the shareholding in the
Indonesian Holdco under our Indonesian Contractual Arrangements.
Due to the foreign ownership restriction under the relevant laws and regulations in Indonesia
specifically in relation to the restriction in Article 11(1)d and 11(2) of the Indonesian Postal
Law, a Foreign Postal Operator is not allowed to acquire the shares of an existing Indonesian
Postal Services Company. A Foreign Postal Operator is allowed to own certain equity interest
in an Indonesian Postal Services Company only if a Foreign Postal Operator forms a new joint
venture company with an Indonesian Postal Services Company. In the event of bankruptcy of
the shareholders of the Indonesian Holdco, we have to cause all of the shares registered under
the name of the respective shareholder of the Indonesian Holdco to be transferred to a third
party designated by us and such third party must also be Indonesian citizen(s) or legal entity
fully owned by Indonesian citizen(s), and to procure such third party to take up and hold all
such shares subject to arrangements similar to that of the Contractual Arrangements. In the
event that we are unable to procure such a third party to replace the shareholders of the
Indonesian Holdco to take up the shares subject to arrangements similar to that of the
Indonesian Contractual Arrangements and in the event that we take up those shares and become
the registered shareholder of those shares, as advised by our Indonesian Legal Counsel, (i) we
may violate the Indonesia law which imposes the foreign ownership restriction and the
restriction of Indonesian Postal Law, (ii) business license of the Indonesian Holdco may be
revoked by the relevant government authority; (iii) the relevant government authority may not
process the application for registration of change in our Company’s shareholders composition,
directors or commissioners or articles of association; and (iv) any transfer of shares of the
shareholders of the Indonesian Holdco that violates Indonesian laws and regulations may be
declared null and void by Indonesian courts in case a party applies to the relevant Indonesian
courts to nullify and void such transfers. In addition, such transfer of shares may also be
subject to substantial costs including professional fees which may be incurred in preparing the
relevant documentation and attending to the filing regarding such transfers.
We may lose the ability to use and enjoy assets held by our PRC or Indonesian consolidated
affiliated entities that are critical to the operation of our business if our consolidated
affiliated entities declare bankruptcy or become subject to a dissolution or liquidation
proceeding.
As part of our Contractual Arrangements, our consolidated affiliated entities in PRC and
Indonesia and their subsidiaries hold certain assets that are material to the operation of a
certain portion of our business, including sorting centers premises and sorting equipment. If
any of our consolidated affiliated entities goes bankrupt and all or part of their assets become
subject to liens or the rights of third-party creditors, we may not be able to continue some or
all of our business activities, which could materially and adversely affect our business,
financial condition and results of operations. Under the Contractual Arrangements, our
consolidated affiliated entities may not, in any manner, sell, transfer, mortgage or dispose of
their assets or legal or beneficial interests in the business without our prior consent. If our
consolidated affiliated entities in the PRC or Indonesia undergo a voluntary or involuntary
liquidation proceeding, the independent third-party creditors may claim rights to some or all
of these assets, thereby hindering our ability to operate our business, which could materially
and adversely affect our business, financial condition and results of operations.
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Our current corporate structure and business operations in the PRC may be substantially
affected by the PRC Foreign Investment Law and Implementing Rules.
The structure based on the PRC Contractual Arrangements has been adopted by many
PRC-based companies to obtain necessary licenses and permits in the industries that are
currently subject to foreign investment restrictions. Pursuant to the PRC Foreign Investment
Law, “foreign investments” refer to investment activities conducted by foreign investors
(including foreign natural persons, foreign enterprises or other foreign organizations) directly
or indirectly in the PRC, which include any of the following circumstances: (i) foreign
investors setting up foreign-invested enterprises in the PRC solely or jointly with other
investors, (ii) foreign investors obtaining shares, equity interests, property portions or other
similar rights and interests of enterprises within the PRC, (iii) foreign investors investing in
new projects in the PRC solely or jointly with other investors, and (iv) investment in other
methods as specified in laws, administrative regulations, or as stipulated by the State Council.
The PRC Foreign Investment Law and the Implementing Rules do not introduce the concept
of “control” in determining whether a company would be considered as a foreign-invested
enterprise, nor do they explicitly provide whether the PRC Contractual Arrangements structure
would be deemed as a method of foreign investment. However, the PRC Foreign Investment
Law has a catch-all provision that includes the definition of “foreign investments” made by
foreign investors in China in other methods as specified in laws, administrative regulations, or
as stipulated by the State Council, and as the PRC Foreign Investment Law and the
Implementing Rules are newly adopted and relevant government authorities may promulgate
more laws, regulations or rules on the interpretation and implementation of the PRC Foreign
Investment Law, the possibility cannot be ruled out that the concept of “control” may be
embodied in, or the PRC Contractual Arrangements adopted by us may be deemed as a method
of foreign investment by, any of such future laws, regulations and rules. If any of our PRC
consolidated affiliated entities was deemed as a foreign-invested enterprise under any of such
future laws, regulations and rules, and any of the businesses that we operate would be in any
“negative list” for foreign investment and therefore be subject to any foreign investment
restrictions or prohibitions, further actions required to be taken by us under such laws,
regulations and rules may materially and adversely affect our business, financial condition and
results of operations. Furthermore, if future laws, administrative regulations or provisions
mandate further actions to be taken by companies with respect to existing PRC Contractual
Arrangements, we may face substantial uncertainties as to whether we can complete such
actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope
with any of these or similar regulatory compliance challenges could materially and adversely
affect our current corporate structure, business, financial condition and results of operations.
The Contractual Arrangements we have entered into with our consolidated affiliated entities
may be subject to scrutiny by the tax authorities. A finding that we owe additional taxes could
negatively affect our financial condition and the value of your investment.
The tax regimes where we operate through the Contractual Arrangements are rapidly evolving,
and local taxpayers shall comply with the latest effective laws and regulations as new laws and
regulations may be promulgated, existing laws and regulations may be amended from time to
time, and our current interpretation and understanding of applicable laws and regulations may
be significantly different from authorities’ interpretations in the future. The local tax
authorities may determine that we or our subsidiaries or consolidated affiliated entities or their
equity holders owe and/or are required to pay additional taxes on previous or future revenue
or income. In particular, under applicable laws, rules and regulations, arrangements and
transactions among related parties, such as the Contractual Arrangements with our consolidated
affiliated entities, may be subject to audit or challenge by the tax authorities in accordance with
applicable laws and regulations. If any Contractual Arrangements were not entered into on an
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arm’s length basis and therefore constitute a favorable transfer pricing, tax liabilities of the
relevant subsidiaries and/or consolidated affiliated entities and/or equity holders of the
consolidated affiliated entities could be increased, which could increase our overall tax
liabilities. In addition, the local tax authorities may impose late payment fees or other
penalties. Our profit may be materially reduced if our tax liabilities increase.
Certain terms of the PRC Contractual Arrangements may not be enforceable under PRC
laws.
The PRC Contractual Arrangements provide for dispute resolution by way of arbitration at the
Shanghai Arbitration Commission, in accordance with the then effective arbitration rules. The
arbitration shall be conducted in Shanghai.
The PRC Contractual Arrangements contain provisions to the effect that the arbitral body may
award remedies over the equity interests, assets or property interest of our PRC consolidated
affiliated entities, injunctive relief or order the winding up of the PRC consolidated affiliated
entities. These agreements also contain provisions to the effect that courts of competent
jurisdictions are empowered to grant interim remedies in support of the arbitration pending the
formation of an arbitral tribunal. However, under PRC laws, an arbitral body does not have the
power to grant injunctive relief or to issue a provisional or final liquidation order for the
purpose of protecting assets of or equity interests in the PRC consolidated affiliated entities in
case of disputes, which may materially and adversely affect the enforcement of those
provisions. In addition, interim remedies or enforcement order granted by overseas courts such
as Hong Kong and the Cayman Islands may not be recognizable or enforceable in other
countries or regions, including countries or regions where we operate, or enforceable under the
local laws. PRC laws allow the arbitral body to grant an award of transfer of assets of or equity
interests in the PRC consolidated affiliated entities in favor of an aggrieved party. In the event
of non-compliance with such award, enforcement measures may be sought from the court. The
court will decide whether to take enforcement measures according to applicable laws and
regulations.
Under PRC laws, courts of judicial authorities in the PRC generally would not grant injunctive
relief or the winding-up order against our PRC consolidated affiliated entities as interim
remedies for the purpose of protecting assets or equity interests in favor of any aggrieved party.
In case the PRC Contractual Arrangements provide that courts in competent jurisdictions may
grant and/or enforce interim remedies or in support of arbitration, such interim remedies (even
if granted by courts in competent jurisdictions in favor of an aggrieved party) may still not be
recognized, or enforced by courts including the courts in the PRC. As a result, in the event that
our PRC consolidated affiliated entities or the shareholders of our PRC VIE breach any of the
PRC Contractual Arrangements, we may not be able to obtain sufficient remedies in a timely
manner, and our ability to exert effective control over our PRC consolidated affiliated entities
and conduct our business could be materially and adversely affected.
Risks Related to Doing Business in Jurisdictions in Which We Operate
Changes in the economic, political or social conditions or government policies of the
geographic markets in which we operate could have a material adverse effect on our business
and operations.
We operate a significant portion of our business in a number of geographic markets across Asia
and other emerging markets. Accordingly, our business, financial condition and results of
operations may be influenced to a significant degree by political, economic and social
conditions in these markets. The economies in emerging markets generally differ from
developed markets in many respects, including the level of government involvement, level of
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development, growth rate, control of foreign exchange, government policy on public order and
allocation of resources. In some of these markets, governments continue to play a significant
role in regulating industry development by imposing industrial policies. Some local
governments also exercise control over the economic growth and public order in their
respective jurisdictions through allocating resources, controlling payment of foreign currency-
denominated obligations, setting monetary policies, and providing preferential treatment to
particular industries or companies. Governmental actions to control inflation and other policies
and regulations have often involved, among other measures, price controls, currency
devaluations, capital controls and limits on imports.
Growth of the economy in each of our geographic markets has been uneven, both
geographically and among various sectors of the economy. An economic downturn, whether
actual or perceived, further decrease in economic growth rates or an otherwise uncertain
economic outlook in our geographic markets or any other market in which we may operate
could have a material adverse effect on our business, financial condition and results of
operations. Some of these markets have experienced, and may in the future experience,
political instability, including strikes, demonstrations, protests, marches, guerilla activity or
other types of civil disorder. These instabilities and any adverse changes in the political
environment could increase our costs, increase our exposure to legal and business risks, disrupt
our office operations or affect our ability to expand our user base.
There may be changes from time to time with respect to the legal systems of certain markets
where we operate, and any failure to comply with laws and regulations could adversely affect
us.
The legal systems markets where we operate vary significantly from jurisdiction to
jurisdiction. Some jurisdictions have a civil law system based on written statutes and others are
based on common law. Unlike the common law system, prior court decisions under the civil
law system may be cited for reference but are not legally binding on other courts.
Some of markets in which we operate have not developed a fully integrated legal system. Laws
and regulations that are recently enacted may not sufficiently cover all aspects of economic
activities in such markets. In particular, the interpretation and enforcement of these laws and
regulations are subject to changes and evolving, and the application of some of these laws and
regulations to our businesses is not settled. Since local administrative and court authorities
have discretion in interpreting and implementing statutory provisions and contractual terms,
the outcome of administrative and court proceedings and the level of legal protection we have
in many of the localities in which we operate are unpredictable. Local courts may have
discretion to reject enforcement of foreign awards or arbitration awards. These uncertainties
may affect our judgment on the relevance of legal requirements and our ability to enforce our
contractual rights or claims. In addition, the regulatory changes may be exploited through
unmerited or frivolous legal actions, claims concerning the conduct of third parties, or threats
in attempt to extract payments or benefits from us.
Furthermore, many of the legal systems in our markets are based in part on government policies
and internal rules, some of which are not published on a timely basis or at all and may have
retroactive effect. There are other circumstances where key regulatory definitions are unclear,
imprecise or missing, or where interpretations that are adopted by regulators are inconsistent
with interpretations adopted by a court in analogous cases. As a result, we may not be aware
of our violation of certain policies and rules until sometime after the violation. In addition, any
administrative and court proceedings in our markets may be protracted, resulting in substantial
costs and diversion of resources and management attention.
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It is possible that a number of laws and regulations may be adopted or construed to apply to
us in our geographic markets and elsewhere that could affect our industries. Scrutiny and
regulation of the industries in which we operate may further increase, and we may be required
to devote additional legal and other resources to addressing this regulation. Changes in current
laws or regulations or the imposition of new laws and regulations regarding our industries in
our geographic markets may slow the growth of our industries and adversely affect our
financial condition and results of operations.
It may be difficult for the Hong Kong regulators to obtain information or call for regulatory
assistance in the Philippines and Cambodia where circumstances necessitate in the course
of overseeing us as a listed company by the regulations in Hong Kong.
Our Directors and us, which will be regulated by the SFO and other applicable laws and
regulations in Hong Kong upon the Listing, shall be required to provide the SFC with all
information relating to our business in the Philippines and Cambodia that is necessary for its
investigation of our affairs as may be required under Hong Kong laws or regulations. However,
as the Philippines and Cambodia have not signed any regulatory cooperation agreement or
memorandum of understanding with the SFC or the Hong Kong Stock Exchange, nor is it a
member of the International Organization of Securities Commissions (the “ IOSCO ”) or a
signatory to the IOSCO Multi-lateral Memorandum of Understanding (the “ IOSCO MMOU ”),
it may be difficult for the Hong Kong regulators to obtain information or call for regulatory
assistance in the Philippines and Cambodia where circumstances necessitate in the course of
overseeing us as a listed company by the regulations in Hong Kong.
As we continue to grow our operations in our core markets and expand our presence into
further global jurisdictions, we do not expect the relevant contributions in revenue or assets
attributable to the Philippines and Cambodia to significantly increase in the future.
Nevertheless, we will continuously monitor our local business operations and business
expansion rate in the Philippines and Cambodia on an ongoing basis. Our management will also
report periodic information of the revenue generated by our operating entities in the
Philippines and Cambodia to our Board of Directors. In the event the contributions of our
business in the Philippines and Cambodia grow in significance in relation to our overall
operations, we will take steps with respect to access to our Philippine and Cambodian operating
entities’ books and records and fully cooperate with all regulatory requests in order to facilitate
the Hong Kong Stock Exchange and the SFC’s access to information of these operating entities
based abroad. Our Directors believe these measures are adequate and effective in ensuring full
compliance with Rule 8.02A of the Listing Rules.
Certain geographic markets where we operate have been subject to periods of political and
social instability, and any renewed or continuous political violence or instability could
materially and adversely affect our business, financial condition, results of operations and
prospect.
Our business, financial condition, results of operations and prospects are significantly
impacted by the political situation in countries where we operate, some of which have
historically been subject to periods of instability, including political violence, contested
elections and military coups. For example, in October and November 2020, Thailand has
experienced mass political movements and protests against the government across certain
provinces, and especially in the central business districts of Bangkok.
In recent years, there have been political protests, other protests, terrorist attacks and other
types of instabilities which have particularly affected countries such as Thailand and the
Philippines. In May 2017, the city of Marawi in the Philippines was assaulted by the Maute
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Group, terrorists. In October 2017, the city was declared liberated from the terrorists but the
state of national emergency on account of lawless violence declared in 2016 in the Mindanao
region (where the city of Marawi is located) has not been lifted. Similarly, Malaysia has also
witnessed a period of political upheavals since 2018 to date.
Continued violence could lead to widespread unrest or a major terrorist incident similar to
those in other parts of Southeast Asia. An increase in the frequency, severity or geographic
reach of violent crimes, political turmoil and similar events could have a material adverse
effect on investment and confidence in, and the performance of the economy of those countries
where we operate. Any such destabilization could cause interruption to our business and
materially and adversely affect our financial conditions, results of operations and prospects.
Y ou may experience difficulties in effecting service of legal process, enforcing Shareholders’
rights and foreign judgments or bringing actions against us or our management named in
the prospectus based on foreign laws.
We are an exempted company incorporated under the laws of the Cayman Islands. The rights
of the Shareholders and the fiduciary duties of our Directors under the Cayman Islands laws
may differ in some respects from what they would be under statutes or judicial precedents in
Hong Kong or other jurisdictions where investors may be located.
In addition, some of our Directors and executive officers reside in the PRC. As a result, it may
be difficult to effect service of process outside of the PRC upon us, our Directors and executive
officers. The PRC does not have treaties providing for the reciprocal recognition and
enforcement of judgments of courts in the U.S., the U.K., Japan or some other countries.
Therefore, recognition and enforcement in the PRC of judgments of a court in these
jurisdictions may be difficult, and the outcomes of which are often unpredictable. In addition,
you may not be able to bring original actions in the PRC based on the U.S. or other foreign laws
against us, our Directors or executive officers. As a result, shareholder claims are subject to the
laws of the jurisdictions where the investigation is conducted or action is being sought, and the
outcomes of such claims may be unpredictable.
On July 14, 2006, Hong Kong and China entered into the Arrangement on Reciprocal
Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of
the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of
Court Agreements Between Parties Concerned (ʝႩ̙ձ
τર), or the 2006 Arrangement, and promulgated
on July 3, 2008, pursuant to which a party with a final court judgment rendered by a Hong
Kong court requiring payment of money in a civil and commercial case pursuant to a choice
of court agreement in writing may apply for recognition and enforcement of the judgment in
China. Similarly, a party with a final judgment rendered by a PRC court requiring payment of
money in a civil and commercial case pursuant to a choice of court agreement in writing may
apply for recognition and enforcement of the judgment in Hong Kong. A choice of court
agreement in writing is defined as any agreement in writing entered into between parties after
the effective date of the 2006 Arrangement in which a Hong Kong court or a PRC court is
expressly designated as the court having sole jurisdiction for the dispute. Therefore, it is not
possible to enforce a judgment rendered by a Hong Kong court in China if the parties in dispute
have not agreed to enter into a choice of court agreement in writing. Although the 2006
Arrangement became effective on August 1, 2008, the outcome and effectiveness of any action
brought under the 2006 Arrangement may be unpredictable.
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On January 18, 2019, the Supreme People’s Court of the PRC and the government of the Hong
Kong Special Administrative Region entered into the Arrangement on Reciprocal Recognition
and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland
and of the Hong Kong Special Administrative Region (ʝ
τર), or the 2019 Arrangement, which seeks to establish a
bilateral legal mechanism that provides clarity and certainty for the recognition and
enforcement of judgments in a wider range of civil and commercial matters between Hong
Kong and mainland China, based on criteria other than a written choice of court agreement. The
2006 Arrangement will be superseded upon the effectiveness of the 2019 Arrangement.
Although the 2019 Arrangement has been signed, it remains unclear as to its effective date and
uncertain as to the outcome and effectiveness of any action brought under the 2019
Arrangement.
If we are classified as a PRC resident enterprise for PRC income tax purposes, such
classification could result in unfavorable tax consequences to us and our non-PRC
Shareholders.
Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise
established outside of the PRC with “de facto management body” within China is considered
a “resident enterprise” and will be subject to the enterprise income tax on its global income at
the rate of 25%. The implementation rules define the term “de facto management body” as the
body that exercises full and substantial control and overall management over the business,
productions, personnel, accounts and properties of an enterprise. In 2009, the State
Administration of Taxation, or SA T, issued the Circular of the State Administration of Taxation
on Issues Relating to Identification of PRC-Controlled Overseas Registered Enterprises as
Resident Enterprises in Accordance with the De Facto Standards of Organizational
Management, which provides certain specific criteria for determining whether the “de facto
management body” of a PRC-controlled enterprise that is incorporated offshore is located in
China. Although this circular only applies to offshore enterprises controlled by PRC enterprises
or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria
set forth in the circular may reflect SA T’s general position on how the “de facto management
body” text should be applied in determining the tax resident status of all offshore enterprises.
According to the above circular, an offshore incorporated enterprise controlled by a PRC
enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having
its “de facto management body” in China and will be subject to PRC enterprise income tax on
its global income only if all of the following conditions are met: (i) the primary location of the
day-to-day operational management is in China; (ii) decisions relating to the enterprise’s
financial and human resource matters are made or are subject to approval by organizations or
personnel in China; (iii) the enterprise’s primary assets, accounting books and records,
company seals, and board and shareholder resolutions, are located or maintained in China; and
(iv) at least 50% of voting board members or senior executives habitually reside in China.
We believe none of our entities outside of China is a PRC resident enterprise for PRC tax
purposes. However, the tax resident status of an enterprise is subject to determination by the
PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de
facto management body.” If the PRC tax authorities determine that we are a PRC resident
enterprise for enterprise income tax purposes, we could be subject to PRC tax at a rate of 25%
on our worldwide income, which could reduce our net income, and we may be required to
withhold a 10% withholding tax (unless a preferential tax treatment is available under an
applicable tax treaty) from dividends we pay to our Shareholders that are non-resident
enterprises, including the holders of our Shares. In addition, non-resident enterprise
Shareholders may be subject to PRC tax at a rate of 10% (unless a preferential tax treatment
is available under an applicable tax treaty) on gains realized on the sale or other disposition of
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our Shares, if such income is treated as sourced from within China. Furthermore, if we are
deemed a PRC resident enterprise, dividends payable to our non-PRC individual Shareholders
and any gain realized on the transfer of our Shares by such Shareholders may be subject to PRC
tax at a rate of 20% unless a reduced rate is available under an applicable tax treaty. However,
it is unclear whether our non-PRC Shareholders would be able to claim the benefits of any tax
treaties between their country of tax residence and the PRC in the event that we are treated as
a PRC resident enterprise. Any such tax may reduce the returns on your investment in our
Shares.
We face uncertainties with respect to indirect transfer of equity interests in PRC resident
enterprises by their non-PRC holding companies.
We face uncertainties regarding the reporting on and consequences of previous private equity
financing transactions involving the transfer and exchange of shares in our Company by
non-resident investors. In February 2015, the SA T issued the Bulletin on Issues of Enterprise
Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises. Pursuant to this
new regulation, an “indirect transfer” of PRC assets, including a transfer of equity interests in
an unlisted non-PRC holding company of a PRC resident enterprise, by non-PRC resident
enterprises may be re-characterized and treated as a direct transfer of the underlying PRC
assets, if such arrangement does not have a reasonable commercial purpose and was established
for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived
from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or
other person who is obligated to pay for the transfer is obligated to withhold the applicable
taxes, currently at a rate of 10% (unless a preferential tax treatment is available under an
applicable tax treaty) for the transfer of equity interests in a PRC resident enterprise. In
October 2017, the SA T issued the Announcement of the State Administration of Taxation on
Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, which
further clarifies the practice and procedure of the withholding of nonresident enterprise income
tax.
We face uncertainties on the reporting and consequences of future private equity financing
transactions, share exchanges or other transactions involving the transfer of shares in our
Company by investors that are non-PRC resident enterprises. The PRC tax authorities may
pursue such non-resident enterprises with respect to a filing or the transferees with respect to
withholding obligation, and request our PRC subsidiaries to assist in the filing. As a result, we
and non-resident enterprises in such transactions may be subject to filing obligations or be
taxed under the above mentioned two bulletins, and may be required to expend valuable
resources to comply with them or to establish that we and our non-resident enterprises should
not be taxed under these regulations.
If our preferential tax treatments and government subsidies are revoked or become
unavailable or if the calculation of our tax liability is successfully challenged by the PRC tax
authorities, we may be required to pay tax, interest and penalties in excess of our tax
provisions.
The Chinese government has provided tax incentives to our PRC subsidiaries in China,
including reduced enterprise income tax rates. We cannot assure you that we will continue to
be eligible to receive such local government tax refunds or subsidies or that amount of such
refunds or subsidies will not be reduced in the future. Our ability to continue enjoying local
government tax refunds or subsidies is subject to changes in national or local policies that
affect the validity of our agreements, and may be affected by the termination of, or amendments
to, such agreements for reasons beyond our control. We cannot assure you that we will be able
to enter into new agreements with local government authorities that provide local government
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tax refunds or subsidies to us on similar terms. Any increase in the enterprise income tax rate
applicable to our PRC subsidiaries in China, or any discontinuation, retroactive or reduction or
refund of any of the preferential tax treatments, or any significant decrease in or termination
of such local government tax refunds or subsidies currently enjoyed by our PRC subsidiaries
in China, could adversely affect our financial condition.
Laws and regulations in countries where we operate may affect our pursuit of growth
through acquisitions.
The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors
() jointly issued by the MOFCOM and five other
PRC regulatory authorities on August 8, 2006, and amended on June 22, 2009 (the “ M&A
Rules ”), the Provisions of the Ministry of Commerce on the Implementation of the Safety
Review System for Merger and Acquisition of Domestic Enterprises by Foreign Investors ( ਠ
) promulgated by the Ministry of
Commerce on August 25, 2011, the Measures for the Examination of the Security of Foreign
Investment () promulgated by the NDRC and the Ministry of
Commerce on December 19, 2020, and some other regulations and rules concerning mergers
and acquisitions established procedures and requirements for some acquisitions of Chinese
companies by foreign investors. These include requirements in some instances that the Ministry
of Commerce, be notified in advance of any change-of-control transaction in which a foreign
investor takes control of a PRC domestic enterprise. PRC laws and regulations also require
certain merger and acquisition transactions to be subject to merger control review or security
review. Mergers and acquisitions by foreign investors that raise “national defense and security”
concerns and mergers and acquisitions through which foreign investors may acquire de facto
control over domestic enterprises that raise “national security” concerns are subject to strict
review by the Ministry of Commerce, and the rules prohibit any activities attempting to bypass
a security review, including by structuring the transaction through a proxy or contractual
control arrangement.
Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the National
People’s Congress of China and effective in 2008, as most recently amended on June 24, 2022
and effective from August 1, 2022, requires that transactions which are deemed concentrations
and involve parties with specified turnover thresholds must be cleared by the relevant
anti-monopoly authority before they can be completed. It also requires business operators not
to abuse data, algorithms, technology, capital advantages and platform rules to exclude or limit
competition.
In Vietnam, when a foreign investor or a foreign investor equivalent entity acquires shares or
equity interest, or makes capital contribution in a Vietnamese company, such investor may be
required to obtain an approval from the competent investment authority under certain
circumstances. See “Regulatory Overview – Vietnam Investment Law – M&A Approval” in
Appendix III to this prospectus. Similarly, in the Philippines, acquisitions of licensed entities,
including domestic and international freight forwarders and courier service providers, require
prior approvals from relevant regulatory authorities before such entity can implement the said
transaction. Republic Act No. 10667, the Philippine Competition Act (the “ PCA”), prohibits
practices that restrict market competition. It also requires parties to notify and obtain clearance
from the Philippine Competition Commission (“ PCC”) for mergers and acquisitions that meet
the notifiability thresholds. PCC also has the discretion to review any transaction that it
believes is likely to substantially restrict competition in the market.
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Under the Republic Act No. 11659 or an Act Amending Commonwealth Act No. 146, otherwise
known as the Public Service Act (“ PSA Amendment ”) and its implementing rules, the
President of the Philippines also has the power to suspend or prohibit any proposed merger or
acquisition transaction, or any investment in a public service that effectively results in the grant
of control, whether direct or indirect, to a foreigner or a foreign corporation or a foreign
government where the proposed merger or acquisition transaction, or investment in a public
service has national security implications.
We may pursue potential strategic acquisitions that are complementary to our business and
operations. If we fail to fully comply with the requirements of the above-mentioned regulations
and other relevant rules and any required approval processes in a timely manner, it may delay
the process or affect our ability to complete such transactions, which could affect our ability
to expand our business or maintain our market share.
Any failure to comply with PRC regulations regarding the registration requirements for
employee share incentive plans may subject our share incentive plan participants or us to
fines and other legal or administrative sanctions.
In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange
Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas
Publicly Listed Company. Pursuant to these rules, PRC citizens and non-PRC citizens who
reside in China for a continuous period of not less than one year and participate in any stock
incentive plan of an overseas publicly listed company, subject to a few exceptions, are required
to register with SAFE through a domestic qualified agent, which could be the PRC subsidiaries
of such overseas-listed company, and complete certain other procedures. In addition, an
overseas-entrusted institution must be retained to handle matters in connection with the
exercise or sale of stock options and the purchase or sale of shares and interests. We and our
executive officers and other employees who are PRC citizens or who reside in China for a
continuous period of not less than one year and who have been granted options will be subject
to these regulations when our Company becomes an overseas-listed company upon the
completion of this Global Offering. Failure to complete SAFE registrations may subject them
to fines of up to RMB300,000 for entities and up to RMB50,000 for individuals, and
administration penalty and may also limit our ability to contribute additional capital into our
PRC subsidiaries and limit our PRC subsidiaries’ ability to distribute dividends to us. We also
face regulatory changes that could restrict our ability to adopt additional incentive plans for our
directors, executive officers and employees under PRC law.
In addition, SA T has issued certain circulars concerning employee share options and restricted
shares. Under these circulars, our employees working in China who exercise share options or
are granted restricted shares will be subject to PRC individual income tax. Our PRC
subsidiaries have obligations to file documents related to employee share options or restricted
shares with relevant tax authorities and to withhold individual income taxes of those employees
who exercise their share options. If our employees fail to pay or we fail to withhold their
income taxes according to relevant laws and regulations, we may face administration penalty
imposed by the tax authorities or other PRC government authorities.
Our failure to fully comply with labor-related laws may expose us to potential penalties.
Companies operating in China are required to participate in various employee benefit plans,
including certain social insurance, housing funds, unemployment insurance, health insurance
plans and other welfare oriented payment obligations, and contribute to the plans in amounts
equal to certain percentages of salaries, including bonuses and allowances, of our employees
up a maximum amount specified by the local government from time to time at locations where
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we operate our businesses. The requirement of employee benefit plans has not been
implemented consistently by the local governments in China given the different levels of
economic development in different locations. During the Track Record Period, there were
shortfalls in our contributions to social insurance and housing funds for our China-based
employees, and we have made provisions in connection with such shortfalls. For 2020, 2021,
2022 and the six months ended June 30, 2023, we had shortfalls of RMB19.4 million, RMB58.2
million, RMB77.7 million and RMB39.4 million, respectively, in our contributions to social
insurance contributions and RMB15.9 million, RMB23.0 million, RMB20.6 million and
RMB11.6 million, respectively, in housing fund contributions. As advised by our PRC Legal
Advisor, an employer that has not made social insurance contributions at such rate and based
on such amount as prescribed by the law, or at all, may be ordered to rectify the
non-compliance and pay the required contributions within a stipulated timeframe and be
subject to a late fee of up to 0.05% per day. Failure to fulfill the outstanding contributions
within the stipulated timeframe may result in fines ranging from one to three times of the
amount in arrears. As of the Latest Practicable Date, we had not received any notice for
payment of penalties of social insurance premium and housing provident funds from the
competent authorities. As advised by our PRC Legal Adviser, the likelihood of us receiving any
notice of penalties from the competent authorities is relatively low, provided that we pay the
outstanding contribution, and late fee (if any), for social insurance and house provident funds
in full amount within the prescribed period after receiving notices to rectify such non-
compliance from the competent authorities. However, there is no assurance that the competent
government authorities will not require us to settle the outstanding amount within the specified
time limit or impose late payment penalties on us, or any of our employees would not make
complaints or demand for payment for any outstanding contribution. Pursuant to the Urgent
Notice on Enforcing the Requirement of the General Meeting of the State Council and
Stabilizing the Levy of Social Insurance Payment (஫࿏ໝྼ਷ਕ৫੬ਕึᙄၚग़ʲྼ
) promulgated on September 21, 2018 by the Ministry
of Human Resources and Social Security, administrative enforcement authorities are prohibited
from organizing and conducting aggregated collection of enterprises’ historical social
insurance arrears. As advised by our PRC Legal Adviser, (i) the likelihood of us being
conducted aggregated collection of our historical social insurance arrears is remote; and (ii) if
we receive notices from the competent authorities requiring us to rectify such non-compliance,
and we pay such outstanding amounts and late fees (if any) within the required period, the
likelihood of us being required to pay penalties is remote. In addition, we also engage
outsourcing firms to provide a large number of personnel to work at our network facilities. The
outsourcing activities and agreements are subject to local laws and regulations. For example,
in the Philippines, outsourcing agreements are highly regulated and are subject to strict
requirements under Philippine labor laws and regulations. Even if we may have contractual
protection against claims from outsourced personnel, in the event that the outsourcing firms
violate any relevant labor laws and regulations or their employment agreements with the
outsourced personnel, such personnel may file a claim against us as they provide their services
at our network facilities. As a result, we may incur legal liability, and our reputation, brand
image as well as our business, financial condition and results of operations could be materially
and adversely affected.
Our PRC subsidiaries may be subject to PRC regulations relating to offshore investment
activities by PRC residents if they want to change their registered capital or distribute profits
to us. We and our PRC resident beneficial owners may also be subject to be subject to liability
and penalties under relevant PRC laws.
On July 4, 2014, SAFE promulgated the Notice on Issues Relating to Foreign Exchange
Administration over the Overseas Investment and Financing and Round-trip Investment by
Domestic Residents via Special Purpose V ehicles, or the SAFE Circular 37. The SAFE Circular
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37 requires PRC residents (including PRC individuals and PRC corporate entities as well as
foreign individuals that are deemed as PRC residents for foreign exchange administration
purposes) to register with SAFE or its local branches in connection with their direct or indirect
offshore investment activities. The SAFE Circular 37 further requires amendment to the SAFE
registrations in the event of any changes with respect to the basic information of the offshore
special purpose vehicle, such as change of a PRC individual shareholder, name and operation
term, or any significant changes with respect to the offshore special purpose vehicle, such as
increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions.
The SAFE Circular 37 is applicable to our Shareholders or beneficial owners who are PRC
residents and may be applicable to any offshore acquisitions that we make in the future.
According to the Notice of the SAFE on Further Simplifying and Improving the Foreign
Exchange Administration Policies for Direct Investment, promulgated by the SAFE on
February 13, 2015 and effective on June 1, 2015, local banks will examine and handle foreign
exchange registration for overseas direct investment, including the initial foreign exchange
registration and amendment registration, under the SAFE Circular 37 from June 1, 2015.
If our Shareholders or beneficial owners who are PRC residents or entities do not complete
their registration with the local SAFE branches or qualified local banks, our PRC subsidiaries
may be prohibited from distributing to us its profits and proceeds from any reduction in capital,
share transfer or liquidation, and we may be restricted in our ability to contribute additional
capital to our PRC subsidiaries. Moreover, failure to comply with the SAFE registration
described above could result in liability under PRC laws for evasion of applicable foreign
exchange administration.
We may not be informed of the identities of all the PRC residents or entities holding direct or
indirect interest in our Company, nor can we compel our Shareholders or beneficial owners to
comply with SAFE registration requirements. We cannot assure you that all shareholders or
beneficial owners of ours who are PRC residents or entities have complied with, and will in
the future make, obtain or update any applicable registrations or approvals required by, SAFE
regulations.
The failure or inability of such Shareholders or beneficial owners to comply with SAFE
regulations, or failure by us to amend the foreign exchange registrations of our PRC
subsidiaries, could subject us or the non-compliant Shareholders or beneficial owners to fines
or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC
subsidiaries’ ability to make distributions or pay dividends to us or affect our ownership
structure. As a result, our operations and our ability to distribute any future profits to you could
be materially and adversely affected.
We may be materially adversely affected if our Shareholders and beneficial owners who are
PRC entities fail to comply with the relevant PRC overseas investment regulations.
In December 2017, the NDRC promulgated the Administrative Measures on Overseas
Investments, according to which non-sensitive overseas investment projects are subject to
record-filing requirements with the local branch of the NDRC. In September 2014, the Ministry
of Commerce promulgated the Administrative Measures on Overseas Investments, according to
which overseas investments of PRC enterprises that involve non-sensitive countries and
regions and non-sensitive industries are subject to record-filing requirements with a local
branch of the Ministry of Commerce. According to the Circular of the State Administration of
Foreign Exchange on Issuing the Regulations on Foreign Exchange Administration of the
Overseas Direct Investment of Domestic Institutions, PRC enterprises must register for
overseas direct investment with a local SAFE branch.
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We may not be fully informed of the identities of all our Shareholders or beneficial owners who
are PRC entities, and we cannot provide any assurance that all of our Shareholders and
beneficial owners who are PRC entities will comply with our request to complete the overseas
direct investment procedures under the aforementioned regulations or other related rules in a
timely manner, or at all. If they fail to complete the filings or registrations required by the
overseas direct investment regulations, the relevant authorities may order them to suspend or
cease the implementation of such investment and make corrections within a specified time.
We may rely to a significant extent on dividends and other distributions on equity paid by our
principal operating subsidiaries to fund offshore cash and financing requirements. Any
limitation on the ability of our operating subsidiaries to make payments to us could have a
material adverse effect on our ability to conduct our business.
We are a holding company and rely on dividends and other distributions on equity paid by our
principal operating entities, for our offshore cash and financing requirements, including the
funds necessary to pay dividends and other cash distributions to our Shareholders, fund
inter-company loans, service any debt we may incur and pay our expenses. When our principal
operating entities incur additional debt, the instruments governing the debt may restrict their
ability to pay dividends or make other distributions or remittances to us. Furthermore, the laws,
rules and regulations applicable to our principal operating subsidiaries and certain other
subsidiaries permit payments of dividends only out of their retained earnings, if any,
determined in accordance with applicable accounting standards and regulations. For example,
under Thai laws, rules and regulations, each of our subsidiaries and consolidated affiliated
entities incorporated in Thailand is required to set aside, every time the dividend payment is
made, at least 5% of the profits until the reserve fund reaches 10% of the capital of the
company, and in the PRC, at least 10% of its net income each year to fund certain statutory
reserves until the cumulative amount of such reserves reaches 50% of its registered capital.
These reserves, together with the registered capital, are not distributable as cash dividends. As
a result of these laws, rules and regulations, our principal operating entities and consolidated
affiliated entities in Thailand and the PRC are restricted in their ability to transfer a portion of
their respective net assets to their shareholders as dividends, loans or advances. In addition,
registered capital and capital reserve accounts are also restricted from withdrawal in the PRC,
up to the amount of net assets held in each operating subsidiary.
The distribution of dividends to us from the subsidiaries in the other geographic markets in
which we operate is subject to restrictions imposed by the applicable laws and regulations in
these markets. For example, although the current foreign exchange control regulations do not
restrict the ability of our subsidiaries in Thailand to distribute dividends to us, the relevant
regulations may be changed and the ability of these subsidiaries to distribute dividends to us
may be restricted in the future. Further, Philippine law requires that dividends may only be
declared out of unrestricted retained earnings; and there are regulations requiring registration
of the foreign investment with the Bangko Sentral ng Pilipinas (“BSP”), the Philippine Central
Bank, to be able to source from the Philippine banking system foreign currency to be used in
repatriating capital or remitting dividends outside the Philippines.
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PRC regulation of loans to and direct investment in PRC entities by offshore holding
companies may delay us from using the proceeds of this Global Offering to make loans or
additional capital contributions to our PRC subsidiaries and to make loans to our VIE,
which could materially and adversely affect our liquidity and our ability to fund and expand
our business.
In utilizing the proceeds of this Global Offering, we, as an offshore holding company, are
permitted under PRC laws and regulations to provide funding to our PRC subsidiaries, which
are treated as “foreign-invested enterprises” under PRC laws, through loans or capital
contributions. However, loans by us to our PRC subsidiaries to finance their activities cannot
exceed statutory limits and must be registered with the local counterpart of SAFE and capital
contributions to our PRC subsidiaries are subject to the requirement of making necessary
registration with competent governmental authorities in the PRC.
SAFE promulgated the Notice of the SAFE on Reforming the Administration of Foreign
Exchange Settlement of Capital of Foreign-invested Enterprises, or Circular 19, effective on
June 1, 2015. According to Circular 19, the flow and use of the RMB capital converted from
foreign currency-denominated registered capital of a foreign-invested company is regulated
such that RMB capital may not be used, whether directly or indirectly, for the issuance of RMB
entrusted loans, the repayment of inter-enterprise loans (including third party advance) or the
repayment of bank loans that have been transferred to a third party. Although Circular 19
allows RMB capital converted from foreign currency-denominated registered capital of a
foreign-invested enterprise to be used for equity investments within the PRC, it also reiterates
the principle that RMB converted from the foreign currency-denominated capital of a
foreign-invested company may not be directly or indirectly used for purposes beyond its
business scope. Thus, it is unclear whether SAFE will permit such capital to be used for equity
investments in the PRC in actual practice. SAFE promulgated the Notice of the SAFE on
Reforming and Regulating the Foreign Exchange Settlement Management Policy of Capital
Account, or Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth
in Circular 19, but changes the prohibition against using RMB capital converted from foreign
currency-denominated registered capital of a foreign-invested company to issue RMB
entrusted loans to a prohibition against using such capital to issue loans to non-associated
enterprises. Violations of Circular 19 and Circular 16 could result in administrative penalties.
Circular 19 and Circular 16 may significantly limit our ability to transfer any foreign currency
we hold, including the net proceeds from this Global Offering, to our PRC subsidiaries, which
may adversely affect our liquidity and our ability to fund and expand our business in the PRC.
On October 23, 2019, the SAFE promulgated the Notice of the SAFE on Further Promoting the
Convenience of Cross-border Trade and Investment, or the SAFE Circular 28, which permits
non-investment foreign-invested enterprises to use their capital funds to make equity
investments in the PRC, with genuine investment projects and in compliance with effective
foreign investment restrictions and other applicable laws. However, as the SAFE Circular 28
was issued recently, there may be changes as to its interpretation and implementations in
practice.
In light of the various requirements imposed by PRC regulations on loans to, and direct
investments in, PRC entities by offshore holding companies, we cannot assure you that we will
be able to complete the necessary government registrations or obtain the necessary government
approvals on a timely basis, if at all, with respect to future loans or future capital contributions
by us to our PRC subsidiaries. As a result, uncertainties exist as to our ability to provide prompt
financial support to our PRC subsidiaries when needed. If we fail to complete such
registrations or obtain such approvals, our ability to use foreign currency, including the
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proceeds we received from this Global Offering, and to capitalize or otherwise fund our PRC
operations may be negatively affected, which could materially and adversely affect our
liquidity and our ability to fund and expand our business.
Governmental control of currency conversion may limit our ability to utilize our revenues
effectively and affect the value of your investment.
We expect to receive a portion of any future revenues we earn in local currencies including
Renminbi, Indonesian Rupiah, Vietnamese Dong, Malaysian Ringgit or Philippine Pesos,
among other currencies. Under our current corporate structure, our Cayman Islands holding
company may rely on dividend payments from our Group entities in Indonesia, the Philippines,
the PRC and other countries to fund any cash and financing requirements we may have. The
distribution of dividends to us from the subsidiaries in these markets as well as other markets
where we operate is subject to restrictions imposed by the applicable laws and regulations in
these markets. For example, in the Philippines, regulations requiring registration of the foreign
investment with the Philippine Central Bank, to be able to source from the Philippine banking
system foreign currency to be used in repatriating capital or remitting dividends outside the
Philippines. Also, under existing PRC foreign exchange regulations, payments of current
account items, including profit distributions, interest payments and trade and service-related
foreign exchange transactions, can be made in foreign currencies without prior approval of
SAFE by complying with certain procedural requirements. Specifically, under the existing
exchange policies, without prior approval of SAFE, cash generated from the operations of our
PRC subsidiaries in the PRC may be used to pay dividends to our company. We need to obtain
SAFE approval to use cash generated from the operations of our PRC subsidiaries to pay off
their respective debt in a currency other than RMB owed to entities outside the PRC, or to make
other capital expenditure payments outside the PRC in a currency other than RMB. The PRC
government may exercise discretion in accordance with applicable laws and regulations and
restrict access in the future to foreign currencies for current account transactions. Our failure
to obtain sufficient foreign currencies to satisfy our foreign currency demands may have a
material adverse impact on our ability to fund our operations in other jurisdictions and our
ability to pay dividends in foreign currencies to our Shareholders.
The current tensions in international trade and rising global and cross-regional political
tensions.
Our operations are adversely affected by the regional and global economic markets. Rising
political tensions could reduce levels of trades, investments, technological exchanges, and
other economic activities. Such tensions and any escalation thereof, may have a negative
impact on the general, economic, political, and social conditions in jurisdictions where we
operate. In case of a tightening of credit in financial markets globally, this could also impact
the markets where we operate and our ability to arrange for financing for our capital
requirements. In addition, any adverse impact on our customers or business partners arising
from such tensions, sanctions or other events beyond their control, may disrupt our business
relationships with them. Any difficulties we face in accessing financing on acceptable terms
and conditions could have a material adverse effect on our business, financial condition, results
of operations and prospects.
Additionally, Russian actions with respect to Ukraine have resulted in certain sanctions and
export controls being imposed by the United States, the European Union, the United Kingdom
and other jurisdictions. Our cross-border delivery services does not cover, ship to or take orders
from any of the sanctioned areas. However, we cannot assure you that our cross-border services
will not be impacted by sanctions or export controls in the future. For example, we cannot
assure you that areas and regions that we currently serve or where our transportation and
RISK FACTORS
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shipment pass through will not become a sanctioned area in the future. The conflict between
Russia and Ukraine, including related economic sanctions, could lead to disruption, instability
and volatility in global markets and industries that could negatively impact our business. We
cannot predict the impact of the Russia-Ukraine conflict and any heightened military conflict
or geopolitical instability that may follow. Any such disruptions or resulting sanctions may
adversely affect our business.
Risks Related to the WVR Structure
The concentration of our Share’s voting power limited our Shareholders’ ability to influence
corporate matters.
Our proposed dual-class structure with weighted voting rights will limit your ability to
influence corporate matters and could discourage others from pursuing any change of control
transactions that holders of our Shares may view as beneficial. Our Company will be controlled
through weighted voting rights upon the completion of the Global Offering. On each resolution
subject to a vote at general meetings on a poll, each Class A Share shall entitle its holder to
ten votes and each Class B Share shall entitle its holder to one vote, except for resolutions with
respect to the Reserved Matters, in relation to which each Class A Share and each Class B Share
shall entitle its holder to one vote on a poll at a general meeting of our Company. We will issue
Class B Shares in the Global Offering. For further details about our shareholding structure, see
“Share Capital – Weighted V oting Rights Structure” of this prospectus.
Immediately upon the completion of the Global Offering, the WVR Beneficiary will be Mr. Li.
Mr. Li will beneficially own 979,333,410 Class A Shares, representing approximately 55.56%
of the total voting rights in our Company (assuming the Over-allotment Option is not
exercised) with respect to shareholder resolutions relating to matters other than the Reserved
Matters. Mr. Li therefore has considerable influence over matters requiring shareholder
approval, including the election of Directors (excluding the appointment, election or removal
of any independent non-executive Director) and significant corporate transactions, such as such
as a merger or other sale of our Company or our assets, for the foreseeable future. This
concentrated control will limit or severely restricts our Shareholders’ ability to influence
corporate matters and, as a result, we may take actions that holders of Class B Shares do not
view as beneficial.
Our WVR Beneficiary has significant influence over our Company and may not act in the
best interests of our other Shareholders.
Our WVR Beneficiary has substantial influence over our business and operations, including
matters relating to management and policies, decisions in relation to acquisitions, expansion
plans, business consolidation, the sale of all or substantially all of our assets, nomination of
directors, dividends or other distributions, as well as other significant corporate actions. The
concentration of voting power and the substantial influence of our WVR Beneficiary over our
Company may discourage, delay or prevent a change in control of our Company, which could
deprive other shareholders of an opportunity to receive a premium for their Shares as part of
a sale of our Company and reduce the price of our Shares. The interests of our WVR
Beneficiary may differ from the interests of our other Shareholders. Subject to the Listing
Rules, our Articles of Association and other applicable laws and regulations, our WVR
Beneficiary will continue to have the ability to exercise substantial influence over us and to
cause us to enter into transactions or take, or fail to take, actions or make decisions which
conflict with the best interests of our other Shareholders.
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Risks Related to the Global Offering
There has been no public market for our Shares prior to the Global Offering, and you may
not be able to resell our Shares at or above the price you pay, or at all.
Prior to the completion of the Global Offering, there has been no public market for our Shares.
There can be no assurance that an active trading market for our Shares will develop or be
sustained after completion of the Global Offering. The Offer Price is the result of negotiations
between our Company and the Overall Coordinators (for themselves and on behalf of the
Underwriters), which may not be indicative of the price at which our Shares will be traded
following completion of the Global Offering. The market price of our Shares may drop below
the Offer Price at any time after completion of the Global Offering.
The trading price of the Shares may be volatile which could result in substantial losses to
you.
In addition, the trading price of our Shares may be volatile and could fluctuate widely in
response to factors beyond our control, including general market conditions of the securities
markets in Hong Kong, China, the United States and elsewhere in the world. In particular, the
performance and fluctuation of the market prices of other companies with business operations
located in Southeast Asia and China countries that have listed their securities in Hong Kong
may affect the volatility in the price of and trading volumes for our Shares. A number of
companies have listed their securities, and some are in the process of preparing for listing their
securities, in Hong Kong. Some of these companies have experienced significant volatility,
including significant price declines after their initial public offerings. The trading
performances of the securities of these companies at the time of or after their offerings may
affect the overall investor sentiment towards companies with operations in China and listed in
Hong Kong, which consequently may impact the trading performance of our Shares. These
broad market and industry factors may significantly affect the market price and volatility of our
Shares, regardless of our actual operating performance, and may result in losses on your
investment in our Shares.
The actual or perceived sale or availability for sale of substantial amounts of our Shares,
especially by our directors, executive officers and substantial shareholders, could adversely
affect the market price of our Shares.
Future sales of a substantial number of our Shares, especially by our directors, executive
officers and substantial shareholders, or the perception or anticipation of such sales, could
negatively impact the market price of our Shares in Hong Kong and our ability to raise equity
capital in the future at a time and price that we deem appropriate.
The Shares held by our substantial shareholders are subject to certain lock-up periods
beginning on the date on which trading in our Shares commences on the Stock Exchange.
While we currently are not aware of any intention of such persons to dispose of significant
amounts of their Shares after the expiry of the lock-up periods, we cannot assure you that they
will not dispose of any Shares they may own now or in the future. In addition, certain existing
shareholders of our Shares are not subject to lock-up agreements. Market sale of Shares by
such shareholders and the availability of these Shares for future sale may have negative impact
on the market price of our Shares. See “History and Corporate Structure – Pre-IPO
Investments” for more details of the existing shareholders not subject to lock-up agreements.
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Y ou will incur immediate and substantial dilution and may experience further dilution in the
future.
As the Offer Price of Shares is higher than the net tangible book value per share of our Shares
immediately prior to the Global Offering, purchasers of our Shares in the Global Offering will
experience an immediate dilution. If we issue additional Shares in the future, purchasers of our
Shares in the Global Offering may experience further dilution in their shareholding percentage.
We cannot assure you that we will declare and distribute any amount of dividends in the
future and you may have to rely on price appreciation of our Shares for return on your
investment.
We currently intend to retain most, if not all, of our available funds and any future earnings to
fund the development and growth of our business. As a result, we have not yet adopted a
dividend policy with respect to future dividends. Therefore, you should not rely on an
investment in our Shares as a source for any future dividend income.
Our board of directors has discretion as to whether to distribute dividends, subject to certain
restrictions under the Cayman Islands laws, namely that our Company may only pay dividends
either out of profits or share premium account, and provided always that in no circumstances
may a dividend be paid if this would result in our Company being unable to pay its debts as
they fall due in the ordinary course of business. In addition, our shareholders may approve, in
a general meeting, any declaration of dividends, but no dividend may exceed the amount
recommended by our board of directors. Even if our board of directors decides to declare and
pay dividends, the timing, amount and form of future dividends, if any, will depend on, among
other things, our future results of operations and cash flow, our capital requirements and
surplus, the amount of distributions, if any, received by us from our subsidiary, our financial
condition, contractual restrictions and other factors deemed relevant by our board of directors.
Accordingly, the return on your investment in our Shares will likely depend entirely upon any
future price appreciation of our Shares. There is no assurance that our Shares will appreciate
in value or even maintain the price at which you purchased the Shares. Y ou may not realize a
return on your investment in our Shares and you may even lose your entire investment in our
Shares.
Investors may experience difficulties in enforcing Shareholder rights.
Our Company is an exempted company incorporated in the Cayman Islands with limited
liability and the laws of the Cayman Islands differ in some respects from those of Hong Kong
or other jurisdictions where investors may be located. The corporate affairs of our Company
are governed by the Memorandum and the Articles of Association, the Cayman Companies Act
and the common law of the Cayman Islands. The rights of Shareholders to take legal action
against our Company and/or our Directors, actions by minority Shareholders and the fiduciary
duties of our Directors to our Company under Cayman Islands laws are to a large extent
governed by the common law of the Cayman Islands. The rights of the Shareholders and the
fiduciary duties of our Directors under Cayman Islands laws may differ in some respects as
they would be under statutes or judicial precedents in Hong Kong or other jurisdictions where
investors may be located. As a result, Shareholders may have more difficulties in exercising
their rights against the management of our Company, Directors or major Shareholders than they
would as shareholders of a Hong Kong company or company incorporated in other
jurisdictions.
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There can be no assurance of the accuracy or completeness of certain facts, forecasts and
other statistics obtained from various government publications, market data providers and
other independent third-party sources contained in this prospectus.
This prospectus, particularly the section headed “Industry Overview,” contains information and
statistics relating to the delivery service market. Such information and statistics have been
derived from third-party reports, either commissioned by us or publicly accessible and other
publicly available sources. The information from official government sources has not been
independently verified by us, the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, or any other
persons or parties involved in the Global Offering, and no representation is given as to its
accuracy. Collection methods of such information may be flawed or ineffective, or there may
be discrepancies between published information and market practice, which may result in the
statistics being inaccurate or not comparable to statistics produced for other economies. Y ou
should therefore not place undue reliance on such information. In addition, we cannot assure
you that such information is stated or compiled on the same basis or with the same degree of
accuracy as similar statistics presented elsewhere. In any event, you should consider carefully
the importance placed on such information or statistics.
Forward-looking statements contained in this document are subject to risks and
uncertainties.
This document contains forward-looking statements with respect to our business strategies,
operating efficiencies, competitive positions, and growth opportunities for existing operations,
plans and objectives of management, certain pro forma information and other matters.
The words “anticipate,” “believe,” “could,” “potential,” “continue,” “expect,” “intend,” “may,”
“plan,” “seek,” “will,” “would,” “should” and the negative of these terms and other similar
expressions identify a number of these forward-looking statements. These forward-looking
statements, including, among others, those relating to our future business prospects, capital
expenditure, cash flows, working capital, liquidity and capital resources are necessary
estimates reflecting the best judgment of our Directors and management and involve a number
of risks and uncertainties that could cause actual results to differ materially from those
suggested by the forward-looking statements. As a consequence, these forward-looking
statements should be considered in light of various important factors, including those set out
in “Risk Factors” in this document. Accordingly, such statements are not a guarantee of future
performance and you should not place undue reliance on any forward-looking information. All
forward-looking statements in this document are qualified by reference to this cautionary
statement.
Y ou should read the entire document carefully and should not rely on any information
contained in press articles or other media regarding us and the Global Offering.
We strongly caution you not to rely on any information contained in press articles or other
media regarding us and the Global Offering. Prior to the publication of this prospectus, there
has been press and media coverage regarding us and the Global Offering. Such press and media
coverage may include references to certain information that does not appear in this prospectus,
including certain operating and financial information and projections, valuations and other
information. We have not authorized the disclosure of any such information in the press or
media and do not accept any responsibility for any such press or media coverage or the
accuracy or completeness of any such information or publication. We make no representation
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as to the appropriateness, accuracy, completeness or reliability of any such information or
publication. To the extent that any such information is inconsistent or conflicts with the
information contained in this prospectus, we disclaim responsibility for it and you should not
rely on such information.
Holders of our Shares are subject to the risk that trading prices of our Shares could fall
during the period before trading of our Shares begins.
Our Shares will not commence trading on the Hong Kong Stock Exchange until they are
delivered. As a result, holders of our Shares are subject to the risk that the price of our Shares
could fall before trading begins as a result of unfavorable market conditions, or other adverse
developments, that could occur between the time of sale and the time trading begins.
RISK FACTORS
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In preparation for the Listing, our Company has applied for the following waivers from strict
compliance with the relevant provisions of the Listing Rules:
MANAGEMENT PRESENCE IN HONG KONG
Pursuant to Rule 8.12 of the Listing Rules, our Company must have sufficient management
presence in Hong Kong, which normally means that at least two executive directors must be
ordinarily resident in Hong Kong. Since most of our Company’s core business operations are
based, managed and conducted outside of Hong Kong, our Company does not have, and in the
foreseeable future will not have, a sufficient management presence in Hong Kong for the
purpose of satisfying the requirement under Rule 8.12 of the Listing Rules.
Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange has granted
us, a waiver from strict compliance with Rule 8.12 of the Listing Rules. We will ensure that
there are adequate and efficient arrangements to achieve regular and effective communication
between us and the Stock Exchange as well as compliance with the Listing Rules by way of
the following arrangements:
1. Authorized representatives : we have appointed Mr. Li, our sole executive Director and
Ms. Yin Shan Hui (“ Ms. Hui ”), our company secretary, as the authorized representatives
(“Authorized Representatives ”) for the purpose of Rule 3.05 of the Listing Rules. The
Authorized Representatives will act as our principal channel of communication with the
Stock Exchange and would be readily contactable by phone and email to deal promptly
with enquiries from the Stock Exchange. Ms. Hui ordinarily resides in Hong Kong
whereas Mr. Li ordinarily resides in the PRC, and Mr. Li possesses valid travel documents
and is able to renew such travel documents when they expire in order to visit Hong Kong.
Accordingly, the Authorized Representatives will be able to meet with the relevant
members of the Stock Exchange to discuss any matters in relation to our Company within
a reasonable period of time. The Company will also inform the Stock Exchange promptly
in respect of any change in the Authorized Representatives. Please see “Directors and
Senior Management” for more information about our Authorized Representatives.
2. Directors : to facilitate communication with the Stock Exchange, we have provided the
Authorized Representatives and the Stock Exchange with the contact details (mobile
phone numbers, office phone numbers, e-mail addresses) of each of our Directors such
that the Authorized Representatives would have the means for contacting all our Directors
promptly at all times as and when the Stock Exchange wishes to contact our Directors on
any matters. In the event that any Director expects to travel or otherwise be out of office,
he or she will provide the phone number of the place of his/her accommodation to the
Authorized Representatives. To the best of our knowledge and information, each Director
who is not ordinarily resident in Hong Kong possesses or can apply for valid travel
documents to visit Hong Kong and can meet with the Stock Exchange within a reasonable
period after requested by the Stock Exchange.
3. Compliance adviser : we have appointed Somerley Capital Limited as our compliance
adviser (the “ Compliance Adviser ”) in compliance with Rule 3A.19 and Rule 8A.33 of
the Listing Rules. The Compliance Adviser will, among other things and in addition to the
Authorized Representatives, provide us with professional advice on continuing
obligations under the Listing Rules and act as additional channel of communication of the
Company with the Stock Exchange. The Compliance Adviser will be available to answer
enquiries from the Stock Exchange and will act as the principal channel of
communication with the Stock Exchange when the Authorized Representatives are not
available.
WAIVERS
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4. Hong Kong legal adviser : we will retain a Hong Kong legal adviser to advise us on the
on-going compliance requirements, any amendment or supplement to and other issues
arising under the Listing Rules and other applicable laws and regulations in Hong Kong
after the Listing.
WAIVER IN RELATION TO RULE 8A.12 OF THE LISTING RULES REGARDING
MINIMUM ECONOMIC INTEREST AT LISTING
Rule 8A.12 of the Listing Rules requires that the beneficiaries of weighted voting rights must
beneficially own collectively at least 10% of the underlying economic interest in the
applicant’s total issued share capital at the time of its initial listing.
The note to Rule 8A.12 further stipulates that the Stock Exchange may be prepared to accept
a lower minimum shareholding percentage, on a case by case basis, if the lower underlying
economic interest still represents a very large amount in absolute dollar terms (for example if
the applicant has an expected market capitalization of over HK$80 billion at the time of its
initial listing) taking into account such other factors about the applicant as the Stock Exchange
may in its discretion, consider appropriate.
To protect Mr. Li’s shareholding in the Company from being further diluted following the
Series D Financing, in recognition of Mr. Li’s continuous contributions to the Company and to
ensure further alignment of Mr. Li’s interests with those of the Company and its shareholders,
the existing Shareholders of the Company unanimously agreed to issue 24,557,934 class B
ordinary shares (the “ Founder Award Shares ”) (Class A Shares equivalent, assuming
completion of Reclassification, Redesignation and Share Subdivision) at par value to Jumping
Summit Limited, a company controlled by Mr. Li, on May 17, 2023. As at the date of the
prospectus, Mr. Li beneficially owns, through Jumping Summit Limited, 195,866,682 class B
ordinary shares, representing approximately 11.54% of the underlying economic interest in our
total issued share capital. Such class B ordinary shares will be redesignated to Class A Shares
following the Reclassification, Redesignation and Share Subdivision. Mr. Li has undertaken to
proportionately relinquish the Founder Award Shares (Class A Shares equivalent, assuming
completion of Reclassification, Redesignation and Share Subdivision) if he ceases to serve as
Chairman of the Board, or as the Chief Executive Officer, or such other position equivalent to
the Chief Executive Officer within the four year period commencing on the Listing Date (the
“Undertaking ”). See “History and Corporate Structure – Issuance of Founder Award Shares”
for further details.
Immediately following the completion of the Listing, assuming the Over-allotment Option is
not exercised and the Reclassification, Redesignation and Share Subdivision are completed, (i)
Mr. Li will beneficially own, through Jumping Summit Limited, 979,333,410 Class A Shares,
representing approximately 11.11% of the underlying economic interest in our total issued
share capital at the time of the Listing; (ii) without taking into account the Founder Award
Shares (Class A Shares equivalent, assuming completion of Reclassification, Redesignation
and Share Subdivision), which are subject to potential relinquishment as a result of the
Undertaking and thus should not be counted towards the minimum economic interest
requirement under Rule 8A.12 of the Listing Rules, Mr. Li will beneficially own, through
Jumping Summit Limited, 856,543,740 Class A Shares, representing approximately 9.72% of
the underlying economic interest in our total issued share capital at the time of the Listing,
which is less than the minimum economic interest as required under Rule 8A.12 of the Listing
Rules.
WAIVERS
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Immediately following the completion of the Listing, assuming the non-exercise of the
Over-allotment Option, based on the Offer Price of HK$12.00, we expect to have a market
capitalization of HK$105.75 billion (or US$13.50 billion), which is significantly larger than
the market capitalization of HK$80 billion as specified in the note to Rule 8A.12 of the Listing
Rules.
We have applied to the Stock Exchange, and the Stock Exchange has granted us, a waiver from
strict compliance with the requirements of Rule 8A.12 of the Hong Kong Listing Rules on the
basis and condition that:
i. the Company will have an expected market capitalisation of HK$105.75 billion based on
the Offer Price, which is over HK$80 billion at the time of the Listing;
ii. Mr. Li has historically and consistently at all times been holding more than 10% of the
Company’s interest and it is only attributable to the dilution effect as a result of the
Global Offering that Mr. Li’s economic interests will be marginally diluted to below 10%;
iii. Mr. Li will beneficially own 9.72% of the underlying economic interests (equivalent to
market value of HK$10.28 billion upon Listing based on the Offer Price) that are not
subject to the Undertaking in the Company’s total issued share capital at the time of
Listing;
iv. the Undertaking and the potential relinquishment arrangement thereunder would not
result in a breach of the requirement under Rule 8A.13 of the Listing Rules; and
iv. the Company will make appropriate disclosure of such lower economic interests
percentage in this prospectus, including the details of the issuance of the Founder Award
Shares (Class A Shares equivalent, assuming completion of Reclassification,
Redesignation and Share Subdivision), the class and number of Shares issued, the
consideration received, the benefits to the Company and the terms of the Undertaking
governing the Founder Award Shares (Class A Shares equivalent, assuming completion of
Reclassification, Redesignation and Share Subdivision), and any relinquishment of shares
shall be effected in a manner that is in full compliance with the applicable Listing Rules.
WAIVER IN RELATION TO THE DISCLOSURE REQUIREMENTS WITH RESPECT
TO CHANGES IN SHARE CAPITAL
We have applied for, and the Stock Exchange has granted, a waiver from strict compliance with
the requirements of paragraph 26 of Part A of Appendix 1 to the Listing Rules in respect of
disclosing the particulars of any alterations in the capital of any member of the Group within
two years immediately preceding the issue of this prospectus.
We have identified 16 entities that we consider are the major subsidiaries and Consolidated
Affiliated Entities primarily responsible for the track record results of our Group or that hold
material intellectual properties of our Group (the “ Selected Entities ”, and each a “ Selected
Entity ”). Globally, our Group has approximately 322 subsidiaries and Consolidated Affiliated
Entities, across 22 different jurisdictions as at December 31, 2022. It would be unduly
burdensome for our Company to disclose this information, which would not be material or
meaningful to investors. By way of illustration, for the years ended December 31, 2020, 2021
and 2022 and the six months ended June 30, 2023, (i) the aggregate revenue of the Selected
Entities represented approximately 81.6%, 77.5%, 71.6% and 69.9% of the Group’s total
revenues, respectively, and (ii) the aggregate total assets of the Selected Entities represented
approximately 47.2%, 65.7%, 57.6% and 52.3% of our total assets, respectively. Accordingly,
WAIVERS
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the remaining subsidiaries and Consolidated Affiliated Entities in our Group are insignificant
to the overall results of the Group and none of which contributes more than 5% to our total
assets for each period of our Track Record Period.
Particulars of the changes in the share capital of the Company and the Selected Entities have
been disclosed in “Statutory and General Information – 1. Further Information about our Group
– 1.2 Changes in the share capital of our Company” and “Statutory and General Information
– 1. Further Information about our Group – 1.3 Changes in the share capital of our major
subsidiaries and operating entities” in Appendix V to this prospectus.
WAIVER IN RELATION TO THE PRE-IPO SHARE INCENTIVE PLAN OF THE
COMPANY
Rule 17.02(1)(b) of the Listing Rules requires a listing applicant to, inter alia, disclose in the
prospectus full details of all outstanding options and awards and their potential dilution effect
on the shareholdings upon listing as well as the impact on the earnings per share arising from
the issue of shares in respect of such outstanding options or awards.
As of the Latest Practicable Date, our Company had granted outstanding restricted share units
(“RSUs ”) under the Pre-IPO Share Incentive Plan to a total of 670 participants, who are
network partners of the Company (the “ Awardee (s)”) to subscribe for an aggregate of
6,398,100 class A ordinary shares (31,990,500 Class B Shares, following completion of the
Reclassification, Redesignation and Share Subdivision), representing approximately 0.36% of
the total number of Shares in issue immediately after completion of the Global Offering
(assuming the Over-allotment Option is not exercised). Among the outstanding RSUs, no
connected persons of our Company were granted RSUs. 670 other Awardees (who are not
Directors or connected persons of the Company) were granted RSUs for 6,398,100 class A
ordinary shares (31,990,500 Class B Shares, following completion of the Reclassification,
Redesignation and Share Subdivision). No awards (including options, RSUs and restricted
shares) under the Pre-IPO Share Incentive Plan will be further granted upon Listing. For more
details of our Pre-IPO Share Incentive Plan, see “Statutory and General information – 4.
Pre-IPO Share Incentive Plan” in Appendix V to this prospectus.
Our Company has applied to the Stock Exchange for a waiver from strict compliance with the
disclosure requirements under Rule 17.02(1)(b) of the Listing Rules, on the grounds that strict
compliance with the above requirements would be unduly burdensome for our Company for the
following reasons:
(a) since the outstanding RSUs under the Pre-IPO Share Incentive Plan were granted to a
total of 670 Awardees involved, strict compliance with the relevant disclosure
requirements in this prospectus will require substantial number of pages of additional
disclosure that does not provide any material information to the investing public and
would significantly increase the cost and timing for information compilation and
prospectus preparation;
(b) key information of the outstanding RSUs granted under the Pre-IPO Share Incentive Plan
to the Directors, senior management and connected persons of our Company has already
been disclosed in “Statutory and General Information – 4. Pre-IPO Share Incentive Plan”
in Appendix V to this prospectus;
WAIVERS
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(c) the key information of the Pre-IPO Share Incentive Plan as disclosed in “Statutory and
General Information – 4. Pre-IPO Share Incentive Plan” in Appendix V to this prospectus
is sufficient to provide potential investors with information to make an informed
assessment of the potential dilution effect and impact on earnings per share of the RSUs
granted under the Pre-IPO Share Incentive Plan in their investment decision making
process;
(d) given the nature of the business of the Company, it is extremely important for the
Company to incentivize and reward its regional sponsors, network partners and
franchisees, and the success of the Company’s long-term development plan will very
much depend on the loyalty and contribution of the grantees, whereas the information
relating to the RSUs granted to the grantees is highly sensitive and confidential, and
disclosure of such information may adversely affect the Company’s cost and ability to
recruit and retain such valuable network partners and franchisees;
(e) with respect to the other Awardees, such number of Class B Shares (in aggregate
representing approximately 0.36% of the total issued share capital of our Company
immediately following the completion of the Global Offering, assuming the Over-
allotment Option is not exercised) is not material in the circumstances of our Company,
and the vesting of such RSUs will not cause any material adverse change in the financial
position of our Company; and
(f) the lack of full compliance with such disclosure requirements will not prevent potential
investors from making an informed assessment of the activities, assets and liabilities,
financial position, management and prospects of our Group and will not prejudice the
interest of the investing public.
The Stock Exchange has granted us a waiver from strict compliance with the disclosure
requirements under Rule 17.02(1)(b) of the Listing Rules on the condition that:
(a) full details of all the RSUs granted under the Pre-IPO Share Incentive Plan to each of the
Directors, senior management and connected persons of our Company (if any) be
disclosed in this prospectus, such details include all the particulars required under Rule
17.02(1)(b) of the Listing Rules;
(b) in respect of the RSUs granted by our Company to the Awardees other than those referred
to in sub-paragraph (a), the following details on an aggregate basis be disclosed in this
prospectus:
(i) the aggregate number of the Awardees and the number of Shares subject to the
RSUs;
(ii) the purchase price of the RSUs; and
(iii) the vesting period for the RSUs;
(c) a full list of the awardees under the Pre-IPO Share Incentive Plan, containing full
particulars required under Rule 17.02(1)(b) of the Listing Rules, will be made available
for public inspection in accordance with the section headed “Documents delivered to the
Registrar of Companies and available on display – Document available for inspection” in
Appendix VI to this prospectus;
(d) the particulars of the waiver granted by the Stock Exchange be disclosed in this
prospectus; and
WAIVERS
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(e) the total number of shares underlying the RSUs under the Pre-IPO Share Incentive Plan
and the percentage of the Company’s issued share capital represented by these underlying
shares as well as the dilution effect and impact on earnings per share upon full vesting of
the RSUs under the Pre-IPO Share Incentive Plan be disclosed in this prospectus.
Further details of the Pre-IPO Share Incentive Plan are set forth in “Statutory and General
Information – 4. Pre-IPO Share Incentive Plan” in Appendix V to this prospectus.
WAIVER IN RESPECT OF INVESTMENTS AFTER THE TRACK RECORD PERIOD
Pursuant to Rules 4.04(2) and 4.04(4)(a) of the Listing Rules, the accountants’ report to be
included in a listing document must include the income statements and balance sheets of any
subsidiary or business acquired, agreed to be acquired or proposed to be acquired since the date
to which its latest audited accounts have been made up in respect of each of the three financial
years immediately preceding the issue of the listing document.
Pursuant to Rule 4.02A of the Hong Kong Listing Rules, acquisitions of business include
acquisitions of associates and any equity interest in another company. Pursuant to Note 4 to
Rule 4.04 of the Hong Kong Listing Rules, the Hong Kong Stock Exchange may consider
granting a waiver of the requirements under Rules 4.04(2) and 4.04(4) on a case-by-case basis,
and having regard to all relevant facts and circumstances and subject to certain conditions set
out thereunder.
Ordinary course Investment since June 30, 2023
Since June 30, 2023 and up to the Latest Practicable Date, we made a minority investment in
a company (the “ Investment ”). The Investment was completed in August 2023. Details of the
Investment are set out below:
Name of the
target company
(1)
Investment
amount/consideration
Percentage of
shareholding/
equity interest
Principal business
activities
Company A RMB2 million 49% A company providing
pick-up and delivery
services
Note:
(1) None of the core connected persons at the level of the Company is a controlling shareholder of the target
company.
According to the unaudited management accounts of Company A, (i) its total assets was
approximately RMB3.15 million and RMB2.99 million as at December 31, 2021 and 2022,
respectively, (ii) its total revenue was approximately RMB46.09 million and RMB36.42
million for the years ended December 31, 2021 and 2022, respectively; and (iii) its net loss
(which is equivalent to loss before tax) was approximately RMB5.91 million and RMB8.84
million for the years ended December 31, 2021 and 2022, respectively.
The investment amount was satisfied by the Group’s own source of funds and will not use any
proceeds from the Offering. The investment amount for the Investment is the result of
commercial arm’s length negotiations, based on factors including market dynamics, a mutually
agreed valuation, and/or capital required for the target company’s operations. The
counterparties and the ultimate beneficial owners of the counterparties of the acquisition are
independent third parties.
WAIVERS
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We believe that the Investment is expected to support the Group’s long-term business
development as the target company is engaged in providing pick-up and delivery services in the
PRC, which will allow the Company to expand its service network and service offerings in
order to serve customers more efficiently. Accordingly, we believe that the Investment will
complement and support the growth of the Group’s businesses, and accordingly, the Investment
will be fair and reasonable and in the interests of the Shareholders as a whole.
Conditions for granting the waiver and its scope in respect of the Investment
We have applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver from
strict compliance with Rules 4.04(2) and 4.04(4)(a) of the Listing Rules in respect of the
Investment on the following grounds:
Ordinary and usual course of business
We make equity investments in sectors relating to our business as part of our ordinary and usual
course of business.
The percentage ratios of the Investment are all less than 5% by reference to the most
recent fiscal year of the Company’s Track Record Period.
The assets, revenue and consideration percentage ratios calculated in accordance with Rule
14.07 of the Listing Rules for the Investment are all less than 5% by reference to the most
recent fiscal year of the Track Record Period.
Accordingly, we believe that the Investment has not resulted in, and do not expect the
Investment to result in, any significant changes to our financial position since June 30, 2023,
and all information that is reasonably necessary for the potential investors to make an informed
assessment of our activities or financial position has been included in this document. As such,
we consider that a waiver from compliance with Rules 4.04(2) and 4.04(4)(a) of the Listing
Rules would not prejudice the interests of the investors.
We are not able to exercise any control over the underlying company or business
We only hold and/or expect to only hold a minority equity interest in the Investment and do
not control their boards of directors, and expect this to remain the case for any subsequent
Investment. The minority rights given to us are generally commensurate to our status as a
minority shareholder and are for the protection of our interests as a minority stakeholder in the
Investment. These rights are neither intended, nor sufficient to compel or require the target
company to prepare or to disclose in this document audited financial statements for the
purposes of compliance with Rules 4.04(2) and 4.04(4)(a) of the Listing Rules. It could be
prejudicial and potentially harmful to our portfolio relationships and commercial interests to
make such disclosures. In addition, disclosing this information could harm the target
company’s interests and bring it into an unfavorable competitive position. Accordingly, as we
do not expect the Investment to result in any material changes to our financial position after
the Track Record Period, we do not believe the non-disclosure of the required information
pursuant to Rules 4.04(2) and 4.04(4)(a) of the Listing Rules would prejudice the interest of
the investors.
WAIVERS
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Alternative disclosure of the Investment in this document
We have disclosed alternative information about the Investment in this document, such
information includes those which would be required for a discloseable transaction under
Chapter 14 of the Hong Kong Listing Rules that our directors consider to be material,
including, the descriptions of the target company’s principal business activities; consideration
of the investment; basis of determination of such consideration; the book value of assets,
revenue and net loss of Company A for the two financial years immediately prior to the
acquisition; the source of funds from which the consideration will be satisfied; the rationale
and benefits of such investment to the Group; and the independence of the ultimate beneficial
owners of the target company. We have however excluded disclosure on the name of company
in connection with the Investment in this document because the investment agreement contains
certain confidentiality clauses and we do not have consent for such disclosure. It is
commercially sensitive to disclose the identity of the target company as such information may
enable our competitors to anticipate our investment strategy. Since the relevant percentage
ratio of the Investment is less than 5% by reference to the most recent fiscal year of the
Company’s Track Record Period, we believe the current disclosure is adequate for potential
investors to form an informed assessment of us.
NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
We have entered into, and are expected to continue, certain transactions that will constitute
non-exempt continuing connected transactions of our Company under the Listing Rules upon
Listing. Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange has
granted, waivers from strict compliance with (i) the announcement, circular and independent
Shareholders’ approval requirements under Rule 14A.105 of the Listing Rules; (ii) the
requirement of setting monetary annual caps for continuing connected transactions under Rule
14A.53 of the Listing Rules; and (iii) the requirement of limiting the term of certain continuing
connected transactions to three years or less under Rule 14A.52 of the Listing Rules. For
further details in this respect, see “Continuing Connected Transactions”.
SUBSCRIPTION AND ALLOCATION OF OFFER SHARES TO EXISTING
SHAREHOLDERS AND THEIR CLOSE ASSOCIATES
Rule 10.04 of the Listing Rules provides that a person who is an existing shareholder of the
issuer may only subscribe for or purchase any securities for which listing is sought which are
being marketed by or on behalf of a new applicant either in his or its own name or through
nominees if the conditions in Rules 10.03(1) and (2) of the Listing Rules are fulfilled.
The conditions in Rules 10.03(1) and (2) of the Listing Rules are as follows: (i) no securities
are offered to the existing shareholders on a preferential basis and no preferential treatment is
given to them in the allocation of the securities; and (ii) the minimum prescribed percentage
of public shareholders required by Rule 8.08(1) of the Listing Rules is achieved.
Paragraph 5(2) of Appendix 6 to the Listing Rules provides that, unless with the prior written
consent of the Stock Exchange, no allocations will be permitted to directors or existing
shareholders of the applicant or their close associates, whether in their own names or through
nominees unless the conditions set out in Rules 10.03 and 10.04 of the Listing Rules are
fulfilled.
Pursuant to the terms of the Shareholders Agreement, it has been agreed that, to the extent
permitted under applicable laws and Listing Rules, each Pre-IPO Investors holding Pre-IPO
Preferred Shares may require the Company to issue Offer Shares (the “ Anti-dilution Shares ”)
WAIVERS
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to such Pre-IPO Investors (and/or any of its associates) at the Offer Price at the Global
Offering, so that the aggregate shareholding percentage of such Pre-IPO Investors (together
with its affiliates) in the Company immediately after the completion of the Global Offering will
be the same as the aggregate shareholding percentage of such Pre-IPO Investors (together with
its affiliates) in the Company immediately prior to the Global Offering (the “ Anti-Dilution
Right ”). For further details, see “History and Corporate Structure – Pre-IPO Investments – 11.
Principal Terms of the Pre-IPO Investments and Pre-IPO Investors’ rights”.
As of the Latest Practicable Date, certain Pre-IPO Investors have provided undertakings to the
Company to subscribe for the Offer Shares at the Offer Price in the Global Offering (the
“Subscription Commitment Shareholders ”). The Subscription Commitment Shareholders are
existing preferred shareholders of the Company. See “History and Corporate Structure –
Pre-IPO Investments – 10. Subscription Commitment by Existing Shareholders” for details of
the Subscription Commitment Shareholders.
In the Global Offering, the Subscription Commitment Shareholders will, and other Pre-IPO
Investors holding the Pre-IPO Preferred Shares (collectively, the “ Subscription Pre-IPO
Shareholders ”) may, exercise the Anti-Dilution Right to subscribe for the Offer Shares up the
respective Anti-dilution Shares.
In addition to the subscription of Offer Shares by the Subscription Shareholders pursuant to the
Anti-Dilution Right, certain Subscription Shareholders may apply for Offer Shares in excess to
the Anti-dilution Shares (the “ Additional Offer Shares ”).
WAIVERS
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Set out below (i) the Offer Shares that may be subscribed based on the committed subscription
amount by the Subscription Commitment Shareholders (or their designated entities) as
cornerstone investors, (ii) the Offer Shares that may be subscribed based on the committed
subscription amount by the other Subscription Commitment Shareholders (or their designated
entities) who will subscribe the Offer Shares as placees, (iii) the Offer Shares that may be
subscribed based on the proposed subscription amount by a certain other Pre-IPO Investor (or
its designated entity) who has expressed interest in subscribing the Offer Shares as a placee,
and (iv) the maximum Offer Shares that may be subscribed by the remaining Pre-IPO Investors
(other than the 4 Pre-IPO Investors who confirmed not to exercise their Anti-Dilution Right)
pursuant to their Anti-Dilution Right, which is based on the Offer Price and assuming the
Over-allotment Option is not exercised:
Shareholders
Subscription
Amount
(USD) Offer Shares
Anti-dilution
Shares
Additional
Offer Shares
Subscription Commitment Shareholders (or
their designated entities) who are
cornerstone investors
Tencent
Deep Red Holdings Limited 20,000,000 13,054,200 6,653,086 6,401,114
Rhododendron Investment Limited ––––
TB RACING RABBITS INVESTMENT
HOLDINGS L.P . 15,000,000 9,790,600 4,989,790 4,800,810
Eternal Earn Holding Limited 15,000,000 9,790,600 4,989,790 4,800,810
Parallel Cluster Investment Limited 12,000,000 7,832,600 3,991,893 3,840,707
Sub-total 62,000,000 40,468,000 20,624,559 19,843,441
Boyu
Jaunty Global Limited ––––
Joyous Tempinis Limited ––––
Jallion Global Limited 11,000,000 7,179,800 7,179,800 –
Sub-total 11,000,000 7,179,800 7,179,800 –
D1
D1 SPV Master Holdco I (Hong Kong)
Limited 12,762,500 8,330,200 3,210,034 5,120,166
D1 SPV Jupiter (Hong Kong) Limited 27,500,000 17,949,600 6,916,858 11,032,742
Sub-total 40,262,500 26,279,800 10,126,892 16,152,908
Hillhouse
JNRY III HOLDINGS LIMITED 10,000,000 6,527,000 6,527,000 –
GLP
China Logistic Investment Holding (11)
Limited ––––
China Logistic Investment Holding (12)
Limited ––––
Hidden Hill SPV VIII 5,000,000 3,263,400 3,263,400 –
Hidden Hill Investment 112 ––––
Sub-total 5,000,000 3,263,400 3,263,400 –
Sequoia
SC GGF III Holdco, Ltd. 5,000,000 3,263,400 3,263,400 –
SF Express
CELESTIAL OCEAN INVESTMENTS
LIMITED 30,000,000 19,581,400 5,030,434 14,550,966
WAIVERS
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--- page 120 ---
Shareholders
Subscription
Amount
(USD) Offer Shares
Anti-dilution
Shares
Additional
Offer Shares
Boyu Jingtai (Shanghai) Enterprise
Management Co., Ltd. ( ௹༃౻इ(ɪऎ)Ά
ʮ̡)
Precision World Limited 16,261,530 10,614,000 2,726,752 7,887,248
Temasek
Dahlia Investments Pte. Ltd. 10,000,000 6,527,000 2,515,217 4,011,783
Aspex
AMF-9 Holdings Limited 10,000,000 6,527,000 2,515,217 4,011,783
Subtotal 199,524,030 130,230,800 63,772,669 66,458,131
As a percentage of Offer Shares 39.9% 39.9% 19.5% 20.4%
Other Subscription Commitment
Shareholders (or their designated
entities) who will be placees
ATM Capital
Fast Creative Zone Limited ––––
Ultra Height Fund L.P . 10,115,824 6,602,600 6,602,600 –
Sub-total 10,115,824 6,602,600 6,602,600 –
SAI Growth
SAI Growth Fund I, LLLP 7,000,000 4,569,000 1,760,652 2,808,348
GCM Grosvenor
GCM Grosvenor JT SPV , LLC 16,500,000 10,769,800 4,150,108 6,619,692
NewQuest Asia
Hidden Hill Investment 123 3,500,000 2,284,400 880,326 1,404,074
Subtotal 37,115,824 24,225,800 13,393,685 10,832,115
As a percentage of Offer Shares 7.4% 7.4% 4.1% 3.3%
Certain other Pre-IPO Investor who may
be a placee
XN Origin International Limited 20,000,000 13,054,200 1,257,554 11,796,646
Subtotal 20,000,000 13,054,200 1,257,554 11,796,646
As a percentage of Offer Shares 4.0% 4.0% 0.4% 3.6%
Remaining Pre-IPO Investors
Ambitious River Limited – – 7,224,476 –
EASY INNOV A TION LIMITED – – 1,505,018 –
Uranus Holding Limited – – 4,987,778 –
V ast Admire Limited – – 4,595,475 –
Yimeter Holding Limited – – 4,365,595 –
Strict Forward Limited – – 2,225,605 –
Tickking Holding Limited – – 3,100,475 –
LONG SHINING LIMITED – – 1,330,036 –
LINK Delivery Investment – – 2,802,454 –
V ast Elegance Limited – – 1,863,061 –
BLESSED TIGER LIMITED – – 1,257,554 –
ZWC JT Investment Limited – – 1,257,554 –
Speedy Innovation L.P . – – 952,021 –
Portland Street Partners Limited – – 952,021 –
Tranquility V entures Limited – – 380,809 –
Subtotal – – 38,799,931 –
As a percentage of Offer Shares – – 11.9% –
WAIVERS
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As set out above, based on the Offer Price of HK$12.00 per Offer Share and assuming the
Over-allotment Option is not exercised:
(i) 10 Subscription Commitment Shareholders (or their designated entities) with a total
subscription amount of US$199,524,030 will subscribe for 130,230,800 Offer Shares
(rounded down to the nearest whole board) at the Offer Price as cornerstone investors,
representing 39.9% of the total Offer Shares, of which 19.5% and 20.4% are subscribed
as Anti-dilution Shares and Additional Offer Shares, respectively;
(ii) 4 Subscription Commitment Shareholders (or their designated entities) with a total
subscription amount of US$37,115,824 will subscribe for 24,225,800 Offer Shares
(rounded down to the nearest whole board) at the Offer Price as placees, representing
7.4% of the total Offer Shares, of which 4.1% and 3.3% are subscribed as Anti-dilution
Shares and Additional Offer Shares, respectively;
(iii) 1 certain other Pre-IPO Investor (or their designated entities) has expressed interest in
subscribing with a total subscription amount of US$20,000,000 for 13,054,200 Offer
Shares (rounded down to the nearest whole board) at the Offer Price as a placee,
representing 4.0% of the total Offer Shares, of which 0.4% and 3.6% are subscribed as
Anti-dilution Shares and Additional Offer Shares, respectively; and
(iv) Remaining Pre-IPO Investors (other than the 4 Pre-IPO Investors who confirmed not to
exercise their Anti-Dilution Right) are entitled to subscribe for Offer Shares pursuant to
the exercise of their Anti-Dilution Rights for a maximum of 38,799,931 Anti-dilution
Shares, representing 11.9% of the total Offer Shares.
Other than the above, 4 Pre-IPO Investors, who are entitled to subscribe for Offer Shares
pursuant to the exercise of their Anti-dilution Rights for a maximum of 53,159,492
Anti-dilution Shares (representing 16.3% of the total Offer Shares), have confirmed that they
will not exercise their Anti-Dilution Rights. Based on the above, it is expected that the
Subscription Shareholders may subscribe up to 63.2% of the total Offer Shares based on the
Offer Price of HK$12.00 per Offer Share and assuming the Over-allotment Option is not
exercised.
Waiver and consent in respect of allocation of Class B Shares to (a) certain Pre-IPO
Investors pursuant to the exercise of Anti-Dilution Rights as cornerstone investors or
placees; and (b) certain Pre-IPO Investors and/or their close associates who currently hold
less than 5% of the Company’s voting rights and will subscribe Class B Shares in addition
to their Anti-Dilution Rights as cornerstone investors or placees
Given that, if the Anti-Dilution Right is exercised:
(a) the subscription for additional Shares by the Subscription Shareholders will be conducted
at the Offer Price on the same terms and conditions as other investors pursuant to the
Global Offering;
(b) the subscription by the Subscription Shareholders will form part of the International
Offering, and will not have an impact on the Shares to be offered to public investors in
Hong Kong under the Hong Kong Public Offering;
(c) the subscription of the additional Shares by the Subscription Shareholders is a
pre-existing contractual arrangement between the Subscription Shareholders and the
Company and was agreed on an arm’s length basis, and the subscription is for the purpose
of giving effect to such pre-existing arrangement;
WAIVERS
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(d) the exercise of Anti-Dilution Right by the Subscription Shareholders will not result in its
percentage interest held in the Company to increase above its percentage interest
immediately prior to the Global Offering. Such right is permitted to be exercised at the
time of IPO pursuant to Paragraph 3.10 of Guidance Letter HKEX-GL43-12; and
(e) full disclosure of the pre-existing contractual arrangement has been made in this
document, including the identity of the Subscription Commitment Shareholders and the
fact that the subscription price per Share will be at the Offer Price. In addition, the
allotment results announcement will contain details of any allocation made to
Subscription Shareholders. On the basis of full disclosure, no investor will be prejudiced
or unfairly treated in their investment decision making process
We have applied to the Stock Exchange for, and the Stock Exchange has granted us, a waiver
from strict compliance with the requirements of Rule 10.04 of the Listing Rules and its consent
under Paragraph 5(2) of Appendix 6 to the Listing Rules to permit the Company to allocate
Class B Shares to (a) certain pre-IPO investors pursuant to the exercise of Anti-Dilution Rights
as cornerstone investors or placees; and (b) certain pre-IPO investors and/or their close
associates who currently hold less than 5% of the Company’s voting rights and will subscribe
Class B Shares in addition to their Anti-dilution Rights as cornerstone investors or placees
subject to the following conditions:
(i) that the total number of Class B Shares allocated to the Subscription Pre-IPO
Shareholders and/or their close associates (including the Subscription Commitment
Shareholders and other Pre-IPO Investors) will not exceed 64% of total Offer Shares;
(ii) for allocation of Class B Shares to the Subscription Pre-IPO Shareholders pursuant to
exercise of Anti-Dilution Rights as cornerstone investors or placees:
(a) full disclosure in this prospectus of the Anti-Dilution Rights (being pre-existing
arrangements between the Subscription Pre-IPO Shareholders and the Company),
and the maximum number of Class B Shares that each of the Subscription Pre-IPO
Shareholders are entitled to subscribe pursuant to the arrangements;
(b) the proposed subscription of new Class B Shares by the Subscription Pre-IPO
Shareholders will be conducted at the Offer Price on the same terms and conditions
as other investors pursuant to the Global Offering;
(c) the proposed subscription of new Class B Shares by the Subscription Pre-IPO
Shareholders will form part of the International Offering, and will not have any
impact on the Class B Shares to be offered to public investors in Hong Kong under
the Hong Kong Public Offering;
(d) the Subscription Pre-IPO Shareholders (either cornerstone investors or placees) are
subject to a lock-up period of at least six months from the Listing Date, and details
of allocation will be disclosed in this prospectus in line with the principles under
Guidance Letter HKEX-GL51-13 (in the case of cornerstone investors) or in the
allotment results announcement (in the case of placees); and
(e) allocation to the Subscription Pre-IPO Shareholders will not affect the Company’s
ability to comply with the minimum public float requirement under Rule 8.08.
WAIVERS
–1 1 2–


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(iii) for certain Subscription Pre-IPO Shareholders who will subscribe Class B Shares in
addition to their Anti-Dilution Rights as cornerstone investors or placees:
(a) each of the Subscription Pre-IPO Shareholders would not be in the position to exert
influence over the Company to obtain actual or perceived preferential treatment in
the allocation process in the Global Offering;
(b) the Sponsors confirm that each of the Subscription Pre-IPO Shareholders (1) is
interested in less than 5% of the Company’s voting rights before Listing on the Stock
Exchange; (2) is not a core connected person or its close associate(s); and (3) does
not have the power to appoint Directors or any other special rights;
(c) the Sponsors confirm that the allocation of Class B Shares to the Subscription
Pre-IPO Shareholders will not affect the Company’s ability to satisfy the minimum
public float requirement under Rule 8.08;
(d) the Sponsors confirm to the Exchange in writing that based on (1) their discussions
with the Company and the Overall Coordinators; and (2) the confirmations provided
to the Exchange by the Company and the Overall Coordinators, and to the best of
their knowledge and belief, the Sponsors have no reason to believe that the
Subscription Pre-IPO Shareholders received any actual and perceived preferential
treatment in the IPO allocation as cornerstone investors or placees by virtue of their
relationships with the Company other than the preferential treatment of assured
entitlement under the cornerstone investments following the principles set out in the
Guidance Letter HKEX-GL51-13, and details of the allocation will be disclosed in
the Prospectus and/or the Company’s allotment results announcement;
(e) the Company confirms to the Exchange in writing that:
(1) in case of participation as a cornerstone investors, no preferential treatment has
been, nor will be, given to the Subscription Pre-IPO Shareholders by virtue of
their relationship with the Company other than the preferential treatment of
assured entitlement under the cornerstone investments following the principles
set out in the Guidance Letter HKEX-GL51-13, that the Subscription Pre-IPO
Shareholders’ cornerstone investment agreements do not contain any material
terms which are more favourable to the Subscription Pre-IPO Shareholders
than those in other cornerstone investment agreements; and
(2) in the case of participation as placees, no preferential treatment has been, nor
will be, given to the Subscription Pre-IPO Shareholders by virtue of their
relationship with the Company in any allocation in the placing tranche; and
(f) in the case of participation as placees, the Overall Coordinators shall confirm, to the
best of their knowledge and belief, to the Exchange in writing that no preferential
treatment has been, nor will be, given to the Subscription Pre-IPO Shareholders by
virtue of their relationship with the Company in any allocation in the placing
tranche.
Please refer to “History and Corporate Structure – Pre-IPO Investments – 10.
Subscription Commitment by Existing Shareholders” for the details of the Pre-IPO
Investors who have provided undertakings to the Company to subscribe for the Offer
Shares. Please refer to “Cornerstone Investors” for the details of subscription by the
existing shareholders as cornerstone investor(s). The details of allocations to the existing
shareholders and/or their close associates as placees will be disclosed in the allotment
results announcement of the Company.
WAIVERS
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DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus includes particulars given in compliance with the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Securities and Futures (Stock Market Listing) Rules
(Chapter 571V of the Laws of Hong Kong) (as amended) and the Listing Rules for the purpose
of giving information to the public with regards to our Group. Our Directors (including any
proposed director who is named as such in this prospectus) collectively and individually accept
full responsibility for the accuracy of the information contained in this prospectus. Our
Directors (including any proposed director who is named as such in this prospectus), having
made all reasonable enquiries, confirm that to the best of their knowledge and belief, the
information contained in this prospectus is accurate and complete in all material respects and
not misleading or deceptive, and there are no other matters the omission of which would make
any statement in this prospectus misleading.
CSRC FILING
On September 15, 2023, the CSRC issued a notification on our Company’ completion of the
PRC filing procedures for the listing of our Class B Shares on the Stock Exchange and the
Global Offering. In issuing this notification, the CSRC does not accept responsibility for the
financial soundness of our Company, or for the accuracy of any of the statements made or
opinions expressed in this Prospectus and the GREEN Application Form.
As advised by our PRC Legal Adviser, our Company has completed all necessary filings with
the CSRC in the PRC in relation to the Global Offering and the Listing.
INFORMATION ON THE GLOBAL OFFERING, STRUCTURE AND CONDITIONS OF
THE GLOBAL OFFERING AND PROCEDURES FOR APPLICATION FOR HONG
KONG SHARES
The Hong Kong Offer Shares are offered solely on the basis of the information contained,
representations made, and on and subject to the terms and conditions set out, in this prospectus
and the GREEN Application Form. No person is authorized to give any information in
connection with the Global Offering or to make any representation not contained in this
prospectus and the GREEN Application Form, and any information or representation not
contained in this prospectus and the GREEN Application Form must not be relied upon as
having been authorized by our Company, the Joint Sponsors, the Overall Coordinators, the
Capital Market Intermediaries, the Joint Global Coordinators, the Joint Bookrunners, the Joint
Lead Managers, the Underwriters, any of their respective directors, agents, employees or
advisers or any other party involved in the Global Offering.
Neither the delivery of this prospectus nor any offering, sale or delivery made in connection
with the Offer Shares should, under any circumstances, constitute a representation that there
has been no change or development reasonably likely to involve a change in our affairs since
the date of this prospectus or imply that the information contained in this prospectus is correct
as of any date subsequent to the date of this prospectus.
Details of the structure of the Global Offering, including its conditions, are set out in
“Structure of the Global Offering”, and the procedures for applying for the Hong Kong Offer
Shares are set out in “How to Apply for Hong Kong Offer Shares” and in the GREEN
Application Form.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–1 1 4–


--- page 125 ---
UNDERWRITING
This prospectus is published solely in connection with the Hong Kong Public Offering, which
forms part of the Global Offering. For applicants under the Hong Kong Public Offering, this
prospectus and the GREEN Application Form set out the terms and conditions of the Hong
Kong Public Offering.
The Listing is sponsored by the Joint Sponsors. The Hong Kong Public Offering is fully
underwritten by the Hong Kong Underwriters under the terms of the Hong Kong Underwriting
Agreement on a conditional basis. An International Underwriting Agreement relating to the
International Offering is expected to be entered into on or around Thursday, October 19, 2023.
For full information about the Underwriters and the underwriting arrangements, see
“Underwriting”.
RESTRICTIONS ON OFFER AND SALE OF THE CLASS B SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering will
be required to, or be deemed by his acquisition of the Class B Shares to, confirm that he is
aware of the restrictions on offers of the Offer Shares described in this prospectus and the
GREEN Application Form.
No action has been taken to permit a public offering of the Offer Shares in any jurisdiction
other than in Hong Kong, or the distribution of this prospectus and/or GREEN Application
Form in any jurisdiction other than Hong Kong. Accordingly, this prospectus and/or GREEN
Application Form may not be used for the purpose of, and does not constitute, an offer or
invitation in any jurisdiction or in any circumstances in which such an offer or invitation is not
authorized or to any person to whom it is unlawful to make such an offer or invitation. The
distribution of this prospectus and the offering of the Offer Shares in other jurisdictions are
subject to restrictions and may not be made except as permitted under the applicable securities
laws of such jurisdictions pursuant to registration with or authorization by the relevant
securities regulatory authorities or an exemption therefrom.
APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We have applied to the Stock Exchange for the granting of the listing of, and permission to deal
in, the Class B Shares in issue and the Class B Shares to be issued pursuant to the (i) Global
Offering; (ii) the exercise of the Over-allotment Option and (iii) the Class B Shares that are
issuable upon conversion of the Class A Shares on a one to one basis. Our Class A Shares will
remain unlisted upon the Company’s Listing as required under Rule 8A.08 of the Listing Rules.
Save as disclosed in this prospectus, no part of our Company’s Shares or loan capital is listed
on or dealt in on any other stock exchange and no such listing or permission to list is being or
proposed to be sought in the near future. All the Class B Shares will be registered on the Hong
Kong register of members of our Company in Hong Kong in order to enable them to be traded
on the Stock Exchange.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–1 1 5–


--- page 126 ---
COMMENCEMENT OF DEALINGS IN THE CLASS B SHARES
Dealings in the Class B Shares on the Stock Exchange are expected to commence at 9:00 a.m.
on Friday, October 27, 2023. The Class B Shares will be traded in board lots of 200 Class B
Shares each. The stock code of the Class B Shares will be 1519.
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, any allotment made in respect of any application will be invalid if the listing of,
and permission to deal in, the Class B Shares on the Stock Exchange is refused before the
expiration of three weeks from the date of the closing of the application lists, or such longer
period (not exceeding six weeks) as may, within the said three weeks, be notified to our
Company by the Stock Exchange.
ADMISSION OF THE CLASS B SHARES INTO CCASS
Subject to the granting of the listing of, and permission to deal in, the Class B Shares on the
Stock Exchange and our compliance with the stock admission requirements of HKSCC, our
Class B Shares will be accepted as eligible securities by HKSCC for deposit, clearance and
settlement in CCASS with effect from the Listing Date or any other date HKSCC chooses.
Settlement of transactions between Exchange Participants (as defined in the Listing Rules) is
required to take place in CCASS on the second settlement day after any trading day. All
activities under CCASS are subject to the General Rules of CCASS and CCASS Operational
Procedures in effect from time to time. Investors should seek the advice of their stockbroker
or other professional advisers for details of the settlement arrangements as such arrangements
may affect their rights and interests.
All necessary arrangements have been made enabling the Class B Shares to be admitted into
CCASS.
REGISTER OF MEMBERS AND STAMP DUTY
Our Company’s principal register of members will be maintained by our principal share
registrar, Harneys Fiduciary (Cayman) Limited, in the Cayman Islands and our Company’s
Hong Kong register of members will be maintained by our Hong Kong Share Registrar, Tricor
Investor Services Limited, in Hong Kong.
All Class B Shares issued pursuant to applications made in the Hong Kong Public Offering and
the International Offering will be registered on the Hong Kong register of members of our
Company in Hong Kong. Dealings in the Class B Shares will be subject to Hong Kong stamp
duty. Unless determined otherwise by our Company, dividends payable in Hong Kong dollars
in respect of Class B Shares will be paid to the Shareholders listed on the Hong Kong register
of members of our Company, by ordinary post, at the shareholders’ risk, to the registered
address of each shareholder.
PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Global Offering are recommended to consult their professional
advisers if they are in any doubt as to the taxation implications of subscribing for, purchasing,
holding or disposal of, and dealing in, our Class B Shares (or exercising rights attached to
them). None of us, the Joint Sponsors, the Overall Coordinators, the Capital Market
Intermediaries, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers,
the Underwriters, any of their respective directors or any other person or party involved in the
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–1 1 6–


--- page 127 ---
Global Offering accepts responsibility for any tax effects on, or liabilities of, any person
resulting from the subscription, purchase, holding or disposal of, dealing in, or the exercise of
any rights in relation to, our Class B Shares.
OVER-ALLOTMENT AND STABILIZATION
Details of the arrangement relating to the Over-allotment Option and stabilization are set out
under “Underwriting”.
EXCHANGE RATE CONVERSION
Solely for convenience purposes, this prospectus includes translations among certain amounts
denominated in Renminbi, Hong Kong dollars and U.S. dollars. No representation is made that
the amounts denominated in one currency could actually be converted into the amounts
denominated in another currency at the rates indicated, or at all.
Unless indicated otherwise, the translation of Renminbi into Hong Kong dollars, of Renminbi
into U.S. dollars and of Hong Kong dollars into U.S. dollars, and vice versa, in this prospectus
was made at the following rates:
RMB0.9165 to HK$1.00
RMB7.1789 to US$1.00
HK$7.8326 to US$1.00
Any discrepancies in any table between totals and sums of amounts listed therein are due to
rounding.
LANGUAGE
If there is any inconsistency between this prospectus and the Chinese translation of this
prospectus, this prospectus shall prevail. Translated English names of Chinese laws and
regulations, governmental authorities, departments, entities, enterprises (including certain of
our subsidiaries), institutions, natural persons, facilities, certificates, titles and the like
included in this prospectus and for which no official English translation exists are unofficial
translations for identification purposes only. In the event of any inconsistency, the Chinese
names will prevail.
ROUNDING
Unless otherwise stated, all the numerical figures are rounded to one decimal place.
Any discrepancies between totals and sums of amounts listed in any table or chart are due to
rounding.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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DIRECTORS
Name Address Nationality
Executive Director
Jet Jie Li
(ҽ௫)
Unit 301, No.16, Lane 899
Xinfeng Middle Road
Huaxinzhen, Qingpu District
Shanghai, PRC
Chinese
Non-executive Directors
(in alphabetical order)
Alice Y u-fen Cheng
(ځ)
10F-2, No. 451, Section 6
Min-Quan East Road
Neihu District, Taipei 114
Taiwan
Chinese
(Taiwan)
Qinghua Liao
(࿋૶ശ)
Unit 2-2-1301
Xinyi-Yicuihaoyuan
Dezheng Middle Road, Changan
Dongguan City, Guangdong Province,
PRC
Chinese
Y uan Zhang
(ੵ๕)
Flat C, 19/F, Tower 1
Victoria Towers
188 Canton Road
Kowloon, Hong Kong
Chinese
(Hong Kong)
Independent non-executive Directors
(in alphabetical order)
Charles Zhaoxuan Y ang
(ᴚ)
Floor 8, Block 1, Chuang’s Tower
30-32 Connaught Road Central
Hong Kong
Chinese
(Hong Kong)
Erh Fei Liu
(࠭)
32H, Tower 2, The Avenue Phase 2
200 Queen’s Road East
Hong Kong
Chinese
(Hong Kong)
Peng Shen
(ӏᘄ)
No. 2253, Mingdu Garden
Houshayu Area
Shunyi District
Beijing, PRC
Chinese
For more information on our Directors, see “Directors and Senior Management”.
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–1 1 8–


--- page 129 ---
PARTIES INVOLVED IN THE GLOBAL OFFERING
Joint Sponsors Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon, Hong Kong
Merrill Lynch (Asia Pacific) Limited
55/F, Cheung Kong Center
2 Queen’s Road Central
Central, Hong Kong
China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central, Hong Kong
Overall Coordinators, Joint Global
Coordinators, Joint Bookrunners, Joint
Lead Managers and Capital Market
Intermediaries
Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon, Hong Kong
Merrill Lynch (Asia Pacific) Limited
55/F, Cheung Kong Center
2 Queen’s Road Central
Central, Hong Kong
China International Capital Corporation
Hong Kong Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central, Hong Kong
UBS AG Hong Kong Branch
52/F, Two International Finance Centre
8 Finance Street
Hong Kong
CCB International Capital Limited
12/F CCB Tower
3 Connaught Road Central
Central, Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–1 1 9–


--- page 130 ---
Joint Bookrunners, Joint Lead Managers
and Capital Market Intermediaries
Huatai Financial Holdings (Hong Kong)
Limited
62/F, The Center
99 Queen’s Road Central
Hong Kong
BOCI Asia Limited
26/F, Bank of China Tower
1 Garden Road
Central
Hong Kong
ABCI Capital Limited
(as Joint Bookrunners only)
11/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
ABCI Securities Company Limited
(as Joint Lead Managers only)
10/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
BOCOM International Securities Limited
9/F, Man Y ee Building
68 Des V oeux Road Central
Hong Kong
ICBC International Securities Limited
37/F, ICBC Tower
3 Garden Road
Hong Kong
Deutsche Bank AG, Hong Kong Branch
Level 60, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
Daiwa Capital Markets Hong Kong
Limited
Level 28, One Pacific Place
88 Queensway
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 120 –


--- page 131 ---
Guotai Junan Securities (Hong Kong)
Limited
26/F-28/F, Low Block
Grand Millennium Plaza
181 Queen’s Road Central
Hong Kong
DBS Asia Capital Limited
73/F The Center
99 Queen’s Road Central
Central
Hong Kong
China Galaxy International Securities
(Hong Kong) Co., Limited
20/F Wing On Centre
111 Connaught Road Central
Hong Kong
Futu Securities International (Hong
Kong) Limited
Unit C1-2, 13/F, United Centre
No.95 Queensway
Hong Kong
Tiger Brokers (HK) Global Limited
1/F, FWD Financial Centre
308 Des V oeux Road Central
Hong Kong
Valuable Capital Limited
RM 3601-06 & 3617-19, 36/F
China Merchants Tower
Shun Tak Centre
168-200 Connaught Road Central
Hong Kong
Riche Bright Securities Limited
Office 2, 7/F, A T Tower
180 Electric Road, North Point
Hong Kong
Fosun International Securities Limited
Suite 2101-2105 21/F Champion Tower
3 Garden Road, Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 121 –


--- page 132 ---
Legal Advisers to Our Company As to laws of Hong Kong and the U.S.:
Latham & Watkins LLP
18th Floor, One Exchange Square
8 Connaught Place, Central
Hong Kong
As to Indonesian laws:
Hutabarat Halim & Rekan
Jl. Kawi Raya No.46A
RT.6/RW.2, Guntur
Kecamatan Setiabudi
Kota Jakarta Selatan
Daerah Khusus Ibukota Jakarta 12980
Indonesia
As to laws of Vietnam:
Vietnam International Law Firm (VILAF)
HCO Building (Melia), 6th Floor
44B Ly Thuong Kiet Street
Hanoi, Vietnam
As to Malaysian laws:
Rahmat Lim & Partners
Suite 33.01, Level 33
The Gardens North Tower
Mid V alley City
Lingkaran Syed Putra
59200 Kuala Lumpur
Malaysia
As to laws of the Philippines:
SyCip Salazar Hernandez & Gatmaitan
SyCipLaw Center
105 Paseo de Roxas
Makati City 1226
The Philippines
As to laws of Thailand:
Weerawong, Chinnavat & Partners Ltd.
22nd Floor Mercury Tower
540 Ploenchit Road, Lumpini
Pathumwan, Bangkok 10330
Thailand
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 133 ---
As to laws of PRC:
DaHui Lawyers
Suite 3720 China World Tower A
1 Jianguomenwai Avenue
Beijing
100040 PRC
As to laws of Cayman Islands:
Harney Westwood & Riegels
3501, The Center
99 Queen’s Road Central
Hong Kong
Legal Advisers to the Underwriters As to laws of Hong Kong and the U.S.:
Skadden, Arps, Slate, Meagher & Flom
and affiliates
42/F, Edinburgh Tower, The Landmark
15 Queen’s Road Central
Hong Kong
As to laws of PRC:
Han Kun Law Offices
9/F, Office Tower C1, Oriental Plaza
1 East Chang An Ave, Dongcheng District
Beijing 100738, PRC
Commerce & Finance Law Offices
12-14th Floor, China World Office 2
No. 1 Jianguomenwai Avenue
Beijing 100004, PRC
Reporting Accountant and Auditor PricewaterhouseCoopers
Certified Public Accountants and Registered
Public Interest Entity Auditor
22/F, Prince’s Building
Central
Hong Kong
Industry Consultant Frost & Sullivan Limited
3006, Two Exchange Square
8 Connaught Place
Central, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 123 –


--- page 134 ---
Receiving Bank Bank of China (Hong Kong) Limited
1 Garden Road
Hong Kong
Compliance Adviser Somerley Capital Limited
20/F China Building
29 Queen’s Road Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 124 –


--- page 135 ---
Registered office in the Cayman Islands Harneys Fiduciary (Cayman) Limited
4th floor, Harbour Place
103 South Church Street
P .O. Box 10240
Grand Cayman, KY1-1002
Cayman Islands
Principal place of business in the PRC Room 1001, Block A, Tower 5
1777 Hualong Road, Huaxinzhen
Qingpu District
Shanghai
PRC
Principal place of business in Hong Kong 5/F, Manulife Place
348 Kwun Tong Road
Kowloon, Hong Kong
Company’s website www.jtexpress.com
(The contents on this website do not form
part of this prospectus)
Company Secretary Yin Shan Hui (ޙ,)ACG, HKACG
Authorized Representatives Jet Jie Li ( ҽ௫)
Unit 301, No. 16, Lane 899
Xinfeng Middle Road
Huaxinzhen, Qingpu District
Shanghai
PRC
Yin Shan Hui (ޙ,)
ACG, HKACG
5/F, Manulife Place
348 Kwun Tong Road
Kowloon, Hong Kong
Audit Committee Charles Zhaoxuan Y ang (Chairman)
Alice Y u-fen Cheng
Erh Fei Liu
Remuneration Committee Erh Fei Liu (Chairman)
Jet Jie Li
Peng Shen
Nomination Committee Erh Fei Liu (Chairman)
Jet Jie Li
Peng Shen
Corporate Governance Committee Peng Shen (Chairman)
Charles Zhaoxuan Y ang
Erh Fei Liu
CORPORATE INFORMATION
– 125 –


--- page 136 ---
Principal share registrar
and transfer office
Harneys Fiduciary (Cayman) Limited
4th floor, Harbour Place
103 South Church Street
P .O. Box 10240
Grand Cayman, KY1-1002
Cayman Islands
Hong Kong Share Registrar Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
Principal bankers CTBC Bank Co., Ltd., Hong Kong
Branch
8 Finance Street
Central, Hong Kong
Citibank, N.A., Hong Kong Branch
Champion Tower, Three Garden Road
Central, Hong Kong
The Hong Kong and Shanghai Banking
Corporation Limited
Head Office, 1 Queen’s Road Central
Hong Kong
Shanghai Pudong Development Bank
Offshore Banking Unit
No. 12 Zhong Shan Dong Yi Road
Shanghai, PRC
CORPORATE INFORMATION
– 126 –


--- page 137 ---
The information and statistics set out in this section and other sections of this prospectus
were extracted from the Frost & Sullivan Report prepared by Frost & Sullivan, which was
commissioned by us, and from various official government publications and other
publicly available publications. We engaged Frost & Sullivan to prepare the Frost &
Sullivan Report, an independent industry report, in connection with the Global Offering.
The information from official government sources has not been independently verified by
us, the Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Underwriters, any of their respective
directors and advisers or any other persons or parties involved in the Global Offering,
and no representation is given as to its accuracy.
SOURCE OF INFORMATION
We engaged Frost & Sullivan to conduct market research and prepare a report concerning the
global express delivery market (the “Frost & Sullivan Report”). We believe that Frost &
Sullivan has specialized research capabilities and experience in this industry. Except as
otherwise noted, all of the data and forecasts contained in this section are derived from the
Frost & Sullivan Report.
FROST & SULLIV AN REPORT
Frost & Sullivan is an independent market intelligence provider that provides market research,
information and advice to companies in various industries, including the express delivery
industry. We have agreed to pay a commission fee of approximately US$455,000 for the Frost
& Sullivan Report. The Frost & Sullivan Report was compiled using both primary and
secondary research conducted in markets where we operate.
Frost & Sullivan’s projection on the size of each of the markets in the Frost & Sullivan Report
takes into consideration various factors, such as (i) primary research including interviews with
industry participants, competitors, downstream customers and recognized third-party industry
associations; and (ii) secondary research including reviews of corporate annual reports,
databases of relevant official authorities, as well as (iii) utilizing the exclusive database
established by Frost & Sullivan over the past decades. Frost & Sullivan has prepared the Frost
& Sullivan Report on the assumptions that (i) the social, economic and political conditions in
the major overseas countries and China markets currently discussed will remain stable during
the forecast period; (ii) government policies on express delivery industries in China and major
overseas countries discussed will remain consistent during the forecast period; and (iii) the
global and China express delivery markets will be driven by the factors which are stated in this
report. The reliability of the Frost & Sullivan Report may be affected by the accuracy of the
foregoing assumptions and factors.
Frost & Sullivan also conducted a consumer survey of the express delivery markets in the five
main country markets of Southeast Asia (Indonesia, Vietnam, Malaysia, the Philippines and
Thailand) and collected 1,500 valid replies (300 for each of the five main country markets)
from respondents including business merchants and individual consumers. The results of the
survey are included in the Frost & Sullivan Report.
The Directors confirm that after taking reasonable care, there has been no adverse change in
the market information since the date of the report prepared by Frost & Sullivan which may
qualify, contradict or have an impact on the information set forth in this section in any material
respect.
INDUSTRY OVERVIEW
– 127 –


--- page 138 ---
REGIONAL MARKET DEFINITIONS
Our core operations, express delivery services, span across primarily seven Southeast Asian
countries and China. We define our region of Southeast Asia (“ SEA”) as the combined markets
of Indonesia, Vietnam, Malaysia, the Philippines, Thailand, Cambodia and Singapore. We have
also expanded globally into Saudi Arabia, UAE, Mexico, Brazil, and Egypt, all of which we
define as our New Markets.
EXPRESS DELIVERY BUSINESS MODELS
Express delivery operators are primarily divided into three main business models, namely
direct operation model, network partner model and regional sponsor model.
Direct operation model . Under a direct operation model, the express delivery operator controls
the entire process of parcel pickup, transportation and delivery, and builds its own sorting
centers, pickup and delivery outlets and delivery teams. Under this model, express delivery
operators take on all revenues and costs in the express delivery process. The direct operation
model typically allows for direct operational control and a higher price, but imposes a
significant demand on capital which may slow the growth of the operations.
Network partner model . Under the network partner model, the express delivery operator is only
responsible for the sorting and line haul transportation process, while network partners are
primarily responsible for first- and last-mile pickup and delivery. Express delivery operators
under a network partner model typically collect waybill fees from network partners and take
on all costs in sorting and transportation. Such model is more demanding upon management
and come with difficulties in controlling service quality.
Regional sponsor model . Under the regional sponsor model, which is currently employed by
J&T, the express delivery operator partners with regional sponsors that assist country
headquarters in operating local delivery networks in designated geographies. Critical parts of
the network, including sorting and line-haul, are operated by country headquarters and the
regional sponsors through regional operating entities, while local pickup and delivery outlets
and service stations are typically either managed directly by regional sponsors or by network
partners. In areas where the express delivery operator engages network partners, such network
partners function similarly to network partners under a network partner model. Advantages of
the regional sponsor model include aligned interest and culture, high flexibility and adaption,
strong operational control and low cost and capital requirement.
Differences between express delivery models
Flexibility is one of the advantages of regional sponsor model over network partners model.
Under the regional sponsor model, once the regional sponsors are appointed, they could, at
their discretion, choose to directly operate their pickup and delivery outlets without any
network partners or engage network partners to expand the network, depending on which is
suitable for the respective market. The split between pickup and delivery outlets operated by
the regional sponsors and by the independent network partners is an outcome reflecting the
operational decision of each regional sponsor across markets.
Under a regional sponsor model, an express delivery operator relies on and partners with
regional sponsors to expand and operate its network. In contrast, under a traditional network
partners model, an express delivery operator predominantly expands the network via network
partners, such express delivery operator directly manages these network partners, and network
partners are their most important business partners.
INDUSTRY OVERVIEW
– 128 –


--- page 139 ---
Additionally, the relationship between regional sponsors and the express delivery operator is
closer and more binding than that between the thousands of network partners and express
delivery companies using a network partner model, because the regional sponsor is
fundamentally different from a network partner due to their investment into the network, scope
of responsibility and alignment of interest. The regional sponsor model is only similar to the
traditional network partner model when the operator under the regional sponsor model engages
network partners for similar obligations (i.e., first-mile pickup and last-mile delivery) as under
the network partner model.
Under a direct operation model, the express delivery operator is responsible for entire express
delivery process. In different stages, the network partner model and regional sponsor model are
different in the following aspects:
Network partner/franchise model Regional sponsor model
Ramp-up stage  If the express delivery operator
plans to enter into a new market,
it needs to spend time and efforts
in searching for every network
partner locally to build the
network.
 The express delivery operators
directly contract with and
manage its network partners.
 When the express delivery
operator enters into a new
market, it first engages the
regional sponsors. The
headquarters authorize regional
sponsors to execute and tailor
strategies based on local market
requirements. Regional sponsors
exercise discretions to invest
resources, time and energy to
expand the network.
Operation stage  Express delivery operators
predominantly rely on network
partners to perform pickup and
delivery obligations.
 Subject to local conditions, the
express delivery operator and
regional sponsors may decide to
(i) directly operate pickup and
delivery outlets, or (ii) engage
network partners.
 In regions where network
partners are engaged, regional
sponsors manage the network
partners.
 Network partners perform limited
functions within a limited
designated area. Network
partners do not operate sorting
centers or line-haul vehicles.
 Regional sponsors are responsible
for the overall operation.
Regional sponsors together with
country headquarters operate
sorting centers and line-haul
vehicles.
 Network partners can use the
express delivery operators’ brand
and logos, software and system.
 Regional sponsors and network
partners in the network can
access to the express delivery
operators’ brand, logos, software
and system.
INDUSTRY OVERVIEW
– 129 –


--- page 140 ---
OVERVIEW OF SEA EXPRESS DELIVERY MARKET
SEA economy
SEA is one of the fastest-growing regions in the world, with significant growth in GDP and per
capita income in the historical period from 2018 to 2022. Nominal GDP of SEA grew from
US$2,959.7 billion in 2018 to US$3,525.7 billion in 2022, representing a CAGR of 4.5% over
the period. The SEA region is expected to maintain fast growth at a CAGR of 7.9% and reach
US$5,188.8 billion by 2027. Nominal GDP per capita of SEA is expected to increase from
US$6,216.9 in 2023 to US$8,143.1 in 2027 at a CAGR of 7.0%, which will further drive the
development of the e-commerce retail and express delivery markets in SEA. Among the SEA
countries, Indonesia, the largest country in SEA, had nominal GDP of US$1,289.4 billion in
2022, accounting for 36.6% of SEA ’s nominal GDP in 2022, and will continue to be the largest
GDP contributor in the region through 2027. Compared to the 65.2% urbanization rate of China
in 2022, the urbanization rate of SEA was 54.4% in 2022 but is expected to reach 68.1% in
2027 due to continued urbanization and development of infrastructure in SEA. In terms of
demographic structure, SEA has a relatively young population, indicating future growth
potential for new technology and new retail markets including the e-commerce retail industry.
For example, the percentage of the population aged 15 to 29 in SEA was approximately 25%,
which is comparatively higher than the percentage in developed countries such as the United
States, in which approximately 20% of the population was aged 15 to 29 in 2022.
SEA e-commerce retail market
With strong economic growth and increasing Internet and smartphone penetration rates, the
e-commerce retail market in SEA experienced rapid growth from 2018 to 2022. An increasing
number and variety of companies from multiple industries have applied omni-channel retail
strategies that have boosted growth of e-commerce. In addition, social restrictions due to the
COVID-19 pandemic have also contributed to the growth of e-commerce and associated parcel
volumes in recent years. The total transaction value of the e-commerce retail market grew from
US$38.3 billion in 2018 to US$154.8 billion in 2022, representing a CAGR of 41.8% during
the period. In 2022, an estimated 11.1 billion parcels were delivered (including e-commerce
and regular commerce) across SEA, representing year-over-year growth of 15.1%.
Concurrently, demand for fast, high-quality express delivery services has increased.
Market Size of E-commerce Retail Market (by Transaction Value),
Southeast Asia, 2018-2027E
USD Billion
0
50
100
150
200
250
300
350
400
38.3
202220212018 2019 2020 2025E 2023E 2024E 2026E 2027E
55.7
88.2
128.2
274.1
154.8
188.6
230.2
322.5
373.6
Indonesia the PhilippinesThailand Vietnam Malaysia Singapore Cambodia
CAGR 18-22 CAGR 23E-27E
Market Size 41.8% 18.6%
Source: Frost & Sullivan
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Indonesia has the largest e-commerce retail market in SEA. The size of Indonesia’s
e-commerce retail market, measured by transaction value, grew at a CAGR of 44.1% from
US$17.1 billion in 2018 to US$73.8 billion in 2022, which represented a 47.7% market share
in SEA in 2022. The number of active e-commerce users in Indonesia increased from 100.4
million in 2018 to 168.6 million in 2022. Other SEA countries have experienced similar
growth. The e-commerce retail market in terms of transaction value in Malaysia, Vietnam, the
Philippines and Thailand have been growing at a CAGR of 44.1%, 41.7%, 37.1%, 42.2%,
respectively, over the same period.
Leading e-commerce platforms in SEA, such as Shopee, Lazada, and Tokopedia, are expected
to maintain fast growth rates, as the improvement of Internet infrastructure and smartphone
penetration in SEA is expected to further facilitate transitions from offline retail into the
e-commerce channel. In a leading market such as Indonesia, the e-commerce penetration rate
is expected to increase from 23.6% in 2023 to 33.3% in 2027, with growth driven by increasing
numbers of online shoppers and product categories. For Thailand, the second largest
e-commerce retail market in SEA, the e-commerce penetration rate was only 14.2% in 2022,
leaving significant room for future growth, and is expecting to reach 29.0% in 2027. The
e-commerce penetration rate in SEA is expected to increase from 17.9% in 2023 to 29.8% in
2027.
As a result, the e-commerce retail market in SEA is expected to reach US$373.6 billion in 2027
from US$188.6 billion in 2023, representing a CAGR of 18.6%. The e-commerce retail market
in Indonesia is expected to continue its leading position, and reach US$175.2 billion by 2027
from US$90.3 billion in 2023, representing a CAGR of 18.0%. The e-commerce retail market
in Vietnam, Malaysia, the Philippines and Cambodia are expected to grow approximately 20%
year over year to 2027.
Social e-commerce is an emerging mode of e-commerce, adopted by companies such as TikTok
and Facebook, which integrates e-commerce with social networks, leveraging on mobile
internet technology, social networking, online payments, logistics and other tools, in order to
sell merchandise online through social group sharing and interaction. Social e-commerce, as a
subset of the e-commerce retail market in SEA, in terms of transaction value, increased rapidly
from US$9.2 billion in 2018 to US$60.2 billion in 2022, representing a CAGR of 59.9%, and
is expected to reach US$179.8 billion in 2027, representing a CAGR of 22.2% from 2023 to
2027. As a percentage of the e-commerce retail market in SEA in terms of transaction value,
social e-commerce grew from 24.0% in 2018 to 38.9% in 2022, and is expected to grow to
48.1% in 2027.
Historical trends and opportunities in the SEA express delivery market
The express delivery industry in SEA is at a nascent stage and is rapidly growing. Driven by
continuous growth of per capita income, rapidly increasing internet penetration and growth of
e-commerce, the SEA express delivery market grew from 3,257.3 million in parcel volume in
2018 to 11,148.4 million in 2022, representing a CAGR of 36.0%, and is expected to reach
23,450.2 million in parcel volume by 2027 from 13,160.3 million in 2023, representing a
CAGR of 15.5%.
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Market Size of Express Delivery Market (by Parcel Volume),
Southeast Asia, 2018-2027E
Million
2018 2019 2020 2021 2024E 2022 2023E 2025E 2026E 2027E
3,257.3
4,944.9
7,030.7
9,689.7
11,148.4
13,160.3
15,504.8
17,945.4
20,566.3
23,450.2
Indonesia Thailand the PhilippinesVietnam Malaysia Singapore Cambodia
CAGR 18-22 CAGR 23E-27E
Market Size 36.0% 15.5%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
Source: Primary interviews, Frost & Sullivan
Drivers and opportunities for express delivery market in SEA
The following factors have historically contributed to and are expected to continue to fuel the
growth of the SEA express delivery industry:
Growing GDP Per Capita
and Consumer
Purchasing Power
The rising level of GDP per capita in SEA has been a major
force behind the booming retail market. The overall SEA market
is expected to experience growth in GDP per capita from
US$6,216.9 in 2023 to US$8,143.1 in 2027, representing a
CAGR of 7.0%, which demonstrates growth in consumer
purchasing power and will continue to support e-commerce
development.
Improved Transportation
and Local Infrastructure
and Payment Systems
Along with improved transportation systems and infrastructure,
express delivery services will see significant improvement in
terms of service quality, coverage and timeliness, which will
further stimulate the demand for e-commerce express logistics.
As online payments become more widely accepted by regional
banks and timely settlement can be provided, this will
encourage consumers to transact with e-commerce platforms.
Additionally, express delivery service providers have begun to
partner with local banks to offer cash on delivery (COD)
services to resolve difficulties in payment where online
payments are not available.
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Growth of E-commerce
Platforms
The growth of major e-commerce platforms such as Shopee,
Lazada, and Tokopedia, continues to support a shift in consumer
behavior to online shopping, with more comprehensive services
such as small value goods and community purchases, which
depend heavily on express delivery services.
Growing popularity of social e-commerce will also lead to a
shift in customer behaviors. Platforms such as Facebook and Tik
Tok are typically more popular among younger consumers with
stronger purchasing power. Social e-commerce has already
grown to 38.9% as a percentage of the SEA e-commerce retail
market in 2022.
Favorable Government
Policies
To promote the sustainable development of express delivery
industry in SEA, governments in the region have issued policies
and guidelines to define the scope of express delivery activities
and standardize the permitting processes to aid the orderly
development of the express delivery industry. Favorable
government policies and guidelines include The Logistics and
Trade Facilitation Masterplan in Malaysia, which aims to
provide the strategic framework to resolve bottlenecks in the
logistics sector, and Indonesia’s digital roadmap 2021-2024,
which aims to develop digital ecosystems covering logistics,
governments, transportations and so on, as well as The Logistics
Reform Development Policy Loan, which aims to improve
logistics system, strengthen country’s connectivity and simplify
current lengthy administrative procedures in Indonesia.
Competitive landscape
The SEA express delivery market historically had been relatively fragmented due to poor
network coverage, underdeveloped transportation infrastructure, unavailability of settlement
options, and difficulty in accessing remote locations. Many players in the express delivery
industry have limited coverage across the region, while relatively few players offer delivery
services across multiple countries in the region. In 2022, there were approximately 2,000
express delivery operators in SEA market, and the top five players in SEA had only 47.9%
market share, compared to China where the top five players had over 70% market share.
Furthermore, the Company has witnessed the exit of certain country level players due to
competition in the past few years in SEA. Therefore, the SEA market presents significant
potential for consolidation.
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Top 5 Express Delivery Operators (by Parcel Volume), SEA, 2022
Rank Express Delivery
Operators Business Model Country Coverage Parcel Volume
(Millions)
Market
Share
1 J&T Regional Sponsor Model
(supported by network
partner model)
Indonesia, Thailand,
Malaysia, Singapore,
Vietnam, Cambodia,
the Philippines
2,513.2 22.5%
2 Company A Direct Operation Model Mainly Thailand 802.8 7.2%
3 Company B Direct Operation and
Network Partner Model
Mainly Indonesia 697.5 6.3%
4 Company C Direct Operation Model Mainly Thailand 668.5 6.0%
5 Company D Mainly Indonesia 657.6 5.9%Direct Operation and
Network Partner Model
Source: Primary interviews, Frost & Sullivan
Notes:
Company A: Established in 1883 and headquartered in Bangkok, it is a state enterprise that provides postal services
mainly in Thailand.
Company B: Established in 1990 and headquartered in Jakarta, it is an Indonesian express delivery and logistics
courier that provides postal and delivery services mainly in Indonesia.
Company C: Established in 2006 and headquartered in Bangkok, it offers a comprehensive range of integrated
parcel delivery services to customers in the C2C, B2C, and B2B segments mainly in Thailand.
Company D: Established in 2014 and headquartered in Jakarta, it offers shipping and logistics services for
customers mainly in Indonesia.
The SEA express and parcel market had historically been supported by government with a
focus on domestic mail and parcel delivery. However, this dynamic is changing due to (i) the
inefficiencies of incumbent firms with higher costs and lower service quality, (ii) the impact
from COVID-19 in the past three years, resulting in a shift of customer behavior and increasing
reliance on online purchases and express delivery, (iii) government promotion of e-commerce
and encouraging the collaboration between e-commerce and parcel delivery players to ensure
that rural communities are covered, and (iv) the fact that SEA continues to serve as a major hub
for cross-border e-commerce.
SEA presents multiple challenges for the development of the express delivery sector. The
primary challenges are as follows:
 Network coverage and difficulty of access . Lack of network coverage, particularly
outside of metropolitan areas, results in certain regions being underserved by express
delivery service providers. Geographic features of certain regions such as Indonesia’s
archipelagic geography also present a challenge for inter-island connectivity that often
involves complex supply chain management.
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 Infrastructure . Many regions in SEA have poorly developed transport infrastructure,
ambiguous location identification, as well as barriers caused by local languages and
dialects, which requires address digitalization across jurisdictions to improve the
accuracy and timeliness of deliveries.
 Settlement . Due to the more nascent developmental stage of the SEA e-commerce retail
market, many regions require different modes of settlement. In particular, in certain
regions such as the Philippines, many transactions are still settled in cash, which creates
challenges for online transactions.
 Data integration . E-commerce platforms require real-time data to allow them to manage
inventory and warehousing, as well as track shipments throughout the delivery process.
However, many traditional delivery service providers in SEA only provide manual
tracking.
These challenges leave great opportunities for players with coverage and standardized
customer service across different countries. Competition in the express delivery market in SEA
will continue to increase, with e-commerce platforms building their own express delivery
teams and new players entering into the market. Despite increasing competition, existing top
market players in the market are expected to maintain leadership supported by various
competitive advantages.
Barriers to entry
New entrants into the SEA express delivery market face multiple major challenges that are
increasing as the industry matures. These challenges are as follows:
 Network . SEA presents challenges in terms of the need to cover vast geographic regions
with many remote locations. Many leading express enterprises have invested in and
developed broad network coverage. It is difficult for new entrants to establish regional
coverage and compete with more established enterprises in the short term.
 Customized operations . The diversity in levels of economic development in the region
requires the adoption of customized operating modes, reducing economies of scale. For
example, the Philippines, Vietnam and Cambodia are still cash-first markets which
require express providers to offer additional services such as COD.
 Capital . New entrants require significant capital to build up adequate network coverage
in a region and contracted volume that are vital to the survival in the early stage.
Additionally, most markets in the region have underdeveloped transport infrastructure as
well as location identification. Incumbents have invested significant resources to
overcome these limitations by hiring local experts with knowledge of the region and
building in-house databases to identify addresses.
 Licensing and regulatory . Several markets in SEA have unique licensing requirements
to operate express delivery services. Within these markets the licensing structure requires
a separate permit to operate within each region, further adding complexity to entering into
and scaling in this market. Certain operators in the region are state-owned, creating
conflicts of interest.
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OVERVIEW OF CHINA EXPRESS DELIVERY MARKET
China economy
China is one of the largest and fastest-growing economies in the world. The Chinese economy
has experienced extraordinary growth over the past five years, with a nominal GDP increasing
from US$13,841.8 billion in 2018 to US$17,994.9 billion in 2022, representing a CAGR of
6.8%. China’s nominal GDP is expected to further grow at a CAGR of 5.6% over the next five
years. China’s GDP per capita increased from US$9,849.0 in 2018 to US$12,746.1 in 2022, and
is expected to increase further to US$16,961.4 by 2027.
E-commerce as the main driver of China express delivery market
China has the largest e-commerce retail market in the world in terms of e-commerce retail
value, amounting to US$1,777.1 billion in 2022, which represented over 40% of the US$3.9
trillion global market in 2022. The development of e-commerce in China has reshaped and
promoted the development of the logistics sector as well as the express delivery industry.
The number of e-commerce users in China increased from 610.1 million in 2018 to 934.3
million in 2022 at a CAGR of 11.2% while the e-commerce user coverage ratio in China
increased from 43.4% to 66.2% as a percentage of the total population during the same period
due to the improvement of internet infrastructure under government support alongside
continued development of mobile internet technology, social networking, online payment and
logistics in China. As a result, the total e-commerce retail market in China, measured by
transaction value, has grown from US$1,058.5 billion in 2018 to US$1,777.1 billion in 2022,
representing a CAGR of 13.8%. With an increasing use of the Internet, smart devices, and
associated suite of functionalities such as electronic payment and live streaming, e-commerce
penetration is expected to further increase.
The COVID-19 pandemic has also contributed to an accelerated shift from offline consumption
to online, advancing the development of the e-commerce industry, and thus supporting the
development of the express delivery industry. Consumers in China are expected to become
increasingly receptive to online shopping and generate larger demand for online shopping, and
the number of e-commerce users is expected to grow from 1,000.7 million in 2023 to 1,202.1
million in 2027, representing a CAGR of 4.7%. The e-commerce retail market of China is
expected to grow from US$1,997.4 billion in 2023 to US$2,957.2 billion in 2027, representing
a CAGR of 10.3%.
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Market Size of E-commerce Retail Market (by Transaction Value) and Penetration
Rate, Mainland China, 2018-2027E
U.S. Dollars Billion
E-commerce Retail Market
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0
5
10
15
20
25
30
35
40
%
2018
1,058.5
20.9%
18.6%
24.9% 24.5%
27.2% 29.1%
30.8% 32.4%
34.1% 35.6%
2019
1,234.9
2020
1,415.0
2021
1,674.5
2022
1,777.1
2023E
1,997.4
2024E
2,221.8
2025E
2,454.7
2026E
2,701.1
2027E
2,957.2
E-commerce Penetration Rate
CAGR 18-22 CAGR 23E-27E
Market Size 13.8% 10.3%
Source: National Statistics Bureau, Frost & Sullivan
The dynamics of the e-commerce industry in China have been evolving rapidly in recent years
and social e-commerce has become the new growth engine. From 2018 to 2022, with the rapid
expansion of e-commerce user scale, a solid foundation has been placed for the development
of the social e-commerce retail market in China. Rapid growth of social e-commerce has been
witnessed alongside the development of social media platforms such as Kuaishou, WeChat and
Douyin. Leading e-commerce platforms such as Tmall, Taobao, JD and Pinduoduo have also
built up their social e-commerce and live-streaming businesses, which greatly expanded their
online product categories and improved the efficiency of traffic conversion. The social
e-commerce retail market in China increased from US$98.5 billion in 2018 to US$626.5 billion
in 2022 at a CAGR of 58.8% and is expected to reach US$1,660.4 billion in 2027 from
US$839.7 billion in 2023 at a CAGR of 18.6%. The number of social e-commerce users in
China increased from 486.4 million in 2018 to 794.2 million in 2022, representing a CAGR of
13.0%, and is expected to further grow to 1,178.1 million in 2027 from 879.2 million in 2023
at a CAGR of 7.6%. Additionally, social e-commerce is expected to increase from 42.0% in
2023 to 56.1% in 2027, as a percentage of the e-commerce retail market in China. Driven by
the fast growth of the social e-commerce sector, the express delivery market in China is
expected to maintain sustainable growth in the forecasted period.
Historical trends and opportunities in China express delivery market
China is the largest express delivery market in the world in terms of parcel volume in 2022.
The China express market has been growing at a CAGR of 21.5% over the past five years (from
2018 to 2022) in terms of parcel volume, and the market is expected to further grow at a CAGR
of 10.7% from 2023 to 2027. The China express market is expected to reach 188.0 billion
parcels by 2027 from 125.1 billion parcels in 2023.
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Market Size of Express Delivery Market (by Parcel Volume),
Mainland China, 2018-2027E
Billion Units
CAGR 18-22 CAGR 23E-27E
Market Size 21.5% 10.7%
0
2018
50.7
2019
63.5
2020
83.4
2021
108.3
2022
110.6
2023E
125.1
2024E
140.2
2025E
156.0
2026E
172.0
2027E
188.0
50
100
150
200
Source: State Post Bureau, Frost & Sullivan
Drivers and opportunities for China express delivery market
Multiple drivers are expected to create additional opportunities in the China express delivery
industry. These include:
 Robust demand from e-commerce . The rapid development of e-commerce business is
the most crucial driver of the express delivery industry, as the majority of express
delivery parcel demand comes from e-commerce.
 Favorable government policies . To promote the healthy and orderly development of
express delivery industry and create a sound business environment, the government has
issued policies and reforms to modernize the express delivery industry, encourage
innovation, enhance branding of express delivery and logistics companies, and stabilize
express delivery pricing. Favorable government policies and guidelines include Plan for
the Development of Modern Logistics during the “14th Five-Y ear Plan” period “ɤ̬
ʞ”஝ྌ, which aims to develop and improve both domestic and
cross-border logistic network, Implementation Plan for the Domestic Demand Expansion
Strategy (2022-2035)ࠅ2022–2035 ϋ)which aims to improve
the logistics infrastructure network, coordinate national logistics hubs and increase
cross-regional logistics service capacity, and Special Action Plan for the High-quality
Development of Trade Logistics (2021-2025)ྌ(2021-2025
ϋ), which aims to build a smooth, efficient, collaborative modern commercial logistics
system.
 Advanced technology applications . Successful applications of innovative technologies
in the express delivery industry enable express delivery operators to further improve
operational efficiency, shorten delivery times and optimize the logistics supply chain.
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 Improving infrastructure and facilities . Improvements in national transportation
infrastructure lay out a solid foundation for the express delivery industry. Additionally,
the focus on new infrastructure and new energy vehicles in the coming years will further
enable the express delivery industry to achieve technological innovation and improve
service.
 Emerging cross-border e-commerce and express delivery demand . Cross-border
e-commerce is another growth opportunity for the express delivery industry in mainland
China. As mentioned in 14th Five Y ear plan, the government encourages cross-border
e-commerce development, expanding China’s established successful e-commerce and
logistics experiences overseas, bridging domestic producers and suppliers directly with
overseas consumers and selling domestically manufactured goods to them. Revenue of
cross-border small parcels is anticipated to grow at a CAGR of 21.6% from 2023 to 2027,
reaching approximately US$92.0 billion by 2027.
Competitive landscape
In 2022, the express delivery industry in China was relatively concentrated and there were
approximately 80 express delivery operators in China, with the top five players accounting for
approximately 76.6% of the total business volume. In March 2020, J&T Global tapped into the
China express market.
Top Express Delivery Operators (by Parcel Volume), China, 2022
Rank Express Delivery Operators Business Model Parcel Volume
(Billions)
1 Company E 24.4
2 Company F 17.6
3 Company G 17.5
4 Company H 12.9
5 Company  I 12.3
6 J&T Express 12.0
7 Company J 11.1
Market Share
22.1%
15.9%
15.8%
11.7%
11.1%
10.9%
10.0%
Network Partner Model
Network Partner Model
Network Partner Model
Network Partner Model
Direct Operation Model
Regional Sponsor Model
(supported by network partner model)
Direct Operation Model
Source: Company Reports, primary interviews, Frost & Sullivan
Notes:
Company E: Established in 2002 and headquartered in Shanghai, it is a express delivery operator that principally
involved in the provision of express delivery services through its nationwide network as well as other
value-added logistics services.
Company F: Established in 1999 and headquartered in Shanghai, it is a express delivery operator that offers
delivery services, warehousing and international logistics.
Company G: Established in 2000 and headquartered in Shanghai, it is a large express enterprise in China and offers
express delivery, general cargo warehousing, domestic air transportation and other related services.
Company H: Established in 1993 and headquartered in Shanghai, it is a express delivery service provider offering
express services and other value-added services.
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Company I: Established in 2019 and headquartered in Beijing, it is a state-owned enterprise engaged in the delivery
of parcels and postal items in China.
Company J: Established in 1993 and headquartered in Shenzhen, it is a multinational delivery services and logistics
company and provides domestic and international express delivery.
Service Quality
Complaint rate, complaint handling composite index and 72 hours on-time rate disclosed by the
State Post Bureau of the PRC are three metrics that can represent the service quality of the
express delivery operators. Complaint rate refers to the units of parcels for which the State Post
Bureau of the PRC receive complaints from customers related to specific express delivery
operators per million units of parcels that they have delivered. The evaluation parameters of
complaint handling composite index include one-time settlement rate, overdue rate, non-
standard response rate of enterprise, false response rate of enterprise, and job satisfaction rate.
72 hours on-time rate refers to the percentage of parcels delivered within 72 hours over total
sample domestic cross-city parcels.
The two comparison graphs set below are based on the available period data in 2023. For
average complaint rate, the Company ranked as the first among major players in China in the
first half of 2023 per available data, significantly better than the industry average level during
the period. During the Track Record Period, the Company’s average complaint rate was 1.5,
which was lower than the average level of 2.5 for other six top express delivery operators in
China. The average compliant rate of Company E, Company F, Company H, Company G,
Company J and Company I during the period was 0.5, 1.1, 1.7, 2.4, 4.1 and 5.1, respectively.
Only complaint rate data from September 2020 to February 2022 are disclosed and available
and such data are used for the comparison above. For complaint handling composite Index, the
Company ranked as the first among major players in China in the first half of 2023 per
available data. In addition, the State Post Bureau of the PRC arranged a survey regarding the
on-time rates of major express delivery operators in China in the first half of 2023. The
industry average 72 hours on-time rate is 79.81%, and the leading three players include
Company J, Company E, and the Company as disclosed by the State Post Bureau of the PRC.
Average Complaint Rate of Top Express Delivery Operators, China, 2023H1
0.6 0.8 1.4 2.2 2.3
3.7
6.8
12.1
30.3
J&T Express Company E Company G Company HCompany F Company I Company K Company LCompany J
Industry Average: 6.7
Source: State Post Bureau of the PRC, Frost & Sullivan
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Complaint Handling Composite Index of
Top Express Delivery Operators, China, 2023H1
99.2899.77
98.87 98.15 97.62
96.64
97.71
96.40
89.19
J&T Express Company E Company H Company KCompany F Company L Company J Company ICompany G
Industry Average: 97.03
vertical
axis starting
from 80
Source: State Post Bureau of the PRC, Frost & Sullivan
Barriers to entry
New entrants into the China express delivery market face multiple challenges that are
increasing as the industry matures. These challenges are as follows:
 Capital . Fixed assets such as sorting centers and transportation vehicles, the basis for
express delivery operators to achieve economies of scale, require heavy capital
expenditures at early stages of market entry and continual investment as to expand
capacity. Most new entrants lack stable operating cash flow while they face the
substantial capital demand for capacity expansion, which creates difficulties in capital
management and market penetration.
 Network . The express industry has experienced a period of rapid growth. As the industry
competition intensifies, express delivery operations become less attractive to potential
entrants, indirectly contributing to a rise in the cost of network expansion. Most leading
express enterprises have nationwide logistics networks and continually consolidate their
infrastructure in order to maintain competitiveness. New entrants are unable to compete
in terms of network coverage with more established enterprises in the short term.
 Economies of scale . Economies of scale have become the key to profitability in the
express delivery industry. Economies of scale enhance express delivery operators’ ability
to control costs. The costs of express delivery mainly consist of waybill cost,
transportation cost, sorting center cost and delivery cost. Currently the line-haul
transportation and transit costs are the main focal points in cost reduction for most
operators. Most leading express delivery operators are ahead of the industry in line-haul
transportation and transit costs due to their large volumes, number of sorting centers and
line-haul vehicles, which reduce the unit cost of a parcel and also enhance the
competitiveness of service. New entrants without adequate scale face challenges in
effectively reducing line-haul transportation and transit costs, which results in higher unit
cost.
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 Technology . The design and application of technologies tailored for the challenges of
each geography are key for express delivery operators to offer competitive services to
cater to diverse and personalized customer needs while maintaining high service quality.
Going forward, intelligent automation will become the core competitiveness of express
delivery operators as it can significantly improve the parcel sorting efficiency and
customer service quality of express delivery operators, and effectively reduce the labor
and operation costs.
OVERVIEW OF NEW MARKETS
New Markets economies
Total nominal GDP of the New Markets including Saudi Arabia, UAE, Mexico, Brazil, and
Egypt was US$5,302.8 billion in 2022. Nominal GDP of the New Markets is expected to reach
US$7,217.9 billion in 2027, representing a CAGR of 6.3% from 2023 to 2027. Egypt, as a
developing country, is expected to become the fastest-growing economy among the New
Markets, growing at a CAGR of 16.0% during the same period. In addition, GDP per capita in
the New Markets is expected to reach US$13,785.1 in 2027, which is significantly higher than
expected GDP per capita of US$8,143.1 in SEA in 2027, representing a CAGR of 5.1% from
2023 to 2027.
E-commerce retail markets in New Markets
Retail markets in Saudi Arabia, UAE, Mexico, Brazil, and Egypt have been on the verge of a
pivotal transition as consumers shift to online shopping. In the past years, these countries have
all experienced significant growth in their e-commerce retail markets. The following chart sets
forth a breakdown of the e-commerce retail markets in these countries for the period indicated:
Market Size of E-commerce Retail Market (by Transaction Value),
New Markets, 2018-2027E
USD Billion
2025E 2027E20192018 2022 2021 2023E 2026E 2024E2020
47.5
32.4 38.0
66.1
85.7
136.3
167.5
203.9
243.1
107.6
0
50
100
150
200
250
300
CAGR 18-22 CAGR 23E-27E
Market Size 27.5% 22.6%
0
50
100
150
200
250
300
Brazil Mexico Egypt UAE Saudi Arabia
Source: Frost & Sullivan
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Each of Saudi Arabia, UAE, Mexico, Brazil, and Egypt is an important economy in their
respective regions. The e-commerce markets in these countries have been growing rapidly and
are expected to maintain the momentum due to fast developing internet infrastructure, growing
national economies and evolving consumer behavior. E-commerce penetration rates have been
growing in recent years. The e-commerce retail markets in Saudi Arabia, UAE, Mexico, Brazil,
and Egypt have collectively grown from US$32.4 billion in 2018 to US$85.7 billion in 2022
in terms of transaction value, representing a CAGR of 27.5%, and are expected to further grow
at a CAGR of 22.6% from 2023 to 2027 and reach US$243.1 billion in 2027. The overall
penetration rate for e-commerce of the New Markets is expected to increase from 14.6% in
2023 to 27.5% in 2027.
Strong development of express delivery markets in these countries presents significant
opportunities. From 2018 to 2022, the express delivery markets in terms of parcel volume in
Saudi Arabia, UAE, Mexico, Brazil, and Egypt grew at a CAGR of 20.2%, 18.5%, 22.3%,
18.7% and 12.7%, respectively. The express delivery markets in Saudi Arabia, UAE, Mexico,
Brazil, and Egypt are expected to grow further from 2023 to 2027 at a CAGR of 20.6%, 21.0%,
18.7%, 16.1% and 15.3%, respectively. The growth is expected to benefit from a range of key
trends including the development of the economy, infrastructure and e-commerce retail
markets, as well as the emergence of cross-border logistics with supportive government
policies, in these countries. Due to the early stage of development, express delivery service
pricing in the New Markets are relatively higher compared to more developed markets.
Market Size Express Delivery Market (by Parcel Volume),
New Markets, 2018-2027E
Million Units
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
7,137.7
20212018 2019
3,733.5
2024E 2025E20222020 2023E 2026E 2027E
6,158.5
1,516.8 1,732.0 2,053.0
2,534.5
3,095.8
4,454.6
5,257.8
Brazil Mexico Egypt UAE Saudi Arabia
CAGR 18-22 CAGR 23E-27E
Market Size 19.5% 17.6%
Source: Primary interviews, Frost & Sullivan
Competitive landscape and entry barriers of New Markets
The express delivery industry in the New Markets is relatively fragmented. Competition
remains split between local players and cross-regional players such as FedEx, UPS, DHL and
Aramex Express. Revenue per parcel remains relatively high in these markets as compared to
revenue per parcel in SEA or China due to fewer competition. Top local players include
Braspress, TNT Express and RTE Rodonaves in Brazil, Estafeta Express in Mexico, Egypt
Express in Egypt, Emirates Post in UAE and Saudi Post in Saudi Arabia.
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Major barriers to entry in the New Markets include:
 Customers . Large-scale express delivery operators such as DHL and FedEx have
established strong and sustainable partnerships with leading e-commerce platforms in the
New Markets, and some e-commerce platforms have built self-operated delivery centers.
For example, the Mexico express delivery market is dominated by Estafeta and
international express delivery operators such as FedEx, UPS, and DHL. With relatively
mature logistics centers, distribution networks and other infrastructure, large-scale
express delivery operators have established strong reputations and relationships with their
customers. It is difficult for new entrants to establish close partnerships with e-commerce
platforms in a short timeframe.
 Capital . Sorting centers, logistics infrastructure, and transportation vehicles are the
foundations for express delivery operators to ensure the sustainable developments of their
business, which require significant capital investments in the early development stages.
Leading operators can continue to invest in and explore business opportunities in New
Markets at limited profit margin to establish competitive advantages.
 Technology . With the rapid development of big data, artificial intelligence and new
infrastructure such as 5G and IoT, most leading express operators are now improving their
technological strengths in providing customized services and improving efficiency, which
help meet diverse and personalized customer needs and enhance service differentiation to
improve business competitiveness. In the future, intelligence and automation will become
core competencies for express delivery operators, but the application of technology in the
business requires operators to accurately capture and understand consumer needs in
different scenarios. The leading players have acquired accurate and relevant data through
years of experience in the industry, which will be a challenge for new entrants.
 Network . The logistics and distribution networks in the New Markets are scattered.
Companies are required to build sufficient logistics infrastructure to cover the rural areas
in the market. However, as price competition intensifies, express delivery operators are
becoming less attractive to potential entrants, while the cost of network expansion is
gradually rising. Even if new entrants can successfully establish and operate their
networks, their coverage will not be able to compete with most of the established players
in the short term.
OVERVIEW OF CROSS-BORDER LOGISTICS MARKET
China’s import and export markets
China, one of the major economies in the world, plays a vital role in global trade. Taking
advantage of domestic scaled industry clusters and abundant resources, China is supplying the
world with a great amount of goods. For both export and import goods value, China accounted
for more than 10% in global trade, with CAGR of around 9.5% and 6.5% respectively from
2018 to 2022. Frequent and significant trade between China and the world create great demand
for cross-border logistics services, and in the forecast period, it will remain as the fundamental
driver for the cross-border logistics service industry.
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Cross-border e-commerce retail market
China is the world’s largest exporter in terms of merchandise trade value in 2022, and China’s
cross-border e-commerce retail business has competitive advantages in terms of policies
environment, supply chains infrastructure, sources of supply and so on. Chinese manufacturers
and merchants are shifting from OEM business models to direct sales via international
e-commerce platforms such as Amazon and Ebay, or independent cross-border e-commerce
platforms such as SHEIN and Temu. At the same time, overseas brands and retailers are
establishing direct access to the Chinese retail market through China’s e-commerce platforms,
such as Tmall Global, Kaola and JD Global.
The market size of cross-border e-commerce retail market in China increased from US$201.0
billion in 2018 to US$442.5 billion in 2022, representing a CAGR of 21.8% from 2018 to 2022.
Driven by favorable policies toward cross-border e-commerce business, partnerships between
e-commerce platforms and overseas brands, and development of international delivery express
services, the cross-border e-commerce retail market is expected to reach US$1,101.9 billion in
2027, with a CAGR of 19.5% from 2023 to 2027.
Market Size of Cross-border E-commerce Retail Market (by Transaction Value),
Mainland China, 2018-2027E
USD Billion
233.4201.0
308.9
398.7 442.5
540.3
655.1
789.2
938.1
1,101.9
2024E 2025E2018 20222019 2020 2021 2023E 2026E 2027E
CAGR 18-22 CAGR 23E-27E
Market Size 21.8% 19.5%
0
200
400
600
800
1,000
1,200
Source: Frost & Sullivan
The Chinese government has been ensuring the continuity and stability of supportive policies
on the cross-border e-commerce retail market, including the promotion of the building of
international warehouses serving cross-border e-commerce and streamlining the return and
refund process for cross-border e-commerce transactions. Driven by the continuous
development of cross-border e-commerce retail market in China, cross-border logistics market
is expected to develop rapidly with the increasing service demands.
INDUSTRY OVERVIEW
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Market Size of Cross-border E-commerce Retail Market (by Transaction Value),
Southeast Asia, 2018-2027E
USD Billion
20.112.8
25.6
38.8
49.7
64.9
82.5
103.5
127.8
155.1
2024E 2025E2018 20222019 2020 2021 2023E 2026E 2027E
CAGR 18-22 CAGR 23E-27E
Market Size 40.4% 24.3%
0
20
40
60
80
100
120
140
160
Source: Frost & Sullivan
Global cross-border e-commerce retail players such as Amazon, eBay, Alibaba and JD have
been continuously investing into cross-border sector in Southeast Asia, the cross-border
e-commerce retail market is expected to reach US$155.1 billion in 2027 from US$64.9 billion
in 2023, with a CAGR of 24.3%. Driven by the rapid development of e-commerce retail
market, construction of international delivery service in Southeast Asia and continuous
development of Free Trade Area between SEA and China, the cross-border e-commerce retail
market (in terms of transaction value) has increased from US$12.8 billion in 2018 to US$49.7
billion in 2022, representing a CAGR of 40.4% during the period, and is expected to become
the future growing point of overall e-commerce retail market in the Southeast Asia.
Cross-border logistics market
The broader cross-border logistics markets in China and SEA have also seen significant growth
due to the rapid development of cross-border e-commerce and China’s central role as an
importer and exporter in the region. The business models of most market players in the
cross-border logistics market fall into four categories: (i) cross-border freight forwarding
service, (ii) cross-border standard express, (iii) cross-border small parcels, and (iv)
international warehousing solutions.
 Cross-border freight forwarding service . Cross-border freight forwarding services can
be rendered through air, sea and rail freight forwarding. In addition to transport services,
freight forwarding service providers also provide customs declaration and custom
clearance services.
 Cross-border standard express . Cross-border Standard Express is a high-quality
international express service typically provided by a single service provider to meet
customers’ needs for sending urgent items, mainly for business purposes. Compared with
cross-border small parcels, this service is typically more expensive and faster.
 Cross-border small parcels . Cross-border small parcels is currently the mainstream
logistics solution for cross-border e-commerce item deliveries and involves multiple
service providers partnering to serve consumers and business entities involved in
cross-border e-commerce transactions. Compared with cross-border standard express, this
service is more economical.
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 International warehousing solutions . Primarily serves e-commerce businesses,
especially for bulky items. After consumers make orders online, items will be sent out
from a warehouse located in the same country. Warehousing services include safekeeping
and storage, unloading and loading, inventory, packaging and disposal services.
Cross-border logistics involves complex processes with multiple parties such as local express
delivery service providers, customs declaration and clearance service providers, freight
forwarders and warehousing service providers. In order to ensure timeliness and delivery
accuracy, the industry has been trending towards integration of the cross-border logistics
supply chain. Companies with the capability to integrate the resources in the supply chain can
streamline cross-border logistics services and improve operational efficiency and service
quality.
Comparison of Different Business Models in Cross-Border Logistics Market
Cross-Border
Standard
Express
Cross-Border
Freight
Forwarding
Service
Cross-Border
Small Parcels
International
Warehousing
Solution
Overseas
Warehousing
Line Haul
Shipping
International ShippingDomestic Shipping Overseas Shipping
Merchants
 Line Haul
Shipping
Pickup, Domestic
Handling and Sorting
Fill out request
Transportation, Last-Mile
Delivery
Instruct to dispatch parcel
from overseas warehouse directly
Merchants
 Line Haul
Shipping
Fill out request
y
Place orders online
Domestic
Clearance
Overseas
Clearance
Domestic
Clearance
Overseas
Clearance
Domestic
Clearance
Overseas
Clearance
Customers
Customers
1
2
3
4
Place orders online
Transportation, Last-Mile
Delivery
Pickup, Domestic
Handling and Sorting
Benefiting from the robust growth in cross-border e-commerce, China’s cross-border logistics
market witnessed growth of 43.3%, from US$127.7 billion in 2018 to US$538.4 billion in
2022. In 2022, cross-border logistics demonstrated a decline. Going forward, the market is
gradually returning to normalcy, and driven by growing international trade, the cross-border
logistic market is expected to reach US$411.4 billion in 2027 from US$260.9 billion in 2023,
representing a CAGR of 12.1%.
Key growth drivers for cross-border logistics services
The rapid development of cross-border e-commerce has boosted consumer and business
demand for cross-border logistics services. The cross-border logistics industry is primarily
influenced by the factors below:
 Development of cross-border e-commerce . The rapid development of cross-border
e-commerce business is an important driver of cross-border logistics. Economic growth,
improvements in quality of life, increase in consumer spending, rapid development of
telecom services and internet quality, as well as convenience brought by emerging
e-commerce platforms have contributed to increasing demand from local residents for
goods and services in the global market. For instance, cross-border e-commerce platforms
such as Temu have accelerated their business expansion and set up their footprints in
North America, Brazil, Australia and Europe within one year, providing local residents
with more shopping options and products to choose from.
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 Favorable government policies . In addition to robust economic growth, cross-border
e-commerce business has been and is expected to further benefit from continued
government support and favorable governmental policies in SEA, China, and the New
Markets, such as the construction of Free Trade Area between SEA and China.
 Development of cross-border logistics infrastructure . With the rapid development of
local economies and increasing scale of international trade, cross-border logistics
infrastructure and facilities have also received local government attention is developing
at a fast pace. The Chinese government is committed to innovate and upgrade the global
supply chain, strengthening overseas warehouses and overseas logistics centers.
 Advanced technology driving supply chain efficiency . Cross-border logistics involves
complex procedures. The application of advanced technology has greatly improved the
service capability, timeliness and safety of cross-border logistics. Advanced technologies
such as IoT, big data, AI and cloud computing can be utilized to support the operation of
logistics systems.
Barriers to entry
New entrants in the cross-border express delivery market face significant competition from
global players and associated entry barriers. These competitive factors include:
 Supply chain coordination . The entire cross-border logistics supply chain comprises
multiple components such as parcel pickup, cross-border line-haul transportation,
customs declaration and clearance, international freight, onshore and offshore
warehousing and last-mile delivery, each of which requires certain expertise, knowledge
and business licenses. As such, typically a large number of specialized agents and
suppliers are involved in the process and complexity arises in the coordination among
various parties. The capabilities to establish and maintain sound business relationships
with business partners and to manage the complicated supply chain is crucial to ensure
stability of service and timeliness of delivery.
 Technology capability . Due to the complicated and multiple procedures involved
alongside the supply chain, it is essential for cross-border logistics players to accumulate
modern information technology and application capabilities. Companies with advanced
logistics information systems and proprietary and integrated technology platforms are
better able to provide services, improve customer satisfaction and build customer trust.
 Infrastructure and facilities . Cross-border logistics is a capital intensive business that
requires investment in logistics network, facilities and manpower. Self-built and
self-owned logistics facilities enable the connection in between various business partners
along the supply chain and smooths the entire cross-border logistics process. The industry
is short of infrastructure and facilities, especially when faced with the COVID-19
pandemic. Companies that have invested in self-owned resources have greater advantages
than new participants.
 Qualification to carry out cross-border logistics . Certain qualifications are required to
conduct cross-border logistics businesses. Government authorities typically would
require cross-border logistics companies to register and obtain related license to operate.
Certain processes within the cross-border logistics supply chain require the service
provider to either be a postal enterprise or an express operator that has completed the
registration procedures with customs for cross-border items declaration.
INDUSTRY OVERVIEW
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OVERVIEW
The Company was incorporated in the Cayman Islands on October 24, 2019 as an exempted
company with limited liability, and is the holding company of the Group with businesses
conducted through its subsidiaries and Consolidated Affiliated Entities controlled by the
Company via the Contractual Arrangements. The Group is a global logistics service provider.
The Group was founded by Mr. Li, the Chairman of the Board, executive Director and Chief
Executive Officer. The development history of the Group can be traced back to August 2015
when Mr. Li founded the Group in Indonesia. Under the leadership of Mr. Li, the Group has
expanded into other Southeast Asian countries, including Vietnam, Malaysia, the Philippines,
Thailand, Cambodia and Singapore, and became the number one express delivery operator in
Southeast Asia by parcel volume in 2022. We expanded into China in 2020. The Group is also
the first Asian express delivery operator of scale to have expanded into Saudi Arabia, UAE,
Mexico, Brazil and Egypt according to Frost & Sullivan. The Group also engages in
cross-border logistics services, which now include freight forwarding, small parcels and
warehousing solutions.
BUSINESS MILESTONES
The following is a summary of our key business development milestones:
Year Event
2015 The Group was founded in August 2015 in Indonesia
2018 We expanded our business into Vietnam and Malaysia
2019 We expanded our business into the Philippines, Thailand and Cambodia
2020 We expanded our business into Singapore and China
2022 We expanded our business into Saudi Arabia, UAE, Mexico, Brazil and Egypt
OUR MAJOR SUBSIDIARIES AND OPERATING ENTITIES
Due to our business model, we have a large number of subsidiaries across multiple
jurisdictions. The following entities are of strategical importance to us or have made material
contributions to our results of operations during the Track Record Period:
Name of company
Principal business
activities
Date and jurisdiction
of establishment
PT. Global Jet Express Our primary operating entity
in Indonesia operated via
contractual arrangements and
primarily engages in express
delivery services
May 21, 2015, Indonesia
(1)
Note: The date May 21, 2015 refers to the date when PT. Global Jet Express obtained its legal entity status from the
Ministry of Law and Human Rights of the Republic of Indonesia.
HISTORY AND CORPORATE STRUCTURE
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Name of company
Principal business
activities
Date and jurisdiction
of establishment
Thuan Phong Express
Company Limited
Our primary operating entity
in Vietnam and primarily
engages in express delivery
services
January 13, 2016, Vietnam
J&T Express (Malaysia)
Sdn. Bhd
Our primary operating entity
in Malaysia and primarily
engages in express delivery
services
January 10, 2018, Malaysia
PH GLOBAL JET
EXPRESS Inc., doing
business under the name and
style of J&T Express
Our primary operating entity
in the Philippines and
primarily engages in express
delivery services
September 14, 2018,
the Philippines
Global Jet Express
(Thailand) Co., Ltd.
Our primary operating entity
in Thailand and primarily
engages in express delivery
services
August 17, 2018, Thailand
J&T Express China
(ʮ̡)
A consolidated affiliated
entity of our Company and a
holding company of certain
PRC subsidiaries that
primarily engages in courier
and logistics services
September 29, 2007, PRC
J&T International Logistics
China
(ʮ̡)
A subsidiary of our
Company and a holding
company of certain PRC
subsidiaries that primarily
engage in cross-border
delivery services
January 10, 2018, PRC
J&T Express (Guangzhou)
Supply Chain Co., Ltd.
(ʮ̡)
A consolidated affiliated
entity of our Company and
primarily engages in courier
services
October 18, 2019, PRC
J&T Express (Jinhua)
Supply Chain Co., Ltd.
(ʮ̡)
A consolidated affiliated
entity of our Company and
primarily engages in courier
services
October 28, 2019, PRC
J&T Express (Shandong)
Supply Chain Co., Ltd.
(ʮ̡)
A consolidated affiliated
entity of our Company and
primarily engages in courier
services
October 31, 2019, PRC
HISTORY AND CORPORATE STRUCTURE
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Name of company
Principal business
activities
Date and jurisdiction
of establishment
J&T Express (Henan) Acme
Supply Chain Co., Ltd.
(ʮ
̡)
A consolidated affiliated
entity of our Company and
primarily engages in courier
services
November 1, 2019, PRC
J&T Express (Jieyang)
Supply Chain Management
Co., Ltd.
(ʮ
̡)
A consolidated affiliated
entity of our Company and
primarily engages in courier
services
November 5, 2019, PRC
J&T Express (Fujian) Supply
Chain Management Co., Ltd.
(ʮ
̡)
A consolidated affiliated
entity of our Company and
primarily engages in courier
services
November 7, 2019, PRC
J&T Express (Hebei) Acme
Supply Chain Management
Co., Ltd.
(ԶᏐᗡ၍ଣϞ
ʮ̡)
A consolidated affiliated
entity of our Company and
primarily engages in courier
services
November 13, 2019, PRC
MAJOR SHAREHOLDING CHANGES OF OUR COMPANY AND MAJOR
SUBSIDIARIES
The Company was incorporated in the Cayman Islands on October 24, 2019 as an exempted
company with limited liability. At the time of formation, it had an authorized share capital of
US$50,000 divided into 5,000,000,000 ordinary shares with a par value of US$0.00001 each.
On May 17, 2023, our Shareholders resolved, among other things that the authorized share
capital of the Company be reclassified and re-designated as follows: (i) 3,719,302,324 Class
A Ordinary Shares of a par value of USD0.00001 each; (ii) 195,866,682 Class B Ordinary
Shares of a par value of USD0.00001 each; (iii) 74,666,665 Series Pre-A1 Preferred Shares of
a par value of USD0.00001 each; (iv) 54,266,667 Series Pre-A2 Preferred Shares of a par value
of USD0.00001 each; (v) 269,921,165 Series A Preferred Shares of a par value of USD0.00001
each; (vi) 22,462,293 Series B Preferred Shares of a par value of USD0.00001 each; (vii)
255,864,131 Series B+ Preferred Shares of a par value of USD0.00001 each; (viii) 266,173,696
Series C1 Preferred Shares of a par value of USD0.00001 each; (ix) 115,332,586 Series C2
Preferred Shares of a par value of USD0.00001 each; and (x) 26,143,791 Series D Preferred
Shares of a par value of USD0.00001 each.
HISTORY AND CORPORATE STRUCTURE
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Between July 15, 2017 and May 17, 2023, we conducted seven rounds of pre-IPO financing,
which raised approximately US$5.57 billion. See “– Pre-IPO Investments” in this section for
subsequent shareholding changes resulting from the Pre-IPO Investments. See also “Statutory
and General Information – 1. Further Information about our Group – 1.2 Changes in share
capital of our Company” in Appendix V to this prospectus for details of changes in the share
capital of our Company during the two years immediately preceding the date of this prospectus.
For Shareholding changes of our major subsidiaries, see “Statutory and General Information –
1. Further Information about our Group – 1.3 Changes in the share capital of our major
subsidiaries and operating entities” in Appendix V to this prospectus for details of changes in
the share capital of our major subsidiaries and operating entities during the two years
immediately preceding the date of this prospectus.
We have entered into shareholder agreements with investors of our subsidiaries Jet Global
Express Limited (“ Jet Global ”), our holding company of operating entities in New Markets
and JNT Express KSA LLC (“ JNT KSA ”), our operating entity for Saudi operations. For
details of the shareholder agreements of Jet Global and JNT KSA, see note five to “Corporate
structure before the Global Offering” in this section for further details.
MAJOR ACQUISITIONS, DISPOSALS AND MERGERS
Acquisition of SEA Entities
In June 2021, we acquired majority equity interest of 13 operating entities established by our
Thai regional sponsors (the “ Thai entities ”), who are all independent third parties. Similarly,
in August 2021, we acquired equity interest in 25 operating entities established by our
Indonesian regional sponsors (the “ Indonesian entities ”, and together with the Thai entities,
the “ SEA entities ”). The consideration for the acquisition of the SEA entities was settled by
the Company issuing approximately 449.77 million new Shares. For more information
regarding our acquisition of the SEA entities, see Notes 36 and 37 to the Accountant’s Report
in Appendix I to this prospectus.
The acquisition of the SEA entities has enabled the Company to achieve synergies under our
regional sponsor business model and further incentivize these regional sponsors to share the
Company’s vision of long-term growth and value proposition. The consideration for the
acquisition was determined after arm’s length negotiation among the parties, taking into
account the SEA entities’ business operations and assets. The Directors confirm that the
acquisition of the SEA entities was properly and legally completed and all applicable requisite
regulatory approvals have been obtained.
Acquisition of BEST Express China
On October 29, 2021, the Group entered into an agreement with BEST Inc., Hangzhou BEST
Network Technologies Co., Ltd. (“ Hangzhou BEST ”, together with its subsidiaries, “ BEST
Express China ”), Zhejiang BEST Technology Co., Ltd., BEST Logistics Technologies (China)
Co., Ltd. (collectively, “ BEST ”), who are all independent third parties, to acquire BEST
Express China at an enterprise value of approximately RMB6.8 billion with a cash
consideration of US$715.5 million paid by our Group in 2021. The acquisition was completed
on December 8, 2021. For more information regarding the acquisition of BEST Express China,
see Note 38 to the Accountant’s Report in Appendix I to this prospectus.
HISTORY AND CORPORATE STRUCTURE
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BEST was founded in 2007 and conducts business as a smart supply chain service provider in
China. BEST Express China is a wholly-owned subsidiary of BEST and mainly engages in
express delivery business in China. The acquisition of BEST Express China represents an
opportunity for the Group to further expand and optimize the Group’s service network in
China, leverage BEST Express China’s infrastructure to strengthen the Group’s capacity and
contribute to the Group’s path to profitability through economies of scale and a more diverse
customer base. Immediately prior to the completion of the acquisition of BEST on December
8, 2021, BEST Express China reached revenue of over US$2.4 billion and had losses of
approximately US$297.0 million for the period from January 1, 2021 to December 8, 2021,
according to its management account. The acquisition of BEST Express China has enabled our
existing logistics network to expand further in China. We believe the acquisition of BEST
Express China demonstrates our capability to successfully execute large scale acquisitions in
a short timeframe. The consideration for the acquisition was determined after arms’ length
negotiations among the parties, taking into account BEST Express China’s business operations
in China which would rapidly scaled up our network capacity and diversify our customer base,
give us access to major e-commerce platforms in China and expand our express delivery
services to merchants on these platforms, and lead to potential significant synergies and
opportunities for our Group. The Directors confirm that the acquisition of BEST Express China
has been properly and legally completed from PRC perspective, with all applicable requisite
regulatory approvals obtained.
Acquisition of Fengwang Information
On May 12, 2023, the Group entered into a share transfer agreement with Shenzhen Fengwang
Holdings Company Limited (ʮ̡)( “Fengwang Holdings ”), a subsidiary
of S.F. Holding Co., Ltd. (ʮ̡) (stock code: 002352.SZ), to acquire the
entire equity interest of Fengwang Holdings’ wholly-owned subsidiary, Shenzhen Fengwang
Information Technology Company Limited (ʮ̡)( “ Fengwang
Information ”), at a total consideration of RMB1,183 million. The acquisition of Fengwang
Information was completed on June 27, 2023. According to the share transfer agreement, the
profit or loss of Fengwang Information during the period from March 31, 2023 until the closing
date (“ Profit or Loss Adjustment during Transition Period ”) shall be enjoyed or borne by
Fengwang Holdings. The payment made by the Group for the acquisition of Fengwang
Information after Profit or Loss Adjustment during Transition Period is RMB461 million.
Fengwang Information is the holding company of Shenzhen Fengwang Express Co., Ltd. ( ଉ
ʮ̡)( “Fengwang Express ”). Fengwang Information mainly provides express
delivery services to e-commerce customers. According to the unaudited financial statements of
Fengwang Information prepared in accordance with accounting principles generally accepted
in the PRC, the total assets of Fengwang Information as at March 31, 2023 was RMB716
million, the revenue and net loss for the year ended December 31, 2022 was RMB3,275 million
and RMB7,473 million, respectively. The Group believes that Fengwang Information is
complementary to its business, and that the acquisition of Fengwang Information will enhance
the integrated service capabilities of the Group, further increase the Group’s competitive
advantages in the e-commerce delivery sector and contribute to the high-quality development
of the industry in China. The consideration for the acquisition was determined after arm’s
length negotiations among the parties, taking into consideration Fengwang Information’s
business operations and the capital markets environment.
HISTORY AND CORPORATE STRUCTURE
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RECLASSIFICATION, RE-DESIGNATION AND SHARE SUBDIVISION OF OUR
SHARES
On October 11, 2023, our Shareholders resolved, among other things, subject to the Global
Offering becoming unconditional, that (i) 195,866,682 class B ordinary shares of a par value
of US$0.00001 each held by Jumping Summit Limited be reclassified and redesignated into
class A shares of a par value of US$0.00001 each and each such issued class A share of a par
value of US$0.00001 each be subdivided into five Class A Shares of a par value of
US$0.000002 each; (ii) all of the issued and unissued class A ordinary shares of a par value of
US$0.00001 each and Pre-IPO Preferred Shares of a par value of US$0.00001 each of the
Company be reclassified and redesignated into class B shares of a par value of US$0.00001
each and each such issued and unissued class B shares of a par value of US$0.00001 each be
subdivided into five Class B Shares of a par value of US$0.000002 each.
As a consequence of the Reclassification, Redesignation and Share Subdivision, immediately
prior to the completion of the Global Offering, the authorized share capital of the Company
shall be US$50,000 divided into (i) 979,333,410 Class A Shares with a par value of
US$0.000002 each and (ii) 24,020,666,590 Class B Shares with a par value of US$0.000002
each, and among which the issued share capital shall be US$16,971.23167 divided into (i)
979,333,410 Class A Shares with a par value of US$0.000002 each and (ii) 7,506,282,425 Class
B Shares with a par value of US$0.000002 each.
HISTORICAL AND CURRENT PRE-IPO SHARE INCENTIVE PLANS
Previously, the Company adopted an employee share incentive plan that was initially approved
and further amended by the Shareholders on December 30, 2020 and February 26, 2022,
respectively. All share awards under the employee share incentive plan have been granted, fully
vested and issued to the Company’s shareholding platforms, namely Confortune Holding
Limited, Colormin Holding Limited, Supertu Holding Limited, Cotron Holding Limited and
Woncher Holding Limited, and there are no outstanding shares under this plan.
In order to align the interests of the Company’s network partners and regional sponsors with
those of the Company’s shareholders, the Network Partner Equity Incentive Plan was initially
approved by the Shareholders on February 26, 2022, and further amended by the Board on May
31, 2023. No additional share awards will be granted under the Network Partner Equity
Incentive Plan upon Listing. For further information, a summary of the principal terms of the
Network Partner Equity Incentive Plan is set out in “Statutory and General Information – 4.
Pre-IPO Share Incentive Plan – Network Partner Equity Incentive Plan” in Appendix V to this
prospectus.
ISSUANCE OF FOUNDER AWARD SHARES
In recognition of Mr. Li’s continuous contributions to the Company and to ensure further
alignment of Mr. Li’s interests with those of the Company and its shareholders, the
Shareholders of the Company unanimously agreed to issue 24,557,934 class B ordinary shares
at par value to Jumping Summit Limited (the “ Founder Award Shares Issuance ”) upon the
completion of the Series D financing. The Founder Award Shares Issuance was completed on
May 17, 2023. Such Class B shares will be redesignated to Class A Shares following the
Reclassification, Redesignation and Share Subdivision. In connection with the Founder Award
Shares Issuance, Mr. Li undertakes to serve as the Chairman of the Board, or as the Chief
Executive Officer, or such other position equivalent to the Chief Executive Officer (the
“Executive Positions ”) for a consecutive period of at least four years (the “ Restricted
Period ”) commencing on the Listing Date. Mr. Li is entitled to exercise the voting rights and
HISTORY AND CORPORATE STRUCTURE
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receive dividends underlying the Founder Award Shares (Class A Shares equivalent, assuming
completion of Reclassification, Redesignation and Share Subdivision) during the Restricted
Period. Mr. Li undertakes to relinquish the Founder Award Shares (Class A Shares equivalent,
assuming completion of Reclassification, Redesignation and Share Subdivision) according to
the following schedule if he ceases to serve in any and all of the Executive Positions within
the four years period commencing on the Listing Date:
Year if and when Mr. Li ceases to serve in
any and all Executive Positions during
the Restricted Period
Percentage of Founder Award
Shares subject to
relinquishment
Y ear 1 100%
Y ear 2 75%
Y ear 3 50%
Y ear 4 25%
If Mr. Li no longer serves in any and all Executive Positions during the Restricted Period under
certain agreed circumstances (including (i) the Founder voluntarily resigns or otherwise ceases
to serve in any or all Executive Positions at his own election; (ii) the Company terminates Mr.
Li from any or all Executive Positions for cause; (iii) the Company and Mr. Li otherwise
mutually agree to terminate the Founder’s employment or services in any or all Executive
Positions; or (iv) a combination of any of (i) to (iii)), subject to any mandatory lock-up
requirements under applicable laws and regulations, the Company shall automatically be
entitled to use any lawful means to procure or otherwise obtain a certain percentage of the
Founder Award Shares (Class A Shares equivalent, assuming completion of Reclassification,
Redesignation and Share Subdivision) at par value based on the year when the Founder ceases
to serve in any and all Executive Positions, and Mr. Li undertakes to relinquish such percentage
of Founder Award Shares (Class A Shares equivalent, assuming completion of Reclassification,
Redesignation and Share Subdivision) at par value by way of any lawful means.
Upon completion of the Series D financing and the Founder Award Shares Issuance, Mr. Li,
through Jumping Summit Limited, holds approximately 11.54% of the total issued and
outstanding shares of the Company and is entitled to 72.29% of the total voting power of the
Company’s issued shares. Upon completion of the Listing, assuming the Over-allotment Option
is not exercised, the Reclassification, Redesignation and Share Subdivision are completed, Mr.
Li, through Jumping Summit Limited, will hold approximately 11.11% of our total issued share
capital, and approximately 11.11% of the total voting rights in our Company with respect to the
Reserved Matters, and approximately 55.56% of the total voting rights in our Company with
respect to matters other than the Reserved Matters, among which, the Founder Award Shares
(Class A Shares equivalent, assuming completion of Reclassification, Redesignation and Share
Subdivision) would present 1.39% of our total issued share capital, and approximately 1.39%
of the total voting rights in our Company with respect to the Reserved Matters, and
approximately 6.97% of the total voting rights in our Company with respect to matters other
than the Reserved Matters.
HISTORY AND CORPORATE STRUCTURE
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CAPITALIZATION OF THE COMPANY
The following table sets out our shareholding structure as of the date of this prospectus and
immediately upon the completion of the Global Offering, assuming the Over-allotment Option
is not exercised.
Shareholders
Aggregate number
of shares of par
value US$0.00001
each as of the date
of this prospectus (1)
Aggregate
Ownership
percentage as of
the date of this
prospectus (1)
Aggregate number
of shares of par
value US$0.000002
each upon the
completion of the
Global Offering (2)
Aggregate
Ownership
percentage upon the
completion of the
Global Offering (2)
Jumping Summit Limited 195,866,682 11.54% 979,333,410 11.11%
Tencent
Deep Red Holdings Limited 26,143,791 1.54% 130,718,955 1.48%
Rhododendron Investment
Limited 26,142,654 1.54% 130,713,270 1.48%
TB RACING RABBITS
INVESTMENT HOLDINGS
L.P . 19,607,843 1.16% 98,039,215 1.11%
Eternal Earn Holding Limited 19,607,843 1.16% 98,039,215 1.11%
Parallel Cluster Investment
Limited 15,686,274 0.92% 78,431,370 0.89%
Sub-total 107,188,405 6.32% 535,942,025 6.08%
Boyu
Jaunty Global Limited 68,282,305 4.02% 341,411,525 3.87%
Joyous Tempinis Limited 20,912,399 1.23% 104,561,995 1.19%
Jallion Global Limited 14,379,085 0.85% 71,895,425 0.82%
Sub-total 103,573,789 6.10% 517,868,945 5.88%
ATM Capital
Fast Creative Zone Limited 79,993,268 4.71% 399,966,340 4.54%
Ultra Height Fund L.P . 13,223,298 0.78% 66,116,490 0.75%
Sub-total 93,216,566 5.49% 466,082,830 5.29%
D1
D1 SPV Master Holdco I
(Hong Kong) Limited 36,581,713 2.16% 182,908,565 2.08%
D1 SPV Jupiter (Hong Kong)
Limited 16,049,006 0.95% 80,245,030 0.91%
Sub-total 52,630,719 3.11% 263,153,595 2.99%
Hillhouse
JNRY III Holdings Limited 33,986,019 2.00% 169,930,095 1.93%
HISTORY AND CORPORATE STRUCTURE
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Shareholders
Aggregate number
of shares of par
value US$0.00001
each as of the date
of this prospectus (1)
Aggregate
Ownership
percentage as of
the date of this
prospectus (1)
Aggregate number
of shares of par
value US$0.000002
each upon the
completion of the
Global Offering (2)
Aggregate
Ownership
percentage upon the
completion of the
Global Offering (2)
GLP
China Logistic Investment
Holding (12) Limited 18,808,445 1.11% 94,042,225 1.07%
China Logistic Investment
Holding (11) Limited 7,022,190 0.41% 35,110,950 0.40%
Hidden Hill SPV VIII 6,535,947 0.39% 32,679,735 0.37%
Hidden Hill Investment 112 1,480,270 0.09% 7,401,350 0.08%
Sub-total 33,846,852 2.00% 169,234,260 1.92%
Sequoia
SC GGF III Holdco, Ltd. 27,450,070 1.62% 137,250,350 1.56%
SF Express
CELESTIAL OCEAN
INVESTMENTS LIMITED 26,143,791 1.54% 130,718,955 1.48%
Temasek
Dahlia Investments Pte. Ltd. 13,071,896 0.77% 65,359,480 0.74%
SAI Growth
SAI Growth Fund I, LLLP 9,150,326 0.54% 45,751,630 0.52%
CMBI
Blessed Tiger Limited 6,535,663 0.39% 32,678,315 0.37%
Other Pre-IPO Investors
Fast Rabbit Global Limited 75,993,543 4.48% 379,967,715 4.31%
Team Spirit Group Limited 74,635,182 4.40% 373,175,910 4.23%
Lead Sky Capital Limited 68,003,712 4.01% 340,018,560 3.86%
Joyous Sound Limited 65,939,639 3.89% 329,698,195 3.74%
Long Origin Limited 65,542,414 3.86% 327,712,070 3.72%
Starlight Hero Limited 65,542,414 3.86% 327,712,070 3.72%
Grow Profit Enterprises Limited 59,708,146 3.52% 298,540,730 3.39%
Top V alley limited 57,702,788 3.40% 288,513,940 3.27%
Constant Power Investment
Limited 55,132,038 3.25% 275,660,190 3.13%
NP Investment Platform
Limited
(3) 38,000,000 2.24% 190,000,000 2.16%
Ambitious River Limited 37,546,504 2.21% 187,732,520 2.13%
Easy Innovation Limited 28,676,171 1.69% 143,380,855 1.63%
Uranus Holding Limited 25,922,105 1.53% 129,610,525 1.47%
V ast Admire Limited 23,883,258 1.41% 119,416,290 1.36%
Super Explorer Holding
Limited
(4) 22,700,294 1.34% 113,501,470 1.29%
Yimeter Holding Limited 22,688,541 1.34% 113,442,705 1.29%
GCM Grosvenor JT SPV , LLC 21,568,627 1.27% 107,843,135 1.22%
Strict Forward Limited 20,504,349 1.21% 102,521,745 1.16%
Tickking Holding Limited 16,113,553 0.95% 80,567,765 0.91%
Long Shining Limited 15,849,967 0.93% 79,249,835 0.90%
Confortune Holding Limited
(4) 15,301,848 0.90% 76,509,240 0.87%
LINK Delivery Investment
Limited 14,564,703 0.86% 72,823,515 0.83%
HISTORY AND CORPORATE STRUCTURE
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--- page 168 ---
Shareholders
Aggregate number
of shares of par
value US$0.00001
each as of the date
of this prospectus (1)
Aggregate
Ownership
percentage as of
the date of this
prospectus (1)
Aggregate number
of shares of par
value US$0.000002
each upon the
completion of the
Global Offering (2)
Aggregate
Ownership
percentage upon the
completion of the
Global Offering (2)
Precision World Limited 14,171,268 0.84% 70,856,340 0.80%
Woncher Holding Limited (4) 13,453,629 0.79% 67,268,145 0.76%
AMF-9 Holdings Limited 13,071,896 0.77% 65,359,480 0.74%
V ast Elegance Limited 9,682,558 0.57% 48,412,790 0.55%
Supertu Holding Limited
(4) 9,336,288 0.55% 46,681,440 0.53%
XN Origin International
Limited 6,535,663 0.39% 32,678,315 0.37%
ZWC JT Investment Limited 6,535,663 0.39% 32,678,315 0.37%
Colormin Holding Limited
(4) 6,184,536 0.36% 30,922,680 0.35%
Portland Street Partners Limited 4,947,773 0.29% 24,738,865 0.28%
Speedy Innovation L.P . 4,947,773 0.29% 24,738,865 0.28%
Hidden Hill Investment 123 4,575,163 0.27% 22,875,815 0.26%
Cotron Holding Limited
(4) 4,542,072 0.27% 22,710,360 0.26%
Square Lord Limited 2,979,201 0.18% 14,896,005 0.17%
Tranquility V entures Limited 1,979,110 0.12% 9,895,550 0.11%
Other public shareholders Nil Nil 326,550,400 3.71%
Total 1,697,123,167 100.00% 8,812,166,235 100.00%
Notes:
(1) Our Company will adopt a WVR structure comprising two classes of Shares, Class A Shares and Class B
Shares. Each Class A Share shall entitle its holder to ten votes and each Class B Share shall entitle its holder
to one vote except for the Reserved Matters.
(2) Assuming the Over-allotment Option is not exercised, the Reclassification, Redesignation and Share
Subdivision are completed, and not taking into account any Offer Shares that may be subscribed for the
existing Shareholders.
(3) Shareholding platform for the Network Partner Equity Incentive Plan.
(4) Confortune Holding Limited, Colormin Holding Limited, Supertu Holding Limited, Cotron Holding Limited,
Woncher Holding Limited and Super Explorer Investment Limited are shareholding platforms for a certain
number of the Company’s current and former employees and consultants. All share awards granted under these
shareholding platforms vested upon grant and have been issued to the designated awardees.
HISTORY AND CORPORATE STRUCTURE
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PRE-IPO INVESTMENTS
1. Series Pre-A1 Financing
On July 15, 2017, our wholly-owned subsidiary, Onwing Global Limited entered into the
initial investment agreement with our Series Pre-A1 investors pursuant to which
74,666,665 Series Pre-A1 Preferred Shares were issued to our Series Pre-A1 investors.
The cost per Series Pre-A1 Preferred Share was approximately US$1.3849 and the total
consideration was approximately US$103.41 million. Based on this round of pre-IPO
financing, the estimated valuation of the Group (on a non-fully diluted basis) was
approximately US$433.18 million. The consideration was determined based on arm’s
length negotiations between our Company and the Series Pre-A1 investors after taking
into consideration the timing of the investments and the status of our business and
operating entities. The settlement date for the Series Pre-A1 investment was on March 8,
2018. Assuming the completion of the Reclassification, Redesignation and Share
Subdivision, the discount to the Offer Price was 81.9%.
2. Series Pre-A2 Financing and Share Swap
On August 20, 2018, our wholly-owned subsidiary, Onwing Global Limited entered into
the initial investment agreement with our Series Pre-A2 investors pursuant to which
54,266,667 Series Pre-A2 Preferred Shares were issued to our Series Pre-A2 investors.
The cost per Series Pre-A2 Preferred Share was approximately US$1.4749 and the total
consideration was approximately US$80.04 million. Based on this round of pre-IPO
financing, the estimated valuation of the Group (on a non-fully diluted basis) was
approximately US$582.09 million. The consideration was determined based on arm’s
length negotiations between our Company and the Series Pre-A2 investors after taking
into consideration the timing of the investments and the status of our business and
operating entities. The settlement date for the Series Pre-A2 investment was on
October 30, 2018. Assuming the completion of the Reclassification, Redesignation and
Share Subdivision, the discount to the Offer Price was 80.7%. On October 24, 2019, we
entered into a share swap agreement with our Pre-A1 and Pre-A2 investors among others,
pursuant to which their respective shareholdings in Onwing Global Limited were swapped
for shares in our Company on a pro-rata basis.
3. Series A Financing
On May 15, 2020, we entered into the initial investment agreement with our Series A
investors pursuant to which 269,921,165 Series A Preferred Shares were issued to our
Series A investors. The cost per Series A Preferred Share was approximately US$4.3962
and the total consideration was approximately US$1.19 billion. Based on this round of
pre-IPO financing, the estimated valuation of the Group (on a non-fully diluted basis) was
approximately US$1.97 billion. The consideration was determined based on arm’s length
negotiations between our Company and the Series A investors after taking into
consideration the timing of the investments and the status of our business and operating
entities. The settlement date for the Series A investment was on August 11, 2020.
Assuming the completion of the Reclassification, Redesignation and Share Subdivision,
the discount to the Offer Price was 42.6%.
HISTORY AND CORPORATE STRUCTURE
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4. Series B Financing
On December 10, 2020, we entered into the initial investment agreement with our Series
B investors pursuant to which 22,462,293 Series B Preferred Shares were issued to our
Series B investors. The cost per Series B Preferred Share was approximately US$4.4519
and the total consideration was approximately US$100 million. Based on this round of
pre-IPO financing, the estimated valuation of the Group (on a non-fully diluted basis),
was approximately US$3.64 billion. The consideration was determined based on arm’s
length negotiations between our Company and the Series B investors after taking into
consideration the timing of the investments and the status of our business and operating
entities. The settlement date for the Series B investment was on December 31, 2020.
Assuming the completion of the Reclassification, Redesignation and Share Subdivision,
the discount to the Offer Price was 41.9%.
5. Series B+ Financing
On February 5, 2021, we entered into the initial investment agreement with our Series B+
investors pursuant to which 255,864,131 Series B+ Preferred Shares were issued to our
Series B+ investors. The cost per Series B+ Preferred Share was approximately
US$7.1225 and the total consideration was approximately US$1.82 billion. Based on this
round of pre-IPO financing, the estimated valuation of the Group (on a non-fully diluted
basis), was approximately US$6.00 billion. The consideration was determined based on
arm’s length negotiations between our Company and the Series B+ investors after taking
into consideration the timing of the investments and the status of our business and
operating entities. The settlement date for the Series B+ investment was on March 25,
2021. Assuming the completion of the Reclassification, Redesignation and Share
Subdivision, the discount to the Offer Price was 7.0%.
6. Series C1 Financing
Between October 19, 2021 and February 25, 2022, we entered into the initial investment
agreement with our Series C1 investors pursuant to which 147,428,024 Series C1
Preferred Shares were issued to our Series C1 investors. The cost per Series C1 Preferred
Share was approximately US$14.1000 and the total consideration was approximately
US$2.08 billion. Based on this round of pre-IPO financing, the estimated valuation of the
Group (on a non-fully diluted basis), was approximately US$18.00 billion. The
consideration was determined based on arm’s length negotiations between our Company
and the Series C1 investors after taking into consideration the timing of the investments
and the status of our business and operating entities. The settlement date for the Series
C1 investment was on March 21, 2022.
On May 17, 2023, the Company issued 118,745,672 Series C1 Preferred Shares to Series
C1 investors at par value of US$0.00001 per Share, see “– Pre-IPO Investments – 9. Issue
of Series C1 Preferred Shares and Series C2 Preferred Shares” in this section.
The average cost per Series C1 Preferred Share was approximately US$7.8097.
HISTORY AND CORPORATE STRUCTURE
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7. Share Repurchase and Concurrent Series C2 Preferred Share Issuance
Between December 31, 2021 and September 30, 2022, a number of our Shareholders
entered into a series of transaction agreements with certain shareholders of Yimeter
Holding Limited and Tickking Holding Limited (the “ relevant Yimi Dida
shareholders ”) in order to restructure their respective shareholdings. Yimeter Holding
Limited and Tickking Holding Limited are shareholding platforms for certain
shareholders of Yimi Dida Supply Chain Group Co., Ltd. (“ Yimi Dida ”). Yimi Dida is
engaged in the provision of less-than-truckload transportation services in China.
As a result of the shareholding restructure, (i) the relevant Yimi Dida shareholders would
become Shareholders of the Company and became our Series C2 Preferred Shareholders
subject to our currently effective shareholders agreement and (ii) the relevant
Shareholders of the Company would indirectly acquire equity interest in Yimi Dida.
Pursuant to these arrangements, 55,528,307 Shares held by our Shareholders were
repurchased by the Company and 55,528,307 Series C2 Preferred Shares were issued to
the relevant Yimi Dida shareholders at the cost per Series C2 Preferred Shares of
approximately US$15.67 as agreed between the Shareholders and relevant Yimi Dida
shareholders.
8. Issue of Series C1 Preferred Shares and Series C2 Preferred Shares
Concurrently with our Series D round financing, on May 17, 2023, we entered into
agreements with our Series C1 investors and our Series C2 investors, pursuant to which
we agreed to issue an aggregate of 118,745,672 Series C1 Preferred Shares and
43,082,204 Series C2 Preferred Shares at total consideration of US$1,618.27876 at par
value of US$0.00001 per Share, in return for which our Series C1 investors and Series C2
investors agreed to the waiver of or amendments to certain of their shareholder rights
under our currently effective articles of association and shareholders agreement. Such
consideration was settled in full on May 18, 2023.
9. Series D Financing
On May 12, 2023, we entered into an investment agreement with our Series D investor,
pursuant to which 26,143,791 Series D Preferred Shares were issued to our Series D
investor. The cost per Series D Preferred Shares was approximately US$7.6500 and the
total consideration was approximately US$200 million. Based on this round of pre-IPO
financing, the estimated valuation of the Group (on a non-fully diluted basis), was
approximately US$13 billion. The consideration was determined based on arm’s length
negotiations between our Company and the Series D investor after taking into
consideration the timing of the investments and the status of our business and operating
entities. The settlement date for the Series D investment was on May 18, 2023. Assuming
the completion of the Reclassification, Redesignation and Share Subdivision, the discount
to the Offer Price was 0.1%.
HISTORY AND CORPORATE STRUCTURE
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10. Subscription Commitment by Existing Shareholders
Each of AMF-9 Holdings Limited, Ultra Height Fund L.P ., Jallion Global Limited,
Precision World Limited, D1 SPV Jupiter (Hong Kong) Limited, D1 SPV Master Holdco
I (Hong Kong) Limited, GCM Grosvenor JT SPV , LLC, Deep Red Holdings Limited,
Eternal Earn Holding Limited, Hidden Hill SPV VIII, JNRY III HOLDINGS LIMITED,
Parallel Cluster Investment Limited, SC GGF III Holdco, Ltd., SAI Growth Fund I, LLLP ,
TB RACING RABBITS INVESTMENT HOLDINGS L.P ., Dahlia Investments Pte. Ltd.,
Hidden Hill Investment 123 and CELESTIAL OCEAN INVESTMENTS LIMITED
(together, “ Subscription Commitment Shareholder(s) ”) has provided undertaking to the
Company to invest a total amount of US$236,639,854 to subscribe for Offer Shares at the
Offer Price in the Global Offering, to the extent permitted under the applicable laws and
Listing Rules and subject to approval from the Stock Exchange. The table below sets forth
the details of the subscription amount committed by each of the Subscription
Commitment Shareholders:
Subscription Commitment Shareholders
Subscription
Commitment
Amounts (USD)
Tencent
Deep Red Holdings Limited 20,000,000
Eternal Earn Holding Limited 15,000,000
Parallel Cluster Investment Limited 12,000,000
TB RACING RABBITS INVESTMENT HOLDINGS L.P . 15,000,000
Sub-total 62,000,000
D1
D1 SPV Jupiter (Hong Kong) Limited 12,762,500
D1 SPV Master Holdco I (Hong Kong) Limited 27,500,000
Sub-total 40,262,500
SF Express
CELESTIAL OCEAN INVESTMENTS LIMITED 30,000,000
GCM Grosvenor
GCM Grosvenor JT SPV , LLC 16,500,000
Boyu Jingtai (Shanghai) Enterprise Management Co., Ltd.
(
௹༃౻इ(ɪऎ)ʮ̡)
Precision World Limited 16,261,530
Boyu
Jallion Global Limited 11,000,000
ATM
Ultra Height Fund L.P . 10,115,824
Aspex
AMF-9 Holdings Limited 10,000,000
HISTORY AND CORPORATE STRUCTURE
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Subscription Commitment Shareholders
Subscription
Commitment
Amounts (USD)
Hillhouse
JNRY III HOLDINGS LIMITED 10,000,000
Temasek
Dahlia Investments Pte. Ltd. 10,000,000
SAI Growth
SAI Growth Fund I, LLLP 7,000,000
GLP
Hidden Hill SPV VIII 5,000,000
Sequoia
SC GGF III Holdco, Ltd. 5,000,000
NewQuest Asia
Hidden Hill Investment 123 3,500,000
Total 236,639,854
Unless such subscription is being made pursuant to the anti-dilution rights of the Pre-IPO
Investors, the Company has the right, but not obligation, to allocate such number of Offer
Shares to the Subscription Commitment Shareholders or their designated entities as the
Company determines in its absolute discretion. Each of the Subscription Commitment
Shareholders undertakes that any Offer Shares which it subscribes for shall be subject to
a lock-up period of six months from the date on which dealings of the Shares of the
Company commences of the Stock Exchange. Assuming (i) all the Subscription
Commitment Shareholders or their designated entities have been allocated Offer Shares
in full to their committed subscription amount, (ii) the Offer Price is determined to be
HK$12.00 per Offer Share, and (iii) the Over-allotment Option is not exercised, the
Subscription Commitment Shareholders will subscribe 154,456,600 Offer Shares
(rounded down to the nearest whole board lot of 200 Class B Shares), representing
approximately 47.3% of the total number of Offer Shares, among which, (a) 77,166,354
Offer Shares (representing approximately 23.6% of the total number of Offer Shares and
approximately 0.88% of the total issued share capital of the Company at the time of the
Listing) will be subscribed pursuant to the exercise of anti-dilution rights of such
Subscription Commitment Shareholders, and (b) 77,290,246 Offer Shares (representing
approximately 23.7% of the total number of Offer Shares and approximately 0.88% of the
total issued share capital of the Company at the time of the Listing) will be subscribed
in excess to the anti-dilution Offer Shares entitled to the Subscription Commitment
Shareholders. We have entered into cornerstone investment agreements with 10
Subscription Commitment Shareholders (or their designated entities) with total
subscription amount of US$199,524,030 to subscribe for Offer Shares (rounded down to
the nearest whole board lot of 200 Class B Shares) at the Offer Price. For more details,
see “Cornerstone Investors” in this prospectus.
HISTORY AND CORPORATE STRUCTURE
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Among all the Pre-IPO Investors with anti-dilution rights, 4 of them with aggregate
ownership of 16.3% in the Company have confirmed to us that they will not exercise their
anti-dilution rights to subscribe Offer Shares in the Global Offering. Apart from the
Subscription Commitment Shareholders and the Pre-IPO Investors who will not exercise
their anti-dilution rights, the maximum number of Offer Shares that may be subscribed by
our other Pre-IPO Investors pursuant to the exercise of their outstanding anti-dilution
rights in aggregate would be 16.4% of the total number of Offer Shares, assuming that the
Over-allotment Option is not exercised and based on the Offer Price. We undertake that
the total allocation of Offer Shares to existing Shareholders and/or their close associates
will not exceed 64% of the total number of Offer Shares under the Global Offering,
assuming that the Over-allotment Option is not exercised and based on the Offer Price of
HK$12.00.
We have applied for and the Stock Exchange has granted a waiver from strict compliance
with Rule 10.04 of the Listing Rules and consent pursuant to paragraph 5(2) of Appendix
6 to the Listing Rules for the proposed subscription by the Subscription Commitment
Shareholders. See “Subscription and Allocation of Offer Shares to Existing Shareholders
and their Close Associates”.
11. Principal Terms of the Pre-IPO Investments and Pre-IPO Investors’ Rights
Basis of determining the
consideration paid
The consideration for the Pre-IPO Investments were
determined based on arm’s length negotiations
between our Company and the Pre-IPO Investors
after taking into consideration the timing of the
investments and the status of our business and
operating entities.
Use of Proceeds from the
Pre-IPO Investments
We utilized the proceeds from the Pre-IPO
Investments involving the issue of Shares to the
Pre-IPO Investors for the operations of our Company
and in accordance with the business plan or budget as
approved by the Board. As of September 30, 2023,
approximately 82.00% of the funds raised from the
Pre-IPO Investments had been utilized.
Lock-up requirement under
Guidance Letter
HKEX-GL93-18
Whilst the Pre-IPO Investors are not subject to any
lock-up arrangement at the time of their Pre-IPO
Investments pursuant to the relevant agreements,
lock-up undertakings will be given to the
underwriters, pursuant to which each Pre-IPO
Investors will agree that, subject to the terms of such
lock-up undertakings, it will not, whether directly or
indirectly, at any time during the period of six months
from the Listing Date dispose of any of the Shares
held by such Pre-IPO Investor. For further
information about lock-up arrangements by the Pre-
IPO Investors to the Underwriters, please refer to
“Underwriting”.
HISTORY AND CORPORATE STRUCTURE
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Principal Pre-IPO Investors which are sophisticated
investors (including Boyu and A TM, the information
of which are set out under “14. Information on the
Pre-IPO Investors” in this section below) will retain
at least an aggregate of 50% of their investment at the
time of Listing for a period of at least six months
following the Listing, in accordance with the Stock
Exchange’s Guidance Letter HKEX-GL93-18.
Strategic benefits of the
Pre-IPO Investors brought
to our Company
At the time of the Pre-IPO Investments, our Directors
were of the view that our Company would benefit
from the additional capital provided by the Pre-IPO
Investors’ investments in our Company and their
knowledge and experience. Our Pre-IPO Investors
include renowned companies in relevant industries,
which can help us achieve business synergies, and
professional strategic investors, which can provide us
with professional advice on our Group’s development
and improve our corporate governance, financial
reporting and internal control.
In particular, with the established network of
reputable and experienced financial investors such as
Boyu, A TM and GLP , we could benefit from such
commitment as we believe the investments
demonstrate their confidence in the operations of our
Group and serve as endorsements of our Group’s
performance, strength and prospects. Furthermore,
the investments from several reputable institutional
investors, such as Tencent and SF Express, will create
potential strategic cooperation opportunities whereby
they can provide us with professional insights and
advice on our development and can help us achieve
business synergies to reinforce our existing market
position.
HISTORY AND CORPORATE STRUCTURE
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Anti-dilution Rights To the extent permitted under applicable laws
and Listing Rules, each Pre-IPO Investors holding
Pre-IPO Preferred Shares may require the Company
to issue Offer Shares to such Pre-IPO Investors
(and/or any of its affiliates) at the Offer Price, so that
the aggregate shareholding percentage of such Pre-
IPO Investors (together with its affiliates) in the
Company immediately after the completion of the
Global Offering will be the same as the aggregate
shareholding percentage of such Pre-IPO Investors
(together with its Affiliates) in the Company
immediately prior to the Global Offering. Assuming
(i) all the Pre-IPO Investors holding Pre-IPO
Preferred Shares (and/or any of its affiliates) have
exercised their anti-dilution rights in full, (ii) the
Offer Price is HK$12.00 per Offer Share, and (iii) the
Over-allotment Option is not exercised, such Pre-IPO
Investors holding Pre-IPO Preferred Shares (and/or
any of its affiliates) will subscribe 199,746,147 Offer
Shares, representing approximately 61.2% of the
total number of Offer Shares and approximately 2.3%
of the total issued share capital of the Company at the
time of the Listing.
12. Special Rights of the Pre-IPO Investors
All of our Pre-IPO Investors are currently bound by the terms of the currently effective
articles of association of the Company, which will be replaced by our Articles effective
upon the completion of the Global Offering. Pursuant to our Shareholders Agreement, the
Pre-IPO Investors were granted certain special rights in relation to the Company.
The redemption rights granted to the Pre-IPO Investors under the Shareholders
Agreement have been suspended immediately prior to the first submission of the listing
application form to the Stock Exchange for the purpose of the Global Offering, and will
only be exercisable if the Listing does not take place, otherwise such redemption rights
will terminate upon the Listing. All other special rights under the Pre-IPO Investments,
including, among others, (a) registration rights; (b) information and inspection rights;
(c) preemptive rights; (d) share transfer restrictions; (e) right of first refusal; (f) right of
co-sale; (g) protective provisions granted to certain shareholders; (h) liquidation
preference rights; (i) most favorable treatment right; and (j) certain corporate governance
rights (including board nomination and board observer rights), shall cease to be effective
and be discontinued upon the Listing in accordance with the Guidance Letter GL43-12,
and the terms of the Shareholders Agreement.
All Ordinary Shares held by shareholders other than Jumping Summit Limited and all of
the Pre-IPO Preferred Shares will convert into Class B Shares on a one-to-one basis
immediately following the Reclassification, Redesignation and Share Subdivision and
completion of the Global Offering at which time our share capital will comprise two
classes of shares, Class A Shares and Class B Shares. For further information on the rights
attached to our Class A Shares and Class B Shares, see “Share Capital.”
HISTORY AND CORPORATE STRUCTURE
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13. Public Float
Upon the completion of the Global Offering (assuming (i) the Over-allotment Option is
not exercised and (ii) Reclassification, Redesignation and Share Subdivision are
completed), the shares held by certain of our Shareholders who are, or are indirectly
controlled by, our core connected persons, will not be counted towards the public float.
Details of these Shareholders and their controllers are set out below:
 Jumping Summit Limited, controlled by Mr. Li, our executive Director, holding
11.11% of the issued share capital of the Company (on a one share, one vote basis);
 Easy Innovation Limited, controlled by Ms. Alice Y u-fen Cheng, our non-executive
Director, holding 1.63% of the issued share capital of the Company (on a one share,
one vote basis); and
 Long Origin Limited, controlled by Mr. Y uan Zhang, our non-executive Director,
holding 3.72% of the issued share capital of the Company (on a one share, one vote
basis).
Save as provided above, upon the completion of the Global Offering (assuming the
Over-allotment Option is not exercised), the other shareholders will collectively hold
7,361,739,900 Class B Shares. The public float of the Company will be approximately
83.54% of the issued share capital of the Company (one a one share, one vote basis).
Save as disclosed above, no other Pre-IPO Investor is a core connected person of the
Company, as defined in the Listing Rules. Therefore, Class B Shares held by the other
Pre-IPO Investors will count towards the public float.
Immediately upon completion of the Global Offering, assuming the Over-allotment
Option is not exercised, at least 1.22% of the total issued Shares of the Company will not
be subject to any lock-up undertaking or requirements and will be free float Shares of the
Company.
14. Information on the Pre-IPO Investors
The following sets forth information of our Pre-IPO Investors.
Tencent
Rhododendron Investment Limited (“ Rhododendron Investment ”) and Deep Red
Holdings Limited (“ Deep Red ”) are companies limited by shares incorporated in the
British Virgin Islands. TB Racing Rabbits Investment Holdings L.P . (“ TB Racing
Rabbits ”) is an exempted limited partnership registered in the Cayman Islands.
Rhododendron Investment, Deep Red and TB Racing Rabbits are all wholly owned by
Tencent Holdings Limited, a company listed on the Main Board of the Stock Exchange
(HKEX: 00700, “ Tencent ”). Tencent is a leading provider of Internet value-added
services in China, including communications and social networks, games, digital content,
advertising, fintech and cloud services.
Eternal Earn Holding Limited is an exempted company incorporated in the Cayman
Islands with limited liability and a wholly-owned subsidiary of TPP Fund II, L.P ., whose
general partner is TPP GP II, Ltd, which is ultimately controlled by Tencent.
HISTORY AND CORPORATE STRUCTURE
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Parallel Cluster Investment Limited is an exempted company incorporated in the Cayman
Islands with limited liability and a wholly-owned subsidiary of Parallel Cluster
Investment L.P ., whose general partner is Parallel Cluster GP Limited, which is ultimately
controlled by Tencent.
Boyu
Joyous Tempinis Limited is an exempted company with limited liability incorporated
under the laws of the Cayman Islands. Jaunty Global Limited and Jallion Global Limited
are BVI business companies incorporated under the laws of the British Virgin Islands.
They are directly or indirectly controlled by Boyu Capital Fund IV , L.P ., an exempted
limited partnership registered under the laws of the Cayman Islands. Boyu Capital Fund
IV , L.P . is advised by Boyu Capital Group Management Ltd. (together with its affiliates,
“Boyu ”). Boyu provides growth and transformational capital for leading businesses and
entrepreneurs in areas that include technology, healthcare, consumer and business
services.
ATM
Fast Creative Zone Limited is a BVI business company incorporated in the British Virgin
Islands and Ultra Height Fund L.P . is an exempted limited partnership registered in the
Cayman Islands (the “ ATM Entities ”). Fast Creative Zone Limited is majority held by
Global Express Fund L.P ., a limited partnership established in Cayman Islands. Global
Express Fund L.P . and Ultra Height Fund L.P . are managed by Global Express GP Limited
and Global Freight Limited respectively, both of which are A TM Capital’s management
entities. A TM Capital is an early to growth stage venture fund rooted in Southeast Asia.
The A TM Capital team consists of Chinese and Southeast Asian professionals with
significant experience in investment, entrepreneurship, technology and operations. A TM
Capital focuses on three main sectors of high growth potential including e-commerce and
its supporting infrastructure, consumer retail, fintech, and renewable energy. A TM Capital
has approximately US$1 billion AUM.
D1
D1 SPV Master Holdco I (Hong Kong) Limited, a company organized under the laws of
Hong Kong, is wholly owned by D1 Master Holdco I LLC, a limited liability company
organized under the laws of the State of Delaware, which is wholly owned by D1 Capital
Partners Master LP , an exempted limited partnership organized under the laws of the
Cayman Islands. D1 Capital Partners Master LP’s general partner is D1 Capital Partners
GP Sub LLC, a limited liability company organized under the laws of the State of
Delaware, and which is ultimately controlled by D1 Capital Partners GP LLC, a limited
liability company organized under the laws of the State of Delaware. D1 Capital Partners
Master LP’s limited partners are D1 Capital Partners Onshore LP , a limited partnership
organized under the laws of the State of Delaware, and D1 Capital Partners Intermediate
LP , an exempted limited partnership organized under the laws of the Cayman Islands. D1
Capital Partners Onshore LP’s general partner is D1 Capital Partners GP LLC, and it has
raised capital from limited partners that include high net worth individuals as well as
institutional investors. D1 Capital Partners Intermediate LP’s general partner is D1
Capital Partners GP LLC, and its sole limited partner is D1 Capital Partners Offshore LP ,
an exempted limited partnership organized under the laws of the Cayman Islands. D1
Capital Partners Offshore LP’s general partner is D1 Capital Partners GP LLC and it has
raised capital from limited partners that include high net worth individuals as well as
institutional investors.
HISTORY AND CORPORATE STRUCTURE
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D1 SPV Jupiter (Hong Kong) Limited, a company organized under the laws of Hong
Kong, is owned by (1) D1 Capital Series LLC – Series Jupiter, a separate series of D1
Capital Series LLC, a limited liability company organized under the laws of the State of
Delaware, which is controlled by its investment manager, D1 Capital Partners L.P ., a
limited partnership organized under the laws of the State of Delaware, and by its
managing member, Daniel Sundheim, and which is wholly-owned by employees of D1
Capital Partners L.P . and (2) D1 Jupiter Holdings LP , a limited partnership organized
under the laws of the State of Delaware. D1 Jupiter Holdings LP’s general partner is D1
Jupiter Holdings GP LLC, a limited liability company organized under the laws of the
State of Delaware, and which is ultimately controlled by D1 Capital Partners GP LLC. D1
Jupiter Holdings LP’s limited partners include institutional investors.
D1 SPV Master Holdco I (Hong Kong) Limited, D1 Capital Partners Master LP , D1
Capital Partners Onshore LP , D1 Capital Partners Intermediate LP , D1 Capital Partners
Offshore LP , D1 SPV Jupiter (Hong Kong) Limited and D1 Jupiter Holdings LP are
directly or indirectly controlled by D1 Capital Partners GP LLC, as well as their
investment manager, D1 Capital Partners L.P ., both of which are ultimately controlled by
Daniel Sundheim. D1 Capital Partners L.P . manages private investment vehicles and other
accounts which invest globally, in both public and private companies, primarily in the
technology, media and telecom, industrials, healthcare, consumer, real estate and
financial services sectors.
Hillhouse
JNRY III HOLDINGS LIMITED is an exempted company with limited liability
incorporated under the laws of the Cayman Islands and is engaged in investment holding.
JNRY III HOLDINGS LIMITED is ultimately managed and controlled by Hillhouse
Investment Management, Ltd. (“ Hillhouse Investment ”), an exempted company
incorporated under the laws of the Cayman Islands. Founded in 2005, Hillhouse
Investment is a global private equity firm of investment professionals and operating
executives who are focused on building and investing in high quality business franchises
that achieve sustainable growth. Independent proprietary research and industry expertise,
in conjunction with world-class operating and management capabilities, are key to
Hillhouse’s investment approach. Hillhouse partners with exceptional entrepreneurs and
management teams to create value, often with a focus on innovation and growth.
Hillhouse invests in the fields of healthcare, business services, broad consumption and
industrials. Hillhouse manages assets on behalf of institutional clients from across the
globe.
GLP
China Logistic Investment Holding (11) Limited, China Logistic Investment Holding (12)
Limited and Hidden Hill Investment 112 are exempted companies incorporated in the
Cayman Islands with limited liability; Hidden Hill SPV VIII is a special purpose vehicle
wholly-owned by Hidden Hill Foundation Fund L.P . Hidden Hill Foundation Fund L.P . is
a private equity fund registered in the Cayman Islands. China Logistic Investment
Holding (11) Limited, China Logistic Investment Holding (12) Limited, Hidden Hill
Investment 112 and Hidden Hill SPV VIII are ultimately controlled by GLP Pte. Ltd.
HISTORY AND CORPORATE STRUCTURE
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Sequoia
SC GGF III Holdco, Ltd. is an exempted company with limited liability incorporated
under the laws of the Cayman Islands. The sole shareholder of SC GGF III Holdco, Ltd.
is Sequoia Capital Global Growth Fund III – Endurance Partners, L.P ., which is an
investment fund whose primary purpose is to make equity investments in private
companies.
SF Express
CELESTIAL OCEAN INVESTMENTS LIMITED is a company incorporated under the
Laws of the British Virgin Islands and is wholly owned by S.F. Holding Co., Ltd. ( නᔮ
ʮ̡)( “ SF Holding ”). SF Holding is a joint stock company established in
the PRC, whose shares are listed on the Shenzhen Stock Exchange (stock code:
002352.SZ). According to SF Holding, it is the largest integrated logistics service
provider in China and Asia, and the fourth largest in the world.
Temasek
Dahlia Investments Pte. Ltd (“ Dahlia ”) is an indirect wholly-owned subsidiary of
Temasek Holdings (Private) Limited (“ Temasek ”). Temasek is a global investment
company with a net portfolio value of S$382 billion (RMB1.98 trillion) as at 31 March
2023. Its Purpose “So Every Generation Prospers” guides it to make a difference for
today’s and future generations. As an active investor, forward looking institution and
trusted steward, it is committed to deliver sustainable value over the long term. Temasek
has overall corporate credit ratings of Aaa/AAA by rating agencies Moody’s Investors
Service and S&P Global Ratings respectively. Headquartered in Singapore, it has 13
offices in 9 countries around the world: Beijing, Hanoi, Mumbai, Shanghai, Shenzhen,
and Singapore in Asia; and London, Brussels, Paris, New Y ork, San Francisco,
Washington DC, and Mexico City outside Asia.
SAI Growth
SAI Growth Fund I, LLLP (“ SAI Growth ”) is a Delaware limited liability limited
partnership. SIG Asia Investment, LLLP , a Delaware limited liability partnership, is the
investment manager for SAI Growth pursuant to an investment management agreement
and, as such, has discretionary authority to vote and dispose of the shares in our Company
held by SAI Growth. In addition, Heights Capital Management, Inc., a Delaware
Corporation, is the investment manager for SIG Asia Investment, LLLP pursuant to an
investment agreement and, as such, has discretionary authority to vote and dispose of the
shares in our Company held by SAI Growth.
CMBI
Blessed Tiger Limited is a British Virgin Islands business company incorporated under
the laws of British Virgin Islands, which is an investment holding vehicle held by funds
managed by a subsidiary of CMB International Capital Corporation Limited (“ CMBI ”).
CMBI and its subsidiaries provide extensive financial services which mainly include,
among others, corporate finance, asset management (over RMB100 billion in AUM as of
31 Dec, 2021), wealth management, equity and structured finance businesses. CMBI is a
subsidiary of China Merchants Bank Co., Limited, a company listed on the Stock
Exchange (HKEX: 3968).
HISTORY AND CORPORATE STRUCTURE
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Other Pre-IPO Investors
Fast Rabbit Global Limited is a limited company incorporated in the British Virgin
Islands, the ultimate beneficial owners of which neither control more than 30% equity
interest nor can be deemed to have majority control.
Team Spirit Group Limited, a limited company incorporated in the British Virgin Islands,
is approximately 65.9% owned by the Labor Union Committee of Guangdong OPlus
Holdings Co., Ltd; approximately 33.6% owned by GLORY HILL HOLDINGS LIMITED
(ʮ̡) and approximately 0.5% owned by Mr. Jin Leqin. The Labor Union
Committee of Guangdong OPlus Holdings Co., Ltd is deemed to be controlled by Mr.
Chen Mingyong
(1). Mr. Chen Mingyong has more than 20 years of management
experience in the telecommunications electronics industry and has significant experience
investing in logistics and technology sectors.
Lead Sky Capital Limited is a limited company incorporated in the British Virgin Islands,
which is a shareholding platform for a number of regional sponsors, the ultimate
beneficial owners of which neither control more than 30% equity interest nor can be
deemed to have majority control.
Joyous Sound Limited is a British Virgin Islands company, wholly-owned by Jin Leqin,
an independent third party. Its main business scope is investment holding. Jin Leqin is an
individual investor with extensive experience investing in telecommunications and
electronics sectors.
Long Origin Limited is a British Virgin Islands company, wholly-owned by Y uan Zhang,
a non-executive Director. Its main business scope is investment holding.
Starlight Hero Limited is a British Virgin Islands company, wholly-owned by Liang
Xiaojing
(1), an independent third party. Its main business scope is investment holding.
Ms. Liang Xiaojing is an individual investor with extensive investment and management
experience in both traditional and innovative technology segments.
Grow Profit Enterprises Limited is a limited company incorporated in the British Virgin
Islands, the ultimate beneficial owners of which neither control more than 30% equity
interest nor can be deemed to have majority control.
Top V alley Limited is a limited company incorporated in the British Virgin Islands, which
is a shareholding platform for a number of regional sponsors, the ultimate beneficial
owners of which neither control more than 30% equity interest nor can be deemed to have
majority control.
Constant Power Investment Limited is a limited company incorporated in the British
Virgin Islands, which is a shareholding platform for a number of regional sponsors, the
ultimate beneficial owners of which neither control more than 30% equity interest nor can
be deemed to have majority control.
Note: Mr. Chen Mingyong and Ms. Liang Xiaojing are spouses of each other.
HISTORY AND CORPORATE STRUCTURE
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Ambitious River Limited is a British Virgin Islands company, wholly-owned by Jin
Zhijiang, an independent third party. Its main business scope is investment holding. Jin
Zhijiang is an individual investor with extensive management experience in the
educational electronics sector.
Easy Innovation Limited is a Cayman Islands company, wholly-owned by Alice Y u-fen
Cheng
(1), a non-executive Director. Its main business scope is investment holding.
Uranus Holding Limited is a limited company incorporated in the British Virgin Islands.
The largest shareholder is Glistening V olition Holdings Limited. None of the remaining
shareholders hold more than 30%.
V ast Admire Limited is a limited company incorporated in the British Virgin Islands, the
ultimate beneficial owners of which neither control more than 30% equity interest nor can
be deemed to have majority control.
Yimeter Holding Limited is a limited company incorporated in the British Virgin Islands,
which is an investment platform for a number of shareholders. The largest shareholder
holding approximately 38.61% equity interest is Orient Alpha Limited, a Hong Kong
incorporated company, wholly-owned by Bank of China Group Investment Limited. None
of the remaining shareholders hold more than 30%.
GCM Grosvenor JT SPV , LLC (the “ GCM Shareholder ”), a Delaware limited liability
company, is managed by GCM Investments GP , LLC, a Delaware limited liability
company, which is wholly owned by Grosvenor Capital Management Holdings, LLLP , a
Delaware limited liability limited partnership. The general partner of Grosvenor Capital
Management Holdings, LLLP is GCM Grosvenor Holdings, LLC, a Delaware limited
liability company, which is wholly owned by GCM Grosvenor Inc., a Delaware
corporation whose Class A common stock is publicly traded on the Nasdaq Stock Market
(Nasdaq: GCMG). GCMG is a global alternative asset management solutions provider.
Michael J. Sacks (“ Mr. Sacks ”) is the Board Chairman and Chief Executive Officer of
GCMG. Mr. Sacks disclaims beneficial ownership of the shares in the Company held by
the GCM Shareholder. The GCM Shareholder purchased these shares in the ordinary
course of business on behalf of its members, which includes institutional investors and D1
Capital Partners GP LLC. An affiliate of D1 Capital Partners GP LLC, D1 Capital
Partners L.P ., serves as a non-discretionary investment consultant to Grosvenor Capital
Management, L.P ., a limited partnership organized under the laws of the State of Illinois,
with respect to certain investments in the Company made by GCM Grosvenor JT SPV ,
LLC. In connection with such non-discretionary investment consulting relationship, D1
Capital Partners GP LLC makes certain de minimis investments in GCM Grosvenor JT
SPV , LLC.
Strict Forward Limited is a British Virgin Islands company, wholly-owned by Qiu Y anjie,
an independent third party. Its main business scope is investment holding.
Tickking Holding Limited is a limited company incorporated in the British Virgin Islands,
which is an investment platform for a number of shareholders. The largest shareholder
holding approximately 30.91% equity interest is Y ang Xingyun, an independent third
party. None of the remaining shareholders hold more than 30%.
Note: Ms. Alice Y u-fen Cheng is currently in the process of setting up a trust for estate planning purposes.
HISTORY AND CORPORATE STRUCTURE
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Long Shining Limited is a British Virgin Islands company, ultimately controlled by Wu
Ching Ho, an independent third party. Its main business scope is investment holding.
LINK Delivery Investment Limited is a limited liability company incorporated in the
British Virgin Islands. LINK Delivery Investment Limited is wholly-owned by LINK
Delivery Holding Limited, a limited liability company incorporated in the British Virgin
Islands. LINK Delivery Holding Limited is wholly-owned by HOPU USD Master Fund
III, L.P ., a Cayman Islands limited partnership, acting through its general partner, HOPU
Investments Co. III Ltd., which is part of and managed by HOPU Investments (an
independent third party), an Asian alternative asset manager.
Precision World Limited is a limited liability BVI business company established under the
laws of the British Virgin Islands, wholly-owned by Boyu Dinghui (Hainan) Business
Management Partnership Enterprise (Limited Partnership) (ᅆ(ی)Άุ၍ଣΥྫ
Άุ(Υྫ)), a limited partnership incorporated in the PRC, which is controlled by its
general partner, Boyu Jingtai (Shanghai) Enterprise Management Co., Ltd. ( ௹༃౻इ(ɪ
ऎ)ʮ̡).
AMF-9 Holdings Limited is a company limited by shares incorporated in the British
Virgin Islands and wholly-owned by Aspex Master Fund. Aspex Master Fund (“ Aspex ”)
is a Cayman Islands exempted company incorporated with limited liability operating as
a private investment fund, which is managed by Aspex Management (HK) Limited
(“Aspex Management ”). Aspex Management is a licensed corporation established in
Hong Kong to carry out type 9 (asset management) regulated activities under the SFO in
Hong Kong and serves as investment manager to Aspex. Aspex’s investment objective is
to achieve attractive absolute returns over the medium-to-long-term horizon through a
bottom-up, research intensive, fundamentally-driven equity investment strategy focused
on companies based in or heavily exposed to the Pan-Asia region.
V ast Elegance Limited is a British Virgin Islands investment holding company, 40%
owned by Hui Group Capital L.P . and 60% owned by Y ang’s Capital Limited. Hui Group
Capital L.P . is managed by its general partner, Hui Investment Management Capital
Limited. Hui Investment Management Capital Limited is controlled by Y ang’s Capital
Limited. The ultimate beneficial owner of Y ang’s Capital Limited is Mr. Y ang Longzhong,
an independent third party.
XN Origin International Limited, a limited liability company established under the laws
of British Virgin Islands, is 40% owned by D1 Capital Partners Master LP; 30% owned
by Nanjing Xingnayang Enterprise Management Partnership (Limited Partnership);
29.8% owned by Focustar Capital Investment Fund L.P .; 0.2% owned by Great Dipper
Limited. Nanjing Xingnayang Enterprise Management Partnership (Limited Partnership)
and Focustar Capital Investment Fund L.P . are investment vehicles controlled by Mr.
Wang Jianguo.
ZWC JT Investment Limited is a limited liability company established under the laws of
British Virgin Islands. ZWC JT Investment Limited focuses on investment in the logistics
industry. It is controlled by ZWC Fund II General Partners Limited as its controlling
shareholder.
Portland Street Partners Limited is a Guernsey limited company focusing on investment
activities.
HISTORY AND CORPORATE STRUCTURE
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Speedy Innovation L.P . is a limited partnership formed in the British Virgin Islands,
whose general partner is Honor Journey Limited. Honor Journey Limited is controlled by
Liu Bin, an independent third party.
Hidden Hill Investment 123 is an exempted company incorporated in the Cayman Islands
with limited liability, fully managed and controlled by NewQuest Asia Fund IV
(Singapore) Pte. Ltd., a private limited company incorporated in Singapore.
Square Lord Limited is a British Virgin Islands company, wholly-owned by Fang Xiaoqiu,
an independent third party. Its main business scope is investment holding.
Tranquility V entures Limited is a limited liability company established under the laws of
the British Virgin Islands, wholly-owned by Echo Investment L.P . focusing on investment
activities.
COMPLIANCE WITH INTERIM GUIDANCE AND GUIDANCE LETTERS
Based on the documents provided by our Company relating to the Pre-IPO Investments, the
Joint Sponsors are of the view that the Pre-IPO Investments are in compliance with the
Guidance Letter HKEx-GL29-12 issued in January 2012 and updated in March 2017 by the
Stock Exchange, Guidance Letter HKEx-GL43-12 issued in October 2012 and updated in July
2013 and in March 2017 by the Stock Exchange and Guidance Letter HKEx-GL44-12 issued
in October 2012 and in March 2017 by the Stock Exchange.
HISTORY AND CORPORATE STRUCTURE
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--- page 185 ---
Corporate structure before the Global Offering
The following diagram illustrates the simplified corporate and shareholding structure of our Company immediately prior to the completion of the
Global Offering:
Direct and indirect equity interest
- - - - - Controlled through contractual arrangements
58.6%
Other Pre-IPO
Investors(2)
Jumping
Summit
Limited
11.54% 0.77%
Dahlia(1)
1.54%
SF Holding(1)
0.39%
CMBI(1)
6.10%
Boyu(1)
1.62%
Sequoia(1)
1.99%
GLP(1)
2.00%
Hillhouse
Investment(1)
5.49%
ATM(1)
6.32%
Tencent(1)
0.54%
SAI Growth(1)
3.10%
D1(1)
J&T GLOBAL
EXPRESS LIMITED
(CAYMAN ISLANDS)
ONWING GLOBAL
LIMITED (BVI)
63.81%
100%
100%
100% 100% 100%100%
100%
J&T Express (Zhejiang) Supply
Chain Management Co., Ltd.
(PRC)
J&T EGY
HOLDINGS
LIMITED
(RAK ICC, UAE)
J&T KSA
HOLDING PTE.
LTD.
(Singapore)
J&T EXPRESS
MIDDLE EAST
HOLDINGS LIMITED
(JAFZA, UAE)
J&T BR HOLDING
PTE. LTD.
(Singapore)
J&T MX HOLDING
PTE. LTD.
(Singapore)
J&T Express International Logistics China
(PRC)
99.66%
J&T International Logistics Limited(4)
(Cayman Islands)
J&T Express (Jinhua) Supply Chain Co., Ltd.
(PRC)
J&T Express (Jieyang) Supply Chain
Management Co., Ltd. 11
(PRC)
J&T Express (Guangzhou)
Supply Chain Co., Ltd.
(PRC)
J&T Express (Fujian) Supply
Chain Management Co., Ltd.
7
(PRC)
J&T Express (Hebei) Acme Supply
Chain Management Co., Ltd.
8
(PRC)
J&T Express (Henan) Acme Supply
Chain Management Co., Ltd.  9
(PRC)
J&T Express (Shandong) Supply Chain
Co., Ltd. 10
(PRC)
J&T Sino Investment
Holdings Limited
(HK)
Chongqing Yunqing Supply
Chain Management Co., Ltd.
(“PRC WFOE”)
JET GLOBAL EXPRESS LIMITED(5)
(Cayman Islands)
Shanghai Yishangshiye
(“PRC Holdco”)
J&T Express China
100%
100%
100%
85%
100%
100%
85%
85%
85%
85%
WINNER STAR HOLDINGS
LIMITED  (HK)
PT
GLOBAL
JET
EXPRESS
(Indonesia)
THUAN
PHONG
EXPRESS
COMPANY
LIMITED
(Vietnam)
J&T
EXPRESS
(MALAYSIA)
SDN. BHD.
(Malaysia)
PH
GLOBAL
JET
EXPRESS
INC.(6)
(Philippines)
GLOBAL
JET
EXPRESS
(THAILAND)
CO., LTD.
(Thailand)
INFINITY
JET
HOLDING
LIMITED(3)
(Thailand)
49%
49%98.97%100%100%100%
51%
HISTORY AND CORPORATE STRUCTURE
– 175 –


--- page 186 ---
Notes:
(1) For details on such Shareholders, see “– Pre-IPO Investments – 14. Information on the Pre-IPO Investors” in this section.
(2) This includes all our other Pre-IPO Investors. For additional information, see “– Pre-IPO Investments – 14. Information on the Pre-IPO Investors ” in this section.
(3) The remaining 51% equity interest is held as to 1 share by Huo Wensheng and as to approximately 51% by Suteemon Aggarwal, who are Independent Third Pa rties. As per
relevant investment agreements, the Company indirectly enjoys substantially 100% of the dividend interest of Global Jet Express (Thailand) Co., Lt d.
(4) The remaining equity interest is held as to approximately 0.34% by Cloud Road Limited, which is a shareholding entity for members of J&T Internatio nal Logistics Limited’s
management team.
(5) Jet Global is the holding company of the Group’s operating entities in new markets including Brazil, Egypt, Mexico, UAE and Saudi Arabia. Jet Globa l conducted a round of
financing in 2021 to certain financial and institutional investors, following which such investors hold 36.19% of the shareholding in Jet Global. We have entered into a
shareholders agreement in relation to Jet Global, which includes customary terms concerning corporate governance (including but not limited to num ber of director, election
and removal of director, vacancy on director, reimbursement and indemnity for directors), shareholder protection (including but not limited to inf ormation right, restrictions on
transfer, right of first refusal, co-sale rights, matters requiring approval of shareholders), arrangement for liquidation or winding up events, c ovenants (in relation to
non-competition, compliance with law and tax matters) and termination provisions. Each of the Jet Global investors (“ Jet Global Investor(s) ”) has also been granted an exit
right, under which it may request the Company to issue such number of Shares as is equal to the result of such Jet Global Investor’s exit price (to be calcu lated based on the
results of operations in the new regions and the Jet Global Investor’s beneficial interest in such new region, or the Jet Global Investor’s investment amount in such new region)
divided by the share price of the Company at the time of the Jet Global Investor Exit Right being exercised, in exchange for such Jet Global Investor’s ho lding in Jet Global
(“Jet Global Investor Exit Right ”). The Jet Global Investor Exit Right will only be exercisable during 30-day periods in each of 2026 and 2027. For illustration purpose of
the potential dilutive impact on the shareholding of the Company upon exercise of the Jet Global Investor Exit Right, based on results of operations in the new regions in 2022,
the Jet Global Investors’ beneficial interest in all new regions, the Jet Global Investors’ investment amount and Offer Price of HK$12.00, the Compan y would issue 553,059,000
Shares should all the Jet Global Investors fully exercise the Jet Global Investor Exit Right, representing approximately 6.28% of the total number of issued and outstanding
Shares immediately upon completion of the Global Offering (assuming the Over-allotment Option is not exercised). The actual number of shares that ma y be issued by the
Company will be based on the actual performance of the new regions and share price of the Company at the time of the Jet Global Investor Exit Right being ex ercised.
The Company holds JNT KSA, the operating entity through which the Company conducts its Saudi operations, through J&T KSA HOLDING PTE. LTD.. JNT KSA is o wned
as to 50% indirectly by the Company and 50% by eWTP Arabia Technology Innovation Limited (“ eWTP ”), an Independent Third Party. We have entered into a shareholders
agreement in relation to the JNT KSA, which includes customary terms concerning shareholders’ information rights and inspection rights, corporate governance (including but
not limited to board composition, shareholder communication updates, related party transaction notification, quorum of board meeting, appointme nt of management, matters
requiring approval of shareholders, signatory authority, etc.), shareholder protection (including but not limited to share transfer restriction s, right of participation to purchase
new shares, right to dividends, etc.), shareholders’ cooperation and support to the company, representations and warranties, shareholders’ intel lectual property rights and
termination provisions. eWTP has also been granted an exit right, under which it may to request the Company to issue such number of Shares as is equal to t he results of eWTP
exit price (to be calculated based on the results of operations of the JNT KSA group and eWTP’s beneficial interest in JNT KSA, or eWTP’s investment amou nt in JNT KSA)
divided by the share price of the Company at the time of the eWTP Exit Right being exercised, in exchange for eWTP’s holding in JNT KSA (“ eWTP Exit Right ”). The eWTP
HISTORY AND CORPORATE STRUCTURE
– 176 –


--- page 187 ---
Exit Right will only be exercisable after December 31, 2026. For illustration purpose of the potential dilutive impact on the shareholding of the Comp any upon exercise of the
eWTP Exit Right, based on the JNT KSA group’s results of operations in 2022, eWTP’s beneficial interest in JNT KSA, eWTP’s investment amount and Offer P rice of HK$12.00,
the Company would issue 68,250,000 Shares should eWTP exercise the eWTP Exit Right, representing approximately 0.77% of the total number of issued an d outstanding Shares
immediately upon completion of the Global Offering (assuming the Over-allotment Option is not exercised). The actual number of shares that may be iss ued by the Company
will be based on the actual performance of the JNT KSA group and share price of the Company at the time of the eWTP Exit Right being exercised.
The Company will comply with the relevant requirements of the applicable Listing Rules, in particular those under Chapters 14 and 14A and obtain the ne cessary shareholders’
approval (if required), listing approval and mandate to issue new Shares of the Company for the purpose of effecting the Jet Global Investor Exit Right and the eWTP Exit Right
if any Jet Global Investors and/or eWTP choose to exercise the Jet Global Investor Exit Right or the eWTP Exit Right respectively after the Proposed Lis ting.
(6) The remaining 1.03% equity interest is held as to 0.33% by Mr. John John Pacheco; as to 0.33% by Ms. Shiela Mae Casayuran; as to 0.33% by Ms. Christina M a Aquino; all
three of which are directors of PH Global Jet Express Inc., doing business under the name and style of J&T Express, 0.03% by J&T PH Holdings Pte Ltd, a subs idiary of the
Company; 1 share by Mr. Lei Ding and 1 share by Mr. Y u Rong.
(7) The remaining 15% equity interest is owned by Chongqing Jiesheng Supply Chain Technology Co., Ltd., ultimately controlled by regional sponsors w ho are responsible for
J&T Express (Fujian) Supply Chain Management Co., Ltd.’s management team.
(8) The remaining 15% equity interest is owned by Chongqing Jiehong Supply Chain Technology Co., Ltd., ultimately controlled by regional sponsors wh o are responsible for Hebei
J&T Express (Hebei) Acme Supply Chain Management Co., Ltd.’s management team.
(9) The remaining 15% equity interest is owned by Chongqing Jieben Supply Chain Technology Co., Ltd., ultimately controlled by regional sponsors who are responsible for Henan
J&T Express (Henan) Acme Supply Chain Co., Ltd.’s management team.
(10) The remaining 15% equity interest is owned by Chongqing Qiyue Supply Chain Technology Co., Ltd., ultimately controlled by regional sponsors who are responsible for J&T
Express (Shandong) Supply Chain Co., Ltd.’s management team.
(11) The remaining 15% equity interest is owned by Chongqing Zhujie Supply Chain Technology Co., Ltd., ultimately controlled by regional sponsors wh o are responsible for Jieyang
J&T Express (Jieyang) Supply Chain Management Co., Ltd.’s management team.
HISTORY AND CORPORATE STRUCTURE
– 177 –


--- page 188 ---
Corporate structure immediately following the Global Offering
The following diagram illustrates the simplified corporate and shareholding structure of our Company immediately following the completion of the
Global Offering (assuming (i) the Over-allotment Option is not exercised and (ii) the Share Subdivision is completed).
Direct and indirect equity interest
- - - - - Controlled through contractual arrangements
56.43%
Other Pre-IPO
Investors(2)
3.71%
Other Public
Shareholders
1.56%
Sequoia(1)
1.92%
GLP(1)
1.93%
Hillhouse
Investment(1)
5.88%
Boyu(1)
5.29%
ATM(1)
0.74%
Dahlia(1)
1.48%
SF Holding(1)
0.37%
CMBI(1)
0.52%
SAI Growth(1)
6.07%
Tencent(1)
2.99%
D1(1)
11.11%
Jumping
Summit
Limited
J&T GLOBAL
EXPRESS LIMITED
(CAYMAN ISLANDS)
ONWING GLOBAL
LIMITED (BVI)
63.81%
100%
100%
100% 100% 100%100%
100%
J&T Express (Zhejiang) Supply
Chain Management Co., Ltd.
(PRC)
J&T EGY
HOLDINGS
LIMITED
(RAK ICC, UAE)
J&T KSA
HOLDING PTE.
LTD.
(Singapore)
J&T EXPRESS
MIDDLE EAST
HOLDINGS LIMITED
(JAFZA, UAE)
J&T BR HOLDING
PTE. LTD.
(Singapore)
J&T MX HOLDING
PTE. LTD.
(Singapore)
J&T Express (Jinhua) Supply Chain Co., Ltd.
(PRC)
J&T Express International Logistics China
(PRC)
99.66%
J&T International Logistics Limited(4)
(Cayman Islands)
J&T Express (Jieyang) Supply Chain
Management Co., Ltd. 11
(PRC)
J&T Express (Guangzhou)
Supply Chain Co., Ltd.
(PRC)
J&T Express (Fujian) Supply
Chain Management Co., Ltd.
7
(PRC)
J&T Express (Hebei) Acme Supply
Chain Management Co., Ltd.
8
(PRC)
J&T Express (Henan) Acme Supply
Chain Management Co., Ltd.  9
(PRC)
J&T Express (Shandong) Supply Chain
Co., Ltd. 10
(PRC)
J&T Sino Investment
Holdings Limited
(HK)
Chongqing Yunqing Supply
Chain Management Co., Ltd.
(“PRC WFOE”)
Shanghai Yishangshiye
(“PRC Holdco”)
J&T Express China
100%
100%
100%
85%
100%
100%
85%
85%
85%
85%
WINNER STAR HOLDINGS
LIMITED (HK)
PT
GLOBAL
JET
EXPRESS
(Indonesia)
THUAN
PHONG
EXPRESS
COMPANY
LIMITED
(Vietnam)
J&T
EXPRESS
(MALAYSIA)
SDN. BHD.
(Malaysia)
PH
GLOBAL
JET
EXPRESS
INC.(6)
(Philippines)
GLOBAL
JET
EXPRESS
(THAILAND)
CO., LTD.
(Thailand)
INFINITY
JET
HOLDING
LIMITED(3)
(Thailand)
49%
49%98.97%100%100%100%
51%
JET GLOBAL EXPRESS LIMITED(5)
(Cayman Islands)
Notes (1) to (11): See the details contained in the preceding pages.
HISTORY AND CORPORATE STRUCTURE
– 178 –


--- page 189 ---
PRC REGULATORY REQUIREMENTS
According to the M&A Rules jointly issued by MOFCOM, the State-owned Assets Supervision
and Administration Commission of the State Council, the SA T, the CSRC, the SAIC and the
SAFE on August 8, 2006, effective on September 8, 2006, and amended on June 22, 2009, a
foreign investor is required to obtain necessary approvals when it (i) acquires the equity of a
domestic enterprise so as to convert the domestic enterprise into a foreign-invested enterprise;
(ii) subscribes the increased capital of a domestic enterprise so as to convert the domestic
enterprise into a foreign-invested enterprise; (iii) establishes a foreign-invested enterprise
through which it purchases the assets of a domestic enterprise and operates these assets; or (iv)
purchases the assets of a domestic enterprise through relevant agreements and then invests such
assets to establish a foreign-invested enterprise. The M&A Rules, among other things, further
purport to require that an offshore special vehicle, or a special purpose vehicle, formed for
overseas listing purposes and controlled directly or indirectly by PRC companies or
individuals, to obtain the approval of the CSRC prior to the listing and trading of such special
purpose vehicle’s securities on an overseas stock exchange, in the event that the special
purpose vehicle acquires shares of or equity interests in the PRC companies in exchange for
the shares of offshore companies.
Our PRC Legal Adviser is of the opinion that, based on their understanding of the current PRC
laws and regulations, prior CSRC approval for the Global Offering is not required because (i)
WFOE and its wholly-owned PRC subsidiaries were not established through a merger or
acquisition of equity interest or assets of a PRC domestic company owned by PRC companies
or individuals, as defined under the M&A Rules, that are the beneficial owners of our
Company, and (ii) no provision in the M&A Rules clearly classifies contractual arrangements
as a type of transaction subject to the M&A Rules. However, our PRC Legal Adviser further
advised that uncertainties still exist as to how the M&A Rules and other PRC laws and
regulations will be interpreted and implemented and whether the relevant authorities would
promulgate new rules or regulations or requirements in the future to impose additional
requirements on us. There can be no assurance that the relevant PRC government agencies,
including the CSRC, would reach the same conclusion as our PRC Legal Adviser. If the CSRC
or other PRC regulatory body subsequently determines that we need to obtain the CSRC’s
approval for this offering or if the CSRC or any other PRC government authorities promulgates
any interpretation or implements rules before our listing that would require us to obtain CSRC
or other governmental approvals for this offering, we may face adverse actions or sanctions by
the CSRC or other PRC regulatory agencies. In any such event, these regulatory agencies may
impose fines and penalties on our operations in China, limit our operating privileges in China,
delay or restrict the repatriation of the proceeds from this offering into the PRC or take other
actions that could have a material adverse effect on our business, financial condition, results
of operations, reputation and prospects, as well as our ability to complete this offering. The
CSRC or other PRC regulatory agencies may also take actions requiring us, or making it
advisable for us, to halt this offering before settlement and delivery of the Shares offered by
this prospectus. Consequently, if you engage in market trading or other activities in
anticipation of and prior to settlement and delivery, you do so at the risk that such settlement
and delivery may not occur. In addition, if the CSRC or other regulatory authorities later
promulgate new rules or explanations requiring that we obtain their approvals or accomplish
the required filing or other regulatory procedures for this offering or future capital raising
activities, we may be unable to obtain a waiver of such approval requirements, if and when
procedures are established to obtain such a waiver. Any uncertainties or negative publicity
regarding such approval, filing or other requirements could materially and adversely affect our
business, prospects, financial condition, reputation, and the trading price of the shares.
HISTORY AND CORPORATE STRUCTURE
– 179 –


--- page 190 ---
SAFE REGISTRATION IN THE PRC
Pursuant to SAFE Circular 37, promulgated by SAFE and effective on July 14, 2014, replacing
SAFE Circular 75, (i) a PRC resident must register with the local SAFE branch in connection
with their contribution of offshore or domestic assets or equity interests in an overseas SPV
that is directly established or indirectly controlled by the PRC resident for the purpose of
conducting overseas investment or financing, and (ii) following the initial registration, the PRC
resident is also required to register with the local SAFE branch for any major change in respect
of the Overseas SPV , including, among other things, a change of the Overseas SPV’s PRC
resident shareholder(s), the name of the Overseas SPV , terms of operation, or any increase or
reduction of the Overseas SPV’s capital, share transfer or swap, and merger or division.
Pursuant to SAFE Circular 37, failure to comply with these registration procedures may result
in penalties. In addition, due to such failure to comply with the registration procedures, the
PRC subsidiaries of that Overseas SPV may be prohibited from distributing their profits and
dividends to their offshore parent company or from carrying out other subsequent cross-border
foreign exchange activities, and the Overseas SPV and its offshore subsidiary may be restricted
in their ability to contribute additional capital to their PRC subsidiaries.
Pursuant to the Circular of the SAFE on Further Simplification and Improvement in Foreign
Exchange Administration on Direct Investment (ટҳ༟̮ි၍ଣ
), promulgated by SAFE and effective on June 1, 2015, the power to accept
foreign exchange registration was delegated from local SAFE to qualified banks.
As advised by our PRC Legal Adviser, Mr. Li, who is a PRC resident, has completed the
required registration with the SAFE on November 28, 2019.
HISTORY AND CORPORATE STRUCTURE
– 180 –


--- page 191 ---
BUSINESS OVERVIEW
We are a global logistics service provider with the leading express delivery business in
Southeast Asia, a competitive position in China and an expanding footprint in Latin America
and the Middle East. Our express delivery services span 13 countries, which include the largest
and fastest-growing express delivery emerging markets globally. We commenced operations in
2015 in Indonesia, and leveraged our success there to expand into other Southeast Asian
countries, including Vietnam, Malaysia, the Philippines, Thailand, Cambodia and Singapore,
and became the number one express delivery operator in Southeast Asia, with a 22.5% market
share in 2022 by parcel volume, according to Frost & Sullivan. In Southeast Asia, we handled
2,513.2 million domestic parcels in 2022, representing a CAGR of 47.6% from 1,153.8 million
in 2020, and we handled 1,438.3 million domestic parcels in the six months ended June 30,
2023, representing an increase of 18.4% from 1,215.0 million domestic parcels in the six
months ended June 30, 2022. We tapped into the express delivery market in China in 2020, and
handled 12,025.6 million domestic parcels in 2022, achieving a market share of 10.9% by
parcel volume, according to Frost & Sullivan. In China, we handled 6,445.6 million parcels in
the six months ended June 30, 2023, representing an increase of 15.1% from 5,602.3 million
parcels in the six months ended June 30, 2022. As of June 30, 2023, we had full network
coverage across the seven Southeast Asia countries and a geographic coverage of over 99% by
counties and districts in China. We are also the first Asian express delivery operator of scale
to have expanded into Saudi Arabia, UAE, Mexico, Brazil and Egypt, according to Frost &
Sullivan, supporting our e-commerce partners as they expand into new markets. To better
capture cross-border logistics opportunities and enhance the connectivity among the countries
we serve, we have expanded our cross-border logistics services, which include small parcels,
freight forwarding and warehousing solutions.
Indonesia
Brazil
Mexico
Singapore
2015
Vietnam
2018
China
2020
The Philippines
2019
Thailand
2019
2020
Cambodia
2019
2022
2022
UAE
2022
Egypt
2022
2018
Malaysia
Saudi Arabia
2022
We provide express delivery services to leading e-commerce platforms, enabling the rapid
development of our partners as they expand into new markets. We have historically helped
e-commerce platforms access regions that were underserved by traditional logistics service
providers. We provide a suite of express delivery services to merchants and consumers on
leading e-commerce platforms, such as Shopee, Lazada, Tokopedia, Pinduoduo, Taobao, Tmall,
Shein and Noon, as well as short video and live streaming platforms which have adopted social
e-commerce services, such as TikTok, Douyin and Kuaishou. As e-commerce continues to
evolve, we believe that we are well positioned to enable further development of the
e-commerce markets in which we operate by leveraging our broad network, extensive
know-how and strong execution capabilities. We expect to provide services to cross-border
logistics with our ever expanding global footprint.
BUSINESS
– 181 –


--- page 192 ---
US$7.3Bn Revenue in 2022
117.6% CAGR 2020-2022
14.6Bn Parcels Delivered
in 2022
112.3% CAGR 2020-2022
No. 1 in Southeast Asia
22.5% Market Share,
> 3 Times of No.2(1)
Partnering with Leading
E-commerce Platforms
in Markets where We
Operate
Unique and Highly Scalable
Regional Sponsor Model
with Aligned Interests and
Shared Culture
Proprietary and Innovative
JMS System to Empower
Global Operations
Spanning 13 Countries
Note:
1. By parcel volume in 2022, according to Frost & Sullivan
Southeast Asia, China and the New Markets where we operate present us with significant
growth opportunities:
Southeast Asia China New Markets
E-commerce
Retail
Transaction
Value
Total
Volume of
Parcels
In billion
13.2
23.5
2023E 2027E
CAGR: 15.5%
In US$ billion
E-commerce penetration rate
1,997.4
2,957.2
2023E 2027E
In billion
125.1
188.0
2023E 2027E
CAGR: 10.7%
CAGR: 10.3%
In US$ billion
107.6
243.1
2023E 2027E
In billion
3.7
7.1
2023E 2027E
CAGR: 17.6%
CAGR: 22.6%
In US$ billion
188.6
373.6
2023E 2027E
CAGR: 18.6%
17.9%
 29.8%
 29.1%
 35.6%
 14.6%
 27.5%
Source: Frost & Sullivan
Shift to e-commerce. E-commerce retail has seen significant growth in Southeast Asia in terms
of transaction value from US$38.3 billion in 2018 to US$154.8 billion in 2022, representing
a CAGR of 41.8%. Improvements in Internet infrastructure in Southeast Asia will likely further
support the transition from offline to online retail channels. According to Frost & Sullivan,
e-commerce retail transaction value in Southeast Asia is expected to grow from US$188.6
billion in 2023 to US$373.6 billion in 2027, representing a CAGR of 18.6%, with e-commerce
penetration rate increasing from 17.9% in 2023 to 29.8% in 2027. In China, e-commerce retail
transaction value increased from US$1,058.5 billion in 2018 to US$1,777.1 billion in 2022,
BUSINESS
– 182 –


--- page 193 ---
representing a CAGR of 13.8%, and is expected to grow from US$1,997.4 billion in 2023 to
US$2,957.2 billion in 2027, representing a CAGR of 10.3%, according to Frost & Sullivan,
with the e-commerce penetration rate increasing from 29.1% in 2023 to 35.6% in 2027. In
addition, we anticipate that the rise of social e-commerce including short video and live
streaming will drive additional e-commerce transactions and demand for cost-effective
logistics services. According to Frost & Sullivan, the social e-commerce retail market in
Southeast Asia grew rapidly from US$9.2 billion in 2018 to US$60.2 billion in 2022,
representing a CAGR of 59.9%, and is expected to reach US$179.8 billion in 2027 from
US$80.7 billion in 2023, representing a CAGR of 22.2% from 2023 to 2027. The social
e-commerce retail market in China also grew rapidly from US$98.5 billion in 2018 to
US$626.5 billion in 2022, representing a CAGR of 58.8%, and is expected to reach US$1,660.4
billion in 2027 from US$839.7 billion in 2023, representing a CAGR of 18.6%. The social
e-commerce penetration rate is expected to reach 48.1% and 56.1% in Southeast Asia and
China in 2027, respectively.
Demand for express delivery services. Benefiting from the significant e-commerce market ,
Southeast Asia and China combined form the largest and fastest-growing express delivery
service market in the world, according to Frost & Sullivan. In Southeast Asia, total volume of
parcels shipped rapidly increased from 3.3 billion in 2018 to 11.1 billion in 2022, representing
a CAGR of 36.0%, and is projected to increase from 13.2 billion in 2023 to 23.5 billion in
2027, representing a CAGR of 15.5%, while in China the volume increased from 50.7 billion
in 2018 to 110.6 billion in 2022, representing a CAGR of 21.5%, and is projected to increase
from 125.1 billion in 2023 to 188.0 billion in 2027, representing a CAGR of 10.7%, according
to Frost & Sullivan.
Demand from the New Markets. In 2022, we strategically expanded into other large and
high-growth markets around the world, including Saudi Arabia, UAE, Mexico, Brazil and
Egypt, which we refer to as the New Markets. These markets have burgeoning e-commerce
industries and are undergoing a pivotal transition as consumer shift from traditional retail to
online shopping. According to Frost & Sullivan, e-commerce retail transaction value of the
New Markets in aggregate reached US$85.7 billion in 2022 at a CAGR of 27.5% from 2018
and is expected to further grow to US$243.1 billion in 2027 at a CAGR of 22.6% from 2023.
Driven by the growth of e-commerce retail markets and e-commerce penetration rate, express
delivery parcel volume in these markets in aggregate reached 3,095.8 million in 2022 and is
expected to further grow to 7,137.7 million in 2027 at a CAGR of 17.6% from 2023.
Demand for cross-border services . Capitalizing on our success in each of the markets in which
we operate, we are developing cross-border services to connect these markets to the global
e-commerce network. In Southeast Asia and China, the total cross-border e-commerce retail
markets by transaction value increased from US$213.8 billion in 2018 to US$492.2 billion in
2022, representing a CAGR of 23.2%, and are expected to increase from US$605.2 billion in
2023 to US$1,257.0 billion in 2027, representing a CAGR of 20.0%, according to Frost &
Sullivan. We believe the rise of the cross-border e-commerce market will drive the growth of
the cross-border logistics market. The global cross-border logistics market is expected to reach
US$680.7 billion in 2027 from US$456.1 billion in 2023, representing a CAGR of 10.5%,
according to Frost & Sullivan.
BUSINESS
– 183 –


--- page 194 ---
We have built an adaptive business model by leveraging our partners whom we refer to as our
regional sponsors, and we are currently the only player in Southeast Asia and China that has
successfully adopted this model at scale. By employing this model in geographically diverse
countries with unique operational challenges in each of the countries where we provide express
delivery services, we have expanded rapidly, serving a geographically dispersed base of
merchants and consumers across multiple regions and enabling the growth of e-commerce
transactions. Regional sponsors play an important role by working with our country
headquarters to execute our strategies in various markets. Our regional sponsors typically hold
equity interest in our country headquarters and/or regional operating entities. Our country
headquarters formulate the overall operational strategy and execution plans in each market,
including density and geographic locations of sorting centers, line-haul routes and network
capacity, of which regional sponsors assume the role of managing regional daily operations.
Regional sponsors manage our network partners through the relevant regional operating
entities. Regional sponsors in certain locations also undertake the management of directly
operated pickup and delivery outlets and service stations through the relevant regional
operating entities. The management responsibilities of regional sponsors encompass the set-up
of local operations, sales and marketing, customer service, and employee and network partner
training.
Directly Operated Outlets
and Service Stations
¾ Regional operating entities
own pick-up and delivery
outlets and service stations
Network Partners
¾ Network partners own
and operate pick-up and
delivery outlets and service
stations
Country Headquarters
• Formulate the overall operational
strategy and execution plans
Regional Sponsors
• Entrepreneurial in nature and the culture carriers
• Local and regional knowledge and business experience
• Alignment of interests including holding equity interests in
headquarters and/or regional operating entities
Strengths of Regional Sponsor Model
/checkbldMaintain long-term cooperation with
regional sponsors to share successes
with various incentive arrangements
based on performanceAligned Interest
and Culture
/checkbldAble to adjust local operations
according to the optimal approach
in each market and successfully
replicated this model in multiple
jurisdictionsHighly Flexible
and Adaptive
/checkbldOvercome multiple operational
challenges specific to each market
together with our global integrated
technology system and enhance
customization of services
Strong
Operational
Control
/checkbldReduce unit costs and increase
operating leverage without the need
to invest a substantial amount of
capital
Lower Cost
and Capital
Requirement
As of June 30, 2023, we had a portfolio of 104 regional sponsors and approximately 8,700
network partners. We operated 265 sorting centers and over 8,400 line-haul vehicles, including
more than 4,400 self-owned line-haul vehicles, with approximately 3,900 line-haul routes, as
well as over 18,600 pickup and delivery outlets as of June 30, 2023. Through collaboration
with international and local partners, we also provide cross-border services across Asia, North
America, South America, Europe, Africa and Oceania.
BUSINESS
– 184 –


--- page 195 ---
We have experienced significant growth since we commenced operations in Indonesia in 2015
and over the Track Record Period. In Southeast Asia, we experienced continuous growth in
parcel volume and were able to achieve positive adjusted EBITDA (a non-IFRS measure) from
2020 to 2022 and from the six months ended June 30, 2022 to the six months ended June 30,
2023. We expanded into the China market in 2020 and have been focusing on consolidating our
market position in China. The following table sets forth our revenue, adjusted loss (a non-IFRS
measure) and adjusted EBITDA (a non-IFRS measure) in total amount and by geographic
segment for the periods indicated:
Year ended December 31,
Six months ended
June 30,
2020 2021 2022 2022 2023
(in US$ thousands)
(Unaudited)
Revenue .................... 1,535,425 4,851,800 7,267,428 3,402,543 4,030,439
Southeast Asia ............... 1,046,504 2,377,544 2,381,726 1,177,929 1,246,076
China .................... 478,847 2,181,368 4,096,177 1,960,145 2,203,070
Others (2) .................. 10,074 292,888 789,525 264,469 581,293
Non-IFRS measures
Adjusted loss (a non-IFRS measure) (1) . . (475,861) (1,177,666) (1,488,297) (418,983) (264,026)
Adjusted EBITDA (a non-IFRS
measure) (1) ................. (321,163) (794,450) (894,090) (138,725) 39,169
Southeast Asia ............... 266,561 427,436 331,582 156,737 184,060
China .................... (616,227) (1,206,014) (722,658) (222,158) (44,967)
Others (2) .................. 1,652 (14,028) (168,789) (45,613) (66,431)
Unallocated (3) ............... 26,851 (1,844) (334,225) (27,691) (33,493)
Notes:
(1) See “Financial Information – Non-IFRS Measures” for more details.
(2) Includes our cross-border services and domestic express delivery services in the New Markets.
(3) Represents (i) certain expenses, gains and losses, including general and administrative expenses, and exchange
gains and losses incurred at the group and holding company levels, and (ii) fair value change of financial assets
and liabilities of other group entities that will not be re-designated from liabilities to equity upon the
completion of the Global Offering, which amounted to US$301.9 million, US$32.9 million, and US$8.9
million for the year ended December 31, 2022, and the six months ended June 30, 2022 and 2023.
During the Track Record Period, the growth of our parcel volume was primarily driven by the
continued expansion of our network, an increase in the number of merchants on e-commerce
platforms that used our services and the increased demand for express delivery services in the
markets in which we operate. Our global annual parcel volume in 2022 was 14.6 billion,
representing an increase of 39.0% from 10.5 billion in 2021 and an increase of 350.6% from
3.2 billion in 2020. Our global parcel volume for the six months ended June 30, 2023 was
7,967.1 million, representing an increase of 16.7% from 6,825.0 million in the six months
ended June 30, 2022. The table below illustrates the growth in our parcel volume in Southeast
Asia and China for the periods indicated, as well as the 2022 market share in these geographic
segments:
Year ended December 31,
Six months ended
June 30, 2020–2022
CAGR
2022
Market
Share2020 2021 2022 2022 2023
(in millions)
Southeast Asia ....... 1,153.8 2,160.8 2,513.2 1,215.0 1,438.3 47.6% 22.5%
China ............. 2,083.5 8,334.3 (1) 12,025.6 5,602.3 6,445.6 140.2% 10.9%
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Note:
(1) On December 8, 2021, we completed the acquisition of BEST Express China from BEST and consolidated the
results of BEST Express China since December 8, 2021.
We entered the New Markets in 2022 and had a very limited history of operating in these
markets. We achieved parcel volume of 49.1 million, with a market share of approximately
1.6% in terms of our parcel volume in 2022, according to Frost & Sullivan. We achieved a
parcel volume of 83.2 million in the six months ended June 30, 2023.
OUR STRENGTHS
A global express delivery operator with the leading position in Southeast Asia, serving
largest and fastest-growing express delivery emerging markets
We are a global logistics service provider with the leading express delivery business in
Southeast Asia, a competitive position in China and an expanding footprint in Latin America
and the Middle East. Our express delivery services span 13 countries, covering seven countries
across Southeast Asia, namely Indonesia, Vietnam, Malaysia, the Philippines, Thailand,
Cambodia and Singapore, as well as China. These seven Southeast Asian countries and China
represented combined e-commerce retail transaction value of US$1,931.9 billion in 2022,
growing at a CAGR of 15.2% from 2018 to 2022, and parcel volume of 121.7 billion in 2022,
growing at a CAGR of 22.6% from 2018 to 2022, according to Frost & Sullivan. According to
Frost & Sullivan, we are the number one express delivery operator in Southeast Asia by parcel
volume for 2022 and the fastest-growing express delivery operator in China among the major
players during the period from the fourth quarter of 2020 to the fourth quarter of 2022 in terms
of parcel volume.
We have achieved marked success in Southeast Asia, an emerging market in which economic
development and increasing internet penetration have spurred rapid growth in the e-commerce
retail market over the last several years. There are significant barriers to entry and operational
challenges in the Southeast Asian markets, including poor network coverage, underdeveloped
transportation infrastructure, fewer settlement options and difficulty of access to remote
locations. We began in Indonesia, the largest e-commerce retail market in Southeast Asia. By
leveraging our existing resources, know-how, broad network and connections with various
stakeholders along the logistics value chain, we have created a reliable and efficient express
delivery network in Indonesia. We then further expanded into Vietnam, Malaysia, the
Philippines, Thailand, Cambodia and Singapore, grew our parcel volume at a CAGR of 47.6%
from 2020 to 2022 and achieved a market share in Southeast Asia of 22.5% by parcel volume
in 2022, according to Frost & Sullivan, and we handled 1,438.3 million domestic parcels in the
six months ended June 30, 2023. Our operational excellence enabled us to achieve cost
efficiency in Southeast Asia. As we strive to innovate and scale, we have invested in
technologies such as our highly automated, modern sorting centers to increase our sorting
capacity, efficiency and scale. Benefiting from our massive parcel volume, we are able to
achieve operating leverage and economies of scale, reducing costs through continuous
technological innovation, automation of sorting centers, systematic planning of resources and
growing bargaining power in the market.
We have also grown rapidly in China since our entry in March 2020, achieving a scale of 50
million peak daily parcel volume in November 2022. According to Frost & Sullivan, we are the
fastest among our peers in China to achieve such scale. We have fully integrated BEST Express
China, which we acquired in December 2021, strengthened our network capacity, enhanced our
infrastructure, enlarged our customer base and established partnerships with key e-commerce
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platforms in China. We grew at a CAGR of 140.2% by parcel volume in China from 2020 to
2022 through a combination of organic growth and acquisition. In 2022, we achieved a market
share of 10.9% with a parcel volume of 12,025.6 million in China, according to Frost &
Sullivan.
In 2022, we strategically expanded into other large and high-growth markets around the world,
including Saudi Arabia, UAE, Mexico, Brazil and Egypt, which are undergoing a pivotal
transition as consumers shift from traditional retail to online shopping. These markets are
expected to continue to experience significant growth in e-commerce retail. In addition,
capitalizing on our success in each of the markets in which we operate, we plan to develop
cross-border services to connect these markets to the global e-commerce network.
Independent e-commerce enabler, connecting marketplaces and merchants to new
markets and consumers
We have enabled e-commerce growth in the key markets in which we operate. According to
Frost & Sullivan, the e-commerce penetration rate in Southeast Asia is expected to increase
from 17.9% in 2023 to 29.8% in 2027, and the e-commerce penetration rate in the New Markets
is expected to increase from 14.6% in 2023 to 27.5% in 2027, but many regions still have
limited express delivery services. We are able to provide reliable and cost-competitive express
delivery services to areas historically underserved by incumbents with a broad network,
reliable service and local know-how.
We are platform neutral and diversified. We serve many consumers and merchants on the
leading e-commerce platforms in Southeast Asia and China that are changing the landscape of
e-commerce, such as Shopee, Lazada, Tokopedia, Pinduoduo, Taobao, Tmall, Shein and Noon,
as well as short video and live streaming platforms, such as TikTok, Douyin and Kuaishou. We
empower our e-commerce partners in various ways. For example, we helped Shopee grow by
providing critical e-commerce logistics and parcel delivery infrastructure in emerging markets
such as Indonesia, Malaysia, Vietnam, the Philippines, Thailand and Brazil. We also provide
our partners with significant network capacity, particularly during peak seasons. For instance,
during the Ramadan season, we were able to process parcels at a peak daily volume of 15.1
million across SEA countries, and we were the only express operator in SEA capable of
processing such significant daily volume, according to Frost & Sullivan. We are also focused
on developing technology so that we can integrate our services with that of our partners. For
example, to facilitate data transfer, we have integrated our application programming interface
(API) with the logistics system of an e-commerce platform of a short video and live streaming
player in Indonesia.
Our global network enables us to best serve the fast-growing cross-border e-commerce retail
markets, connecting marketplaces and merchants to new markets and consumers. Our leading
positions in Southeast Asia and China, combined with our global network, position us to
capture the significant market potential from growing cross-border e-commerce activities and
intra-regional trade. The total cross-border e-commerce retail markets in Southeast Asia and
China by transaction value increased at a CAGR of 23.2% from US$213.8 billion in 2018 to
US$492.2 billion in 2022, and are expected to increase from US$605.2 billion in 2023 to
US$1,257.0 billion in 2027, representing a CAGR of 20.0%, according to Frost & Sullivan.
The rise of the cross-border e-commerce market is expected to drive the growth of the
cross-border logistics market. The global cross-border logistics market is expected to reach
US$680.7 billion in 2027 from US$456.1 billion in 2023 at a CAGR of 10.5%, according to
Frost & Sullivan.
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Scalable regional sponsor model that promotes rapid penetration and growth in new
markets
We operate a highly scalable regional sponsor model based on the local networks that we lead
with the support of our regional sponsors. Under the leadership of our country headquarters,
critical parts of our network, including sorting centers, line-haul and sometimes first-mile
pickup and last-mile delivery, are operated by our regional sponsors through regional operating
entities. Through years of collaborating with regional sponsors and successfully expanding
throughout Asia, we have amassed deep institutional knowledge with respect to effective
management of regional sponsors and network partners. The regional sponsors maintain
long-term cooperation with us to grow and share successes in the local markets, and we provide
institutional support for regional sponsors as they seek to expand to new locations
internationally. We leverage our accumulated insights and experience in order to expand into
new geographic markets along with our regional sponsors.
Our business model allows us to maintain effective management over our network. At the same
time, our regional sponsors, who are our culture carriers, can make decisions that promote the
growth and success of the business based on their local knowledge and business experience in
their respective regions without unnecessary administrative hurdles. By collaborating with
regional sponsors, we have been able to leverage regional sponsors’ resources and experience
to expand our network, reach markets that historically had limited express delivery
alternatives, and establish operations rapidly and efficiently, while striving to reduce capital
expenditures. Benefiting from the local knowledge and experience of our regional sponsors, we
are able to provide consistent services to our direct and end customers. In addition, our regional
sponsors help us monitor and manage the network partners, implement our technologies and
maintain service standards across the pickup and delivery outlets operated by our network
partners, ensuring sustainable growth of the network partners. Through this adaptive business
model, we have been able to reduce our unit costs, improve operating leverage, and achieve
market-leading positions in Southeast Asia. In China, the largest express delivery market in the
world in 2022, we are able to compete effectively with long-established players. Our success
in Southeast Asia and China demonstrates the strengths of our business model, including our
execution capabilities and resilience against competition from established players. Capitalizing
on our seamless collaboration with regional sponsors, we have rapidly scaled our local express
delivery networks in countries that we entered into in 2022, laying a solid foundation for our
future expansion and success in these markets.
Adaptive technology system and continued focus on innovation to empower global
operations
We tackled challenges unique to each market at different stages of operations with technology
and innovation. Since our inception, we have been committed to building integrated technology
infrastructure that can empower our global operations. We designed our JMS system, a
universal technology framework that encompasses a broad range of critical functions. Through
the JMS system, we are able to build and continually upgrade the address digitalization system
in each market, allocate transportation and network resources, track and monitor the full
lifecycle of parcels, ensure quality customer services, manage complex finance processes, and
provide regional sponsors and network partners with easy-to-use, reliable tools to manage local
operations. The JMS system is also highly flexible and adaptive, allowing us to localize the
operating system and launch operations in new markets in a frictionless, expedited way. For
example, we were generally able to complete the set-up of a customized JMS system and
related IT infrastructure and expedite pre-operation preparation in the New Markets within
three months of preparation.
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Apart from being digital native, we also continue to innovate critical aspects of our business
and stay ahead of our local peers. For example, we pioneered the digitalization and
management of addresses in Southeast Asia with our proprietary address digitalization
platform, which differentiated us from our peers who conventionally based their address
digitalization systems primarily on third-party address databases. Our self-developed, self-
maintained address database, as well as our nine-digit code address system built upon this
database, ensures uninterrupted, consistent technology support for operations in Southeast
Asia. According to Frost & Sullivan, we were the only express delivery service provider at
scale that applied its nine-digit code technology with a proprietary address database in
Southeast Asia as of December 31, 2022. Similarly in China, we first developed our own
address digitalization system to cater to our unique, dynamic expansion activities when we first
entered into the market. After establishing our operations and network, we continued to
innovate and upgrade our address digitalization system, which now employs an advanced
address mapping algorithm to standardize, categorize and format the massive volume of
address inputs into structured data with auto-correct, auto-fill, auto-associate, and auto-cleanse
functions. The upgraded system improves delivery efficiency and accuracy even if the delivery
addresses are partially incorrect or inconsistent in format, which we believe is instrumental to
e-commerce players targeting remote areas. According to Frost & Sullivan, the J&T
four-segment code system is one of the few advanced systems that integrate and consolidate the
major capabilities of the mainstream address digitalization algorithms in China.
Our innovation and technology capabilities are backed by a strong team of research and
development personnel. As of June 30, 2023, we had a research and development team of 1,658
personnel across the globe. Our global R&D expenses have been growing at a CAGR of 77%
from 2020 to 2022.
Quality services catering to regional customer and market needs
We provide quality services that cater to regional customer and market needs. Together with
our regional sponsors and network partners, we strive to provide consistent and superior
service to our direct and end customers. We actively manage and optimize our network density
to ensure our capacity during seasonal shopping events and holidays, and bring efficiency
improvements to our customers with reduced delivery time and higher fulfillment accuracy. We
have established and streamlined our operations, policies and processes to standardize and
control service quality throughout our network. We have standardized, unified and streamlined
our customer service protocols and criteria across Southeast Asia, aiming to provide consistent,
reliable, quality shipping experience to consumers and customers. For example, we have
provided express delivery services with features such as 365-day operation and 24-hour
customer service in Indonesia and Malaysia, according to Frost & Sullivan.
We also offer ancillary services based on local market demands. For example, we provide the
broadest coverage of cash-on-delivery services in Southeast Asia, which allows our
e-commerce platform customers to reach a greater range of consumers, according to Frost &
Sullivan. This addresses challenges faced by e-commerce platforms which operate in markets
with many online shoppers who may not have access to digital payment services.
We monitor a series of key service quality indicators such as lost parcel rate and complaint rate
and have improved each of these rates over the years. In China, based on figures reported by
the State Post Bureau of the PRC, we achieved a lost parcel rate of 0.23 per million parcels,
a complaint rate of 0.58 per million parcels and an effective complaint rate of 0.015 per million
parcels in the six months ended June 30, 2023, compared to industry averages of 1.90, 6.68 and
1.83 per million parcels, respectively, in the six months ended June 30, 2023.
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Entrepreneurial and experienced management team and regional sponsors dedicated to
cultivating leaders and promoting development of our network
Our founder, Mr. Jet Jie Li, a serial entrepreneur with over 20 years of sales and entrepreneurial
experience, is supported by a professional management bench and an extensive regional
sponsor group. Our regional sponsors also collectively form a pool of deep entrepreneurial and
industry experience, bringing local knowledge to our business and helping us execute our
regional strategies. Bringing diverse perspectives and an international outlook, our regional
sponsors work with our management team to implement key strategic initiatives in our regions
of operations and help us manage our vast delivery network.
Our management team is dedicated to investing in our employees and promoting leaders. We
continue to invest in training and skills development to promote our culture and develop
leaders with in-depth knowledge of us, the industry, technology and local market needs. We
also hire highly qualified personnel into our country-level management teams, who are
responsible for day-to-day operations in each of our regions of operations. We believe our
experienced and entrepreneurial management team, our dynamic team of regional sponsors and
our vibrant entrepreneurial culture have contributed to and will continue to contribute to the
growth of our operations and our success in replicating our business model in other markets.
OUR STRATEGIES
Solidify our leading position and continue to grow our market share
We have built a global network and achieved a leading market share by parcel volume in
multiple countries where we operate. We intend to solidify our leading position in these
markets as well as establish leadership positions in the new markets which we have recently
entered into with our regional sponsors to grow our scale of operations. We will continue to
deepen our relationships with e-commerce partners locally and globally, tap into other markets
with them, explore new ways of collaboration, connect with more merchants across regions,
and grow our market share. We will also expand the coverage of our global network and
enhance cross-border connectivity by capitalizing our experience in localizing our express
delivery services, navigating different linguistic, cultural and operational environments and
managing a complex, global network. In particular, we intend to replicate our operational
excellence to the New Markets and stay ahead of the competition.
We intend to invest more deeply in our brand and improve service quality. We will continue
to offer premier services tailored to the diversified demands and requirements of our end
customers. We also will continue to upgrade our customer service, enhance our technology
system, and strengthen management of regional sponsors and training of network partners to
maintain service quality, improve brand image and earn our customers’ trust and business. We
believe our continuing quality growth at scale will drive stronger unit economics and
economies of scale in the future.
Expand our capacity while enhancing the efficiency and connectivity of our logistics
network
We will continue to expand the capacity of our logistics network in a selective, prudent and
capital-efficient manner. We plan to strategically select sites for our new sorting centers and
optimize density of our pickup and delivery outlets to deepen geographical coverage based on
end customer demands. In addition, we expect to continue upgrading sorting machinery and
investing in technology that will further improve the accuracy and efficiency of our sorting
centers. Having obtained success in Southeast Asia and China, we seek to skip the
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trial-and-error process in other emerging markets and apply our industry insights, advanced
machinery and equipment, and operational know-how that are readily accessible to us.
Meanwhile, we will continue to expand our line-haul network, upgrade our fleets, and diversify
means of transportation in accordance with local demands in each market. Through our unique
business model, our regional sponsors will be incentivized to help us manage our facilities
including line-haul vehicles and sorting centers, recruit and manage network partners, and help
expand our network capacity to create a network that is resilient to peak volumes. In addition,
we will continue to help our network partners grow their business and optimize their
operations.
As we further develop each local network, we are also well positioned to facilitate global and
local expansion of our e-commerce partners by helping them reach more customers in each
local market and offering consistent, reliable services across the globe. For example, we will
continue to capture the opportunity to collaborate with global e-commerce players and go to
the markets in which they intend to start operations, becoming their anchor express delivery
service provider and quickly growing our local networks. In addition, taking advantage of our
local network capacity, we will be able to further develop our cross-border services and offer
consumers, merchants and e-commerce partners a diversified portfolio of service offerings.
Expand into new markets and new service offerings
We seek to provide integrated logistics services to our customers globally. We believe there are
significant opportunities in emerging economies, where prospective e-commerce market
growth is expected to be high and e-commerce penetration remains low. For each future market
we intend to enter into, we will also take into consideration the local e-commerce penetration
and development stage of the economy. We will continue to seek collaboration with
e-commerce partners who intend to penetrate these markets and establish themselves in these
markets. We also intend to further diversify our service offerings and provide one-stop logistics
solutions to consumers covering storage, inventory management, parcel delivery and
warehousing. To support our key strategic partnerships, we have expanded into select growth
markets including Saudi Arabia, UAE, Mexico, Brazil and Egypt. In July 2023, we achieved
a daily peak volume of over 1,100,000 parcels in Brazil. According to Frost & Sullivan, we are
the fastest to achieve such level of parcel volume among our major local peers in Brazil. We
plan to continue replicating our success in Southeast Asia and China in carefully selected
markets, by partnering with our regional sponsors and network partners to quickly establish a
strong network in these new markets to serve a broad customer base.
We will leverage our existing infrastructure and network capacity to develop and expand our
services throughout the entire logistics value chain. We will continue expanding our
cross-border services by connecting with more destination logistics centers, domestic
warehouses and last-mile capacity. In addition, we have recently developed a variety of service
offerings such as reverse logistics and supply chain solutions and will continue to introduce
new service offerings to provide more comprehensive services to our customers. We also
expect to expand and diversify our customer base and acquire more non-e-commerce parcels
to enhance the mix of our parcel volume and broaden our market reach.
Invest in innovation, technology and environmental sustainability
We strive to continually apply technologies across all aspects of our business. We plan to
develop and apply our self-developed JMS system in all the markets we operate in. We seek
to develop and upgrade key functions within the JMS system to empower each stage of our
business processes. For example, we will continue our research and development in our address
digitalization system to improve accuracy and efficiency of the delivery process. We seek to
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continually optimize our address digitalization algorithms and adopt the most suitable address
digitalization system in each market based on local market needs. We will also further develop
our global data management platform to centrally manage data from every aspect of our
operations and from each market, analyze and visualize the data to facilitate management
review, perform effective projections on delivery demand, resource allocation and
transportation route planning, and empower operations with functions including alerts on
anomalies such as lost parcels or missed pickups, among others. We will constantly follow the
latest technology trends in the industry and keep our technologies and systems updated. For
example, we plan to implement more AI-powered customer support to reduce waiting time and
improve end customer experience.
We will also continue to invest in automation technologies to streamline operations, optimize
transportation and labor costs, increase operational efficiency and reduce unit cost. In
particular, we will increase the utilization of digitalized packaging identification such as RFID
to be compatible with our increasingly automated operations in an eco-friendly, sustainable
way. We also intend to invest in smart management systems to monitor and optimize our energy
and water usage. We are also committed to researching and upgrading software that is equipped
with hardware to maximize the utility of the sorting equipment, reduce human errors and labor
costs involved and ultimately increase operational efficiency. Leveraging our existing data
analysis technologies, we intend to further enhance our route planning, address digitalization
and parcel volume prediction capabilities by exploring AI-based functions.
V ALUE PROPOSITIONS TO OUR PARTICIPANTS
Value Propositions to Consumers and Customers
 Connectivity . Growing alongside significant e-commerce markets, we have built an
extensive network, particularly in regions historically underserved by logistics providers.
We believe we have helped promote regional and cross-regional connectivity in the
Southeast Asian markets, allowing consumers to connect globally to a broader world of
merchandise to enjoy door-to-door shipping services through our network.
 Reliability and Service Quality . We strive to deliver a reliable, high-quality shipping
experience with 365-day service. We provide consistent, quality customer care to end
customers globally. We monitor a series of key service quality indicators to ensure, among
other things, timely delivery and responsiveness to inquiries.
 Transparency and Cost-efficiency . We offer competitive delivery fees and price
transparency upfront so that consumers can make informed decisions about the cost of
delivery. We also provide real-time updates on delivery status to senders and receivers of
packages.
 Ease of Use . We have developed multiple ordering interfaces to cater to the diverse needs
of customers. Customers can access our services from website, mobile applications, call
center and social media applications anywhere and anytime.
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Value Propositions to E-commerce Platforms and Merchants
 Consumer Reach . Our broad regional and cross-regional network gives e-commerce
platforms and their merchants greater reach to consumers beyond saturated markets in
first- and second-tier cities as well as international consumers. We offer the broadest
coverage of COD services in Southeast Asia, which allows e-commerce platforms and
merchants to serve a broader range of consumers for whom online payments may not be
an option.
 Stable and Scalable Service . Leveraging our integrated network that seamlessly
connects us with our regional sponsors and network partners, we are able to handle
periodic surges in volumes requiring significant capacity. We can scale with e-commerce
and social e-commerce platforms as they grow in different regions.
 Resources for Operation Management . We provide a centralized technology platform to
merchants on e-commerce platforms, helping them track packages in real time, manage
inventory and better understand their business operations. Our system is easy to deploy
and integrate with existing infrastructure via APIs, reducing the need for navigating
disparate systems for order management and shipping. For certain merchants not
affiliated with any e-commerce platforms and hence lack basic technology infrastructure,
they can conveniently access our system via Independent Software V endors (ISVs) to
place delivery orders, enabling them to grow their business. According to Frost &
Sullivan, we are one of the first express delivery operators in Southeast Asia to provide
online logistics solutions to enterprise customers.
Value Propositions to Network Partners and Local Communities
 Earnings Potential and Economic Stimulus . Network partners gain access to the sheer
volume of packages delivered through our network as well as exposure to the largest
e-commerce platforms and global opportunities. We also diversify the revenue sources of
local communities by offering positions in our sorting centers, engaging pickup and
delivery personnel and collaborating with local small enterprises, convenience stores and
grocery stores to establish service stations.
 Empowerment and Inspiration . We empower our network partners with our technology
solutions, such as our digital address libraries, data management system and proprietary
waybill system, to improve their operational efficiency. We also provide our network
partners with applications that provide digital settlement solutions and manage cash flow
for delivery personnel. We also hold trainings, conferences and seminars, and sponsor
local entrepreneurial events to help inspire business ideas.
 Support during Challenging Times . We are capable of supporting local communities
during challenging times. Throughout the COVID-19 pandemic we have donated
hundreds of thousands of medical supplies and care packages throughout our regions of
operations. In 2022, we partnered with YDSF Malang to participate in the construction of
local residences after the eruption of volcano Semeru in Indonesia.
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OUR REGIONAL SPONSOR MODEL
We pioneered a highly scalable regional sponsor model, and we are currently the only player
in Southeast Asia and China that has successfully adopted this model at scale, according to
Frost & Sullivan. We started in Indonesia and have since expanded our network using this
model into several other markets in Southeast Asia and China as well as Saudi Arabia, UAE,
Mexico, Brazil and Egypt, serving a geographically dispersed base of merchants and
consumers across multiple regions and enabling the growth of e-commerce.
The diagram below illustrates our regional sponsor model:
Directly Operated Outlets
and Service Stations
¾ Regional operating entities
own pick-up and delivery
outlets and service stations
Network Partners
¾ Network partners own
and operate pick-up and
delivery outlets and service
stations
Country Headquarters
• Formulate the overall operational
strategy and execution plans
Regional Sponsors
• Entrepreneurial in nature and the culture carriers
• Local and regional knowledge and business experience
• Alignment of interests including holding equity interests in
headquarters and/or regional operating entities
Strengths of Regional Sponsor Model
/checkbldMaintain long-term cooperation with
regional sponsors to share successes
with various incentive arrangements
based on performanceAligned Interest
and Culture
/checkbldAble to adjust local operations
according to the optimal approach
in each market and successfully
replicated this model in multiple
jurisdictionsHighly Flexible
and Adaptive
/checkbldOvercome multiple operational
challenges specific to each market
together with our global integrated
technology system and enhance
customization of services
Strong
Operational
Control
/checkbldReduce unit costs and increase
operating leverage without the need
to invest a substantial amount of
capital
Lower Cost
and Capital
Requirement
In each geography, our local delivery networks comprise critical facilities including sorting
centers and line haul, as well as our pickup and delivery outlets and service stations. Local
pickup and delivery outlets are typically managed either by our network partners or directly by
regional sponsors through regional operating entities. Service stations are physical presences
such as small retail stores operated by third-party small enterprises or individuals, which
typically have more limited functions and service scope compared to outlets.
As of June 30, 2023, we adopted the regional sponsor model in each of our countries of
operations with the exception of Cambodia and Singapore (where we operate the network
directly without regional sponsors). In countries where a regional sponsor model is adopted,
the proportions of outlets and service stations that are operated by network partners and those
that are directly operated by regional sponsors via regional operating entities vary based on
local circumstances. We actively monitor and adjust the mix of directly operated outlets and
network partner outlets in accordance with local performance and expansion progress in these
countries.
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Advantages and Innovations of Our Business Model
Our business model is highly scalable, allowing us to leverage the resources of regional
sponsors and network partners to achieve rapid expansion and deep penetration of our network.
Compared with traditional business models for express delivery services (i.e., the network
partner model and the direct operation model), we believe our business model is able to better
overcome the operational challenges during expansion.
Under a regional sponsor model, an express delivery operator relies on and partners with
regional sponsors to expand and operate its network. We may operate with or without network
partners in a region. If we and the relevant regional sponsor decide to engage network partners,
regional sponsors would be responsible for identifying, attracting and managing network
partners. In contrast, under a traditional network partners model, an express delivery operator
predominantly expands the network via network partners, such express delivery operator
directly manages these network partners, and network partners are their most important
business partners.
Additionally, the relationship between regional sponsors and the express delivery operator is
closer and more binding than that between the thousands of network partners and express
delivery companies using the network partner model, because regional sponsors are
fundamentally different from network partners due to their investment into the network, scope
of responsibility and alignment of interest. The regional sponsor model is only similar to the
traditional network partner model when the operator under the regional sponsor model engages
network partners for similar obligations (i.e., first-mile pickup and last-mile delivery) as under
the network partner model. Regional sponsors manage the overall operations (e.g., customer
acquisition, marketing, customer service, training of network partners) within a much larger
designated region. Network partners perform much more limited roles and obligations of
first-mile pickup and last-mile delivery in a more limited area.
For details of comparisons between network partner, or the franchise model, and the regional
sponsor model, please see “Industry Overview – Express Delivery Business Models –
Differences between express delivery models.”
Our business model provides us with the following unique features that set us apart:
 Operational efficiency . We lead a pool of regional sponsors. We draw on the expertise of
regional sponsors to manage the network, while providing them with systematic and
reliable support. Regional sponsors usually invest their own capital and resources to help
the country headquarters expand the network and develop new network partners. Our
regional sponsors help local management team in each country supervise daily
performance of their respective regions and optimize the operations consistently.
We value regional sponsors who are entrepreneurial with forward-leaning spirit and
diverse backgrounds, and we have a review system that factor in regional sponsors’
contributions and investments, while balancing the dynamic process of our expansion. We
provide operational and technological support to regional sponsors by leveraging our JMS
system and our resources. We listen to and collect feedback from regional sponsors on
local operations, and we, together with our regional sponsors, design solutions to cope
with operational challenges in each market.
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 Flexibility and expansiveness . Express delivery operators under the network partner
model face difficulties in locating a sufficient number of qualified network partners to
help build their network, while direct operation companies typically must invest a
substantial amount of capital in a short time to achieve adequate coverage of their
services. Leveraging our unique business model, we are not limited by the vast
differences in local operating environments across regions, as we and our regional
sponsors can decide on the optimal approach to establish local operations, including using
a mix of network partner and full direct-operation models. In some regions, regional
sponsors may also establish unconsolidated regional operating entities supported by our
critical network infrastructure and technological capabilities. As our network expands, we
and the regional sponsors adjust local operations to adapt to the evolving market demands
to maintain our sustainable growth.
 Deep insights and strong control in local operations . Our regional sponsors form the
foundation of our local operations. Our regional sponsors are knowledgeable of local
markets and aware of acute changes in their regions. Our regional sponsors also help us
manage our network partners. Regional sponsors are able to quickly respond to needs of
network partners, as well as our end customers, handle complaints, adjust pricing based
on local circumstances, and provide rewards or penalties for network partners and outlets,
among others. Through our regional sponsors, we gather first-hand feedback, design
strategies and solutions, and maintain operational excellence when launching and scaling
our network and service offerings.
 Bonding with regional sponsors . Our interests are highly aligned with those of our
regional sponsors, which incentivizes them to take ownership in local operations, tailor
and execute our overall strategies and help achieve growth. We incentivize, supervise and
provide institutional support to regional sponsors, continually building and strengthening
our bonding with regional sponsors. We supervise regional sponsors’ work and review
their performance on a regular basis with certain KPIs set by us, and we may choose to
optimize the regional sponsor team.
As a testament to our unique, effective business model, we have achieved leading positions
across Southeast Asia and China through the regional sponsor model. In Southeast Asia and
China, where other established players have been building their network, and investing in
technology and accumulating resources in the past decade, we have established ourselves as a
major player in these highly competitive markets by partnering with regional sponsors with
local expertise and financial strengths. We entered into the China market in March 2020 and
we are the youngest among the scaled and established players – one of the very few newcomers
that successfully took a sizable share of the market from major players, according to Frost &
Sullivan. We achieved a milestone of 50 million daily parcel volume within three years, which
was the shortest period of time needed among our peers in the China market to achieve the
same scale.
In 2022, we expanded into Saudi Arabia, UAE, Mexico, Brazil and Egypt. Each of these
countries presented unique operational challenges ranging from under-developed
infrastructure, limited connectivity in certain areas, political instability to complex regulatory
regimes. Drawing on the efforts of our regional sponsors, we quickly completed market
research, navigated local environment, and formulated our operation strategies including
transportation and route planning, construction of critical network infrastructure and setup of
pickup and delivery outlets, allowing us to reach efficient scale and achieve geographic
coverage of over 90% in these countries as of June 30, 2023. We leverage our proprietary JMS
system, the backbone of our operations, to achieve efficient growth and expansion. In the New
Markets, we were generally able to set up and launch our JMS system within three months,
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which allows us to build localized operations and provides indispensable support to regional
sponsors to efficiently execute our growth strategies. In particular, in July 2023, we achieved
a daily peak volume of over 1,100,000 parcels in Brazil. According to Frost & Sullivan, we are
the fastest to achieve such level of parcel volume among our major local peers in Brazil. In
those countries, where the e-commerce markets are significant but the express delivery markets
are highly fragmented, we are well positioned to expand in and penetrate these markets by
leveraging our regional sponsor model.
Partnership with Regional Sponsors
The strengths and uniqueness of our business model stem from the fact that we partner with
regional sponsors that assist us in operating local delivery networks in designated geographies.
Regional sponsors are individuals authorized by our Company to assist in operating local
delivery networks in their respective designated geographic regions. Under the leadership of
our country headquarters, critical parts of our network, including sorting centers and line-haul,
are operated by regional operating entities, most of which are subsidiaries or consolidated
affiliated entities within our Group. We constantly evaluate the performance of our regional
sponsors and optimize the portfolio of our regional sponsors.
Commercial arrangements among us and regional sponsors vary across regions. We align the
interests of our regional sponsors, including allowing for holdings of equity interests in the
relevant operating entities and/or the country headquarters. When we enter into a new market,
we may choose to establish our regional operating entities with regional sponsors, who may
become minority shareholders in the country headquarters or regional operating entities while
we beneficially own the majority interests. Some regional sponsors may also own all the
interests in the relevant regional operating entities if it is feasible under local laws and
regulations. We refer to such entities as unconsolidated regional operating entities. See “–
Consolidation of Certain Regional Operating Entities” in this section for more details.
The table below sets forth the number of jurisdictions under different models of operations as
of the dates indicated:
As of December 31, As of June 30,
2020 2021 2022 2023
Countries with
regional sponsors
– without
unconsolidated
regional operating
entities
(1)
Vietnam, Malaysia,
the Philippines,
China
Indonesia, Vietnam,
Malaysia, the
Philippines,
Thailand, China
Indonesia, Vietnam, Malaysia,
the Philippines, Thailand, China,
Saudi Arabia, UAE, Brazil, Egypt
(4)
– with
unconsolidated
regional operating
entities
(2)
Indonesia, Thailand N/A (5) Mexico
Countries without
regional
sponsors
(3)
Singapore,
Cambodia
Singapore,
Cambodia
Singapore, Cambodia
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Notes:
(1) We did not adopt unconsolidated regional operating entities in jurisdictions where such arrangement is not
practicable or feasible under local laws and regulations when we first entered into market. For example, in
China, for an express delivery service provider to obtain a cross-provincial courier permit, it is required to set
up subsidiaries or branches capable of performing express delivery services in each relevant region (i.e., the
entity that covers operations in each region/province must be a subsidiary or a branch of ours, instead of an
independent third party). Therefore, when we first entered into the China market, we set up various regional
operating entities with regional sponsors, who were and still are minority shareholders in such Group entities.
During the Track Record Period, we acquired certain unconsolidated regional operating entities. See “–
Consolidation of Certain Regional Operating Entities” in this section.
(2) In Indonesia and Thailand, where it is practical for each regional sponsor to obtain new express delivery
licenses under local laws and regulations, regional sponsors set up multiple unconsolidated regional operating
entities, each with its own express delivery license. In 2021, we acquired the unconsolidated regional operating
entities in Indonesia and Thailand from relevant regional sponsors. For more details, see “Financial
Information – Business Combination” and “History and Corporate Structure – Major Acquisitions, Disposals
and Mergers.”
(3) As Singapore and Cambodia are relatively small in terms of geography, we operate in these regions without
involving any regional sponsors.
(4) As of December 31, 2021, we had established operating entities in each of the New Markets in preparation for
our expansion into these markets, but had not officially launched operations in these regions.
The table below sets forth a summary of how the regional sponsor model implemented in each
country (other than Singapore and Cambodia) as of June 30, 2023:
Country Current Regional Sponsor Model Equity Ownership Structure
Indonesia
Thailand
 We currently hold 100% equity interest in the country headquarters and typically hold 70%
equity interests in regional operating entities, while regional sponsors typically hold 30%
equity interests in regional operating entities.
Malaysia
Vietnam
 Regional sponsors held minority interests in the country headquarters at the early stage of
our operations. We subsequently acquired such minority interests and currently hold 100%
equity interests in the country headquarters.
Mexico  We collaborate with an unconsolidated regional operating entity, in which we do not hold
any equity interest.
China  Regional sponsors typically hold 15% equity interests in their respective operating entities,
while we typically hold 85% equity interests in these entities.
The Philippines  Due to requirements under Philippine laws and regulations on foreign investments in effect
when we entered into the market none of our regional sponsors hold any equity interest in
our Philippine operations.
UAE
Saudi Arabia
Egypt
 None of the regional sponsors hold any equity interest in any local entities. However,
regional sponsors provided financial support in the form of loan to local operations.
Brazil  We hold the controlling stake in the country headquarters, while regional sponsors together
hold 19% equity interest in such entity.
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Our aggregate revenues for the Track Record Period from the countries where we operate via
direct operation model (i.e., Singapore and Cambodia) were only approximately 1% of our
aggregate revenues during the Track Record Period. Substantially all of our revenues were
from regional operating entities under our regional sponsor model during the Track Record
Period.
The table below sets forth a movement analysis of unconsolidated regional operating entities,
consolidated regional operating entities and headquarters for the periods indicated:
Year ended December 31,
Six months
ended
June 30,
2020 2021 2022 2023
Number of consolidated regional
operating entities and country
headquarters
Beginning balance /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H110033 48 91 94
(+) Addition /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H110015 43 5 –
(-) Reduction /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100– – (2) –
Ending balance /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H110048 91 94 94
Number of unconsolidated regional
operating entities
(1)
Beginning balance /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H110025 38 – 1
(+) Addition /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H11001 4–1–
(-) Reduction /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100(1) (38) – –
Ending balance /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H11003 8–11
Total number of regional operating
entities
Beginning balance /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H110058 86 91 95
(+) Addition /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H110029 43 6 –
(-) Reduction /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100(1) (38) (2) –
Ending balance /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H110086 91 95 95
Note:
(1) Includes (i) 25 unconsolidated regional operating entities in Indonesia and 13 unconsolidated regional
operating entities in Thailand as of December 31, 2020, and (ii) one unconsolidated regional operating entity
in Mexico as of December 31, 2022 and June 30, 2023. Revenue that we generated from unconsolidated
regional operating entities contributed to 16% and 2%, respectively, of our revenue in 2020 and 2021. After
the acquisitions of the SEA entities, revenue from the only unconsolidated regional operating entity amounted
to approximately 0.1% and 0.3% of our total revenue in 2022 and the six month ended June 30, 2023,
respectively.
Regional sponsors, irrespective of operating through consolidated or unconsolidated regional
operating entities, invest resources into local operations in various forms, including providing
capital to regional operating entities particularly during the ramp-up stage of the network,
leveraging personal connections to navigate local markets, and engaging network partners, who
operate their own pickup and delivery outlets and/or service stations, to expand the network.
When we hold interests in local operations, we typically are the controlling shareholder and
provide financial assistance by way of equity investment and loans. For unconsolidated
regional operating entities in which we do not hold equity interests, we may provide financial
assistance after unconsolidated regional operating entities exhaust their own financial
resources, typically in the form of loan. For details, see “Financial Information – Analysis of
Key Balance Sheet Items – Assets – Other non-current assets.” Subject to local conditions, we
and our regional sponsors may decide to directly operate all pickup and delivery outlets,
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engage network partners or adopt a hybrid model that operates through both network partners
and directly operated outlets in certain regions. The structure of operations and commercial
arrangements between us and our regional sponsors are tailored to cater to the maturity of local
express delivery markets, operational challenges specific to such regions and local laws and
regulations.
Consolidation of Certain Regional Operating Entities
During the ramp-up period when we enter into new markets, certain of the regional operating
entities, which we refer to as our “unconsolidated regional operating entities,” are wholly
owned and operated by a regional sponsor. These unconsolidated regional operating entities
operate exclusively under our “J&T” brand. We enter into cooperation agreements to allow
these unconsolidated regional operating entities to operate under our brand in their respective
jurisdictions, under which regional sponsors are allowed to use our logo, brand names and our
JMS system. See “– Customers” and “– Suppliers” in this section for more details on our
relationship with and measures to manage unconsolidated regional operating entities.
Typically, we design, invest in and direct the construction of sorting centers in these regions,
and designate regional sponsors to execute sorting and transportation processes according to
our requirements and standards. Unconsolidated regional operating entities utilize our network
infrastructure such as sorting centers and line-haul when transferring parcels, and we charge
fees for the use of our infrastructure as well as other operational and system support. Regional
sponsors in charge of such entities also benefit from incentive arrangements for achieving
certain KPIs in their respective markets.
Typically, we seek to acquire from our regional sponsors their interests in these regional
operating entities in exchange for interests in our Company once we determine that such
entities have achieved certain level of business stability in their relevant market. This allows
the regional sponsors to share our success and further align our interests toward long-term
global growth. For example, in 2021, we acquired majority interests in unconsolidated regional
operating entities in Thailand and Indonesia after regional sponsors in Thailand and Indonesia
had set up an effective network in their respective regions, demonstrated a track record of
collaborating with each other, and proved their abilities to fulfill requirements of our
e-commerce partners in the respective regions. We do not maintain any fixed protocol or
quantitative criteria to assess potential acquisitions of unconsolidated regional operating
entities. Instead, we consider a series of factors, including, but not limited to, parcel volume,
end customer relationship, performance of network partners, and operating results, among
others, to assess business stability in a certain market. Prior to the acquisitions of the SEA
entities, the SEA entities were both our customers and our suppliers. We accounted for the
parcel volume they delivered under our brand and we charged network service fees and
delivery services fees from the SEA entities. See “– Customers” in this section and “Financial
Information – Critical Accounting Policies and Estimates – Revenue Recognition – (1) Express
delivery services – (ii) Services provided to unconsolidated operating entities of regional
sponsors.” After we acquired the SEA entities, we consolidated the revenues attributable to and
the costs incurred by the SEA entities such as transportation costs and delivery costs.
Meanwhile, we integrated the customer resources and network of the SEA entities to provide
consistent services to customers and improve their operating efficiencies through integrated
centralized planning of the routes and resources.
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Role of Regional Sponsors
Regional sponsors work with our country headquarters to execute our strategies in the various
markets of operations. Regional sponsors, whether they operate through consolidated or
unconsolidated regional operating entities, play equally critical roles in our business operations
and network expansion, enjoy substantially the same level of discretion, and are subject to the
same KPI standards that we tailor based on local circumstances in each jurisdiction. In areas
where network partners are engaged, regional sponsors identify, engage and manage network
partners through the relevant regional operating entities. In certain locations, regional
operating entities also manage the directly-operated pickup and delivery outlets and service
stations. Typically, there is only one regional sponsor within a designated region. From time
to time, we may designate more than one regional sponsors to jointly manage the same region.
We only consider adopting this strategy in areas with enormous operational challenges,
particularly during the ramp-up and expansion stage, where the collective efforts from regional
sponsors are needed to establish our operations.
The table below set forth a summary of the key functions of our regional sponsors:
Role of Regional Sponsors
Setup and management
of sorting centers and
logistics network
Regional sponsors help execute regional strategies by assisting in
the setup and management of sorting centers, line-hauls and
personnel, among others.
Sales and marketing Regional sponsors conduct regional sales and marketing activities.
In applicable regions, regional sponsors provide assistance,
guidance and training in sales and marketing to network partners.
Setup of outlets Where applicable, regional sponsors are tasked with finding and
leasing space for local delivery outlet operations and hiring staff.
In applicable regions, regional sponsors designate areas of
operations for network partners.
Customer services Regional sponsors help manage customer service enquiries within
the region when needed and provide systematic trainings to
network partners and/or other staff in connection with our business
operations.
KPI and execution In applicable regions, regional sponsors set KPIs for network
partners and supervise their performance and execute rewards and
penalties.
Whether operating through consolidated or unconsolidated regional operating entities, our
regional sponsors operate express delivery services with us on an exclusive basis. As of
December 31, 2020, 2021 and 2022 and June 30, 2023, we had 77, 110, 104 and 104 regional
sponsors, respectively. Except for regional sponsors of unconsolidated regional operating
entities, substantially all of our regional sponsors hold certain positions within our Group as,
among others, employees, consultants, minority shareholders, directors, commissioners and/or
legal representatives of the relevant regional operating entity and/or a group entity. In late
2021, in preparation for our upcoming expansion, we identified and engaged regional sponsors
for the New Markets. In 2022, we adjusted our strategies in countries where we have
established our presence. We restructured our regional sponsor arrangements, adjusted the
re-designated regions for certain regional sponsors and optimized the regional sponsor team
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based on their past performance. Based on their performance, we may choose to optimize the
pool of our regional sponsors. During the Track Record Period, there was no significant change
in or massive termination of our regional sponsors.
Role of Country Headquarters
Our country headquarters implement global strategies set by our senior management. While
regional sponsors carry out granular ground work, our country headquarters, guided and
supported by our senior management and group functional departments, make operational
decisions and take actions considering market conditions, market practices and our partners in
each market. Our country headquarters also measure the progress of our development and are
able to adjust their approach based on local dynamics.
The table below set forth a summary of the key functions of our country headquarters:
Role of Country Headquarters
Network planning Our country headquarters plan for geographic locations of sorting
centers, line-haul routes and optimal network capacity. Our
country headquarters also constantly monitor and adjust our
network density based on network performance and historical
trends of parcel volumes.
Network setup Our country headquarters are typically in charge of procuring
line-haul vehicles, and establishing and constructing major sorting
centers.
Pricing guidelines Our country headquarters set pricing guidelines based on market
demand, seasonality, operational costs, and others.
Technology
infrastructure
Our country headquarters operate, maintain and upgrade the
technology system for daily operations.
Partnership and
customer relations
Our country headquarters leverage resources to develop and
maintain customer relationship and strategic partnerships. Our
country headquarters negotiate commercial terms with these key
stakeholders, and provide centralized, standardized customer care
to them.
KPI and supervision Our country headquarters supervise and provide guidance to
regional sponsors in key aspects of operations. Our country
headquarters set KPIs to regional sponsors and provide regional
sponsors with feedback to enhance their management of local
network partners.
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Identifying Regional Sponsors
Our founder, Mr. Li, through continued success in entrepreneurship in Southeast Asia and
China, has developed relationships with an extensive network of entrepreneurs. These
entrepreneurs typically have been successful in prior business endeavors, have often had prior
experience in logistics management and are familiar with our business model. Capitalizing on
these relationships and Mr. Li’s valuable experience as a serial entrepreneur, as well as the
shared business success and mutual trust developed through previous partnerships with other
entrepreneurs, we are able to identify individuals who are willing to join hands with us and act
as regional sponsors. The selected regional sponsors are individuals with successful business
experience, entrepreneurship and oftentimes strong financial capabilities. They help address
operational challenges specific to each market with our support and are our culture carriers that
embrace our “Ben Fen” ( ͉ʱ) culture. Importantly, our regional sponsors typically have an
international outlook and are willing to build up our network in new geographic locations, not
limited to their country of origin.
In addition to the initial pool of regional sponsors, we may also consider individuals within our
network, such as successful network partners or employees, who demonstrate vision and
leadership, to act as our regional sponsors for our future expansion. Therefore, we have a
self-sustaining pool of potential regional sponsor candidates as we continue to grow our
network.
The standards for selecting regional sponsors and network partners are fundamentally different.
In line with industry practices, when selecting network partners, we typically focus on whether
an individual meets the threshold for capital and resources (i.e., human capital for pick-up and
delivery obligations, access to physical establishment that can function as outlets, and funding
to carry out operations). When selecting regional sponsors, we focus on a wide range of
qualifications that demonstrate an individual’s entrepreneurship, his/her ability to work as a
team player, and his/her ability to bring success in certain region. We focus on their willingness
to take on challenges, initiatives in developing business, management and leadership
capabilities, and whether their values and visions are aligned with us as regional sponsors are
our critical business partners. Regardless of their background, regional sponsors invest capital
in the network and undertake much greater responsibilities and incentives than network
partners.
Our regional sponsors typically do not own express delivery businesses prior to becoming our
regional sponsors. Historically, except for our acquisitions, we built our local network
organically from scratch with our regional sponsors in relevant markets. For regional sponsors
who have demonstrated their ability in running critical operations, we also consider deploying
them to new markets.
Through years of collaborating with regional sponsors and successfully expanding our global
network, we have amassed deep know-how with respect to effective management of regional
sponsors and network partners which can only come with years of experience. Regional
sponsors maintain long-term cooperation with us to grow and share successes in local markets,
and we provide institutional support for regional sponsors as they seek to help us expand local
network and our cross-border operations.
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Incentives to and Evaluation of Regional Sponsors
Regional sponsors typically invest their resources in local operations and, as stakeholders of
local operations, they are incentivized to continually invest when needed, optimize local
operations, and provide trainings to network partners, so as to drive our overall growth.
Regardless of the ownership structure adopted, the regional sponsors will provide financial
support (as equity investment or in other forms) particularly in the ramp-up period. We
compensate and incentivize our regional sponsors through various incentive arrangements that
align the interests and enable efficient growth of the larger group despite complex and diverse
market dynamics across different regions. We evaluate regional sponsors’ performance on a
regular basis with certain KPIs set by our country headquarters. These KPIs include but are not
limited to indicators such as on-time delivery rate, on-time transit rate, on-time package signoff
rate, lost parcel rate, damaged parcel rate and complaint rate that measure their results of
operations and service quality, and are determined based on local market conditions, historical
performance and other factors. In recognition for committing significant capital and taking on
commercial risks associated with establishing a presence in new locations, regional sponsors
are entitled to discretionary awards or bonus in cash. Discretionary awards or bonus to regional
sponsors are determined considering whether these KPIs are completed during certain period.
For any cash incentive, we consider key performance targets such as the results of operations
of the relevant regional operating entity, taking into consideration factors including (i) the
maturity of the local network, including any ramp-up period, and operational difficulties within
an operating region, (ii) the overall KPIs within an operating region, (iii) the parcel volume and
profitability of network partners in the operating region, and (iv) the contribution to the overall
cost-effectiveness of the overall network and cooperation with other regional sponsors in
connection with the optimization of cost structure of the regional operating entities. We may
also, from time to time, optimize the regional sponsor team to drive greater operational
efficiency and to adjust to market dynamics.
Role of Network Partners
Our network partners are typically local logistics companies that operate in a specified region,
operate their own facilities and perform first-mile pickup and/or last-mile delivery.
We consider network partners who signed cooperation agreements with us as part of our
customer group, as our regional operating entities provide parcel sorting and line-haul services
to them and collect fees from them for use of our network. Such network partners also act as
our suppliers when they fulfill last-mile deliveries.
Network partners enter into cooperation agreements, pursuant to which the network partners
are authorized to carry out part of the express delivery business under the “J&T” brand within
a designated geographic region. Typically, network partners enter into cooperation agreements
with regional operating entities that are our subsidiaries or controlled affiliated entities. During
the Track Record Period, we also collaborated with unconsolidated regional operating entities
in Indonesia and Thailand to manage network partners. Network partners in those jurisdictions
typically signed collaboration agreements with these unconsolidated regional operating
entities. These cooperation agreements contained substantially the same terms as our
cooperation agreements with other network partners. Below are some of the key terms of our
cooperation agreements with network partners:
 Fees . Pursuant to our cooperation agreements with network partners, we collect fees from
the network partners for the use of our delivery network. These fees are variable and
based on guidelines, local market conditions and government guidance, where applicable.
We also pay pickup and/or delivery fees to our network partners for the services fulfilled
through their pickup and/or delivery outlets.
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 Business operations . Our cooperation agreements with network partners assign specific
geographic regions of operations for each network partner which vary in size depending
on the capabilities of the network partner and the needs of our network, including
business volume. Our network partners also have access to our proprietary software that
is designed to be used by network partners and their delivery personnel and link them to
our system.
 Pricing . Network partners are free to determine the customer-facing price, taking into
account the service fee collected by the regional operating entity, the network partner’s
own operating costs and our guidance.
 Term. The cooperation agreements with network partners are generally for a term of one
or two years and each network partner may elect to negotiate with us for renewal of the
agreement upon expiration.
 Deposit . Network partners are required to place deposits with us as a performance
guarantee.
 Termination. The cooperation agreements can be terminated upon mutual agreement or by
either party with prior notice after the occurrence of certain events including, but not
limited to, one party’s failure to perform certain contractual obligations.
 Service quality. To ensure the performance and service quality of our network partners,
the cooperation agreements also set out terms such as operation process, service standards
and quality, maintenance and settlement. For example, our regional sponsors oversee the
performance of our network partners, set performance targets and provide them with
training. In practice, we review their key performance indicators through our systems so
that our regional sponsors can help them improve operational performance. If there is a
material violation of our operational standards by network partners, we are entitled to
request such network partners to suspend business and rectify accordingly. We also have
the right to impose monetary penalties according to the policies imposed by the relevant
regional operating entities on our network partners for failure to adhere to the terms of
the agreements.
Detailed terms of cooperation agreements with network partners – including whether an
exclusivity clause exists – vary by jurisdiction to accommodate varying laws, regulations and
market practices. For example, in Thailand and China, network partners also make advance
payments to us, which would be deducted for services we provided to them.
Whether the cooperation agreements contain exclusivity clauses vary from jurisdiction to
jurisdiction based on local practice. During the Track Record Period, we entered into
cooperation agreements with exclusivity clauses with network partners in certain jurisdictions.
In other jurisdictions, the cooperation agreements by and between us and network partners
typically did not contain an exclusivity clause. As of June 30, 2023, less than half of our
network partners operated under cooperations agreements that contain exclusivity clauses.
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In regions where we have network partners, we typically only have one network partner in each
designated area. As of December 31, 2020, 2021 and 2022 and June 30, 2023, we had
approximately 3,800, 13,300, 9,600 and 8,700 network partners, respectively, across the world.
The table below set forth the breakdown of our network partners in Southeast Asia and China:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in thousands)
Southeast Asia .................. 2 . 5 3 . 8 3 . 4 2 . 8
China ........................ 1 . 2 9 . 5 6 . 2 5 . 9
We entered into the New Markets in 2022 and have a very limited history of operating in these
markets. We plan to expand with a prudent “hybrid” model in these markets.
During the Track Record Period, we operated under a “hybrid” model where we relied on
pickup and delivery outlets operated directly by regional operating entities and network
partners in Southeast Asia. Throughout 2020 and 2021, we continued to engage more network
partners in Southeast Asia. In 2022, after we have successfully established a team of network
partners, we further adjusted our network. We strengthened our cooperation with high-quality
network partners, re-organized designated regions, and optimized the network partner team
based on their performances, which resulted in a slight fluctuation in the total number of our
network partners in Southeast Asia.
We entered into the China market in March 2020. Similar to our peers, we predominately
collaborate with network partners to perform the first-mile pickup and last-mile delivery
obligations in China. Our expansion in China throughout 2020 and 2021 thus led to a
significant increase in the number of our network partners from December 31, 2020 to
December 31, 2021. In December 2021, we acquired BEST Express China. The total number
of our network partners as of December 31, 2021 was disproportionately impacted by the
additional network partners from BEST Express China before we completed the integration
process. In 2022, we successfully integrated BEST Express China. As of June 30, 2023, we had
over 5,900 network partners in China, allowing us to effectively cover our pickup and delivery
needs throughout in the China market.
OUR GLOBAL FOOTPRINT
Indonesia
Brazil
Mexico
Singapore
2015
Vietnam
2018
China
2020
The Philippines
2019
Thailand
2019
2020
Cambodia
2019
2022
2022
UAE
2022
Egypt
2022
2018
Malaysia
Saudi Arabia
2022
Note : Labeled according to year of entry into each market.
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Our express delivery operations span 13 countries, covering seven countries across Southeast
Asia, including Indonesia, Vietnam, Malaysia, the Philippines, Thailand, Cambodia and
Singapore, and China, as well as other markets, including Saudi Arabia, UAE, Mexico, Brazil
and Egypt. We first started building our express delivery network in 2015 when we commenced
operations in Indonesia, a large archipelago whose more than 17,000 widespread and often
remote islands present significant operational challenges to logistics service providers. We
entered Vietnam and Malaysia in 2018 and further expanded to the Philippines, Thailand and
Cambodia in 2019 and Singapore in 2020. In March 2020, bringing our experience from
Southeast Asia, we entered into the China market. In 2022, we further tapped into Saudi Arabia,
UAE, Mexico, Brazil and Egypt to replicate our success. We have also quickly achieved a
geographic coverage of over 90% in the New Markets as of June 30, 2023.
Today, our massive global network connects us with local communities, e-commerce platforms
and consumers we serve every day. We now have full network coverage across the seven
Southeast Asia countries and over 98% of all counties and districts in China. For example, in
Indonesia and the Philippines, our express delivery network has achieved the highest network
coverage scores among our major competitors in these two markets according to the consumer
survey conducted by Frost & Sullivan. As of June 30, 2023, our network consisted of
approximately 8,700 network partners, 265 sorting centers and over 8,400 line-haul vehicles,
including more than 4,400 self-owned line-haul vehicles with approximately 3,900 line-haul
routes.
We have achieved leading industry positions in the express delivery markets in Southeast Asia
and China through rapid growth. In addition, our market share increased from 2.5% in 2020 to
10.9% in 2022 in China by parcel volume according to Frost & Sullivan. We are also the first
Asian express delivery operator of scale to have expanded into Saudi Arabia, UAE, Mexico,
Brazil and Egypt, according to Frost & Sullivan, supporting our partners as they expand into
new markets.
We will continue to expand our global network. We believe our expansion will lower our costs
by increasing density in our pickup-and-delivery operations, thereby accelerating our growth.
Our regional hubs and facilities will serve as a gateway for local and international operations,
thereby allowing us to continue to better serve our customers.
OUR SERVICES
Through our network and together with our regional sponsors and network partners, we
primarily provide domestic express delivery services supplemented by other value-added
services across 13 jurisdictions. Our services in each geographic region are customized based
on local needs. For example, in Indonesia we offer J&T Super, our priority service, to deliver
time-sensitive parcels to even the most remote islands in the country. We mainly provide
express deliveries of parcels weighing under 20 kilograms with expected delivery time ranging
from 24 to 72 hours. Leveraging on our first-mile and last-mile capacity, we also provide
cross-border services covering air, sea and land transport, customer clearance and overseas
warehousing solutions to facilitate delivery of goods from one country to another. Through
collaboration with international and local partners, our cross-border services currently cover
Asia, North America, South America, Europe, Africa and Oceania, with a focus in Southeast
Asia.
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Express Delivery Process
The following diagram illustrates the process for the completion of typical domestic express
delivery orders:
Pickup DeliverySorting and Transportation
Through
Network Partners
Through
Direct Operation
Senders Pickup Outlets Destination
Sorting Centers
Recipients
Delivery Outlets
Gross Service Fee
Pickup Fee
Transit Fee
Delivery Fee
1
2
3
Transit
Fee2
3
Gross Service Fee
Pickup Fee
Transit Fee
Delivery Fee
1
2
3
Regional
Sorting Centers
Delivery
Fee
Regional Operating Entities
3 Delivery
Fee
Regional Operating Entities
Regional
Sponsors
Regional
Sponsors
Transportation
Fee in red  J&T’s revenue
Fund Flow
Parcel Flow
Network Partners Network Partners
Step 1 : Parcel Pickup. Senders can request pickup services. Pickup outlets or service stations
in our network arrange for couriers to collect the parcels from the senders once they receive
a delivery order. Alternatively, senders can drop off parcels at our pickup outlets or service
stations that provide first-mile pickup services. The parcels are then collected and sent to the
regional sorting centers. Through each waybill, we assign a unique tracking number and
corresponding barcode to each parcel. The waybills, coupled with our automated systems,
allow customers to track the status of each individual parcel throughout the entire pickup,
sorting and delivery process.
Step 2 : Parcel Sorting and Transportation. Upon receipt of parcels shipped from various pickup
outlets and service stations within its coverage area, the regional sorting center sorts, further
packs and dispatches the parcels to the destination sorting center through line-haul as well as
air and sea transportation services as applicable. A number of outlets in our network are also
capable of high-speed sorting and other centralized functions. Barcodes on each waybill
attached to the parcels are scanned as they go through each sorting center so that we can keep
track of the service progress.
Step 3 : Parcel Delivery. The destination sorting center unloads and sorts the parcels before
sending the parcels to local delivery outlets or service stations in preparation for last-mile
delivery to the recipients via couriers. Once the recipients sign on the waybill to confirm
receipt, a full service cycle is completed and the settlement of the delivery service fee promptly
ensues on our network payment settlement system. During the ramp-up period, we may also
engage third party service providers to fulfill delivery obligations in certain areas before our
local network reaches efficient scale.
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Cross-border Service Process
In order to meet the strong demand for cross-border e-commerce transactions, we currently
provide cross-border services to e-commerce platforms, merchants and consumers through our
own cross-border network. The following diagram illustrates the key components and steps of
our cross-border network:
Country of Origination Country of Destination
Onshore  Corporates/
Freight Owners
Custom
Clearance
(Onshore)
Custom
Clearance
(Offshore)
Offshore
Corporates/Carriers
Pickup
&
Sorting
Cargo  Space
Booking &
Coordination
Shipment
through Carriers
by Air, Sea, etc.
Sorting
&
Delivery
Onshore E-commerce
Sellers/Senders
Onshore
Warehouse
Destination
warehouse
Offshore
Consumers
6 6
1 2 4 5
3 3
Based on our broad cross-border network empowered by both our domestic express delivery
capabilities and partnerships with other commercial partners, we offer the cross-border
services below (each process labeled with its corresponding number in the diagram above):
(i) Cross-border small parcels , which includes (i) a door-to-door express service typically
for e-commerce platforms and merchants covering pickup and sorting in the country of
origin (step 1), custom clearance (step 3), shipment (step 4), all the way to sorting and
delivery in the country of destination (step 5), and (ii) transshipment service for
individual consumers covering consolidating e-commerce parcel in our warehouses (step
6), transshipment (step 4) and delivery in the country of destination (step 5);
(ii) Cross-border freight forwarding , which primarily includes cargo space booking and
coordination (step 2), custom clearance (step 3), and shipment through carriers by air or
sea (step 4); and
(iii) International warehousing solutions , which are integrated warehousing services mostly
for e-commerce platforms and merchants with our self-operated warehouses (step 6).
Our cross-border services are seamlessly integrated with our local logistics network and
infrastructure. For example, in the situation of cross-border parcels, our domestic express
delivery services or our commercial partners within the country of origin will deliver parcels
to the port of origin, after which we will ship the parcels to the port of destination via aircraft
or arrange for stowage on other transport for shipping. Upon arrival at the port of destination,
our local teams will assist with the customs clearance process, after which our domestic
express delivery services or our commercial partners within the country of destination will
complete the parcel delivery to the recipient.
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Service Pricing
Pricing for express delivery services is generally determined based on parcel size and weight,
shipping distance and speed of service. Pricing for cross-border services is based on similar
factors, as well as mode of transport. Such prices are determined dynamically according to
market conditions and standards for each geography, operating costs and network load.
In regions where local outlets are operated by our network partners, the regional operating
entity collects fees from the network partner for the use of our delivery network. Such fees are
based on local market conditions and standards where applicable. The network partner is free
to determine the price charged to the shippers, who are considered our end-customers and
customers of the network partners, under our guidance and market conditions, taking into
account their own operating costs. By giving our network partners latitude in pricing, they are
able to effectively respond to competitive dynamics in their local markets and business volume.
We believe this model leverages our network partners’ entrepreneurship and insights in local
markets, which strengthens our network.
In connection with services we provide to our e-commerce platform partners and corporate
customers, we may also provide certain volume discounts to them.
BUSINESS SUSTAINABILITY
According to Frost & Sullivan, we are the number one express delivery operator in Southeast
Asia by parcel volume in 2021 and 2022, with a market share of 22.5% in 2022, and we are
one of the top players in China with a 10.9% market share by parcel volume for 2022. In 2022,
we further expanded into the New Markets. During the Track Record Period, we incurred gross
losses, operating losses and net operating cash outflows. We expect that we will continue to
record a net loss for our results of operations in 2023.
Our Historical Performance
We originated in Indonesia in 2015 and entered into the China market in 2020. Our Southeast
Asia operations have been generating profits for us during the Track Record Period and are
expected to maintain healthy margin. Compared to the incumbent players with decades of
accumulated experience, we are a late comer to the China market. Since 2020, we have quickly
ramped up our parcel volume through expansion of our collaboration with e-commerce
platforms, competitive pricing and capital expenditure into infrastructures to build up our
logistics network. In December 2021, we acquired BEST Express China and subsequently
completed the integration of its network in 2022. In connection with the transaction, we
experienced certain fluctuation in our service quality as well as market share in China, and we
also identified certain redundancy of assets including sorting centers, equipment, and vehicles,
which led to an increase in our impairment losses. Therefore, we incurred gross loss and
operating loss for our China operations during the Track Record Period. The negative gross
margin was further exacerbated by the “Others” segment, as we further expanded our
cross-border business in 2021 and entered into the New Markets in 2022, both of which are still
in the early stage of development. As of January 1, 2020, we had accumulated losses as a
group, primarily due to our net loss position as of December 31, 2019 resulting from our
expansion into certain new markets in Southeast Asia and preparation activities in relation to
our expansion into China. As a group, we incurred a gross loss and an operating loss for China
and other regions in 2022, which offset the gross profit and operating profit achieved in
Southeast Asia during the Track Record Period. Some of the countries in Southeast Asia
incurred a operating loss due to different operating environments and countrywide strategies
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or focuses during the Track Record Period, but we have achieved a healthy margin in Southeast
Asia as a whole. We also incurred net operating cash outflow for each period during the Track
Record Period for the aforementioned reasons.
The table below sets forth a breakdown of our revenue by geographic segment, in absolute
amount and as a percentage of our total revenue, for the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Southeast
Asia ..... 1,046,504 68.1 2,377,544 49.0 2,381,726 32.7 1,177,929 34.6 1,246,076 30.9
China ...... 478,847 31.2 2,181,368 45.0 4,096,177 56.4 1,960,145 57.6 2,203,070 54.7
Others (1) .... 10,074 0.7 292,888 6.0 789,525 10.9 264,469 7.8 581,293 14.4
Total ...... 1,535,425 100.0 4,851,800 100.0 7,267,428 100.0 3,402,543 100.0 4,030,439 100.0
Note:
(1) Includes revenue from our cross-border services and revenue from express delivery services in other regions.
Our revenue by geographic segment includes revenue from: (i) Southeast Asia, (ii) China, and
(iii) others. We generate substantially all of our revenue from express delivery services in
Southeast Asia and China, while the rest of our revenue is generated from our express delivery
services in the New Markets and our cross-border services. We witnessed a fast growth in our
business operations and financial results during the Track Record Period. Our total revenue
grew from US$1.5 billion in 2020 to US$4.9 billion in 2021, and further to US$7.3 billion in
2022. In addition, our total revenue grew from US$3.4 billion for the six months ended June
30, 2022 to US$4.0 billion for the same period in 2023. Our revenue from Southeast Asia grew
at a CAGR of 50.9% from 2020 to 2022 and increased by 5.8% from US$1,177.9 million for
the six months ended June 30, 2022 to US$1,246.1 million for the same period in 2023. Our
revenue from China grew at a CAGR of 192.5% from 2020 to 2022 and increased by 12.4%
from US$1,960.1 million for the six months ended June 30, 2022 to US$2,203.1 million for the
same period in 2023. As we have been expanding our operations to new markets and enriching
our service offerings, our revenue from the New Markets and cross-border services grew from
US$10.1 million in 2020 to US$292.9 million in 2021, and further grew by approximately
169.6% to US$789.5 million in 2022. Our revenue from the New Markets and cross-border
services increased by 119.8% from US$264.5 million for the six months ended June 30, 2022
to US$581.3 million for the same period in 2023.
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The following table sets forth our gross profit/(loss) and (negative) gross margin by geographic
segment for the periods indicated.
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
Gross
profit/
(loss)
(Negative)
Gross
margin
Gross
profit/
(loss)
(Negative)
Gross
margin
Gross
profit/
(loss)
(Negative)
Gross
margin
Gross
profit/
(loss)
(Negative)
Gross
margin
Gross
profit/
(loss)
(Negative)
Gross
margin
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Southeast Asia ..... 3 1 1,953 29.8 662,131 27.8 476,002 20.0 223,037 18.9 220,118 17.7
China .......... (576,734) (120.4)(1,218,693) (55.9) (664,760) (16.2) (267,879) (13.7) (17,085) (0.8)
Others (1) ........ 3,293 32.7 11,818 4.0 (81,480) (10.3) (21,217) (8.0) (9,493) (1.6)
Total .......... (261,488) (17.0) (544,744) (11.2) (270,238) (3.7) (66,059) (1.9) 193,540 4.8
Note:
(1) Includes revenue from our cross-border services and revenue from domestic express delivery services in the
New Markets.
We had a gross loss of US$261.5 million, US$544.7 million, US$270.2 million and US$66.1
million in the years ended December 31, 2020, 2021 and 2022 and the six months ended June
30, 2022, respectively. In the six months ended June 30, 2023, we had a gross profit of
US$193.5 million. Our negative gross margin narrowed from 17.0% in 2020 to 11.2% in 2021,
and further to 3.7% in 2022, and we recorded a gross profit margin of 4.8% for the six months
ended June 30, 2023, reflecting the improved network effects of our global operation and
economies of scale, and demonstrating a clear trajectory of profitability improvement. Our
gross profit/(loss) and (negative) gross margin performance differs by geographic segment
during the Track Record Period.
 Southeast Asia: We have consistently achieved gross profits in Southeast Asia during the
Track Record Period. We recorded a gross profit of US$312.0 million, US$662.1 million,
US$476.0 million, US$223.0 million and US$220.1 million, and a gross margin of 29.8%,
27.8%, 20.0%, 18.9% and 17.7% in 2020, 2021, 2022 and the six months ended June 30,
2022 and 2023, respectively. The decline in gross margin from 2020 to 2021 was mainly
due to a change of service scope after our acquisitions of unconsolidated regional
operating entities in Indonesia and Thailand in 2021, after which we started to incur
line-haul costs and fulfillment costs previously borne by the then unconsolidated regional
operating entities for delivery orders directly placed with them. The decline in gross
margin from 2021 to 2022, as well as the decline in the six months ended June 30, 2023,
was mainly due to (i) our strategic pricing adjustment for certain e-commerce platform
customers to reinforce our relationship with them, (ii) generally increased costs due to
inflation, and (iii) additional costs in relation to new customer relationship acquisition.
Our businesses in certain countries in Southeast Asia incurred gross losses in different
periods during the Track Record Period, but our businesses in most countries in Southeast
Asia recorded gross profits during the Track Record Period. In Southeast Asia, we
generated a substantial amount of our aggregate revenue for the Track Record Period from
Indonesia, the Philippines, Malaysia and Thailand, which were our top four countries in
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terms of revenue contribution, representing approximately 89.5% of our aggregate
revenues from Southeast Asia during the Track Record Period. The average gross margin
of our operations in the seven Southeast Asian countries, based on country-level
management accounts, was 15%, 14%, 9%, and 9%, respectively, for the year ended
December 31, 2020, 2021, 2022 and the six months ended June 30, 2023.
 China: We incurred gross losses in China during the Track Record Period. We recorded
a gross loss of US$576.7 million, US$1,218.7 million, US$664.8 million, US$267.9
million and US$17.1 million, and a negative gross margin of 120.4%, 55.9%, 16.2%,
13.7% and 0.8% in 2020, 2021, 2022 and for the six months ended June 30, 2022 and
2023, respectively. We have demonstrated significant improvements in our margins from
2020 to 2022 and in the six months ended June 30, 2023. Our historical loss-making
positions in China were primarily attributable to our continued investments in technology
infrastructure, scale and expansion. Capitalizing on such investments, we have grown
rapidly in China since our entry into the market in March 2020, achieving significant
growth in parcel volume and market share during the Track Record Period. In China, we
handled 12,025.6 million parcels in 2022, representing a market share of 10.9% by parcel
volume in 2022. We furthered increased our market share to 11.7% and 12.4% in June and
August 2023, respectively. We were one of the very few newcomers in the industry that
successfully took a sizable share of the market from major players. From the fourth
quarter of 2020 to the fourth quarter of 2022, we were the fastest-growing express
delivery operator in China among major players in terms of parcel volume, as well as the
fastest among our peers in China to achieve a scale of 50 million peak daily parcel
volume, according to Frost & Sullivan.
 Others: For our cross-border services and New Markets operations, we had a gross loss
of US$81.5 million in 2022, compared to gross profits of US$3.3 million and US$11.8
million in 2020 and 2021, as we just started to enter express delivery services in the New
Markets and continued to expand our cross-border services in 2022. We recorded a gross
loss of US$9.5 million for the six months ended June 30, 2023. During the Track Record
Period, each country in the New Markets incurred a gross loss, as our operations in these
markets are still in the ramp-up stage. We expect to continue to selectively invest in our
cross-border operations and ramp up our operations in the New Markets.
Despite our continuous growth in revenue and volume and our narrowing negative gross
margin from 2020 to 2022, we incurred operating losses and net operating cash outflow, mainly
due to (i) the gross loss incurred in our operations in China during the three years ended
December 31, 2022 and (ii) to a much lesser extent, our cross-border and the New Markets
businesses in 2022.
Our Path to Profitability
In the long term, to continue to realize our revenue potential and achieve profitability, we plan
to further (i) grow our parcel volume and market share, (ii) maintain a flexible pricing strategy,
(iii) control costs, narrow gross loss and improve gross margin, and (iv) enhance operating
leverage.
Grow our parcel volume and market share
We focus on growing our parcel volume to solidify our market share and leading market
positions through expanding network coverage, enriching and enhancing our service offerings
and strengthening our relationships with e-commerce partners. We have established a highly
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scalable regional sponsor model based on local networks that we lead with the support of our
regional sponsors in selected geographies. Our growth and profitability depend on the volume
of deliveries we provide to underserved markets.
The table below illustrates the growth in our parcel volume in our regions of operations over
the Track Record Period.
Year ended December 31,
Six months ended
June 30, 2020-2022
CAGR2020 2021 2022 2022 2023
(in millions, except for percentages)
Southeast Asia ..... 1,153.8 2,160.8 2,513.2 1,215.0 1,438.3 47.6%
China .......... 2,083.5 8,334.3 12,025.6 5,602.3 6,445.6 140.2%
New Markets ...... – – 49.1 7.7 83.2 N/A
Our global parcel volume in 2022 was 14.6 billion, representing a CAGR of 112.3% from 3.2
billion in 2020. Our global parcel volume in the six months ended June 30, 2023 was 8.0
billion, increasing by 16.7% from 6.8 billion in the six months ended June 30, 2022.
Leveraging our existing advantages and expanding customer outreach, our parcel volume had
been growing at a rate higher than the industry average during the Track Record Period, and
we believe we will be able to maintain a robust growth of parcel volume in the following 12
to 24 months.
 In Southeast Asia, a majority of our parcels directly came from e-commerce platforms
during the Track Record Period, who have significant influence over the choice of
delivery companies for the goods sold on these platforms. We grew our parcel volume
mainly through (i) rapid ramp-up of our network and operations through the regional
sponsor model and (ii) deepened and expanded relationships with e-commerce platforms.
In addition, we have been expanding our business outreach to corporate customers with
express delivery demand as well as individual customers. In the meantime, we have been
exploring collaboration opportunities with emerging e-commerce platforms, whose
business volumes have been rapidly growing and who need reliable express delivery
partners to fulfill delivery orders. Our parcel volume in Southeast Asia grew at 87.3%
year over year from 2020 to 2021, and further at 16.3% year over year from 2021 to 2022,
representing market share of 16.4%, 22.3% and 22.5% in 2020, 2021 and 2022 by parcel
volume, respectively. Our parcel volume in Southeast Asia increased by 18.4% from
1,215.0 million in the six months ended June 30, 2022 to 1,438.3 million in the six months
ended June 30, 2023. On a quarterly basis, the average daily parcel volume, calculated by
the parcel volume in a given quarter divided by the number of days in such quarter, grew
from 7.3 million in the first quarter of 2023 to 8.5 million in the second quarter of 2023.
 In China, substantially all of our parcels originated from through e-commerce platforms,
whose merchants have decision power over the choice of delivery companies for the
goods sold on the platforms during the Track Record Period. We increased our parcel
volume through (i) continued expansion of partnership with more e-commerce platforms
and therefore more diversified parcel sources, (ii) expanded network of network partners
acquiring a wide range of merchants across China, and (iii) continuously improving
service quality and enhancing brand image which facilitated with our client sourcing
abilities. In 2021, the acquisition of BEST Express China provided us with access to
additional e-commerce platforms which we could not access before, and we also
commenced partnership with social e-commerce platforms such as Douyin and Kuaishou,
both of which diversified our sources of parcels and brought in new growth opportunities
for us. As we expand our relationships with more e-commerce platforms, we are able to
access additional merchants on these platforms. Satisfactory services provided to
merchants and end customers on these platforms could solidify our relationships with
e-commerce platforms, who closely monitor the performance of express delivery partners
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and feedback on our delivery services from their end customers. With our enlarged
network, established infrastructure and flexible pricing strategies, we can further grow
parcel volume and market share in China. Our parcel volume in China grew at 300.0%
year over year from 2020 to 2021, and further at 44.3% year over year from 2021 to 2022,
representing market share of 2.5%, 7.7% and 10.9% in 2020, 2021 and 2022 by parcel
volume, respectively. Our parcel volume in China increased by 15.1% from 5,602.3
million in the six months ended June 30, 2022 to 6,445.6 million in the six months ended
June 30, 2023. On a quarterly basis, the average daily parcel volume, calculated by the
parcel volume in a given quarter divided by the number of days in such quarter, grew from
30.0 million in the first quarter of 2023 to 41.2 million in the second quarter of 2023. In
addition, we achieved a market share of 11.5% by parcel volume in the second quarter of
2023.
 We entered into the New Markets in 2022 and have a very limited history of operating in
these markets. Our parcel volume in these markets was 49.1 million in total in 2022 and
83.2 million for the six months ended June 30, 2023. The average daily parcel volume
grew from 323,200 in the first quarter of 2023 to 594,400 in the second quarter of 2023.
The following charts illustrate the growth in our daily average parcel volume by geographic
regions for the periods indicated.
Southeast Asia Daily Average Parcel
Volume (in millions)
China Daily Average Parcel
Volume (in millions)
2022 2023
3.0
6.5
10.0
6.4
7.3 7.0
8.5
Q1 Q2
2022 2023
3
24
45
28.4 30.0
33.5
41.2
Q1 Q2
New Markets Daily Average Parcel Volume (in thousands)
2022 2023
3.0
311.5
620.0
8.7
323.2
76.0
594.4
Q1 Q2
We will continue to grow our parcel volume and enlarge the scale of our platform, which will
increase utilization rate of our critical facilities, including sorting centers and line-hauls, and
improve the efficiency of our resources.
 In Southeast Asia, we expect to continue increasing our parcel volume and market share
through (i) deeper collaboration with existing e-commerce clients and expanding
partnerships with more e-commerce platforms in the region, (ii) continuously improving
our regional network, our service quality and our ability to retain existing customers and
acquire new customers, and (iii) maintaining our dominant market position to further
capture growth. According to Frost & Sullivan, the express delivery market in Southeast
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Asia is expected to further grow in the next five years, driven by (i) the growing GDP per
capital and consumer purchasing power, (ii) improved transportation and local
infrastructure and payment systems, (iii) the growth of e-commerce platforms, and (iv)
favorable government policies. Leveraging our first-mover advantage and market
leadership as well as our leading infrastructure and network in Southeast Asia, we believe
we are capable of supporting the growing volumes of our e-commerce customers in
Southeast Asia, which allows us to stand out among our competitors. We expect to
maintain our dominant market leadership in Indonesia, Malaysia, the Philippines and
Cambodia, where we were ranked No. 1 by parcel volume in 2022, and grow market share
in Thailand, where we recently upgraded and improved the automation level of our
sorting facilities in order to increase our capacity. Our Directors are of the view that given
the established network, investments in logistics facilities and customer relationships, as
well as cultivation of prospective customer relationships in the regions, it is feasible for
us to achieve our goals. Furthermore, our achieved cost efficiency may also enable us to
maintain flexible pricing and continue to grow our parcel volume so as to grow our
market share.
 In China, we expect to increase our parcel volume and market share through (i) deeper
collaboration with existing e-commerce clients and expanding partnerships with more
e-commerce platforms, (ii) improved and consistent service quality driven by optimized
management of network partners, (iii) diversified sources of parcels from merchants on
a wide range of e-commerce platforms, and (iv) continued efforts in developing non
e-commerce customers to further diversify source of parcels. In addition, due to the
integration with BEST Express China, we encountered business fluctuations which may
have impacted our post-acquisition market share in China during certain time throughout
2022. Such integration was completed in the six months ended June 30, 2022 and we
expect to further release growth potential with an enlarged network going forward.
According to Frost & Sullivan, the express delivery market in China is expected to further
grow, driven by (i) robust demand from e-commerce, (ii) favorable government policies,
(iii) advanced technology applications, (iv) improving infrastructure and facilities, and
(v) emerging cross-border e-commerce and express delivery demand. We have been able
to maintain our growth in market share in China since our entry into the market from 7.7%
in 2021 to 10.9% in 2022. In August 2023, our market share by parcel volume amounted
to 12.4%.
Maintain flexible pricing strategy
During the Track Record Period, we also adjusted pricing of our services based on the
competitive landscape and operations across the markets in which we operated. The table
below illustrates the average revenue per parcel in Southeast Asia and China over the Track
Record Period as a result of our pricing strategy.
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
(US$, per parcel)
Southeast Asia ............ 0.91 1.10 0.95 0.97 0.87
China .................. 0.23 0.26 0.34 0.35 0.34
In Southeast Asia, e-commerce platforms usually purchase delivery services from express
delivery companies in bulk, and we consider pricing strategy along with volume discounts. Our
revenue per parcel in Southeast Asia during the Track Record Period was affected by a mix of
factors, including (i) the impact of foreign exchange rates, (ii) our acquisition and
consolidation of the SEA entities to expand the scope of our services, and (iii) our strategic
pricing adjustment in 2022 to stay competitive in Southeast Asian markets. Leveraging our
dominant market positions, extensive network and established infrastructure in Southeast Asia,
we expect to maintain an adaptive and flexible pricing strategy while growing our parcel
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volume and market share. According to Frost & Sullivan, average revenue per parcel in the
express delivery service industry has been steadily decreasing during the Track Record Period
but the pace of decline is expected to stabilize gradually between 2023 and 2027.
Our revenue per parcel in China increased during the Track Record Period, primarily driven by
(i) the fast establishment and expansion of our network in China since our entry into the market
in 2020, leading to improved bargaining power with network partners, (ii) government policies
and guidance supporting the stabilization of pricing in China during the Track Record Period,
and (iii) our access to additional e-commerce platforms and ability to source high-value parcels
from high-quality customers or merchants. We expect to maintain and improve our pricing
terms, driven by (i) our continued efforts to deepen partnership with various e-commerce
platforms such as Taobao / Tmall, Douyin and Kuaishou, (ii) optimize the management of our
network partners and continuously improve service quality across our network, and (iii)
diversify customer base and acquiring premium enterprise customers through our enhanced
brand image. We expect to maintain a competitive but sustainable average revenue per parcel
in China. According to Frost & Sullivan, the average revenue per parcel in the express delivery
service industry has been steadily decreasing during the Track Record Period but is expected
to stabilize between 2023 and 2027.
In 2022, we expanded into the New Markets. Our average revenue per parcel in the New
Markets was US$1.7 in 2022 and US$1.6 for the six months ended June 30, 2023. As we only
started our operations in the New Markets recently, revenue from these markets was US$81.8
million in 2022 and US$132.8 million for the six months ended June 30, 2023, and only
accounted for 1.1% and 3.3% of our total revenue in the respective period.
Control costs, narrow gross loss and improve gross margin
Cost of revenue
The table below illustrates our cost of revenue breakdown by nature, in absolute amount and
as a percentage of our total cost of revenue, during the Track Record Period. For more details
on the components of our cost of revenue, see “Financial Information – Major Components of
Results of Operations – Cost of Revenue.”
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Fulfillment costs . . . 820,139 45.6 2,385,225 44.2 3,320,187 44.0 1,582,047 45.6 1,790,771 46.7
Line-haul costs . . . 368,172 20.5 1,341,433 24.9 2,221,664 29.5 995,370 28.7 1,137,526 29.6
Staff costs ..... 306,000 17.0 701,196 13.0 645,682 8.6 349,397 10.1 313,364 8.2
Other labor costs . . . 93,149 5.2 308,451 5.7 382,250 5.1 179,712 5.2 206,453 5.4
Depreciation and
amortization .... 82,554 4.6 192,207 3.6 443,466 5.9 219,136 6.3 219,137 5.7
Impairment losses . . – – 250,292 4.6 219,080 2.9 – – – –
Others ....... 126,899 7.1 217,740 4.0 305,337 4.0 142,940 4.1 169,648 4.4
Total ........ 1,796,913 100.0 5,396,544 100.0 7,537,666 100.0 3,468,602 100.0 3,836,899 100.0
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Cost of revenue by segment
The table below illustrates our cost of revenue breakdown by geographical segment, in
absolute amount and as a percentage of our total cost of revenue, during the Track Record
Period:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Southeast Asia .... 734,551 40.9 1,715,413 31.8 1,905,724 25.3 954,892 27.5 1,025,958 26.7
China ........ 1,055,581 58.7 3,400,061 63.0 4,760,937 63.2 2,228,024 64.2 2,220,155 57.9
Others (1) ...... 6,781 0.4 281,070 5.2 871,005 11.5 285,686 8.2 590,786 15.4
Total ........ 1,796,913 100.0 5,396,544 100.0 7,537,666 100.0 3,468,602 100.0 3,836,899 100.0
Note:
(1) Include cost of revenue for our cross-border services and express delivery services in the New Markets.
The table below illustrates the average cost per parcel and its breakdown by express delivery
process in our geographical segment during the Track Record Period:
Average cost per parcel
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
(US$ per parcel)
Southeast Asia ............ 0.64 0.79 0.76 0.79 0.71
Pickup and delivery cost .... 0.39 0.46 0.43 0.44 0.40
Transportation cost ........ 0.15 0.22 0.22 0.23 0.19
Sorting cost ............ 0.08 0.09 0.09 0.11 0.09
Other cost ............. 0.02 0.02 0.02 0.01 0.03
China ................. 0.51 0.41 0.40 0.40 0.34
Delivery cost ............ 0.25 0.21 0.20 0.21 0.20
Transportation cost ........ 0.12 0.08 0.09 0.10 0.08
Sorting cost ............ 0 . 1 1 0.06 0.08 0.09 0.06
Other cost ............. 0.03 0.05 0.03 0.01 0.01
Our average cost per parcel consists of:
 Pickup and delivery cost per parcel. In Southeast Asia, for pickup and delivery cost per
parcel, pickup and delivery costs consist of (i) costs paid to unconsolidated regional
operating entities in 2020 and part of 2021 prior to the acquisitions of the SEA entities,
(ii) staff costs and external labor costs for the delivery personnel, depreciation and
amortization expenses incurred for directly operated outlets, and (iii) pickup and delivery
fees paid to the network partners since we directly contract with e-commerce platforms
who are our customers. In China, pickup and delivery costs mainly consist of delivery
fees paid to network partners.
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 Transportation cost per parcel. Transportation costs include (i) transportation services
costs paid to third-party fleet providers, and (ii) staff costs, fuel costs and tolls, and
depreciation and amortization expenses in relation to our self-operated fleet, as well as air
transportation expenses.
 Sorting cost per parcel. Sorting costs include (i) staff costs, (ii) external labor costs, and
(iii) depreciation and amortization expenses which are mainly depreciation expenses in
relation to sorting equipment and other types of fixed assets, as well as the right-of-use
assets for certain logistics facilities under IFRS 16, namely the lease payments for sorting
centers.
 Other cost per parcel. Other costs include (i) impairment losses for redundant property,
plant and equipment identified after the acquisition and integration of BEST Express
China, which is considered one-off given the size of the integration, and (ii) other
miscellaneous costs including cost of packaging materials, rental costs, utility costs, other
operating costs and maintenance expenses.
Our average cost per parcel in Southeast Asia increased in 2021 due to our acquisition of
certain unconsolidated regional operating entities in Indonesia and Thailand, which changed
our cost structure in Southeast Asia. Before such acquisitions, we generated a meaningful
portion of our revenue from such entities.
 Prior to the acquisitions, we incurred a large portion of costs in these countries for
engaging unconsolidated regional operating entities to perform pickup, sorting,
transportation and delivery, as well as other labor costs, transportation costs, etc. For
parcel orders directly placed with the unconsolidated regional operating entities, they
were responsible for all costs associated with the parcels delivered through our network,
during which we received network service fees from them for the use of our brand,
platform and infrastructure.
 After the acquisition, we consolidated the regional operating entities and accounted their
costs for the delivery of parcels. In addition, we streamlined and standardized our
delivery services and became responsible for the costs associated with the pickup, sorting,
transportation and delivery of all parcels delivered through our network.
In Southeast Asia, we expect our average cost per parcel to decline as we continue to expand
our scale, optimize our operations, increase our self-owned fleet capacity and improve our
technology system. Specifically, we expect to achieve:
 Optimized pick up and delivery cost per parcel. Upon our acquisitions of the SEA entities,
we operated a majority of pickup and delivery outlets directly through regional operating
entities in Southeast Asia, which incurred costs for the first-mile pickup and last-mile
delivery personnel. Therefore, our pickup and delivery cost per parcel increased from
US$0.39 in 2020 to US$0.46 in 2021. In 2022, we started to dynamically adjust the
density and locations of outlets based on local operating environment, such as selectively
engaging network partners who own and operate their own pickup and delivery outlets,
expanding coverage of each outlet operated by network partners, or increasing capacity
of each outlet, which helped us reduce the pickup and delivery cost per parcel to US$0.43
in 2022, and further to US$0.40 in the six months ended June 30, 2023. We will continue
to optimize our pickup and delivery cost structure by engaging network partners to
operate more of our outlets and also increase their operating efficiency.
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 Resilient sorting cost per parcel. In 2021, upon the acquisitions of unconsolidated
regional operating entities, we also integrated sorting centers and relevant staff of such
entities in Indonesia, which caused an increase in our sorting cost per parcel from
US$0.08 in 2020 to US$0.09 in 2021 and 2022. We have been actively enhancing the
efficiency of our sorting staff since 2022, which helped us maintain a sorting cost per
parcel at US$0.09 in the six months ended June 30, 2023. We strive to continuously
increase sorting efficiency in Southeast Asia through consolidating sorting centers,
upgrading automated equipment, and enhancing the efficiency of staff and external labor
at sorting centers.
 Optimization of transportation cost efficiency : We continue to optimize routes connecting
sorting centers, which helped us increase efficiency during the Track Record Period. Our
transportation cost per parcel increased from US$0.15 in 2020 to US$0.22 in 2021,
primarily due to the consolidation of transportation costs previously borne by the
unconsolidated regional operating entities in Indonesia and Thailand. After the
acquisitions of these entities, we were able to integrate resources, allowing us to increase
capacity on every trip and optimize resource allocation between self-operated vehicles
and third-party transportation service providers, which was partially offset by the
inflation in labor and fuel prices in 2022. We have commenced optimizing and adjusting
the coverage of each sorting center in Thailand, Malaysia and Vietnam in late 2022, which
further reduce the number of line-haul trips needed among the sorting centers. Our
transportation cost per parcel remained at US$0.22 in 2022 and declined to US$0.19 in
the six months ended June 30, 2023. We expect to selectively utilize third-party fleets as
we continue to build up our self-operated fleet which has higher efficiency.
Our average cost per parcel in China during the Track Record Period has steadily decreased,
primarily driven by efficiency gains from economies of scale as we rapidly ramp up our parcel
volume, leading to decreases in delivery cost, transportation cost and sorting cost on a per
parcel basis. In 2021 and 2022, our average cost per parcel was also impacted by impairment
losses incurred mainly for the impairment of redundant property, plant and equipment
identified after the acquisition and during the subsequent integration of BEST Express China.
Such impairment was classified under other costs and caused average other costs per parcel in
2021 and 2022 to being comparatively higher at US$0.05 and US$0.03, respectively. We do not
expect to further incur such impairment losses given the integration has been completed.
In China, we expect our average cost per parcel to decline as we continue to achieve better
economies of scale, employ more self-owned fleet and optimize the operating efficiency of our
sorting centers. Specifically, we expect:
 Stabilized delivery costs : After our entry into China in March 2020 and during the initial
ramp-up phase, we compensated our network partners on delivery fees given the parcel
volume was relatively low. Leveraging our rapid increase in parcel volume during the
Track Record Period, we were able to adjust the delivery fees paid to our network
partners, and have achieved a decrease in our average delivery cost per parcel from
US$0.25 in 2020 to US$0.20 in 2022 and the six months ended June 30, 2023. As the
scale and density of our parcel volume further increases, we will be able to further
maintain stable delivery fees paid to network partners.
 Enhancement of transportation cost efficiency : We have been increasing the proportion of
self-owned vehicles in our total fleet during the Track Record Period. By improving the
utilization rate of fleet capacity as our parcel volume ramped up, we were able to decrease
our average transportation cost per parcel from US$0.12 in 2020 to US$0.09 in 2022 and
further to US$0.08 in the six months ended June 30, 2023. In 2022, we experienced a
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slight increase in average transportation cost per parcel due to increases in fuel costs and
line-haul trips as we consolidated additional sorting centers from BEST Express China.
As we enlarge our self-owned fleet, especially in terms of high capacity line-haul vehicles
and optimize transportation routes through better planning and monitoring of an enlarged
network, we expect to increase line-haul efficiency further.
 Higher efficiency of sorting centers : In China, our average sorting cost per parcel mainly
consists of labor costs incurred in relation to internal sorting staff and external labor force
utilized to supplement capacity, as well as depreciation expenses which are mainly lease
payments for sorting centers. Driven by improved capacity utilization of sorting centers
from increases in parcel volume, our average sorting cost per parcel was US$0.11,
US$0.06, US$0.08 and US$0.06 in 2020, 2021, 2022 and the six months ended June 30,
2023, respectively, demonstrating a general downward trend. In 2022, we experienced a
slight increase in average sorting cost per parcel compared to 2021 due to temporary
increase in labor costs and depreciation expense associated with the consolidation of
sorting facilities from BEST Express China. We expect to further enhance the efficiency
of our sorting operations in general with (i) further upgrade of the automated sorting
equipment deployed at the sorting centers, (ii) enhancing management and training of the
employees, (iii) better management of the external labor force, and (iv) continuously
optimizing planning of our sorting center facilities post integration of BEST Express
China.
As we tapped into the New Markets, we incurred certain ramp-up costs in relation to our
preparation activities in these markets. Our cost of revenue for the New Markets was US$100.8
million in 2022 and US$156.2 million for the six months ended June 30, 2023. We expect to
improve our cost per parcel in the New Markets, which was US$2.1 for the year ended
December 31, 2022 and US$1.9 for the six months ended June 30, 2023, after our operations
in these markets stabilize and reach a critical scale.
Investment in infrastructure
We record depreciation and amortization in relation to property, plant and equipment under cost
of revenue as well as lease of logistics facilities (recognized as right-of-use assets under IFRS
16), which represented our continuous investment into the scale of our fixed assets as well as
the network. Depreciation and amortization under cost of revenue has been increasing by
132.8% year over year from US$82.6 million in 2020 to US$192.2 million in 2021, and further
by 130.7% year over year to US$443.5 million in 2022, and remained stable at US$219.1
million and US$219.1 million for the six months ended June 30, 2022 and 2023. Depreciation
and amortization as percentage of revenue was 5.4%, 4.0%, 6.1%, 6.4% and 5.4% in 2020,
2021, 2022 and the six months ended June 30, 2022 and 2023, respectively. China accounted
for the majority of our property, plant and equipment balance during the Track Record Period.
We also incurred increasing capital expenditure during the Track Record Period, of which a
majority was incurred to build our express delivery network in China. With impairment
associated with redundant fixed assets in relation to BEST Express China completed by the end
of 2022 and stable level of capital expenditure planned in Southeast Asia and China, we expect
to maintain stable depreciation and amortization expense as a percentage of revenue.
Gross profit/loss and gross margin
Our negative gross margin was 17.0%, 11.2% and 3.7% in 2020, 2021 and 2022, respectively.
We recorded a gross profit margin of 4.8% for the six months ended June 30, 2023, compared
to a negative gross margin of 1.9% for the same period in 2022, by maintaining resiliency in
our profitability for Southeast Asia and significantly narrowing our gross loss in China. Our
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overall gross loss during each period of the Track Record Period was attributable to the gross
loss in China and, to a much lesser extent, the gross loss in cross-border business and the New
Markets. We achieved a healthy gross margin in Southeast Asia during the Track Record
Period. Based on the measures as discussed above, we expect to narrow our gross loss and
improve our gross margin.
Enhance operating leverage
Our operating expenses mainly consists of selling, general and administrative expenses, and
research and development expenses, with selling, general and administrative expenses
accounting for the majority. The table below illustrates the breakdown of our operating
expenses and operating expenses (excluding share-based payments in relation to equity
transactions, share-based compensation expenses and other share-based compensation
expenses), which are not directly related to our daily operations, as a percentage of our
revenue.
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
As percentage of our revenue (%)
(Unaudited)
Operating expenses (1) ........ 24.7 24.1 15.7 16.1 44.3
Operating expenses (excluding
share-based payments and
expenses)
(2) ............ 12.5 11.4 11.8 8.4 8.9
Notes:
(1) Include impairment of goodwill of US$117.5 million in 2022.
(2) Exclude share-based payments and expenses of US$188.3 million, US$619.0 million, US$281.4 million,
US$260.6 million and US$1,426.9 million in 2020, 2021, 2022 and the six months ended June 30, 2022 and
2023, respectively.
Selling, general and administrative expenses
Our selling, general and administrative expenses primarily consists of (i) staff costs, including
salaries, bonus, other compensation and share-based compensation expenses to our staff, (ii)
share-based payments related to equity transactions, (iii) other share-based compensation
expenses, (iv) office related expenses, (v) professional service fees, including auditor’s
remuneration, listing-related service fees and fees for other consulting services, (vi) promotion
and marketing expenses relating to branding initiatives and advertising activities, (vii)
depreciation and amortization of office equipment and right-of-use assets in relation to the
leases for offices, (viii) one-off impairment of goodwill relating to BEST Express China based
on peers’ performance and general industry trend, and (ix) other selling, general and
administrative expenses. The table below illustrates our selling, general and administrative
expenses, excluding share-based payments in relation to equity transactions, share-based
compensation expenses and other share-based compensation expenses, which are not directly
related to our daily operations, as a percentage of our revenue.
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Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
As percentage of our revenue (%)
(Unaudited)
Selling, general and
administrative expenses (1) .... 23.8 23.3 15.1 15.5 43.9
Selling, general and
administrative expenses
(excluding share-based
payments and expenses)
(2) . . . 11.6 10.8 11.2 7.8 8.5
Notes:
(1) Include impairment of goodwill of US$117.5 million in 2022.
(2) Exclude share-based payments and expenses of US$188.3 million, US$603.7 million, US$281.4 million,
US$260.6 million and US$1,426.9 million in 2020, 2021, 2022 and the six months ended June 30, 2022 and
2023, respectively.
Excluding the impact from share-based payments and expenses notwithstanding the slight
increase in 2022 due to inclusion of one-off impairment of goodwill relating to BEST Express
China our selling, general and administrative expenses as percentage of revenue continuously
decreased from 11.6% in 2020 to 10.8% in 2021, and further to 8.5% for the six months ended
June 30, 2023, as a result of enhanced operating leverage as parcel volume and revenue
increases. We expect our selling, general and administrative expenses as percentage of revenue
to gradually decline as we expect to (i) achieve enhanced economies of scale for staff costs
with increasing global scale of operations, as certain headquarter functions can support our
operations in growth initiatives, and (ii) grow our promotion and marketing expenses at a pace
slower than the growth of revenue, as our past strategic marketing events and activities
enhances brand recognition and increases user mindshare.
Research and development expenses
Our research and development expenses primarily consist of (i) staff costs, including salaries,
bonuses and share-based compensation expenses to our research and development personnel,
(ii) depreciation and amortization of intangible assets, and (iii) others, primarily including
utilities, rent and other expenses necessary to support research and development activities.
Our research and development expenses (excluding share-based compensation payments and
expenses) as percentage of revenue decreased from 0.9% in 2020 to 0.5% in 2021, and remain
relatively stable at 0.6% in 2022, and decreased from 0.6% for the six months ended June 30,
2022 to 0.5% for the six months ended June 30, 2023. While committed to continue to invest
in research and development, we will carefully expand our research and development team and
selectively invest in technology upgrades.
In summary, we had a gross loss, negative adjusted EBITDA (a non-IFRS measure), and
adjusted loss (a non-IFRS measure) in 2020, 2021 and 2022, as we focused on long-term
growth strategies such as enhancing our leading positions in Southeast Asia and China,
growing our market share in core markets, expanding our geographic coverage and logistics
network and investing in technology, talent, customer service and environmental sustainability.
We had a gross profit, positive adjusted EBITDA (a non-IFRS measure) and net operating cash
inflow for the six months ended June 30, 2023, as we remained resilient in maintaining
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profitability in Southeast Asia and have significantly narrowed our loss position in China.
Upon the successful implementation of the aforementioned measures to achieve profitability
and grow our scale, we believe that we are able to pave the way for long-term business
sustainability.
Working capital management policies
To ensure our working capital sufficiency, we maintain a suite of working capital management
policies. We implemented various of procedures and policies, such as working capital
management policy, bank account management policy, overall budget management policy and
investment management policy to screen and standardize the management of working capital
of our Company and the subsidiaries. For example, pursuant to our centralized cash flow
management and forecasting policies, each of our subsidiary is required to submit its rolling
cash-flow budget on a monthly basis and we would calculate cash needs and formulate
appropriate strategies. By analyzing actual-vis-budget figures, we would refine policies or
provide guidance to our subsidiaries as necessary. For accounts receivables management, we
circulate aging report and analyze various metrics, such as aging, customer type and countries,
to monitor the collection of receivables. We have also implemented alert system to prevent any
overdrafts or long-term receivables. With regard to accounts payables management, our
approach involves a detailed analysis of cost items. For example, we scrutinize transportation
costs by examining factors such as capacity, route planning and loading rates. This approach
enables us to improve operational efficiency and enhance our working capital management.
OUR INFRASTRUCTURE
Sorting centers and warehouses
Our sorting centers are connected by the line-haul transportation network that we operate. They
collect parcels from outlets and service stations within their respective coverage area, sort them
according to their destinations and dispatch them to the destination sorting centers. As of June
30, 2023, our express delivery network had 265 sorting centers in operation. The following
map shows our network of sorting centers and warehouses in operation as of June 30, 2023.
Countries where J&T has local operations as of June 30, 2023
Other destination countries for J&T’s cross-border business
Egypt
1 sorting center
China
83 sorting centers
Mexico
15 sorting centers
Brazil
14 sorting centers
UAE
1 sorting center
Saudi Arabia
3 sorting centers
Southeast Asia
148 sorting centers
13 offshore warehouses
United States
1 offshore warehouse
The Netherlands
1 offshore warehouse
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Our centralized planning team coordinates the development of new hubs and the expansion of
existing ones in aspects including site selection, facility layout design and equipment purchase.
We consider adding new sorting centers to our network if they can optimize our routes or
increase our capacity in the surrounding areas. We select sites with convenient access to major
highways to improve efficiency and reduce cost. We design new sorting centers with their
expected growth in mind and build in extra capacity for volume growth in the foreseeable
future. We equip our hubs with sorting and loading equipment that best fits our needs.
We believe that our sorting centers are among the most efficient in the markets where we
operate. We employ automated sorting machines at certain critical high-volume sorting centers
capable of scanning up to approximately 88,000 packages per hour at peak volume, and
intelligent scanning, which feeds data into our tracking system, greatly reduces reliance on
manual labor, lowers operating cost and shortens delivery times. As a testimony of our success,
in 2020, we won the Indonesia Digital Innovation award for our sorting centers in Jakarta,
Indonesia, which allowed us to increase sorting capacity from approximately 180,000 packages
per day to approximately 460,000 packages per day. We are also in the process of building
customized integrated logistics centers, upgrading our sorting centers through a combination of
renovation and self-construction. These customized integrated logistics centers combine
functions of warehouses and sorting centers with other functions including after-sale services.
Designed to optimize storage, sorting and transportation efficiency, these customized logistic
centers are expected to further expand our network capacity and resilience. Our waybill
tracking system monitors the status of parcel movement and enables us to identify centers with
the need for additional investment or resource allocation to increase sorting speed. We continue
to upgrade and optimize operations of our sorting centers and further expand our network
capacities.
When planning routes, we prioritize the efficiency of the entire network over the interest of any
individual regional sponsor or network partner. We dispatch each parcel to the sorting center
closest to its destination even if the sorting center and the destination are located in different
administrative regions. This greatly reduces transportation time and lowers our transportation
cost. Our seamless route planning and management benefit from our experience accumulated
through years of optimization and the support of our information technology infrastructure,
which enables dynamic tracking and monitoring of parcel movement.
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Transportation network
Given that we operate in multiple countries, each with unique local transportation
environments, we have set up a large, diversified and multimodal transportation network
tailored to local market requirements. Our sorting centers were connected by over 1,100 and
over 2,600 well-planned line-haul routes in Southeast Asia and China, respectively, as of June
30, 2023. We utilize a self-owned fleet as well as third-party transportation service providers
to form our line-haul transportation network responsible for the transportation of parcels
between sorting centers. We control the line-haul route planning and vehicle dispatch of our
entire line-haul transportation system. Leveraging our centralized transportation management
system, we plan our routes to achieve lower transportation cost and shortened transit time. Our
fleet consisted of more than 1,270 and 3,100 self-owned line-haul vehicles in Southeast Asia
and China, respectively, as of June 30, 2023.
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We enhance our fleet with a suite of intelligent safety systems aided by multiple cameras which
include collision warning, lane departure, pedestrian detection and automatic reporting of
incidents through photos and video recordings. We also employ in-vehicle cameras to detect
driver fatigue and dangerous driving behaviors and prompt the driver in real time. We have a
centralized team responsible for monitoring conditions of our fleet in real time. We also offer
multiple safety-themed training activities throughout the year covering defensive driving,
weather safety, accident case studies and other topics.
We also contract for air and sea shipping for our cross-border services as well as shipping
across Indonesia and the Philippines. We strategically maintain access to third-party operators
in order to have the flexibility to expand our total fleet during demand peaks in connection with
certain seasonal shopping events.
Pickup and delivery outlets and service stations
As of June 30, 2023, we had more than 18,600 pickup and delivery outlets in our network, of
which over 12,900 pickup and delivery outlets were operated by our network partners and over
5,600 pickup and delivery outlets were operated by our regional operating entities. The table
below set forth a breakdown of our outlets by its primary operator in Southeast Asia and China
as of the dates indicated.
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As of December 31,
As of
June 30,
2020 2021 2022 2023
(in thousands)
Outlets operated by network partners .. 13.7 17.8 15.4 12.9
– Southeast Asia ................. 2 . 5 4 . 3 7 . 0 5 . 1
– China ...................... 1 1 . 2 13.5 8.4 7.8
Directly operated outlets ........... 10.1 8.1 5.6 5.7
– Southeast Asia (1) ............... 9 . 1 7 . 8 5 . 2 4 . 9
– China ...................... 1 . 1 0 . 1 0.02 0.02
Note:
(1) Include approximately 250, 400, 70 and 14 outlets directly operated by us as of December 31, 2020, 2021 and
2022 and June 30, 2023, respectively.
We entered into the New Markets in 2022 and had a very limited history of operating in these
countries. As of June 30, 2023, we had approximately 800 outlets in the New Markets and we
did not have any network partners in these countries. We are exploring a “hybrid” model in a
prudent method to expand in the New Markets.
We also had multiple service stations within our network in Southeast Asia, which are typically
collection points in convenience stores, grocery stores or other local shops with more limited
functions than our pickup and delivery outlets. Each outlet and service station has its own
designated geographical scope of operation and can generally only take orders generated within
that area. We closely monitor the performance of outlets in our network and provide incentives
to our regional sponsors and network partners to optimize performance.
CUSTOMERS
For our express delivery and cross-border services, our customers include our network
partners, e-commerce platforms, certain enterprise and individual customers, as well as our
unconsolidated regional operating entities. For our cross-border services, our customers also
include freight forwarders who place orders on behalf of their end customers.
We consider our network partners as part of our direct customer group, as our regional
operating entities provide parcel sorting and line-haul services to them and collect fees from
them for use of our network.
We also directly serve e-commerce platforms, other enterprise customers and individuals. We
collect the entire amount of delivery service fees from these direct customers and pay fees to
our network partners for their first-mile pickup and/or last-mile delivery services. For certain
direct customers, we provide direct pickup and/or delivery services ourselves without the
services provided by our network partners, depending on the availability and capacity of our
directly operated outlets at the relevant locations.
In addition, we consider the unconsolidated regional operating entities, which are owned and
operated by regional sponsors during the ramp-up period, our customers until we acquire
majority interests in them. In 2020, around 25% of the parcels in Southeast Asia were from
unconsolidated regional operating entities who were our customers.
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Many end customers are not our direct customers. Instead, they are customers of our network
partners or unconsolidated regional operating entities. Such end customers primarily include
merchants or individual shoppers on e-commerce platforms.
The following charts illustrate the delivery process and funds flow in the process for an express
delivery parcel.
Express Delivery Process through Consolidated Regional
Operating Entities – Network Partners
Pickup
Outlets
Regional
Sorting
Centers
(Origination)
Delivery
Outlets Recipients
Regional
Sorting
Centers
(Destination)
Consolidated
Regional
Operating Entities
Consolidated
Regional
Operating Entities
Network
Partners
(Customer)
Network
Partners
(Supplier)
Senders
(End
Customer) Line-haul
transportation
First-mile pickup Last-mile
delivery
Parcel Flow
Fund Flow
Delivery fee
Transit fee
Pickup fee
Payment
by senders
a
b
c
Revenue
earned by J&T
Pickup feea
Delivery fee
Transit feeb
c
Revenues earned by
network partners
Payment for staff costs, line-haul
costs and other labor costs and etc.
in relation to sorting and transit
d
Fulfillment costse
a b c++ b c+
d
100
10
e
Costs of J&T
+
+ +
operate operate
operate operate
90
60
20
Notes:
(1) The diagram is for illustrative purposes only and does not represent scale.
(2) For parcel delivery process where network partners are engaged, network partners who pick up parcels charge
end customers service fees for pickup, transit and delivery. Network partners then pay us (together with
consolidated regional operating entities) fees for transit and delivery. Such network partners at the “pickup
end” of the process are our customers. After sorting and line-haul transportation of parcels, we engage network
partners to perform the last-mile delivery obligations, and we pay such network partners delivery fees.
Network partners at the “delivery end” of the process are our suppliers. A parcel is typically picked up and
delivered by different network partners.
(3) For parcels directly from e-commerce platforms, in terms of fund flow, e-commerce platforms would pay fees
to us directly (which include pickup, transit and delivery fees) for parcels delivered by our network partners.
The flow of parcel delivery process is the same as illustrated above.
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Express Delivery Process through Consolidated Regional
Operating Entities − Direct Operation
Pickup
Outlets
Regional
Sorting
Centers
(Origination)
Delivery
Outlets Recipients
Regional
Sorting
Centers
(Destination)
Consolidated Regional Operating Entities
Senders
(Customer)
Line-haul
transportation
First-mile pickup Last-mile
delivery
Consolidated Regional Operating Entities
a b c++
d
operateoperate
Delivery fee
Transit fee
Pickup fee
Payment
by senders
a
b
c
Revenue earned
by J&T
Delivery fee
Transit feeb
c
Payment for staff costs, line-haul
costs and other labor costs and etc.
in relation to sorting and transit
d
Costs of J&T
+
+ +
Pickup feea
+
Parcel Flow
Fund Flow
100 100
90
Notes:
(1) The diagram is for illustrative purposes only and does not represent scale.
(2) For parcels delivered under the “direct operation” model, we (along with consolidated regional operating
entities) earn fees for the entire delivery process of parcels, including pickup, transit and delivery, from senders
of parcels. Such senders could be enterprises, individuals, merchants or e-commerce platforms. We bear the
costs of leasing pickup and delivery outlets, employing staff at the outlets and procuring equipment deployed
at the outlets.
Express Delivery Process through Unconsolidated Regional Operating Entities
Scenario (i)
Unconsolidated Regional Operating Entities (Supplier) RecipientsSenders
Fulfillment cost
a b c++
d
Delivery fee
Transit fee
Pickup fee
Payment
by senders
a
b
c
Revenue earned
by J&T
Delivery fee
Transit feeb
c
Fulfillment costs paid to
unconsolidated regional
operating entities
d
Costs of J&T
+
+ +
Pickup feea
+
Parcel Flow
Fund Flow
100 100
90
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Scenario (ii)
RecipientsSenders
Platform fee for use of branding / platform / infrastructure
(Network services fee)
Unconsolidated Regional Operating Entities (Customers)
a b c++
d
Delivery fee
Transit fee
Pickup fee
Payment
by senders
a
b
c
Revenue earned
by J&T
Platform fee
(Network services fee)d
+
+
Parcel Flow
Fund Flow
100
10
Notes:
(1) The diagram is for illustrative purposes only and does not represent scale.
(2) For parcel delivery process where unconsolidated regional operating entities are engaged, there could be two
modes of collaborations, (i) we receive delivery orders from senders directly and earn fees for pickup, transit
and delivery of the parcels. We then engage unconsolidated regional operating entities to deliver the parcel and
pay them fees for the pickup, transit and delivery process of the parcels, during which such unconsolidated
regional operating entities are our suppliers. (ii) unconsolidated regional operating entities receive delivery
orders from senders directly and deliver the parcels themselves. They pay us fees for the use of our branding,
platform and infrastructure, and we deem such unconsolidated regional operating entities our customers.
During the Track Record Period, we generated a substantial portion of our revenue in Southeast
Asia from e-commerce platforms who are our direct customers. Due to market practice in
Southeast Asia, e-commerce platforms typically have significant influence over the shipping
method for items sold on their platforms and therefore enter into agreements with express
delivery service providers directly to purchase the express delivery services in bulk. For
e-commerce platforms that collaborate with us in different Southeast Asian countries, we
typically negotiate and enter into agreements separately and independently for the operations
in each country. E-commerce platforms in Southeast Asia typically engage and allocate
shipping orders among a number of their approved express delivery service providers, based
on factors such as service quality and efficiency of each express delivery service provider.
Consumers and merchants provide feedback for their shipping experiences, which allows
e-commerce platforms to review the performance of their approved express delivery service
providers to facilitate their decision of express delivery service providers. In Southeast Asia,
more than 80%, more than 85%, more than 89% and more than 91% of the parcels were from
e-commerce platforms for the years ended December 31, 2020, 2021 and 2022 and for the six
months ended June 30, 2023, respectively. E-commerce regime in Southeast Asia, including the
social e-commerce sector, is still rapidly evolving. For example, the social e-commerce
platforms in Indonesia might change the way they operate in order to comply with the relevant
laws and regulations. For details, see “Summary – Recent Developments – Recent Overseas
Regulatory Developments” and “Risk Factors – Our business and growth are highly dependent
on the development of the e-commerce industry in the markets where we operate”. During the
Track Record Period, our revenue from social e-commerce platforms in Indonesia remained
immaterial.
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Our direct customers in China are primarily our network partners, as network partners who pick
up parcels from merchants would pay us fees for transportation, sorting, and delivery of the
parcel, as well as use of our brand and platform. Unlike in Southeast Asia, e-commerce
platforms in China are not our direct customers. As express delivery services and the
e-commerce industry are highly developed and standardized in China, e-commerce platforms
in China typically allow merchants to choose their preferred express delivery service providers
from a list of service providers connected to such platform. Therefore, express delivery service
providers establish partnerships with e-commerce platforms by becoming permitted service
providers, gaining access to merchants and orders on the platforms. Merchants become
customers of our network partners when they place orders through outlets operated by our
network partners and pay our network partners delivery fees for the whole process of delivery
including pickup, transportation, sorting and delivery. Such merchants are our end customers,
whom we (along with our regional sponsors) work with our network partners together to
acquire and retain. Express delivery service providers compete in terms of efficiency, service
quality and other aspects to become the preferred service provider for merchants. See also
“Risk Factor – Risks Related to Our Business and Industry – We have relied, and may continue
to rely, on certain prominent e-commerce platforms.” In terms of parcel volume, in China,
more than 50%, 80%, 80% and 99% of our parcels were from network partners, for the years
ended December 31, 2020, 2021 and 2022 and for the six months ended June 30, 2023,
respectively.
Our five largest customers in each of 2020, 2021, 2022 and the six months ended June 30,
2023, contributed to 44.6%, 39.4%, 25.7% and 29.9% of our total revenue, respectively. For
the same periods, our largest customer, an e-commerce platform, contributed to 35.4%, 35.4%,
16.9% and 11.1% of our total revenue for their respective period as we continued to diversify
our customer base and expand collaboration with e-commerce partners. Revenue from this
customer was US$543.0 million, US$1,715.4 million, US$1,231.3 million and US$446.2
million in 2020, 2021, 2022 and the six months ended June 30, 2023. The fluctuation from
2021 to 2022 was due to the significant growth in our total revenue and our commitment to
expanding our e-commerce partnerships and establishing collaboration with new e-commerce
platforms. Before we acquired the SEA entities in 2021, some of these entities were among our
top customers. The following tables set forth details of our five largest customers during the
Track Record Period:
For the year ended December 31, 2020
Customer
Services
provided by us
Principal
business and
background of
the customer
Year of
starting
business
relationship
with us
Revenue
contributed
Percentage
of our total
revenue
Typical
credit
period
(in US$
thousands)
Customer A (1) . . . Express delivery
and cross-border
services
E-commerce
platform
2017 542,963 35.4% within 30
days
PT. GLOBAL
BINTANG
TIMUR
EKSPRESS
(2) ..
Express delivery Express delivery
service
2016 74,767 4.9% 30 days
Customer C (3) . . . Express delivery Express delivery
service
2020 27,993 1.8% upfront
payment
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Customer
Services
provided by us
Principal
business and
background of
the customer
Year of
starting
business
relationship
with us
Revenue
contributed
Percentage
of our total
revenue
Typical
credit
period
(in US$
thousands)
PT. KARY A
NIAGA
ABADI
(2) ....
Express delivery Express delivery
service
2015 21,247 1.4% 30 days
PT. SEMUT
MERAH
SQUAD
(2) ....
Express delivery Express delivery
service
2015 18,118 1.2% 30 days
Notes:
(1) An e-commerce platform and online marketplace in Southeast Asia.
(2) A SEA entity that has been acquired and consolidated into our Group in 2021. See “History and Corporate
Structure – Major Acquisitions, Disposals and Mergers” and “Financial Information.”
(3) An express delivery operator and a supply chain management company in China.
For the year ended December 31, 2021
Customer
Services
provided by us
Principal
business and
background of
the customer
Year of
starting
business
relationship
with us
Revenue
contributed
Percentage
of our total
revenue
Typical
credit
period
(in US$
thousands)
Customer A ..... Express delivery
and cross-border
services
E-commerce
platform
2017 1,715,398 35.4% within 30
days
Customer C ..... Express delivery Express delivery
service
2020 76,868 1.6% upfront
payment
Customer F
(1) .... Express delivery Express delivery
service
2020 42,637 0.9% upfront
payment
Customer G (2) . . . Express delivery Express delivery
service
2020 42,357 0.9% upfront
payment
PT. GLOBAL
BINTANG
TIMUR
EKSPRESS
(3) ..
Express delivery Express delivery
service
2016 34,621 0.7% 30 days
Notes:
(1) An express delivery operator and a supply chain management company in Zhejiang, China.
(2) An express delivery operator and a supply chain management company in Guangdong, China.
(3) A SEA entity that has been acquired and consolidated into our Group in 2021. See “History and Corporate
Structure – Major Acquisitions, Disposals and Mergers” and “Financial Information.”
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For the year ended December 31, 2022
Customer
Services
provided by us
Principal
business and
background of
the customer
Year of
starting
business
relationship
with us
Revenue
contributed
Percentage
of our total
revenue
Typical
credit
period
(in US$
thousands)
Customer A .... Express delivery
and cross-border
services
E-commerce
platform
2017 1,231,324 16.9% within 30
days
Customer H
(1) . . Express delivery
and cross-border
services
Social
e-commerce
platform
2021 482,887 6.6% 30 days
Customer I
(2) . . . Cross-border
services
E-commerce
platform
2022 54,160 0.7% 90 days
Customer J (3) . . . Express delivery
services
E-commerce
platform
2021 51,505 0.7% 30 days
Customer C .... Express delivery
services
Express delivery
service
2020 48,102 0.7% upfront
payment
Notes:
(1) An international social e-commerce platform.
(2) An e-commerce platform in China.
(3) An international e-commerce company with operations mainly in Southeast Asia.
For the six months ended June 30, 2023
Customer
Services
provided by us
Principal
business and
background of
the customer
Year of
starting
business
relationship
with us
Revenue
contributed
Percentage
of our total
revenue
Typical
credit
period
(in US$
thousands)
Customer H .... Express delivery
and cross-border
services
Social
e-commerce
platform
2021 446,218 11.1% 30 days
Customer A .... Express delivery
and cross-border
services
E-commerce
platform
2017 360,181 8.9% within 30
days
Customer I .... Cross-border
services
E-commerce
platform
2022 229,296 5.7% 90 days
Customer K
(1) . . Express delivery
services
E-commerce
platform
2022 120,982 3.0% 30 days
Customer J .... Express delivery
services
E-commerce
platform
2021 49,111 1.2% 30 days
Note:
(1) An e-commerce platform in China.
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During the Track Record Period, none of our Directors or Shareholders who, to the knowledge
of our Directors, own more than 5% of our issued share capital immediately following the
completion of the Global Offering (but without taking into account the exercise of the
Over-allotment Option) nor any of their respective associates had any interest in any of our five
largest customers, except for a SEA entity that we acquired and consolidated into our Group
in 2021.
Key terms of agreements with our customers
Our direct customers are primarily our network partners, unconsolidated regional operating
entities, e-commerce platforms and other enterprise customers and individuals which require
customized express delivery services. For details of our agreements with our network partners,
see “– Our Regional Sponsor Model – Role of Network Partners” in this section. We typically
sign master service agreements with e-commerce platforms and other enterprise customers,
which include various terms including parties, tenor, scope of services, fee rate and payment
terms, among others. Set forth below is a summary of typical terms of our master service
agreements with e-commerce platforms and other enterprise customers:
Key Terms Description
Tenor Typically one year or per transaction basis
Service Type Express delivery services and cross-border services, as
the case may be
Service Scope Express delivery services: standard express delivery
services covering pickup, sorting, transportation and
delivery of parcels
Cross-border services: inbound acceptance, goods and
storage, return processing and value-added services
Pricing With reference to standardized pricing for the relevant
services or fee rates otherwise agreed between the
parties, subject to mutually agreed upon fee changes
Payment Term Settlement typically around 30 days
Termination May be terminated by one or either party upon prior
notice upon certain events
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Our individual customers primarily use our express delivery services and enter into our
standard express delivery services agreement with us. Set forth below is a summary of the key
terms of a typical delivery services agreement between an individual customer and us:
Key Terms Description
Tenor Per transaction basis
Service Type Express delivery services
Pricing Fixed fee based on the distance, weight, dimension and
time sensitivity of the shipment
Payment Term Upfront payment or upon delivery
Set forth below is a summary of typical terms of our master service agreements with our
unconsolidated regional operating entities:
Key Points Description
Term Typically three years
Service Type Express delivery services
Service Scope Standard express delivery services, including sorting,
transportation and delivery of parcels as the case may be
per request by the unconsolidated regional operating
entities.
Pricing Service fees consisted of network service fee and fees for
express delivery including but not limited to transit and
delivery of parcels.
Payment Term Service fees are paid monthly.
Termination The agreement can be terminated upon mutual agreement
or by us with a 30-day prior notice.
CUSTOMER SERVICE
We believe our customer service enhances our customer loyalty and brand image. We have
established a cohesive and responsive customer service system in close collaboration with our
regional sponsors. In addition to a dedicated customer service team at our country
headquarters, our regional sponsors are also responsible for setting up regional customer
service functions and helping us manage customer service enquiries in regional operational
entities within the applicable region. Our regional sponsors also provide ongoing training and
conduct regular performance reviews of network partners where applicable to ensure that they
provide quality customer service.
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We strive to innovate in customer service. For example, we are the first to provide 365-day
operations in Malaysia and Indonesia with 24-hour customer service, according to Frost &
Sullivan. In China, we undertake to respond to customer-initiated inquiries and complaints
within one hour of a complaint being lodged within our system, which is at the forefront of the
industry. Additionally, we have implemented an industry-leading one hour refund policy,
whereby we initiate refunds to the customer within one hour of a determination of
responsibility.
We also operate a call system providing real-time assistance by our representatives during
business hours, seven days a week. Our automated system continues to respond to inquiries
outside of business hours and forwards inquiries that require attention from representatives to
our call center representatives for further handling. We have call centers in each of our
countries of operations. All branches within a country can be reached via a unified number and
use the same call system and database. Our call system automatically forwards incoming calls
to the local branch near the caller’s location. Our over 2,600 call center representatives as of
December 31, 2022 adhere to the same customer service standards throughout our network and
their local knowledge contributes to enhanced customer service effectiveness. We provide
regular trainings to our representatives and review the callers’ level of satisfaction with their
service. For each complaint, we strive to provide a response within 24 hours.
SUPPLIERS
During the Track Record Period, our suppliers primarily included service providers of
third-party transportation, human resources services and express delivery services including
our network partners and unconsolidated regional operating entities. Our five largest suppliers
in each of 2020, 2021, 2022 and the six months ended June 30, 2023 accounted for 15.6%,
12.3%, 10.0% and 10.3% of our total purchases for their respective period. For the same
periods, our largest supplier accounted for 6.2%, 3.6%, 2.5% and 3.0% of our total purchases,
respectively.
Our network partners and our unconsolidated regional operating entities could be both our
customers and our suppliers. They are our customers as we provide them with express delivery
services including, but not limited to, integrated express delivery services, network
management services, parcel sorting services and transportation services, as the case may be.
They are also our suppliers as they provide us with pickup, delivery and other services with
respect to parcels from other customers in our network. We do not control these unconsolidated
regional operating entities, which are responsible of obtaining relevant licenses and permits
under and ensuring compliance with relevant laws and regulations in each market. We review
and inspect their qualifications including whether they have obtained necessary licenses and
permits before we engage them as business partners. We ask unconsolidated regional sponsors
to provide timely update on their license and permit renewal, and, based on findings and alerts
from our own ongoing compliance program, follow up with unconsolidated regional operating
entities on major operation and compliance items.
During the Track Record Period, some of them were both our top five customers and top five
suppliers. PT. GLOBAL BINTANG TIMUR EKSPRESS, a major customer of 2021, and
Customer C, a major customer of 2020, were both our suppliers. We provided express delivery
services, including pickup, sorting and delivery to them, while they provided us with express
delivery service mainly comprised of pickup and delivery services. In 2020 and 2021, the
revenue generated from such customers represented approximately 6.7% and 2.3% of our total
revenue, respectively, and the purchase amount attributable to such customers represented
3.0% and 4.5%, respectively, of the corresponding period.
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During the Track Record Period, none of our Directors or Shareholders who, to the knowledge
of our Directors, own more than 5% of our issued share capital immediately following the
completion of the Global Offering (but without taking into account the exercise of the
Over-allotment Option) nor any of their respective associates had any interest in any of our five
largest suppliers, except for a SEA entity that we acquired and consolidated into our Group in
2021.
We maintain direct control over parcels going through our network. Our system is seamlessly
connected to the systems of major e-commerce platforms, allowing merchants and consumers
on those platforms to place order, trace parcels and enjoy our customer services. We are
therefore able to track and monitor every single parcel from those platforms. Our end
customers expect obtaining tracking numbers upon dropping off a parcel. For each parcel to be
traceable, such parcel needs to be appropriately labeled and recorded in our system, rendering
it impracticable for network partners or a regional operating entity to take a delivery order
without properly recording such parcel in our system. In addition, participants in every
segment of the delivery process rely on waybill information to properly fulfill their functions.
For example, operators in sorting centers scan waybills to obtain information and instruction
to sort parcels, and network partners scan and record every single parcel they deliver to ensure
delivery fees they earn are properly calculated. Therefore, it is practically impossible for a
parcel to be delivered without being recorded in our system, thus rendering it practically
impossible for a network partner or any regional operating entity to take and fulfill a parcel
delivery order without involving us.
We maintain direct control over key routes and line-haul transportation to maintain operational
control over critical aspects of our network. We engage third-party operators for certain
components of our delivery process when such process does not significantly impact the
quality and efficiency of our overall services. For example, for our line-haul transportation
network, we directly control our sorting centers as well as line-haul route planning. However,
we engage third party transportation service providers to complete a portion of the
transportation to supplement our capacity.
We typically enter into master service agreements with our third-party service providers. Some
participants in our network such as our network partners and unconsolidated regional operating
entities are recognized both as our customers and service providers. For details of our
agreements with our network partners and unconsolidated regional operating entities, see “–
Our Regional Sponsor Model – Relationship with Network Partners” in this section.
TECHNOLOGY
We have developed a global technology platform centered around our proprietary JMS system,
along with our open platform and various applications designed for employees and network
participants. The global technology platform is supported by multiple proprietary technology
platforms that empower multiple key aspects of our operations and enhance our efficiency. We
deployed a hybrid cloud and public cloud infrastructure globally to support our global
technology platform, which is easily scalable, and built a micro-services architecture to power
its modularized functions, features and applications.
Our integrated technology platform allows regional sponsors to manage local network, perform
express delivery services, and thus provide reliable services to customers. Critical functions
such as data management and financial management enable regional sponsors to track network
performance and manage each outlet in the network. Through transportation management
system, regional sponsors can efficiently allocate resources and formulate detailed execution
plans for line hauls and delivery. The ability to integrate our system with enterprise customers
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and small e-commerce merchants further broadens our customer base that is otherwise
inaccessible to our competitors. In Southeast Asia, we tailored our technologies, such as our
address coding system, to tackle unique challenges in the relevant regions.
Integrated systems
We have developed a suite of integrated platforms for management of day-to-day operations,
covering data management, network management, service quality management, customer
relationship management, transportation management and device and materials management:
 Data management : we established a standardized data management framework which
unifies and integrates datapoints arising from all stages of business operations including
orders, pickup and delivery outlets, sorting centers, flow of orders and transport, among
others. Our data management platform visualizes the datapoints and generates insights for
management.
 Network management : we map our overall express delivery network and manage the key
information of each network partner such as their location, qualification, key management
personnel and employees, among others, to facilitate efficient management of the
network.
 Service quality management : we rigorously monitor each completed delivery and display
reminders on the status of the delivery to facilitate us in handling events that may lead
to complaints in advance.
 Customer relationship management : our customer relationship management platform
enables us to categorize and manage the end customer base, including merchants,
individuals and enterprise customers. We track daily incoming and delivered orders in
real time and regularly monitor the activeness and stickiness of these end customers.
 Transportation management : we have a command center monitoring and coordinating our
fleet to optimize resource allocation and advise on alternative routes. The platform also
identifies vehicles irregularities and provides early warnings, enabling us to enhance the
efficiency of transportation.
 Device and materials management : we connect and manage our PDAs across our
network. We can monitor the use of this equipment and timely report on any damage or
malfunction. We have established solid redundancy systems to maintain databases and
system backup, as well as backup hardware and equipment. In addition, we conduct
regular data backup and data recovery tests. We leverage our technology infrastructure,
cybersecurity expertise and our database to enhance the reliability, stability and security
of our data. We also are able to track per-person processing capacity and the usage of
sustainable materials in our operations to enhance our overall efficiency.
The key innovative features of our integrated technology platform include, among others, (i)
the platform is highly modularized and could be tailored for operations in different markets.
Localization is achieved with customizable modular components that can adapt to different
languages, currencies, time zones, and local infrastructure. This modular system can be easily
set up, allowing us to enter into a new market within a short period of preparation time. It can
also dynamically scale up according to network volume, flexibly respond to market demands,
and cover a majority of the required functions of the entire express delivery system, (ii) the
platform supports the most number of languages among our peers in Southeast Asia and China.
This is the foundation for us to cater to vast geographical coverage of our network and different
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languages, culture and operating environment, and (iii) the platform is the foundation for us to
deliver extraordinary services, compared to our peers in Southeast Asia market. In addition, we
were one of the first to adopt customized APIs for e-commerce platforms and developed the
most number of interfaces for different end users.
Global coverage and localization
Circumstances in different markets, such as Southeast Asia, China and other markets, vary
drastically in terms of parcel volumes, infrastructure, business culture and other market
characteristics. This necessitates a level of customized development in areas such as systems
displays and settlement logistics, as well as investment in technical architecture. Our system
is highly modularized with main express delivery functions across various stages of the parcel
delivery process, such as order placement, price monitoring and order tracking, among others.
This is also supported by a suite of proprietary applications designed to be utilized by
personnel across our network with different roles. Localization is achieved through
customization using modular components that can be deployed in different languages,
currencies, time zones and local infrastructure. This modular system can also be dynamically
expanded according to network volume, flexibly responds to market demands and covers a
majority of the required functions of the entire express delivery system. Due to this, we have
substantially shortened the trial and error period when entering into a new market.
Highly automated express delivery processing
We deploy a wide array of automated machines and equipment across our network, including
sorting machines, tracking systems and PDA scanners, among others. We have developed our
proprietary parcel tracking system that is connected with the systems of our regional operating
entities and network partners to increase transparency throughout the delivery cycle. We also
employ automated sorting machines at certain critical high-volume sorting centers capable of
scanning up to approximately 88,000 packages per hour at peak volume and intelligent
scanning, which feeds data into our tracking system, greatly reduces reliance on manual labor,
lowers operating cost and shortens delivery times. The use of automated equipment at major
links of the parcel delivery process enables us to enhance our processing capacity.
Customized APIs and user interfaces
Due to our globalized business across diversified markets, we have customized portals to
connect with a variety of network participants as well as different interfaces to cater to
different customers. We link our system with those of our e-commerce platform customers via
Application Programming Interfaces (APIs), allowing the e-commerce platforms and the
merchants to access shipment data to provide analysis for business purposes. Through this
customized interface, e-commerce platforms can track packages in real time and better manage
their inventory and warehousing needs. For certain merchants not affiliated with any
e-commerce platforms and hence lacking basic technology infrastructure, they can
conveniently access our system via Independent Software V endors (ISVs) to place delivery
orders, enabling them to grow their business and us to expand our customer reach. We have
also developed multiple ordering interfaces to cater to the diverse needs of customers.
Customers can access our services from website, mobile applications, call center and social
media applications anywhere and anytime.
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Enhanced address digitalization system
We leverage address digitalization systems across the markets we operate in. In Southeast Asia,
our enhanced address digitalization platform encompasses our digitalized address coding
system, which we refer to as our “nine-digit code,” and our self-developed and self-maintained
address library. Our digitalized address coding system identifies the destination outlets and the
designated delivery personnel. We accumulate authentic address data points, use them to train
our systems through fundamental machine learning approaches and thereby address the unique
logistics issues in Southeast Asia, including the inaccuracy and insufficient coverage of
third-party address libraries and non-standard data inputs which require extended data
cleansing. We have developed our proprietary address digitalization platform in China by
leveraging our graphical learning and Bidirectional Encoder Representations from
Transformers (BERT) algorithms to enhance the accuracy of our address identification and
efficiency of delivery. Our implementation of the enhanced digitalized address coding system
has increased our level of automation and accuracy, allowing us to make better predictions,
allocate resources more efficiently, optimize our delivery routes and reduce our costs while
making it easier for us to expand into new geographies.
Our digitalized address coding system is embedded with enhanced delivery information, which
enables us to predict demands more accurately and allocate resources more efficiently. The
address digitization systems of the express delivery service providers usually contain
information including destination city, township, and ultimately the destination service area,
which is usually the closest service outlet to the final destination of a parcel. After a parcel
reaches the destination service area, the parcel would then get allocated to designated delivery
personnel based on their respective service coverage, which is usually a smaller neighborhood
within the destination service area. Such an allocation process may cause delays or errors to
the final delivery of the parcel to end customers. However, our digitalized address coding
system could directly point to a designated delivery personnel at the beginning of transfer,
thereby enabling us to plan ahead and allocate resources even prior to the parcel reaching
destination service area. As a result, we would be able to reduce the delivery cycle of a parcel.
The implementation of the system reduced the average delivery cycle for parcels on a particular
route in Southeast Asia that historically was 41 hours to 35 hours.
According to Frost & Sullivan, we are the only express delivery service provider in Southeast
Asia who built address digitization system based on a fully proprietary address library. Express
delivery service providers without an enhanced digitalized address coding system need to fully
rely on third-party address libraries. By relying on such third-party address libraries, express
delivery service providers expose themselves to the risks of obtaining inaccurate delivery
information once such third-party address library is not well maintained or updated regularly
or when it encounters service disruptions. However, we would be able to continue the operation
and navigate deliveries, thereby upholding the delivery speed and service quality for each
parcel.
When we entered a new market in the Southeast Asia, although the address library would need
to be reestablished through certain initial manual collection, the address database digitalization
technologies can be easily replicated and applied in the new market, enabling us to analyze new
address entries and reducing the research and development costs in the new market.
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INTELLECTUAL PROPERTY
Our intellectual property, including any trademarks, copyrights, trade dress, trade secrets and
proprietary technologies, is an important part of our business. Our success depends in part on
our ability to obtain and maintain intellectual property and proprietary protection for our
technology, defend and enforce our intellectual property rights, preserve the confidentiality of
our trade secrets and operate without infringing, misappropriating or otherwise violating valid
and enforceable intellectual property and proprietary rights of others. To protect our
intellectual property and proprietary information, we rely on a combination of trademark,
copyright and trade secret laws and regulations, as well as contractual restrictions. We seek to
protect our proprietary technology, in part, by requiring our employees, consultants,
contractors and other third parties to execute confidentiality agreements and invention
assignment agreements and by implementing technological measures and other methods. As of
the Latest Practicable Date, we owned 647 registered trademarks and 269 registered domain
names. We also had 251 copyright registrations, primarily covering the proprietary software we
have designed. For further details of our intellectual property rights, see “Statutory and General
Information – 2. Further Information about our Business – 2.2 Intellectual property rights of
our Group” in Appendix V to this prospectus. During the Track Record Period and up to the
Latest Practicable Date, no material claims or disputes were brought against us in relation to
any infringement of trademarks, copyrights or other intellectual property.
COMPETITION
The express delivery industry in Southeast Asia is fragmented and we compete primarily with
express delivery service provided by national postal agencies as well as leading private
domestic express delivery companies in each of the countries in which we operate. In each
country where we operate, we compete with other express service providers in terms of our
geographic coverage, quality service and cost-efficiency. We also compete with international
carriers that operate in Southeast Asia and China in connection with our cross-border services.
We believe that our global footprint, innovative regional sponsor business model, superior
operational capabilities and our quality service provide us with a competitive advantage. While
we maintain leading positions in our core markets, certain more established e-commerce
companies may compete with us by building their own logistics capabilities. Furthermore,
certain local players might seek to expand regionally and compete with us in overlapping
geographies. We believe that our core strengths provide us with competitive advantages over
existing and potential competitors. For further details regarding our industry, see “Industry
Overview.”
In Southeast Asia, the e-commerce penetration rate was 15.5% in 2022, and is expected to
reach 29.8% in 2027, at a CAGR of 18.6% from 2023 to 2027. Leveraging the great growth
potential in e-commerce industry, we intend to expand our collaboration with e-commerce
partners in Southeast Asia, including deepening relationship with the current e-commerce
platforms and extending our reach to additional e-commerce platforms. We will seek to acquire
non-ecommerce parcels from the enterprises with more diverse needs. We will continue to
upgrade our infrastructure in Southeast Asia including sorting facilities and line-haul vehicles
to further enhance efficiency of our network.
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In China, we expect to continue competing with our peers by strengthening partnership with
more e-commerce platforms to diversify the source of parcels and generating sustainable
growth of parcel volume. We endeavor to access and acquire high-quality end customers by
leveraging our enhanced brand image and improved service quality, which will help us
maintain our average revenue per parcel. We will also continue to optimize our cost and
operating efficiency as our network expands, which would help us continuously narrow losses
in China.
For the New Markets, we intend to continuously expand our operation and compete with our
peers, leveraging our capabilities proven in Southeast Asia and China markets, existing
relationship with e-commerce partners globally and future growth of the e-commerce industry
in these markets.
SECURITY AND SAFETY
We follow local regulations regarding security and safety in each of our jurisdictions of
operations and have obtained certification of the ISO9001 for express delivery management
services. We maintain lists of prohibited and/or regulated items based on jurisdiction, local
industry regulations and shipping method. We have established standardized parcel security
screening protocols throughout the pickup, sorting and delivery process. We require that pickup
personnel visually inspect all items sent by end customers. We also employ measures such as
X-ray screening of parcels for safety hazards or prohibited items. Penalties are imposed on the
responsible personnel for picking up or delivering prohibited items. Our safety screening
system will continue to evolve to meet changing needs.
Workplace safety and transportation safety are important to our business. We have
implemented protocols for safety of ground transportation for our fleet and operations of our
sorting centers to ensure safety and minimize accidents. We provide periodic training to our
employees to recognize hazards, mitigate risk and avoid injury to themselves and others at
work. We have already instituted safety policies in response to the COVID-19 pandemic, which
includes various policies for screening personnel prior to entry into the workplace and masking
policies. We have implemented regular disinfection schedules for all of our workplace areas
and have required pickup and delivery outlets to perform regular disinfection. We also screen
vehicles according to itinerary information prior to entry onto our premises as well as require
regular disinfection of vehicles and packages prior to delivery.
DATA SECURITY AND PRIV ACY
To comply with applicable laws and regulations, we have implemented a suite of data security
management protocols that set out policies for our data-related operations, including the
collection, transmission, storage, sharing, destruction, backup and recovery of data. We strictly
limit and monitor our employee access to user data. We provide data privacy training to
authorized employees and require them to report to us promptly on any potential data leakage.
For details of relevant laws and regulations, see “Regulatory Overview” in Appendix III to this
prospectus.
As a global logistics service provider, we primarily generate operating, non-personal data from
our operations. As advised by the PRC Legal Adviser, our logistics services operation do not
involve cross-border transmission of any personal data. For details, see “Risk Factors –
Complying with evolving laws and regulations regarding cybersecurity, information security,
privacy and data protection and other related laws and requirements may be expensive and may
force us to make adverse changes to our business. Many of these laws and regulations are
subject to changes, and any failure or perceived failure to comply with these laws and
regulations could result in negative publicity, legal proceedings, suspension or disruption of
operations, increased cost of operations, or otherwise harm our business.” We may, due to
cross-border travel or internal management of our personnel, incidentally transmit certain data
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concerning personal information of our employees and staff. We have conducted and will
continue to perform internal assessments in accordance with the Standard Contract Measures
to identify whether a standard contract is required for any potential outbound cross-border
transfer of personal information. We would ensure such PRC entities to comply with the
Standard Contract Measures by taking proper measures including executing standard contracts
with the overseas recipients of personal information upon the expiry of the six-month grace
period when necessary.
We have also implemented a suite of policies and management framework to safeguard data
generated in our operations and to ensure our compliance with data-related laws and
regulations. We have obtained ISO 27001:2013 certification on information security
management systems and ISO27701:2019 certification on privacy information management.
We also conduct periodic reviews on our data compliance practice.
As a result of our internal control and compliance efforts, no material weakness or deficiency
has been identified in our data security measures and our business operations are in compliance
with all current data security laws and regulations in all material aspects. During the Track
Record Period and up to the Latest Practicable Date, we did not experience any material
information leakage or loss of user data in all jurisdictions where we have operations.
Sources, Types and Scope of Data Collection
During the course of our business operations, we mainly collect the data and information: (a)
from logistics service users based on business needs, including basic user information,
transaction information, invoice information, waybill information and contact information
necessary for customer service dispute resolution; (b) for the purpose of customer
management, including names, phone numbers, addresses, business licenses, and ID card
information of legal representatives; (c) from the logistics transportation department of
companies that are connected to us and third-party carriers to arrange and manage logistics and
transportation, including departure fees, geographic locations, driver’s license numbers,
insurance status, as well as the names, phone numbers, addresses, ID numbers, and driver’s
license numbers of the transport department’s drivers; and (d) from franchisees for franchise
management, including names, phone numbers, addresses, information about legal
representatives, as well as franchisees’ business and operation data.
All of the above-mentioned data and information are collected in accordance with relevant laws
and regulations, and we collect the minimal amount of data and information only when it is
necessary.
Data Usage and Processing Methods
We adopted a standard data usage and privacy policy to collect and process data. For user
information, we collect relevant data and information by having the users fill out and complete
the paper order forms and the electronic order forms on our mobile apps, WeChat
Mini-Program, or website. For customer and network partners, we collect relevant data and
information via documents such as the cooperation agreements, when they register on or
logging in to relevant online platforms or mobile apps, and via email and phone
communication. For third-party carriers and drivers of line-haul vehicles, we collect relevant
data and information via documents they sign including their service agreements, labor
contracts, as well as when they and register on or log into relevant online platforms or mobile
apps.
We undertake to manage and use the user data in accordance with applicable laws and make
reasonable efforts to prevent the unauthorized access, breach, tampering or loss of personal
information. Specifically, we have established a system for data classification management and
data access-rights division. Only employees who are granted relevant rights can access and
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obtain designated data and information based on operational needs. The data cannot be
exported in batches, and corresponding records are generated to ensure that the collected
personal information is accessed and used within the minimum scope necessary.
Data Protection Policies
Our data security policies include mechanisms covering customer privacy protection, data
classification, monitoring, emergency response and management of third parties. We have a
dedicated data security team that establishes and enforces procedures regarding the
management of data security. In 2023, we obtained the ISO27001 certification for information
security management system.
We have developed our internal policies and procedures with the goal of meeting industry
standards and establishing good practices. A few examples of our measures include (i)
instituting a governance framework to ensure senior management fully equipped with
procedures and solution toolkits to address any privacy issues, (ii) standardizing internal group
data transfers with procedures to ensure lawful transfer of data to protect the security of
personal information, (iii) implementing international information security and data privacy
standards, (iv) updating our policies and procedures pursuant to periodic security impact
assessments, and (v) implementing a framework to ensure the protection of personal data of
customers and notification of customers if a data leakage event were to occur.
Generally, we adhere to the principle of only collect relevant data to the minimum extent
necessary, with the authorization of the data subject. We have established a solid data
encryption system to encrypt personal information such as phone numbers, ID numbers,
account numbers, addresses and email addresses when they are entered into the system. In
addition, we also impose confidentiality requirements on employees through documents such
as employment contracts and employee handbooks, prohibiting the improper use and disclosure
of data they collect and encounter during the course of their work.
For data access and use, we have formulated a system of data classification management and
data access rights division. We also implemented management and protection measures for
collected data based on importance and sensitivity. Accessing and retrieving data and
information of higher levels of protection involves stricter approval and supervision processes.
Regardless of its usage scenario, access to relevant data can only be granted after due
assessment and appropriate approval.
To ensure the security of data collection and processing activities throughout the network, we
have engaged a professional third-party network security service provider to be responsible for
the operation and maintenance of its network. We have set up four security lines of defense for
the our domestic network against possible external attacks, installed a full range of
threat-aware devices for the internal network, and equipped the system hosts with intrusion
detection devices to avoid data leakage due to external attacks through multi-layer protection.
In particular, we have also conducted a network security protection assessment for our network
in China and filed the details with the regulatory authorities according to relevant regulations.
Data Sharing Arrangements
We do not share or transfer information and data collected or preserved by us to any person,
unless with a explicit prior consent from the relevant parties. For data or information to be
transmitted to a third-party partner based on business needs, we will provide the relevant data
and information through encrypted transmission. If our partners are not equipped with data
protection measures as strong as ours, we will only allow our partners to access relevant data
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through our system after due approval procedures, which ensures that data used by external
parties are also subject to the same level of protection. As our operations span different
jurisdictions and we collaborate with partners across the globe, we also requires its partners to
abide by their region or country’s data security laws and regulations.
In addition, for cross-border data transmission, we ask all vendors such as overseas logistics
companies and customs clearance agents, to adopt the same level of data security standards by
entering into independent data processing agreements, commercial agreements with data
compliance clauses and other methods. We continue to strengthen our data security
management during cooperation with overseas third parties.
As a result of the above-mentioned internal control and compliance efforts, no material
weakness or deficiency has been identified in our data security measures and our business
operations are in compliance with all current data security laws and regulations in all material
aspects. During the Track Record Period and up to the Latest Practicable Date, we did not
experience any material information leakage or loss of user data in all jurisdictions where we
have operations.
BRANDING AND MARKETING
We seek to expand brand awareness and enhance our brand image for individual and enterprise
customers by focusing on high delivery volumes paired with high service quality. While we
seek to establish a unified brand, we carefully research the particulars of each market in which
we operate, including local competition and consumer sentiment, and develop a variety of
marketing initiatives tailored to each region to promote our brand. Our offline marketing
activities include traditional media such as billboards with slogans customized for different
local regions and public relations activities, particularly in key locations of e-commerce
businesses. We work with celebrities to provide endorsements for our platform and promote a
youthful and energetic brand image. We also offer rebates and promotions in connection with
various e-commerce shopping events and in partnership with e-commerce platforms. In
addition, we continue to seek partnerships with social media and e-commerce platforms to
increase our brand visibility as well as the number of consumer touchpoints.
With the help of our regional sponsors, we train and guide our network partners to market their
services to our end customers and maintain customer relationships. To advance our goal of
establishing a unified brand image, we require network partners to apply our logos on
personnel uniforms, transportation vehicles and packaging materials in a consistent and unified
manner in order to further enhance our brand recognition during interactions with our end
customers. We also have a designated sales team that handles enterprise customer relationships
directly. In general, we strive to continuously improve our service quality to elevate our brand
and attract and retain more customers.
SEASONALITY
Our results of operations are affected by seasonal patterns peculiar to the jurisdictions where
we operate. Our parcel volume was typically lower in the first quarter of each year as a result
of regional holidays such as the Lunar New Y ear. In Southeast Asia, our parcel volume is also
impacted by holidays such as Ramadan and regional promotion periods such as September 9
and October 10 sales promotion periods. In China, we typically experience higher parcel
volume in the fourth quarter of the year due to various holidays and promotional events offered
by e-commerce platforms, such as around the November 11 and December 12 sales promotion
periods. Our financial condition and results of operations for future periods may continue to
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fluctuate. As a result of such fluctuations, comparisons of revenue and results of operations
between different periods within a single financial year or between different periods in
different financial years cannot be relied on as indicators of our performance.
EMPLOYEES
We had a total of 73,927, 146,432 and 126,511 and 131,935 full-time employees as of
December 31, 2020, 2021 and 2022 and June 30, 2023, respectively. The following table sets
forth the breakdown of our full-time employees as of June 30, 2023 by function:
Function Number of Employees Percentage of Total
(%)
Operations 111,162 84.3
Sales and Marketing 1,709 1.3
Research and Development 1,658 1.3
General Administration 14,284 10.8
Customer services 3,122 2.4
Total 131,935 100.0
As of June 30, 2023, we had 113,053, 8,683 and 10,199 employees in Southeast Asia, China
and other markets, respectively. In Southeast Asia, compared with China, we operated much
larger amount of pickup and delivery outlets directly through regional operating entities and
therefore engaged a larger number of staff.
We believe we offer our employees competitive compensation packages and a merit-based
work environment that encourages initiative, and as a result, we have generally been able to
attract and retain qualified personnel and maintain a stable core management team. In addition,
as required by applicable regulations, we participate in various government statutory employee
benefit plans.
We enter into standard labor agreements with our employees and, in addition, enter into
confidentiality and non-compete agreements with our key employees. The non-compete
restricted period typically expires two years after the termination of employment, and we agree
to compensate the employee with a certain percentage of his or her pre-departure salary during
the restricted period.
We believe that we maintain a good working relationship with our employees, and we have not
experienced any major labor disputes or any difficulty in recruiting staff for our operations
during the Track Record Period.
PROPERTIES
As of June 30, 2023, the properties that we occupied or managed as sorting centers and
warehouses had a total GFA of approximately 4.8 million square meters, including self-owned
and leased properties.
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Self-owned Properties
As of June 30, 2023, our self-operated sorting centers and warehouses that are located on
premises we own represented a GFA of over 83 thousand square meters, accounting for
approximately 1.7% of the total GFA of sorting centers and warehouses occupied or managed
by us.
Leased Properties
As of June 30, 2023, we leased approximately 4.7 million square meters of sorting centers and
warehouses, accounting for substantially all the total areas of sorting centers and warehouses
occupied or managed by us. The lease term typically ranges from one to six years.
According to Chapter 5 of the Listing Rules and section 6(2) of the Companies (Exemption of
Companies and Prospectuses from Compliance with Provisions) Notice (Cap. 32L of the Laws
of Hong Kong), this prospectus is exempted from compliance with the requirements of section
342(1)(b) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance in relation
to paragraph 34(2) of the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, which requires a valuation report with respect to all our interests in land
or buildings.
INSURANCE
We maintain various insurance policies to safeguard against risks and unexpected events, such
as insurance over the equipment in our sorting centers as well as accident insurance. We have
purchased compulsory motor vehicle liability insurance and commercial insurance such as
automobile third-party liability insurance, vehicle loss insurance and driver/passenger liability
insurance.
We do not maintain business interruption insurance nor do we maintain product liability
insurance or key-man insurance. Our management will evaluate the adequacy of our insurance
coverage from time to time and purchase additional insurance policies as needed. Our business
is, however, susceptible to risks arising from losses we sustain during the course of our
business operations and we cannot assure you that the insurance policies we have taken out are
always able to cover all losses we sustain. For further details see “Risk Factors – Risks Related
to Our Business and Industry – We have limited insurance coverage which could expose us to
significant costs and business disruption.”
We believe that the insurance coverage we currently have is in line with relevant industry
standards and is adequate for us to conduct normal business operations. During the Track
Record Period and up to the Latest Practicable Date, we did not experience any material claim
from a third party nor did we make any material insurance claim in the course of our
operations.
ENVIRONMENT, SOCIETY, AND CORPORATE GOVERNANCE
Environmental, Social, and Governance (ESG) considerations are an essential part of our
business strategy. We are committed to building a lasting brand, and we believe our long-term
success rests on our ability to make positive impacts on the environment and society. We
recognize that operating sustainably and social responsibly is not only the right thing to do but
is also essential to our long-term success and the well-being of our stakeholders.
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ESG Governance
We have established a tiered, comprehensive ESG management framework. The board of
directors is responsible for steering our overall ESG strategy, setting annual ESG goals, and
reviewing budgets and policies. We aim to build a sustainable community with our employees,
clients and partners by supporting local initiatives that aim to create effective and lasting
benefits to the local community through various initiatives that may include corporate
philanthropy and establish community partnerships. Under the supervision of our management,
we actively identify and monitor actual and potential impact of environmental, social and
climate-related risks on our business, strategy and financial performance, and incorporate
considerations of these issues into our business, strategic and financial planning. We have
established an ESG committee, led by the our CFO, to supervise overall ESG matters, review
ESG objectives, and report to the board of directors on our ESG progress. Our ESG committee
is further supported by our risk control and audit department, which would supervise and
implement our ESG projects, identify ESG-related risks to assist the management’s decision
making process, and prepare our ESG publication and disclosure.
Materiality Assessment
We conducted a materiality assessment to identify ESG topics that are material to us, from
which we are able to prioritize ESG aspects and strategize our action plan. We identify and
assess material ESG-related issues as follow:
 We build and continue to update our own ESG issues database based on the ESG
guidelines of the Hong Kong Stock Exchange, GRI, SASB and other relevant authorities,
with reference to ESG rating indicators from MSCI, Sustainalitics and DJSI;
 We identify potential material ESG topics which may affect our business or stakeholders
based on our actual development and characteristics of the industry;
 We engage internal and external stakeholders to participate in surveys to express their
concerns and opinions regarding various potential material topics, identify specific ESG
questions, determine the materiality of different issues and evaluate the impact of
different ESG issues on us;
 Based on the results of the questionnaire, we identify material ESG issues by considering
their respective impact on stakeholders and our sustainable development, and incorporate
such ESG issues into our strategies and development plans.
We have been maintaining a close relationship with the stakeholders in our business as we
believe they play a crucial role in maintaining business sustainability. Key stakeholders of our
business include our investors, customers, suppliers, employees, governments and
communities. Through continuous communication, we have been collecting their views and
opinions which help us to identify ESG-related risks and formulate the sustainability
framework to address those risks. We also maintain an open dialogue with the stakeholders to
receive their comments and understand their expectations on what the ESG issues matter most
via meetings, interviews and discussions.
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Identifying ESG Risks
We have adopted the following approaches and strategies to evaluate priorities and manage
material ESG-related issues:
(a) Identification – industry benchmarking
 We identify important topics with reference to HKEX, SASB and MSCI standards,
as well as benchmarking with leading domestic and foreign industry players.
 The materiality of each ESG area is determined based on the importance of each
ESG area to us through internal discussion with our management.
(b) Prioritization – stakeholder engagement
 We discuss with key stakeholders on key ESG areas identified to ensure that (i) all
the key aspects are covered; and (ii) the material issues are ranked in order of
importance.
(c) V alidation – determining material issues
 Based on the discussion with key stakeholders and internal discussion among our
management, our management ensured that all the key and material ESG areas,
which are important to our business development, are reported and complied with
relevant environmental laws and regulations.
Managing ESG Risks
We have adopted the following measures to identify, assess, manage and mitigate ESG risks.
Management of Environmental and Climate Changes
We continue to improve our management system for environmental sustainability and promote
effective implementation of environmental protection measures. We have established an
Eco-Environmental Protection Committee, chaired by the CEO, as well as a project
management sub-committee focused on carbon neutrality and green packaging. In addition, we
issued and implemented the Measures of Identifying and Evaluating Environment-related
Factors, Waste Management Measures and other protocols to safeguard our environmental
protection effort at an institutional level. We actively encourage and lead network partners to
participate in environmental initiatives, adopt standardized packaging protocols, attend
trainings and educational sessions.
We are actively responding to the carbon peaking and carbon neutrality goals by continuously
optimizing our energy usage structure and reducing our carbon emissions. In 2022, we
deployed over 150 LNG-powered tractors for our line-haul routes across the country to
facilitate long-distance transportation, and equipped line-haul vehicles with advanced GPS
system supported by GIS technology, which allows us to monitor anomalies in transportation
process, optimize the planning of line-haul routes and improve energy efficiency, which
effectively reduces carbon dioxide emissions by 20% compared to traditional diesel tractors.
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In the process of preparing our self-constructed logistic centers, we introduced a smart
management system to monitor the energy and water usage. To further mitigate the
environmental impact, we participated in various environmental programs including the
reforestation initiative led by Jiuquan City, Gansu Province, where we planted more than 2,000
saplings of poplar trees, date palm trees and sorrel trees in 2022.
Promoting Green Express Delivery Practice
We are dedicated to advancing green practices in every step of the express delivery process by,
among others, promoting e-waybills, “slim tapes”, reusable transfer bags, and reusable parcel
boxes, throughout our network.
We began implementing reusable transit bags in April 2021. As of June 30, 2023, we had
deployed over 20 million reusable transit bags throughout our network, which use RFID chips
that carry route tracking information. Our scanning technology uses RFID to collect
information such as transit status, package flow, loss tracking and warehouse storage. Each
usage of our RFID-enabled reusable transit bags can reduce carbon emissions by 169 grams.
As of June 30, 2023, our reusable transit bags had been used over 700 million times, reducing
carbon emissions by approximately 124,000 tons.
In August 2021, we established a research and development unit for reusable transit box, and
started implementing our reusable transit box, the Red Box, in March 2022. As of June 30,
2023, we have purchased over 40,000 Red Boxes and are in the process of deploying them
across our network. We also launched the initiative to recycle used corrugated fiberboard
boxes. In 2022, we deployed the designated recycle bins in over 4,000 outlets.
Additionally, compared with traditional paper sheet, our single-sheet e-waybill saves 72.5% of
paper consumables. By the end of 2022 we had fully implemented this e-waybill system
throughout our network. As a result, approximately 42,305 tons of base paper had been saved
in 2022, which is equivalent to approximately 79,110 tons reduced in carbon emissions.
Metrics and Targets
We have taken into account the quantitative information that reflect our management for
environmental and climate related risks, which primarily includes resource consumption and
emissions.
The following table sets forth a breakdown of our resource consumption and greenhouse gas
(“GHG”) emissions in China in 2020, 2021 and 2022:
Year ended December 31,
2020 2021 2022
Total energy consumption (MWh) /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100214,741 810,131 1,598,106
Total GHG emissions (tonnes CO 2
equivalent) /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H110065,347 261,261 540,170
GHG emissions (scope 1) /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H110051,652 201,980 375,330
GHG emissions (scope 2) /H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H1100/H110013,695 59,281 164,840
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We will continue to improve our environmental performance to fully prepare for the
establishment of clear environmental goals. We have implemented important performance
indicators such as gasoline and diesel consumption, electricity consumption and greenhouse
gas emissions, which are monitored at our country headquarters and regional sponsors. Based
on the performance in the past years, we will formulate environmental targets that are more in
line with the actual development of our Company in the future. We expect to reduce energy
consumption at our country headquarters in China by 5% in the second half of 2023 compared
to the same period in 2022. In terms of energy conservation and emission reduction, we
continue to optimize the energy use framework and reduce carbon emissions, and actively
respond to the goals of carbon peaking and carbon neutrality.
Anti-bribery and Anti-corruption
We have in place an anti-bribery and anti-corruption policy to safeguard against any fraud,
bribe or corruption. The policy explains potential bribery and corruption conduct and our
anti-bribery and anti-corruption measures. We make our internal reporting channel open and
available for our staff to report any bribery and corruption acts. We also provide regular
anti-corruption and anti-bribery compliance trainings for employees in order to cultivate a
good compliance culture.
Supply Chain Management
We depend on certain third-party service providers for transportation, supplies of equipment
and other services. If we are unable to select, monitor or manage those service providers and
suppliers, we may be exposed to risks of suppliers’ non-compliance with applicable laws and
regulations and unethical practices, which could diminish our competitiveness and harm our
reputation.
We have established a supplier approval process, through which suppliers must provide
relevant qualifications or certifications, such as their business licenses and operation licenses,
among others, and demonstrate legal compliance with environmental and social policies prior
to approval. If the suppliers are not compliant with the applicable laws and regulations
regarding safety and quality or commit misconducts, we may terminate our contracts with
them.
Social Responsibilities
Human Capital
We understand that our success is closely correlated to the well-being of our employees,
customers, and the communities where we operate. To that end, we have launched the
following social initiatives:
 Recruitment and equal employment in the workforce . We believe that our quality
personnel are our key to success and future development. We have been recruiting talents
from various channels, such as universities, online platforms, media advertising, talent
market, third-party recruitment agencies, headhunters, and internal referrals, and provide
training and promotion opportunities to our staff members of our own accord.
We have implemented principle of openness, fairness and impartiality when conducting
recruitment and has policies on compensation, dismissal, equal opportunities, diversity
and anti-discrimination. Accordingly, we give each job applicant an equal opportunity and
we have an internal policy in place to ensure that there is no discrimination as to
nationality, region, gender and ethnicity. We are committed to build a corporate culture
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of fairness, openness, integrity, and honesty, aiming to maintain our good reputation. As
of June 30, 2023, approximately 22.4% of our employees were female. As of the same
date, we had 77,551 employees below age 30, 52,862 employees between age 30 to 50,
and 1,522 employees above age 50, representing 58.8%, 40.1% and 1.2% of our total
workforce, respectively.
 Labor and Employee Rights . We respect and protect employees’ rights and interests, and
we strive to create a work environment of openness, fairness, impartiality and equal
recruitment. We forbid any forms of discrimination, we respect and provide equal
treatments to employees of different countries, nationalities, genders, religious beliefs
and cultural backgrounds, and we adopt a zero-tolerance policy against any form of child
labor. We also require our staff to conform to high ethical standards.
We have set up labor union and dedicated supervisory committees to hear the voice of
employees and delivery personnel through a myriad of channels ranging from telephone,
WeChat to email.
We closely monitor and strive to adhere to laws and regulations in each country where we
operate, and we implement internal management and control procedures to safeguard
rights and interests of every employee stipulated by relevant laws and regulations.
 Remuneration and benefits . We offered our employees competitive compensation
packages. We determine employee remuneration based on factors such as qualifications,
expertise and years of relevant experience. In accordance with applicable laws and
regulations, we currently participate in social insurance contribution plan organized by
the relevant local governments, including but not limited to, pension insurance plan,
medical insurance plan, unemployment insurance plan, a work-related injury insurance
plan, maternity insurance plan and housing provident fund.
 Career Development . We have established a solid talent cultivation mechanism and
created an online-offline hybrid training platform. We continuously improve our training
framework to empower every category of participant on our value chain and develop their
careers. We offer a broad range of courses and programs covering professional training,
general development, and management skills. We design training programs tailored for
different positions at various career stages, meeting the training needs of employees,
regional sponsors, network partners and delivery personnel. In 2022, we provided
approximately 800 hours of trainings to over 290,000 participants.
We have a complete employee career development system, to evaluate employees and
provide opportunities for promotion.
 Employee care . We care about the physical and mental health of employees. We regularly
organize physical therapy lecture and provide mental counseling session. For the delivery
personnel in our network, we offer support through mental health hotlines and other
benefits.
We procure additional commercial insurance for employees who travel frequently. We
also strive to help our employees balance their work and life. We organize various
recreational and sports activities for our employees. For example, we established different
sports clubs that include basketball, table tennis and soccer. Our badminton club
cooperated with a professional badminton club for professional training. In January 2022,
we launched the second “Jitu Union Warm Bee Action” and distributed condolences to
couriers with special difficulties. In Vietnam, we also set up our J&T Care Fund with
initial commitment of up to VND3.0 billion for our employees and their families who had
been heavily impacted by the COVID-19 pandemic.
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 Occupational health and safety . We have established a series of safety guidelines, rules
and procedures for different aspects of our operations, covering fire safety, operation
safety, warehouse safety, work-related injuries and emergency and evacuation procedures
to promote occupational employee’s health, safety and compliance with applicable laws
and regulations. We put the safety and health of our employees as our priority when
designing our operations. We have established and continue to update policies and
procedures relating to occupational health managements. We have also established a
Safety Committee chaired by our CEO, which oversees the overall safe management. In
2022, we obtained certification of the ISO14001 environmental management system and
ISO45001 occupational health and safety management system. We are also committed to
raising occupational health and safety awareness by organizing safety education and
training programs. In 2022, we have organized over 6,300 safety-related training sessions
to approximately 409,000 participants.
Charitable Endeavors
 Poverty alleviation and community support . We actively explore the rural market to
promote the sales of commodities to, and sales of agricultural products by, residents in
remote regions with the aim to help stimulate consumption in rural areas and increase the
income of rural residents. We actively cooperate with local governments in Jilin, Shaanxi,
Shanxi, Guangxi and other major agricultural provinces in China to bring local products
to the broader market by using our network of sorting centers, and have a dedicated team
to lead agricultural initiatives, including the setup of front-line warehouses designed
specifically for agricultural products. We also promote digital inclusion of merchants,
users and rural communities in countries where we operate, thereby helping alleviate
poverty across the country. We have set up a special program in Vietnam to facilitate
shipment of agricultural products and promote rural residents’ participation in
e-commerce via trainings and assistance programs.
 Support in time of need . Following the COVID-19 outbreak, we have been committed
to helping people affected by the pandemic during the most difficult times. We launched
initiatives in several countries to provide transportation and logistics support to local
governments. We provided our frontline employees with masks and other protective
equipment immediately after the outbreak. We also supported local communities in
Indonesia, Vietnam, Malaysia and other jurisdictions where we operate by donating
medical and rescue supplies, food, water and other basic necessities to frontline workers.
For example, in Malaysia we donated over 60,000 face masks to the police in February
2021. This is just one example of the hundreds of thousands of care packages, meals and
supplies that have been donated through the J&T network during the pandemic.
During the Track Record Period and up to the Latest Practicable Date, we had not been subject
to any fines or other penalties due to non-compliance in relation to health, work safety, social
or environmental regulations which had materially and adversely affected our financial
condition or business operations, and have not had any accidents or claims for personal or
property damage made by our employees.
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LEGAL PROCEEDINGS AND COMPLIANCE
During the Track Record Period and up to the Latest Practicable Date, we had not been a party
to, and were not aware of any threat of, any legal, arbitral or administrative proceedings,
which, in our opinion, would likely have a material and adverse effect on our business,
financial condition or results of operation. We may from time to time become a party to various
legal, arbitral or administrative proceedings arising in the ordinary course of our business.
Compliance
During the Track Record Period and up to the Latest Practicable Date, we had not been
involved in any material noncompliance incidents that have led to fines, enforcement actions
or other penalties that could, individually or in the aggregate, have a material and adverse
effect on our business, financial condition and results of operations.
TRANSFER PRICING ARRANGEMENTS
Our Company, our controlled affiliated entities and our subsidiaries conduct intra-group
provisions of services and other related party transactions in accordance with our transfer
pricing policy. We follow the fundamental principle that intra-company transactions must be
conducted at an arm’s length basis.
During the Track Record Period and up to the Latest Practicable Date, our intra-Group
transaction mainly included the following:
 Provision of technical service. J&T Express (Shanghai) Acme Supply Chain Management
Co., Ltd. (ʮ̡)( “ J&T Acme ”), Shenzhen Y unlu
Information Technology Co., Ltd (ப΂ʮ̡)( “Shenzhen Yunlu ”)
and Shanghai Jiexiao Information Technology Co., Ltd. (ʮ̡)
(“Shanghai Jiexiao ”) provided technical services to J&T Express China including system
development, software upgrade, maintenance and troubleshooting etc. Similarly,
Shenzhen Y unlu and Shanghai Jiexiao provided technical services to Winner Star
including system development, software upgrade, maintenance and troubleshooting etc.
tailored for our Southeast Asia operations.
 Provision of logistics services. J&T Express China provided other Group entities express
delivery services including sales of e-waybill, centralized parcel sorting, distribution and
transportation etc. Other group entities also provided J&T Express China with various
express delivery services such as centralized parcel sorting, distribution and
transshipment as needed.
 System and software licensing and Provision of technical support service. Winner Star
granted the licenses to other group entities for use of the system and software. Winner
Star also provided technical support services to group entities who were counterparties of
the software licensing transactions.
 Trademark Licensing to subsidiaries. Winner Star granted the license to other group
entities to utilize the “J&T express” trademark.
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The Organization for Economic Co-operation and Development (“ the OECD ”), an
international organization of cross-border cooperation, promulgated the transfer pricing
guidelines for multinational enterprises and tax administration (“ the OECD TP Guidelines ”),
which is generally followed by the relevant tax jurisdictions involved in the related party
transaction worldwide. According to the OECD TP Guidelines, these intra-Group transactions
should be priced at arm’s length principle.
To keep in compliance with the relevant transfer pricing regulations, we have engaged third
party tax advisers to provide independent analysis and opinion on the specific transactions in
relation to system and software licensing and trademark licensing, which we refer to in the
following paragraphs as the “Covered Transaction,” in accordance with the OECD TP
Guidelines, which primarily identified the arm’s length pricing and/or profit range for the
Covered Transaction.
During the Track Record Period and up to the Latest Practicable Date, Winner Star, as the
owner of trademark and software copyrights of our business in Southeast Asia, granted the
licenses to other group entities in Southeast Asia for use of the system and software and the
licenses to utilize the “J&T Express” trademark.
Based on the functional profiles of Winner Star and other group related entities, the
Comparable Uncontrolled Price method (“ CUP”) and the Transactional Net Margin Method
(“TNMM ”) are selected as the most appropriate transfer pricing methods to evaluate the
licensing arrangement between Winner Star and other group entities in Southeast Asia during
the Track Record Period and up to the Latest Practicable Date. The CUP and TNMM methods
are commonly accepted in the OECD TP Guidelines and are stipulated in relevant TP
regulations. Based on the transfer pricing review, it is indicated that the license fee rate and the
profit level indicators of the licensees are generally within the profit range that was considered
an appropriate range for the arm’s length transactions during the Track Record Period and up
to the Latest Practicable Date.
In addition, Winner Star and most other group related entities in Southeast Asia have been
preparing transfer pricing local files on annual basis for the Track Record Period to meet the
applicable TP documentation compliance requirement.
During the Track Record Period and up to the Latest Practicable Date, we were not subject to
any penalty, investigations, inquiries or transfer pricing audits carried out by local tax
authorities in relation to these intra-Group transactions.
Based on the above, and as advised by our tax advisers, our Directors are of the view that the
above-mentioned inter-company transactions are in line with the arm’s length principle and we
are in compliance with the relevant transfer pricing laws and regulations during the Track
Record Period and up to the Latest Practicable Date.
To ensure our ongoing compliance with the applicable transfer pricing laws and regulations, we
plan to take the following measures:
 continue to engage third party tax advisers to carry out review on transfer pricing
initiatives to ensure our transfer pricing arrangements are in line with arm’s length
principle;
 provide training to teams responsible of such transactions, keeping them informed of
transfer pricing laws and regulations in different jurisdictions; and
 continue to monitor the profitability of our subsidiaries and controlled affiliated entities
and adjust pricing arrangements as appropriate.
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OUR GLOBAL OPERATION RISKS
Our Operations in the Philippines and Cambodia
Our express delivery operations span 13 countries. Among these countries, Cambodia and the
Philippines are not signatories to the IOSCO MMOU, which may present certain difficulties for
the Hong Kong regulators to seek regulatory assistance and information from the statutory
securities regulator in the Philippines and Cambodia in a readily available manner. The
following measures are adopted to mitigate such enforcement risk so that the Hong Kong
regulators can obtain information as to our operations in the Philippines and Cambodia as and
when necessary and in a timely manner:
 Our operations in the Philippines and Cambodia, on an aggregate basis, are comparatively
not significant to our operations in jurisdictions. Our Company is incorporated in the
Cayman Islands. We maintain a centralized management system that ensures that our
Directors and senior management would have full and timely access to books and records
regarding our operations in the Philippines and Cambodia. For example, we have an
internal ERP system where a group entity can only enter into major transactions after
management’s review and approval. For our ledgers and management accounts, we have
promulgated a list of action items and procedures for our account closing process on our
group level. Our headquarters teams set monthly closing deadline for each region and
review the compliance status of each region. The finance team of each region is required
to submit the management accounts and relevant materials in our designated finance
system by the relevant deadlines. These measures ensure that our management team will
have full and timely access to relevant books and records regarding our business
operations in the Philippines and Cambodia, including full sets of ledgers, management
accounts, a full list of bank accounts and all major agreements. Given securities
regulators of the Cayman Islands are signatories to the IOSCO MMOU, we believe we
will be in compliance with Rule 8.02A of the Listing Rules.
 In the six months ended June 30, 2023, our operations in the Philippines and Cambodia
in aggregate contributed to approximately 7.4% of our total revenue. As we continue to
expand globally and enhances our market positions in markets such as China, we do not
expect the materiality of our operations in the Philippines and Cambodia to increase in the
near future. In the Philippines, private express and/or messenger delivery service as well
as domestic airfreight forwarding, were previously considered “public utilities” which are
subject to a minimum of 60% Filipino ownership requirement. However, the PSA
Amendment has taken out these activities from the definition of “public utilities” and
these activities are therefore no longer subject to minimum 60% Filipino ownership. For
details, see “Regulatory Overview – Laws and Regulations in Relation to Our Business
in the Philippines” in Appendix III to this prospectus.” Although we indirectly own only
40% equity interests in PH GJE during certain periods of the Track Record Period,
through certain agreements and arrangements, we are considered, from an accounting
perspective, to have control over PH GJE, see “Financial Information – Critical
Accounting Policies and Estimates – Subsidiaries and controlled affiliated entities.” We
will continue to monitor the significance of our operations in these markets and, in the
event there is a material increase in their materiality, we will consult the Stock Exchange
on any additional suitable measures to ensure our compliance with Listing Rules.
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 The Company undertakes that it will cooperate, and cause relevant employees and staff
to cooperate in all investigations and proceedings conducted or initiated by the Stock
Exchange, the SFC, the Independent Commission Against Corruption (the “ ICAC ”), the
Commercial Crimes Bureau of the Hong Kong Police Force (the “ CCB”), the AFRC and
other law enforcement agencies in Hong Kong. The SFC, the ICAC, the CCB, the AFRC
or other law enforcement agencies in Hong Kong will be able to deliver service notice at
our Company’s registered address in Hong Kong and will have full and timely access to
materials that the Group uses to prepare its local financial statements in Cambodia and the
Philippines.
We believe that, with internal control and review measures in place and our commitment
to cooperating with relevant authorities, regulators and enforcement agencies in Hong
Kong will not face any impediment in accessing our books, records and documents in
relation to the preparation of our Group’s financial statements if necessary.
Our Operations in China and Indonesia
China
We operate in certain industries that are subject to restrictions under the current PRC laws and
regulations. In order to comply with such laws and regulations, we operate our business in
China through our consolidated affiliated entities, in which we have no ownership interest and
rely on a series of contractual arrangements with our consolidated affiliated entities and their
respective equity holders to control and operate these businesses. See “Contractual
Arrangements – PRC Contractual Arrangements” for more details.
Indonesia
Foreign Ownership Restrictions in Indonesia
We provide nationwide commercial courier services in Indonesia. We collect parcels from
senders, transport such parcels to regional sorting hubs. The regional sorting hubs sort, further
pack and dispatch the parcels to the destination sorting hubs, which further send parcels to
delivery outlets or service stations for delivery to end customers. The commercial courier
services that we provide are currently subject to foreign ownership restrictions under Indonesia
law.
In Indonesia, only Foreign Postal Operators may hold equity interests in an Indonesian
company that can engage in postal services in limited circumstances by fulfilling the
Partnership Requirements, and such company need to hold equity interests in a joint venture
company formed with an Indonesian Postal Services Company whose entire capital is owned
by either the Indonesian government, Indonesian citizens or Indonesian legal entities wholly
owned by Indonesian citizens. See more details on the Partnership Requirements, see
“Contractual Arrangements – Indonesia Contractual Arrangements.”
The Indonesian Postal Law defines a “Foreign Postal Operator” as a foreign company that
provides postal services outside Indonesia, which requires that such foreign company directly
engages in postal activities outside Indonesia and does not take into consideration any
operations engaged by its affiliates. The Indonesian Postal Law and relevant implementing
regulations also provides that such joint venture company’s operations must be limited to the
areas of provincial capitals (i.e., cannot provide any inter-city pick-up or delivery services
outside provincial capitals).
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Necessity of the current Indonesian Contractual Arrangements
Due to our corporate structure, we currently enter into the Indonesian Contractual
Arrangements. We cannot directly hold any equity interest in Indonesian Opco without
substantially changing our corporate and operational structure.
To conduct express delivery services through a joint venture company under the Partnership
Requirements would require us to abandon our current national express delivery network,
curtail our ability to reach end customers, reduce our competitiveness in Indonesia and
restructure our tax efficient structure, all of which are fundamentally detrimental to our
operations and future prospects. Specifically:
 We will be forbidden from providing any pick-up or delivery services outside provincial
capitals. If we were to hold any direct equity interest in a Postal Services Company, we
may only hold equity interest in a joint venture company to be formed with in accordance
with the Partnership Requirements. The joint venture company would not be permitted to
engage in any operation outside the provincial capitals, which would fundamentally
change our current operations in Indonesia. Furthermore, foreign ownership would need
to be held by an operating company within us instead of an intermediate holding
company. Even if we are able to restructure our corporate structure which would result in
significant tax burdens, it is practically and economically impossible for us to conduct our
business under the joint venture structure under the Partnership Requirements.
 We have substantial operations outside provincial capitals. Inter-capital parcels only
accounts for an insignificant portion of our parcel volume in Indonesia. We have
significant operations providing courier services outside provincial capitals in Indonesia
(including, in particular, distributing packages to and connecting a vast majority of
lower-tier cities, counties and towns), and such operations are indispensable to our overall
courier services in Indonesia. Therefore, to conduct express delivery services through a
joint venture company under the Partnership Requirements would require us to abandon
our current national express delivery network, curtail our ability to reach end customers
and reduce our competitiveness in Indonesia, all of which are fundamentally detrimental
to our operations and future prospects.
 We have an integrated nationwide express delivery network. It is practically impossible
for us to divest our inter-capital operations in Indonesia from Indonesian Opco. We
operate an integrated nationwide express delivery network, and it is practically
impossible for us to split off our inter-capital operations, or to divest such operations from
Indonesian Opco and or conduct such operations separately. With well-planned line-haul
routes and high-capacity fleet connecting sorting subs at strategic locations with
high-volume automated sorting capacities, we, via Indonesian Opco, reach and connect
cities, countries and villages in Indonesia, satisfy customers’ demands for one-stop
courier delivery services and enable them to send their parcels to anywhere they want in
Indonesia. We generate a substantial amount of parcels from leading e-commerce
platforms. Our capabilities in achieving broad network coverage while maintaining high
efficiency and short settlement cycles is the foundation for our cooperation with these
strategic partners. As such, changing the scope of our operations in Indonesia (i.e.
divesting inter-capital operations from Indonesian Opco) and abandoning our current
integrated nationwide express delivery service network would materially and adversely
impact our ability to reach customers, provide efficient services to strategic partners, and
thus materially reduce our competitiveness in Indonesia, all of which are fundamentally
detrimental to our operations and future prospects. Furthermore, even though the
Indonesian Postal Law sets out a separate idea of “operation within/outside provincial
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capitals”, providing inter-capital services or services outside provincial capitals only will
be contrary to current industry practices. It is practically impossible to meet customers’
expectation for an express delivery company with nationwide coverage and demands for
connectivity and efficiency without an integrated network covering operations both
between and outside provincial capitals.
LICENCES AND REGULATORY APPROV ALS
Licences, Permits and Registrations
Our Directors confirm that during the Track Record Period and up to the Latest Practicable
Date, we had obtained all the approvals, permits, consents, licences and registrations that are
material to our business and operations and all of them were in force as of the Latest
Practicable Date. We had obtained or been awarded the following licences, permits and
registrations that are, in the opinion of our Directors, material to our business, as of the Latest
Practicable Date:
Holder License, certificate or registration Date of grant Date of expiry
J&T International
Logistics China
International Freight Forwarding
Agencies
April 19, 2021 Long-term
J&T Express China Courier Service Operation Permit
for International Courier Service
November 17, 2020 November 16, 2025
J&T Express China Courier Service Operation Permit
for Domestic Courier Service
June 25, 2019 June 24, 2024 (1)
Y uyi Transportation
(Chongqing) Co., Ltd.
Road Transportation Operation
Permit
February 13, 2020 February 13,
2024 (1)
PT GJE Postal License March 18, 2019 Long term
J&T Express (Malaysia)
Sdn. Bhd.
Courier License April 1, 2021 March 31, 2024 (1)
Thuan Phong Express
Company Limited
Domestic Postal License May 27, 2016 May 27, 2026
Thuan Phong Express
Company Limited
International Postal License December 30, 2021 December 30, 2031
Note:
(1) We are in the process or will be renewing the licenses, permits or registrations in accordance with relevant
laws, regulations and rules. We do not expect any legal impediment to renew those licenses, permits or
registrations.
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RISK MANAGEMENT AND INTERNAL CONTROL
Our senior management are responsible for formulating and overseeing the implementation of
our internal control measures and the effectiveness of our risk management system, which is
designed to provide reasonable assurance regarding the achievement of objectives relating to
operations, reporting and compliance.
Operational Risk Management
See “– Security and Safety” in this section for information about our for information about our
security and safety protocols.
Human Resources Risk Management
We have established internal control policies covering various aspects of human resources
management such as recruiting, training, work ethic and legal compliance. The demand in our
industry for skilled employees is intense and we may be adversely affected by the departure of
any key employees. See “Risk Factors – Risks Related to Our Business and Industry – Overall
tightening of the labor market, increases in labor cost or any possible labor unrest may affect
our business as we operate in a labor-intensive industry.” Each of our executive officers and
key employees has entered into an employment agreement with confidentiality, intellectual
property and non-competition provisions with us.
We distribute copies of our employee handbook to all of our employees. The employee
handbook contains, among other things, a code of conduct that each employee must comply
with.
We provide regular trainings to our staff on work ethic, working procedures, internal policies,
management, technical skills and other aspects that are relevant to their day-to-day work.
Through these trainings, we ensure their skillset is up-to-date and meets our requirements.
Information Technology Risk Management
See “– Data Security and Privacy” in this section for information about our information
security procedures and policies.
Financial Reporting and Risk Management
We have adopted comprehensive accounting policies in connection with our financial reporting
risk management. We have established strict internal reimbursement and financial activities
reporting policies. In particular, our finance department has implemented special inspection
and verification procedures on invoices, bills, notes and other financial instruments, to check
the legitimacy of the original instruments we receive and use. Our finance department also
checks whether the amount and time provided on the face of the instrument match the relevant
contracts. Our finance team has extensive experience in finance and financial reporting. We
provide ongoing training to our finance staff to ensure that our financial reporting and risk
management policies are well-observed and effectively implemented.
AWARDS AND RECOGNITION
We have repeatedly been recognized for the quality and popularity of our products and
services. The following table sets forth a few of our major awards and recognitions during the
Track Record Period.
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Award/recognition Country Award year Awarding institution/authority
Asian Excellent Brand 2023 –
Gold Medal for Asian Quality
Products and Services
Vietnam 2023 Asian Economic Research Institute
in collaboration with Vietnam
Union of Science and Business
Development
SBR Technology Excellence
Awards 2023 – E-Commerce –
Logistics
Singapore 2023 Singapore Business Review
Last-Mile Delivery Company of
the year
Saudi Arabia 2023 KSA Logistics & Transport Awards
Top Brand Award 2022 Indonesia 2022 Marketing.co.id
Top 10 Asia Excellent Brand
2022
Vietnam 2022 Asian Economic Research Institute
Vietnam Digital Awards 2022 Vietnam 2022 Vietnam Digital Communications
Association
Philippines’ Best Employers for
2023 Award
the Philippines 2022 Philippine Daily Inquirer & Statista
Singapore Partner Experience of
the Y ear – Logistics
Singapore 2022 Asian Business Review
2021 Annual Development
Award in the Express Industry
(2021ᆤ) & 2021
Social Responsibility Award
(2021ึப΂ᆤ)
China 2022 China Post and Express News
Office (ٟ)
PR Newswire Corporate
Communications Awards 2022 –
Global Development Award
(2022ɽᆤ –೐̈
ᆤ)
China 2022 PR Newswire (ٟ)
Reclame AQUI (ਕᆤ) Brazil 2022 Reclame AQUI
Top Brand Award 2021 (2021 ϋ
೐ᆤ)
Indonesia 2021 Frontier Group
Most Engage Delivery Services
Brand 2021 Award (2021 ௰௫̈
೐)
Indonesia 2021 MIX MarComm
Bronze Stevie Awards for
Achievement in Growth and
Branded Content Campaign of
2021
the Philippines 2021 The Stevie Awards
BUSINESS
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Award/recognition Country Award year Awarding institution/authority
Company of the Y ear for
Services & Fast Moving
Company of the Y ear
the Philippines 2021 Asia Leader’s Awards
2021 Outstanding Caring
Enterprise & 2021 Outstanding
Public Welfare Practice Award
(2021௫̈ฌːΆุᆤʿ
2021௫̈ʮूྼስᆤ)
China 2021 The Fourth Social Responsibility
Conference (ึப΂ɽึ)
Top Brand Award 2020 (2020 ϋ
೐ᆤ)
Indonesia 2020 Frontier Group
Digital Award Innovation Award
(ᅰο௴อᆤ)
Indonesia 2020 Warta Economic Research and
Consulting
Top 10 Asia-Pacific Outstanding
Brand 2020 (Top 10 ԭ˄ήਜՊ
೐ᆤ)
Vietnam 2020 Asia-Pacific Economic Center and
the Asia-Pacific Economic Review
Organization
Business Newcomer of the Y ear
in the Courier Services Industry
(ਠุอɛᆤ)
the Philippines 2020 National Customers’ Choice
Awards
BUSINESS
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PRC CONTRACTUAL ARRANGEMENTS
Regulatory Background
Overview
Foreign investment activities in the PRC are mainly governed by the Special Administrative
Measures (Negative List) for the Access of Foreign Investment (the “ Negative List ”) and the
Catalog of Industries for Encouraging Foreign Investment (the “ Encouraging Catalog ”),
which was promulgated and is amended from time to time jointly by the MOFCOM and the
NDRC. The Negative List and the Encouraging Catalog divides industries into three categories
in terms of foreign investment, namely, “encouraged”, “restricted”, and “prohibited.”
Industries not listed in the Encouraging Catalog and the Negative List are generally deemed as
falling into a fourth category “permitted.” The currently effective Negative List is the Special
Administrative Measures (Negative List) for the Access of Foreign Investment (2021 V ersion)
(the “ 2021 Negative List ”), which became effective on January 1, 2022. As advised by our
PRC Legal Adviser, a summary of our business/operation that is subject to foreign investment
restriction or prohibition in accordance with the Negative List, the Encouraging Catalog and
other applicable PRC laws and on certain interview with governmental authority is set out
below (the “ Relevant Businesses ”):
As advised by our PRC Legal Adviser, Article 51 of the Postal Law of the PRC ( ʕശɛ͏΍
ج݁prohibits foreign investment in a business that operates and provides domestic
express delivery of letters. Similarly, according to the 2021 Negative List, promulgated by the
NDRC and the MOFCOM, postal services and domestic express delivery of letters are
industries where foreign investment is not permitted, i.e., prohibited categories.
Pursuant to the Administrative Measures on the Courier Service Market (ج)
and the Administrative Measures on Courier Service Operation Permits ( Ҟ჈ุਕ຾ᐄ஢̙၍
جany entity operating courier services within a province, autonomous region or
municipality, including but not limited to delivery of letters, parcels and other items, must
obtain a Courier Service Operation Permit ( Ҟ჈ุਕ຾ᐄ஢̙ᗇ) from the provincial Postal
Administrations, and any entity operating courier services across multiple provinces, including
but not limited to delivery of letters, parcels and other items, must obtain a cross-provincial
Courier Service Operation Permit ( Ҟ჈ุਕ຾ᐄ஢̙ᗇ) from the State Post Bureau (ඉ
҅).
Given that the Company provides an integrated service with respect to its express delivery
services and it is unlikely for the Company to be able to successfully apply for two separate
Courier Service Operation Permits for two separate entities using the same stations, facilities
and service network, we believe that it is neither legally nor commercially practicable to
separate the domestic express delivery of non-letters from the Company’s domestic express
delivery of letters which rely on the Courier Service Operation Permit and/or are subject to
foreign ownership restrictions pursuant to the 2021 Negative List (the “ Prohibited
Businesses ”) for the following reasons:
(a) we currently do not distinguish between letters and non-letters at our service stations and
it would be impracticable from a manpower and cost perspective for us to enforce
additional categorisations at such customer service stations as all customer service
stations currently use the same finance, accounting and logistics management technology
systems;
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(b) our delivery facilities and personnel are currently fully integrated and it would incur
significant additional costs for us to consciously delineate the delivery of letters and
non-letters due to the need to form separate administrative systems, retrain our personnel
and revamp our current service interface; and
(c) the use of a single integrated system for both letters and non-letters would enable us to
maximise economies of scale and our data integrated platforms allows us to enhance our
network management, service quality management, customer relationship management,
transportation management and device and materials management. This enhances the
customer experience and also reduces inefficiencies and wastage across our network,
allowing us to provide better service at a lower cost to retain our competitive advantage.
Our PRC Legal Adviser conducted verbal consultations in February and June 2023 with market
regulation offices of 17 provincial Postal Administrations (the “ Regulatory Consultations ”),
during which the corresponding officers confirmed that (i) applicants must fulfill a number of
conditions to obtain a Courier Service Operation Permit, including whether the applicant has
its own standalone delivery stations, facilities, delivery capability and service network; and (ii)
a separate Courier Service Operation Permit will not be issued to two separate entities which
use the same delivery stations, facilities, delivery personnel and service network. As advised
by our PRC Legal Adviser, the daily duties of such provincial Postal Administrations, include,
among others: (i) the review of application for provincial Courier Service Operation Permit;
(ii) the review and verification for application of cross-provincial Courier Service Operation
Permit under the direction of the State Post Bureau; (iii) the implementation of market entry
and exit rules of courier and postal services in accordance with applicable laws; and (iv) the
enforcement of the national and provincial courier and postal services related laws and
regulations. In light of the foregoing, our PRC Legal Adviser is of the view that such consulted
officials are competent persons to give the above confirmation.
Consequently, it is unlikely that our Company can obtain or will in the foreseeable future
obtain separate cross-provincial Courier Service Operation Permits for two separate entities
which use the same delivery stations, facilities, delivery personnel and service network. In
other words, as advised by our PRC Legal Adviser, two separate entities under the Group may
obtain a cross-provincial Courier Service Operation Permits only if their delivery stations,
facilities, delivery personnel and service network do not overlap.
J&T Express China is currently holding a cross-provincial Courier Service Operation Permit.
J&T Express China is a wholly-owned subsidiary of Shanghai Yishangshiye (the “ PRC
Holdco ”), which is a Consolidated Affiliated Entity of the Company.
In addition, following the acquisition of BEST Express China, the Group acquired another
cross-provincial Courier Service Operation Permit by acquiring 100% of the equity interests in
Hangzhou BEST on December 8, 2021. The two cross-provincial Courier Service Operation
Permits held by each of J&T Express China and Hangzhou BEST are based on their respective
standalone delivery stations, facilities, delivery personnel and service network before the
acquisition of BEST Express China. As of the Latest Practicable Date, all of the aforesaid
delivery stations, facilities, delivery personnel and service network had been all consolidated
to have been possessed and operated by J&T Express China. After the completion of the
consolidation, Hangzhou BEST will not possess any delivery stations, facilities, delivery
personnel or service network, and will dispose of its cross-provincial Courier Service
Operation Permit in due course.
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The Contractual Arrangements also include certain business that are not relying on the Courier
Service Operation Permit and/or not subject to foreign ownership restrictions pursuant to the
2021 Negative List, which is the short messaging service (“ SMS”) business. The revenue
contribution of the SMS business under the Contractual Arrangements to our Group amounted
to approximately 0.03%, 0.04% and 0.06% for the years ended December 31, 2020, 2021 and
2022, respectively, with the remaining revenue contribution under the Contractual
Arrangements arising from Prohibited Businesses. As at the date of this prospectus, the
Company has started the separation of the SMS business from the PRC Contractual
Arrangements by transferring the entire equity interests of the Consolidated Affiliated Entity
which operates the SMS business to a wholly owned subsidiary of the Company. The
restructuring is expected to be completed within 6 months. Before completion of the
restructure, the Company confirms that it will (and will have measures in place to) ensure the
SMS business under the PRC Contractual Arrangements will remain immaterial after the
Listing and its annual revenue contribution relative to the Group will be below 5%. Our finance
department will monitor the proportion of revenue generated from the SMS business and report
the status to our senior management on a quarterly basis, and, our audit committee will also
review the proportion of the revenue generated from the SMS business on a quarterly basis, to
ensure it will remain below 5% and will make adequate disclosure on an ongoing basis in our
Company’s annual report after the Listing.
For further details of the limitations on foreign ownership in PRC companies conducting the
aforementioned business under PRC laws and regulations, see “Regulatory Overview”.
Overview of Our PRC Contractual Arrangements
Because foreign investment in certain areas of the industry in which we currently operate is
subject to restrictions under current PRC laws and regulations as outlined above, and to
maintain the business operations and the effectiveness of license and permits held by J&T
Express China, J&T Express China and its relevant holding company and subsidiaries which
are engaged in the domestic express delivery of letters business must be controlled by the
Company through the Contractual Arrangements.
The PRC Holdco, Shanghai Yishangshiye is held by Wu Rongmei (޵as to 99% and Liu
Wei ( ᄎਃ) as to 1%. Wu Rongmei (޵is the office manager of J&T Express China and
the director of J&T Express (Shanghai) Acme Supply Chain Management Co., Ltd. ( ɪऎ฽Մ
ʮ̡) and J&T Express China and Liu Wei ( ᄎਃ) is the supervisor of J&T
Express (Shanghai) Acme Supply Chain Management Co., Ltd. (ࠢ
ʮ̡) and J&T Express China. Both Wu Rongmei (޵and Liu Wei ( ᄎਃ) have been the
Group’s PRC regional senior managers since the Group entered the China market. Considering
their rich industry experience, their long time commitment to and in-depth understanding of the
Group, the Company considers that they are suitable to be the PRC Registered Shareholders.
The PRC Contractual Arrangements (set out in more detail below) allow for our Company
(or our wholly-owned subsidiaries) to exercise control of our Consolidated Affiliated Entities.
Further, the PRC Registered Shareholders have, in the shareholder rights proxy agreement,
given its irrevocable undertakings that address potential conflicts of interests that may arise in
connection with the PRC Contractual Arrangements.
In view of the aforementioned PRC regulatory background, after consultation with our PRC
Legal Adviser, we determined that it was not viable for our Company to hold the Consolidated
Affiliated Entities directly through equity ownership. Instead, we decided that, in line with
common practice in industries in the PRC subject to foreign investment restrictions, we would
gain effective control over, and receive all the economic benefits generated by the businesses
currently operated by the Consolidated Affiliated Entities through the PRC Contractual
Arrangements between the PRC WFOE, on the one hand, and Shanghai Yishangshiye and its
shareholders, on the other hand. The PRC Contractual Arrangements allow the results of
operations and assets and liabilities of the Consolidated Affiliated Entities to be consolidated
into our results of operations and assets and liabilities under IFRSs as if they were subsidiaries
of our Group.
CONTRACTUAL ARRANGEMENTS
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In order to comply with PRC laws and regulations while availing ourselves of international
capital markets and maintaining effective control over all of our operations, we commenced a
series of reorganization activities. In replacement of certain of the previous contractual
arrangements and to comply with the requirements set out in HKEX-LD43-3, the PRC
Contractual Arrangements currently in effect were entered into on January 18, 2023, whereby
the PRC WFOE have acquired effective control over the financial and operational policies of
the Consolidated Affiliated Entities and have become entitled to all the economic benefits
derived from their operations. As advised by the Company’s PRC Legal Adviser, the Company
will not incur additional PRC income tax and business tax as a result of the termination and
replacement of the previous contractual arrangements on the basis that there was no material
change to the contractual arrangements.
Our Directors believe that the PRC Contractual Arrangements conferring significant control
and economic benefits from Shanghai Yishangshiye to the Company are fair, enforceable and
reasonable because: (i) the PRC Contractual Arrangements were freely negotiated and entered
into between the PRC WFOE and Shanghai Yishangshiye; (ii) by entering into the exclusive
business cooperation agreement with our PRC WFOE, which is our Group’s subsidiary
incorporated in the PRC, Shanghai Yishangshiye will enjoy significant control and economic
and technical support from us, as well as a better market reputation after the Listing, and (iii)
a number of other companies use similar arrangements to accomplish the same purpose.
The PRC Holdco(2)
Onshore subsidiaries
100%
Technical support,
business support
and relevant
consultation services
Service Fees
The Company
The PRC WFOE(1) PRC Registered
Shareholders(3)
100%
Intermediate holding companies
100%
Notes:
(1) The PRC WFOE provides technical support, business support and relevant consultation services in exchange
for service fees from Shanghai Yishangshiye. See “Contractual Arrangements – Our Contractual Arrangements
– Summary of the agreements under the PRC Contractual Arrangements and other key terms thereunder –
Exclusive Business Cooperation Agreement”.
(2) The PRC Holdco refers to Shanghai Yishangshiye, which is owned as to 99% by Wu Rongmei (޵and
1% by Liu Wei ( ᄎਃ) (the “ PRC Registered Shareholders ”), respectively.
CONTRACTUAL ARRANGEMENTS
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--- page 278 ---
(3) The PRC Registered Shareholders executed an exclusive option agreement in favor of the PRC WFOE for the
acquisition of all or part of the equity interests in and all or part of the assets of Shanghai Yishangshiye. See
“Contractual Arrangements – Our Contractual Arrangements – Summary of the agreements under the PRC
Contractual Arrangements and other key terms thereunder – Exclusive Option Agreement”. The PRC
Registered Shareholders executed shareholder rights proxy agreements in favor of the PRC WFOE, for the
exercise of all shareholders’ rights in Shanghai Yishangshiye. See “Contractual Arrangements – Our
Contractual Arrangements – Summary of the agreements under the PRC Contractual Arrangements and other
key terms thereunder – Shareholder Rights Proxy Agreement”. The PRC Registered Shareholders granted
security interests in favor of the PRC WFOE, over the entire equity interests in Shanghai Yishangshiye. See
“Contractual Arrangements – Our Contractual Arrangements – Summary of the agreements under the PRC
Contractual Arrangements and other key terms thereunder – Equity Pledge Agreement”.
(4) “
” denotes beneficial ownership in the equity interest. The PRC WFOE is an indirect wholly-owned
subsidiary of the Company.
(5) “ ” denotes contractual relationship.
(6) “ ” denotes the control by the PRC WFOE over the PRC Registered Shareholders and Shanghai
Yishangshiye through (i) proxy agreement to exercise all shareholders’ rights in Shanghai Yishangshiye,
(ii) exclusive options to acquire all or part of the equity interests and assets of Shanghai Yishangshiye and
(iii) equity pledges over the equity interests in Shanghai Yishangshiye.
Our Group will adopt the following measures to further enhance our Group’s control over the
PRC Holdco: (a) as part of the internal control measures, major issues arising from
implementation of the PRC Contractual Arrangements with the PRC Holdco and onshore
subsidiaries will be regularly reviewed, at least on an annual basis, by the Board upon Listing.
Our Board will determine, as part of its periodic review process, whether legal advisors and/or
other professionals will be retained to assist the Group to deal with specific issues arising from
the PRC Contractual Arrangements; (b) the relevant business units and operation divisions of
our Group will report regularly to the senior management of our Company in relation to
compliance and performance conditions under the PRC Contractual Arrangements and other
related matters; and (c) the company seals and crucial corporate certificates of the PRC Holdco
are kept by our Group’s administrative department. Any employee of our Group (including the
PRC Registered Shareholders) who wishes to use the seals will have to obtain internal approval
from the business, finance and legal departments of the Group, as well as approval from the
senior management members of our Company, depending on the importance or transaction
value of the document to which the seal/seals will be affixed.
Circumstances under which we will unwind the PRC Contractual Arrangements
Our Group will unwind and terminate the PRC Contractual Arrangements as soon as
practicable in respect of the operation of our supply chain solutions and logistics services
business to the extent permissible and we will directly hold the maximum percentage of
ownership interests permissible under relevant PRC laws and regulations in the event that PRC
regulatory restrictions on foreign ownership of the relevant business cease to exist or allow the
relevant business to be held by sino-foreign equity joint ventures or wholly-owned foreign
investment entities.
CONTRACTUAL ARRANGEMENTS
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Summary of the agreements under the PRC Contractual Arrangements and other key
terms thereunder
A description of each of the specific agreements that comprises the PRC Contractual
Arrangements is set out below.
Exclusive Business Cooperation Agreement
As part of the PRC Contractual Arrangements, Shanghai Yishangshiye entered into the
exclusive business cooperation agreement (the “ Exclusive Business Cooperation
Agreement ”) with the PRC WFOE, pursuant to which, in exchange for service fees, Shanghai
Yishangshiye agreed to engage the PRC WFOE as its exclusive provider of the following
technical support, business support and relevant consultation services:
 the license of relevant software and technologies to Shanghai Yishangshiye which are
legitimately owned by the PRC WFOE and required by Shanghai Yishangshiye’s
businesses;
 the development, maintenance and updates of relevant software required by Shanghai
Yishangshiye’s businesses;
 the design, installation, daily management, maintenance and updating of computer and
network systems, hardware equipment and database;
 the development and testing of new products;
 the technical support and professional trainings for Shanghai Yishangshiye’s staff;
 the assistance for Shanghai Yishangshiye in consultations, collections and surveys of
technical and market information (other than those market surveys which are prohibited
from being conducted by a wholly foreign-owned entity according to PRC laws);
 providing enterprise management consultation for Shanghai Yishangshiye;
 leasing of equipment and assets; and
 other relevant technical services and consultation services as required by Shanghai
Yishangshiye from time to time to the extent permitted by PRC laws.
The service fees shall consist of 100% of the total profit of Shanghai Yishangshiye and its
subsidiaries in any given financial year, after the deduction of any accumulated deficit of
Shanghai Yishangshiye and its subsidiaries in respect of the preceding financial year(s),
operating costs, expenses, taxes and other statutory contributions required in any given
financial year. Notwithstanding the foregoing, the PRC WFOE may adjust the scope and
amount of service fees in accordance with PRC tax law principles and tax practices, and with
reference to the working capital needs of Shanghai Yishangshiye and its subsidiaries, and
Shanghai Yishangshiye will accept any such adjustment. The PRC WFOE may adjust the
sharing ratio, payment amount, calculation of service fees and payment method with a written
notice.
CONTRACTUAL ARRANGEMENTS
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The PRC WFOE and Shanghai Yishangshiye, during the term of the Exclusive Business
Cooperation Agreement and where necessary, may enter into further technical service
agreement and/or consultation service agreement between Shanghai Yishangshiye and the PRC
WFOE or its designated person, which shall provide the specific contents, methods, personnel,
and fees for the specific services.
In addition, absent the prior written consent of the PRC WFOE, during the term of the
Exclusive Business Cooperation Agreement, with respect to the services subject to the
Exclusive Business Cooperation Agreement, Shanghai Yishangshiye shall not accept the same
or any similar consultation or services provided by any third party and shall not establish
similar cooperation relationships with any third party. The PRC WFOE has the right to appoint
any third party to provide services specified under the Exclusive Business Cooperation
Agreement.
Shanghai Yishangshiye grants the PRC WFOE an irrevocable and exclusive purchase option
right to, at the sole discretion of the PRC WFOE and to the extent permitted by PRC laws,
purchase all or any part of assets of Shanghai Yishangshiye and its subsidiaries at the lowest
price permitted by PRC laws. To secure Shanghai Yishangshiye’s performance of the Exclusive
Business Cooperation Agreement, Shanghai Yishangshiye agrees to provide the PRC WFOE a
guarantee with its receivables arising from daily operation and all of its assets.
The Exclusive Business Cooperation Agreement also provides that the PRC WFOE has the
exclusive proprietary rights to and interests in any and all intellectual property rights
developed or created by Shanghai Yishangshiye and its subsidiaries during the performance of
the Exclusive Business Cooperation Agreement. Shanghai Yishangshiye may register certain
intellectual property rights designated by the PRC WFOE under the name of Shanghai
Yishangshiye and its subsidiaries as required by businesses of Shanghai Yishangshiye, but
Shanghai Yishangshiye shall, and shall procure its subsidiaries to, transfer such intellectual
property rights to the PRC WFOE upon request by the PRC WFOE for free or at the lowest
price permitted by law. The Exclusive Business Cooperation Agreement shall remain effective
unless terminated (a) in accordance with the provisions of the Exclusive Business Cooperation
Agreement or mandatory provisions of PRC laws; (b) in writing by the PRC WFOE;
(c) renewal of the expired business period of either the PRC WFOE or Shanghai Yishangshiye
is declined or rejected by relevant government authorities, at which time the Exclusive
Business Cooperation Agreement will terminate upon termination of that business period; or
(d) in the event that the PRC WFOE or their subsidiaries are able to conduct the Relevant
Businesses directly as a result of being permitted to do so under the then-applicable PRC laws,
and the entire equity interests of Shanghai Yishangshiye or all of Shanghai Yishangshiye and
its subsidiaries’ assets have been transferred to the PRC WFOE or its appointee(s).
Exclusive Option Agreement
As part of the PRC Contractual Arrangements, the PRC Registered Shareholders entered into
the exclusive option agreement (the “ Exclusive Option Agreement ”) with Shanghai
Yishangshiye and the PRC WFOE. Pursuant to the Exclusive Option Agreement, the PRC
WFOE has the exclusive, irrevocable and unconditional right to purchase, or to designate one
or more persons/entities to purchase, from the PRC Registered Shareholders all or any part of
its equity interests in Shanghai Yishangshiye and from Shanghai Yishangshiye all or any part
of the assets of Shanghai Yishangshiye and its subsidiaries at any time in the PRC WFOE’s
absolute discretion in accordance with the provisions of the Exclusive Option Agreement and
to the extent permitted by the PRC laws. The consideration in relation to purchasing shares
from the PRC Registered Shareholders of Shanghai Yishangshiye shall be the amount of
contributed registered capital made by the PRC Registered Shareholders corresponding to the
CONTRACTUAL ARRANGEMENTS
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--- page 281 ---
shares to be purchased, or the lowest price as permitted by the applicable PRC laws, whichever
is lower. The consideration in relation to purchasing assets from Shanghai Yishangshiye shall
be the lowest price as permitted under the applicable PRC laws. The aforesaid consideration
shall be paid within seven (7) days upon transfer.
Each of Shanghai Yishangshiye and the PRC Registered Shareholders has covenanted that, as
applicable, among other things:
 without the prior written consent of the PRC WFOE, it shall not in any manner
supplement, change or amend the constitutional documents of Shanghai Yishangshiye,
increase or decrease its registered capital, or change the structure of its shareholding in
other manner;
 it shall maintain Shanghai Yishangshiye’s corporate existence in accordance with good
financial and business standards and practices, and prudently and effectively operate its
business and handle its affairs;
 without the prior written consent of the PRC WFOE, it shall refrain from any
action/omission that may adversely affect Shanghai Yishangshiye’s assets, businesses or
liabilities; without the prior written consent of the PRC WFOE, it shall not at any time
following the signing of the Exclusive Option Agreement sell, transfer, pledge or dispose
of in any manner any legal or beneficial interest in the assets, business or revenues of
Shanghai Yishangshiye, or allow the encumbrance thereon of any security interest;
 without the prior written consent of the PRC WFOE, Shanghai Yishangshiye shall not
incur, inherit, guarantee or assume any debt, except for (i) debts incurred in the ordinary
course of business other than payables incurred by a loan, and (ii) debts already disclosed
to the PRC WFOE and for which written approval has already been obtained from the
PRC WFOE;
 Shanghai Yishangshiye shall always operate all of its businesses during the ordinary
course of business to maintain its asset value and refrain from any action/omission that
may adversely affect Shanghai Yishangshiye’s operating status and asset value;
 without the prior written consent of the PRC WFOE, Shanghai Yishangshiye shall not
execute any material contracts (for the purpose hereof, a contract with a value above
RMB10,000,000), except for contracts executed in the ordinary course of business;
 without the prior written consent of the PRC WFOE, Shanghai Yishangshiye shall not
provide any person with any loan or guarantee;
 it shall provide the PRC WFOE with information on Shanghai Yishangshiye’s business
operations and financial condition at the request of the PRC WFOE;
 without the prior written consent of the PRC WFOE, it shall not cause or permit Shanghai
Yishangshiye to merge, consolidate with, acquire or invest in any person;
 it shall immediately notify the PRC WFOE of the occurrence or possible occurrence of
any litigation, arbitration or administrative proceedings relating to Shanghai
Yishangshiye’s assets, businesses or revenues;
CONTRACTUAL ARRANGEMENTS
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--- page 282 ---
 to maintain the ownership by Shanghai Yishangshiye of all of its assets, it shall execute
all necessary or appropriate documents, take all necessary or appropriate actions and file
all necessary or appropriate claims or complaints or raise necessary and appropriate
defences against all claims;
 without the prior written consent of the PRC WFOE, Shanghai Yishangshiye shall not in
any manner distribute dividends, provided that upon the written request of the PRC
WFOE, Shanghai Yishangshiye shall immediately distribute all distributable profits to
their shareholders;
 without the prior written consent of the PRC WFOE, Shanghai Yishangshiye shall not
proceed with dissolution or liquidation;
 once PRC laws permits foreign invested enterprises to operate the businesses which
Shanghai Yishangshiye is engaged in, the PRC Registered Shareholders shall transfer all
of its equity interests in Shanghai Yishangshiye to the PRC WFOE or a person appointed
by the PRC WFOE, and/or Shanghai Yishangshiye shall transfer all of the assets of
Shanghai Yishangshiye and its subsidiaries to the PRC WFOE or a person appointed by
the PRC WFOE; and
 to the extent permitted by PRC laws, the PRC WFOE shall have the right to exercise the
exclusive option right against the PRC Registered Shareholders or the legitimate
successors or representatives of the PRC Registered Shareholders pursuant to the terms
and conditions of the Exclusive Option Agreement in the event of death, divorce,
incapacity, bankruptcy of the PRC Registered Shareholders or other circumstances which
causes his/her inability to exercise his/her rights as a shareholder of Shanghai
Yishangshiye.
The aforementioned covenants shall also apply to all the subsidiaries of Shanghai
Yishangshiye.
In addition, each of the PRC Registered Shareholders has covenanted that:
 upon a request by the PRC WFOE, it shall consent and appoint the persons appointed by
the PRC WFOE to act in the positions of director, general management and other senior
management, change such appointment at any time as required by the PRC WFOE, and
proactively cooperate to proceed with such appointment and change of appointment,
including without limitation, executing necessary documents and making filings with the
corresponding administration for market regulation with respect to such appointment or
change of appointment;
 to the extent permitted by PRC laws, upon the request by the PRC WFOE, it shall transfer
all or any part of its equity interests in Shanghai Yishangshiye to the PRC WFOE or a
person appointed by the PRC WFOE immediately and unconditionally at any time, and
relinquish the right of first refusal it is entitled to in relation to any equity interests to be
transferred by any other existing shareholder of Shanghai Yishangshiye. It shall
proactively cooperate to proceed with such equity transfer, including without limitation,
executing necessary documents and filing with the corresponding administration for
market regulation with respect to such equity transfer; in addition, it shall pay to the PRC
WFOE or its designated persons all consideration received in connection such transfer in
accordance with Exclusive Option Agreement;
CONTRACTUAL ARRANGEMENTS
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 it will immediately gift any profits or dividends received from Shanghai Yishangshiye in
accordance with the written consent by the PRC WFOE to the PRC WFOE or a
representative appointed by the PRC WFOE to the extent permitted by the PRC laws;
 it shall strictly abide by the provisions of the Exclusive Option Agreement and other
agreements entered into with Shanghai Yishangshiye and the PRC WFOE, perform the
obligations under these agreements in a practical manner, and refrain from any
action/omission which would affect the validity and enforceability of such agreements;
 it will gift any liquidation proceeds received from Shanghai Yishangshiye (if any) due to
any liquidation of Shanghai Yishangshiye caused by any reason (including bankruptcy) to
the PRC WFOE or a representative appointed by the PRC WFOE to the extent permitted
by the PRC laws.
The aforementioned covenants shall also apply to all the subsidiaries of Shanghai
Yishangshiye.
The Exclusive Option Agreement shall remain effective unless terminated (i) in the event that
the entire equity interests held by the PRC Registered Shareholders in Shanghai Yishangshiye
or all of Shanghai Yishangshiye and its subsidiaries’ assets have been transferred to the PRC
WFOE or its appointee(s); or (b) in writing by the PRC WFOE.
Loan Agreement
The PRC WFOE and the PRC Registered Shareholders have executed a loan agreement
(the “ Loan Agreement ”). Pursuant to the Loan Agreement, the PRC WFOE enjoys the right of
the creditor against the PRC Registered Shareholders in an aggregate amount of RMB10
million (the “ Loans ”), and such loans have been used for contribution to paid-in capital of
Shanghai Yishangshiye. Pursuant to the Loan Agreement, the PRC Registered Shareholders can
only repay the Loans by the transfer of all their equity interest in Shanghai Yishangshiye or all
of the assets of Shanghai Yishangshiye and its subsidiaries to the PRC WFOE or its designated
third party upon the exercise by the PRC WFOE of the exclusive option right pursuant to the
terms and conditions of the Exclusive Option Agreement, and the PRC Registered Shareholders
shall pay all of the proceeds from transfer of such equity interests or assets (to the extent
permitted under PRC law) to the PRC WFOE for such repayment. In the event that the PRC
Registered Shareholders transfer their equity interests or assets to the PRC WFOE or its
designated person with a price equivalent to or less than the amount of the principal, the Loans
will be deemed as interest free. If the price is higher than the amount of the principal, the
excess amount will be paid to the PRC WFOE as the loan interest. The term of the Loans shall
terminate when the PRC WFOE exercises the exclusive option right pursuant to the terms and
conditions of the Exclusive Option Agreement. The Loans must be repaid immediately under
certain circumstances, including, among others, (i) upon the expiration of 30 days after the
PRC WFOE sends a written notice requesting repayment of the Loans; (ii) in the event of
death, divorce, incapacity, bankruptcy of the PRC Registered Shareholders or other
circumstances which causes his/her inability to exercise his/her rights as a shareholder of
Shanghai Yishangshiye; (iii) if the PRC Registered Shareholders engage in criminal acts or are
involved in criminal activities; or (iv) if a foreign investor is permitted to invest in PRC in form
of holding majority or 100% equity interest for principal business currently conducted by
Shanghai Yishangshiye and its subsidiaries and branches according to applicable PRC law,
relevant PRC authorities begin to approve such business, and the PRC WFOE elects to exercise
its exclusive purchase option pursuant to the Exclusive Option Agreement.
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Shareholder Rights Proxy Agreement
Each of the PRC Registered Shareholders has executed the shareholder rights proxy agreement
(the “ Proxy Agreement ”). Under the Proxy Agreement, the PRC Registered Shareholders
irrevocably appointed the PRC WFOE and its designated persons (including but not limited to
the directors of the parent company of the PRC WFOE and their successors and the liquidators
replacing such directors or successors) as its exclusive agent to exercise on its behalf, any and
all rights that it has in respect of its equity interests in Shanghai Yishangshiye, including
without limitation: (i) to propose, convene and attend shareholder’s meetings of Shanghai
Yishangshiye according to its articles of association, and to exercise the rights of voting and
making decisions on behalf of the PRC Registered Shareholders on all matters required to be
resolved by shareholders;; (ii) to exercise any shareholder rights it is entitled to as shareholder
of Shanghai Yishangshiye according to its articles of association, including but not limited to
any right to dividends and right to sell, transfer, pledge or dispose of all or any part of the PRC
Registered Shareholders’ equity interests in Shanghai Yishangshiye; (iii) to transfer the equity
interest or approve to transfer the assets of Shanghai Yishangshiye, decrease registered capital
of Shanghai Yishangshiye, accept capital increases to Shanghai Yishangshiye by the PRC
WFOE or its designated person, execute relevant equity transfer agreements, asset transfer
agreements (if applicable), capital decrease agreements, capital increase agreements,
shareholder resolutions, meeting minutes and other relevant documents on behalf of the PRC
Registered Shareholders, proceed with necessary approvals, registrations, filings or
submissions with governmental authorities and companies registry for the aforesaid matters;
(iv) to bring litigation or take other legal actions against the legal representative, director(s),
supervisor(s), general manager or other members of senior management of Shanghai
Yishangshiye if any conduct of the aforesaid has damaged the interests of the PRC WFOE or
its shareholder(s); and (v) to exercise all other shareholders’ rights under Shanghai
Yishangshiye’s articles of association and other applicable PRC laws and regulations.
The Proxy Agreement is irrevocable and shall remain effective, and may only be terminated in
the event that (i) it is terminated in accordance with mandatory provisions of PRC laws; (ii) in
writing by the PRC WFOE; (iii) the business period of any party to the Proxy Agreement
expires; or (iv) the PRC Registered Shareholder has transferred all of its equity interests in
Shanghai Yishangshiye pursuant to the prior written consent by the PRC WFOE, or has
decreased the registered capital of Shanghai Yishangshiye to the extent it does not own any
equity interests in Shanghai Yishangshiye, and has completed the relevant government
procedures.
The Proxy Agreement also provides that, in order to avoid potential conflicts of interest where
the PRC Registered Shareholders, are officers or directors of the Group, any exercise of the
rights under the Proxy Agreement shall be in favor of our Company.
Equity Pledge Agreement
As part of the PRC Contractual Arrangements, the PRC Registered Shareholders have entered
into the equity pledge agreement (the “ Equity Pledge Agreement ”) with Shanghai
Yishangshiye and the PRC WFOE. Pursuant to the Equity Pledge Agreement, the PRC
Registered Shareholders agree to pledge all its equity interests in Shanghai Yishangshiye,
including any interest or dividend paid for the shares, to the PRC WFOE as a security interest
to guarantee the performance of contractual obligations under the relevant PRC Contractual
Arrangements.
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The equity pledges under the Equity Pledge Agreement comes into effect upon completion of
registration with the relevant administration for market regulation and shall remain valid until
after all the contractual obligations of the PRC Registered Shareholders and Shanghai
Yishangshiye under the relevant PRC Contractual Arrangements have been fully performed.
Pursuant to the Equity Pledge Agreement, the PRC Registered Shareholders and Shanghai
Yishangshiye agree that, without prior written consent from the PRC WFOE, the PRC
Registered Shareholders shall not transfer the pledged equity interests or create or allow any
third party to create any encumbrance on the pledged equity interests.
Upon the occurrence and during the continuance of an event of default (as defined in the Equity
Pledge Agreement), the PRC WFOE shall have the right to exercise all such rights as a secured
party under the Equity Pledge Agreement and any applicable PRC laws, including without
limitations, being paid in priority with the equity interests based on the monetary valuation that
such equity interests are converted into or from the proceeds from auction or sale of the equity
interest upon written notice to the PRC Registered Shareholders.
As of the Latest Practicable Date, the registrations of the Equity Pledge Agreement in relation
to PRC Registered Shareholders had been completed.
Spouse Undertakings
The spouse of each of the relevant PRC Registered Shareholders, where applicable, has signed
undertakings to the effect that (i) he/she has no right to or control over such interests of the
respective PRC Registered Shareholder and will not have any claim on such interests, or exert
influence on the day-to-day management or voting matters of Shanghai Yishangshiye;
(ii) confirms that the respective spouse may further amend or terminate the PRC Contractual
Arrangements without the need for authorization or consent by him/her; (iii) the respective
spouse’s interests in Shanghai Yishangshiye (together with any interests therein) do not fall
within the scope of communal property; and (iv) if he/she is transferred any shares of Shanghai
Yishangshiye for any reason, he/she will be bound by the PRC Contractual Arrangements and
will observe obligations contained in such agreements, and will sign all necessary documents
and to take all necessary actions to ensure the PRC Contractual Arrangements are properly
preformed.
Other key terms thereunder
Dispute resolution
Each of the PRC Contractual Arrangements stipulates that the parties thereto shall negotiate in
good faith to resolve any dispute with respect to the construction and performance of the
provisions of any such PRC Contractual Arrangements. In the event the parties fail to resolve
such a dispute within 30 days after any party’s request for resolution of the dispute through
negotiations, any party may submit the relevant dispute to the Shanghai Arbitration
Commission for arbitration, in accordance with the then-effective arbitration rules. The
arbitration shall be conducted in Shanghai, and the language used during arbitration shall be
Chinese. The arbitration ruling shall be final and binding on all parties.
The PRC Contractual Arrangements also provide that (i) the arbitral tribunal may award
remedies over the equity interests, assets or property interest of Shanghai Yishangshiye and its
subsidiaries, injunctive relief (e.g. for the conduct of business or to compel the transfer of
assets) or order the winding up of Shanghai Yishangshiye and its subsidiaries; and (ii) the
courts of Hong Kong, the Cayman Islands (being the place of incorporation of our Company)
and other jurisdiction (being the place where the principal assets of Shanghai Yishangshiye and
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its subsidiaries and the PRC WFOE are located) also have jurisdiction for the grant or
enforcement of the arbitral award and the interim remedies against the equity or property
interest of Shanghai Yishangshiye.
However, our PRC Legal Adviser has advised that (i) a tribunal normally would not grant such
kind of injunctive relief or winding up order of Shanghai Yishangshiye under PRC laws;
(ii) interim remedies or enforcement orders granted by overseas courts such as Hong Kong and
the Cayman Islands may not be recognizable or enforceable in the PRC; and (iii) even if the
abovementioned provisions may not be enforceable under PRC laws, the remaining provisions
of the dispute resolution clauses are legal, valid and binding on the parties to the agreement
under the PRC Contractual Arrangements.
As a result of the above, in the event that Shanghai Yishangshiye or the PRC Registered
Shareholders breaches any of the PRC Contractual Arrangements, we may not be able to obtain
sufficient remedies in a timely manner, and our ability to exert effective control over Shanghai
Yishangshiye and conduct our business could be materially and adversely affected. See Risk
Factors – Risks Related to Our Corporate Structure – We rely on Contractual Arrangements to
establish control over certain entities and government authorities may determine that these
arrangements do not comply with existing laws and regulations. for details.
Arrangements to address potential conflicts of interest
Each of the PRC Registered Shareholders has, in the Proxy Agreement, given his/her
irrevocable undertakings to address potential conflicts of interests that may arise in connection
with the PRC Contractual Arrangements. For further details, see “– Our Contractual
Arrangements – Summary of the agreements under the PRC Contractual Arrangements and
other key terms thereunder – Shareholder Rights Proxy Agreement” in this section.
Loss sharing
None of the agreements constituting the PRC Contractual Arrangements provides that our
Company or the PRC WFOE is obligated to share the losses of Shanghai Yishangshiye, but if
Shanghai Yishangshiye or any of its subsidiaries suffers any losses or material difficulties of
business, the PRC WFOE may adjust the amount or percentage of service fees at its discretion
under the terms of the Exclusive Business Cooperation Agreement. Further, each of Shanghai
Yishangshiye and its subsidiaries is a limited liability company and shall be solely liable for
its own debts and losses with assets and properties owned by it. Under PRC laws and
regulations, our Company or the PRC WFOE and its subsidiaries are not expressly required to
share the losses of Shanghai Yishangshiye or provide financial support to Shanghai
Yishangshiye. Despite the foregoing, given that our Consolidated Affiliated Entities conduct
the Relevant Businesses in the PRC through J&T Express China (and Hangzhou BEST until its
permit is deregistered) which hold the requisite PRC permit and approvals and that results of
operations and assets and liabilities of the Consolidated Affiliated Entities are consolidated
into our results of operations and assets and liabilities under the applicable accounting
principles, our business, financial condition and results of operations would be adversely
affected if the Consolidated Affiliated Entities suffered losses.
Liquidation
Pursuant to the Exclusive Option Agreement, in the event of a mandatory liquidation required
by PRC laws, Shanghai Yishangshiye shall sell all of its assets, to the extent permitted by PRC
laws, to the PRC WFOE or another qualifying entity designated by the PRC WFOE, at the
lowest selling price permitted by applicable PRC laws. Any obligation for the PRC WFOE to
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pay Shanghai Yishangshiye as a result of such transaction shall be waived by Shanghai
Yishangshiye and any profits arising from the above transactions shall be paid to the PRC
WFOE or the qualifying entity designated by the PRC WFOE in partial satisfaction of the
service fees under the Exclusive Business Cooperation Agreement, as applicable under the
then-current PRC laws. Accordingly, in the event of winding up of Shanghai Yishangshiye, a
liquidator may seize the relevant assets of Shanghai Yishangshiye through the PRC WFOE
based on the PRC Contractual Arrangements for the benefit of our creditors/shareholders.
Termination
The PRC Contractual Arrangements shall be terminated once the PRC WFOE or its designated
person holds the entire equity interests in Shanghai Yishangshiye and/or the entire assets of
Shanghai Yishangshiye and its subsidiaries under the then-applicable PRC laws and if the PRC
WFOE or their subsidiaries are able to conduct the Relevant Businesses directly as a result of
being permitted to do so under the then-applicable PRC laws and the PRC WFOE or its
designated person are registered as the shareholder of Shanghai Yishangshiye. In addition,
pursuant to the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement
and the Proxy Agreement, the PRC WFOE has the unilateral right to terminate these
agreements at any time by providing 30 days’ advance written notice to Shanghai Yishangshiye
or the PRC Registered Shareholders, as applicable.
Insurance
We do not maintain an insurance policy to cover the risks relating to the PRC Contractual
Arrangements.
Company’s confirmation
As of the Latest Practicable Date, we had not encountered any interference or encumbrance
from any PRC governing bodies in operating our businesses through Shanghai Yishangshiye
under the PRC Contractual Arrangements.
Legality of the PRC Contractual Arrangements
We and our PRC Legal Adviser are of the view that the PRC Contractual Arrangements are
narrowly tailored to minimize the potential conflict with relevant PRC laws and regulations. In
addition, our PRC Legal Adviser is of the opinion that:
(i) parties to each of the PRC Contractual Arrangements have obtained all necessary
approvals and authorizations to execute and perform the PRC Contractual Arrangements;
(ii) the PRC Contractual Arrangements would not be deemed as “impairing others’ legitimate
rights and interests with malicious collusion” under the PRC Civil Code, which will lead
the arrangements to be deemed an invalid act under the PRC Civil Code;
(iii) none of the agreements under the PRC Contractual Arrangements violates any provisions
of articles of association of the PRC WFOE or Shanghai Yishangshiye;
(iv) the parties to each of the PRC Contractual Arrangements are not required to obtain any
approvals or authorizations from the PRC governmental authorities, except that (a) the
pledge under the equity pledge agreement is required to be registered with the
administration for market regulation; (b) the exercise of the option by the PRC WFOE of
its rights under the Exclusive Option Agreement to acquire all or part of the equity
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interests in Shanghai Yishangshiye is subject to the approvals of, consent of, filing with
and/or registration with the PRC governmental authorities; and (c) the arbitration
awards/interim remedies provided under the dispute resolution provision of the PRC
Contractual Arrangements shall be recognized by the PRC courts before compulsory
enforcement.
(v) each of the PRC Contractual Arrangements is valid and binding on the parties under the
PRC laws, except in relation to the dispute resolution clause under these agreements.
These agreements provide that any dispute shall be submitted to the Shanghai Arbitration
Commission for arbitration, in accordance with the then-effective arbitration rules. The
PRC Contractual Arrangements also provide that the arbitrator may award interim
remedies over the shares or assets of the Consolidated Affiliated Entities or injunctive
relief or order the winding-up of Shanghai Yishangshiye and its subsidiaries; and the
courts of Hong Kong, the Cayman Islands and the PRC also have jurisdiction for the grant
and/or enforcement of the arbitral award and the interim remedies. However, our PRC
Legal Adviser has advised that the tribunal normally would not grant such injunctive
relief or order the winding-up of the Consolidated Affiliated Entities pursuant to PRC
laws. In addition, interim remedies or enforcement orders granted by overseas courts such
as Hong Kong and the Cayman Islands may not be recognizable or enforceable in China.
Our PRC Legal Adviser also advised us that there are substantial uncertainties regarding the
interpretation and application of current and future PRC laws and regulations. Accordingly,
there can be no assurance that the PRC regulatory authorities will not in the future take a view
that is contrary to or otherwise different from the above opinion of our PRC Legal Adviser.
Based on the above analysis and advice from our PRC Legal Adviser, the Directors are of the
view that the adoption of the PRC Contractual Arrangements is unlikely to be deemed
ineffective or invalid under the applicable PRC laws and regulations. See “Risk Factors – Risks
Related to Our Corporate Structure – We rely on Contractual Arrangements to establish control
over certain entities and government authorities may determine that these arrangements do not
comply with existing laws and regulations.”
Given that the PRC Contractual Arrangements will constitute non-exempt continuing
connected transactions of our Company, a waiver has been sought from and has been granted
by the Stock Exchange, details of which are disclosed in “Continuing Connected Transactions”.
DEVELOPMENT IN THE PRC LEGISLATION ON FOREIGN INVESTMENT
Background of the Foreign Investment Law
On March 15, 2019, the National People’s Congress approved the Foreign Investment Law,
which became effective on January 1, 2020. On December 26, 2019, the State Council
promulgated the Implementation Rules to the Foreign Investment Law, which came into effect
on January 1, 2020. The Foreign Investment Law replaced the Equity Joint V enture Law, the
Wholly Foreign-owned Enterprise Law, and the Cooperative Joint V enture Law to become the
legal foundation for foreign investment in the PRC. The Foreign Investment Law stipulates
certain forms of foreign investment, but does not explicitly stipulate contractual arrangements
as a form of foreign investment. The Implementation Rules to the Foreign Investment Law are
also silent on whether foreign investment includes contractual arrangements.
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Impact and consequences of the Foreign Investment Law
Conducting operations through contractual arrangements has been adopted by many
PRC-based companies, including our Group. We use the PRC Contractual Arrangements to
establish control of Shanghai Yishangshiye, by the PRC WFOE through which we operate our
business in the PRC. As advised by our PRC Legal Adviser, since contractual arrangements are
not specified as foreign investment under the Foreign Investment Law and the Implementation
Rules to the Foreign Investment Law, and if future laws, regulations and provisions prescribed
by the State Council do not incorporate contractual arrangements as a form of foreign
investment, our PRC Contractual Arrangements as a whole and each of the agreements
comprising the PRC Contractual Arrangements will not be affected and will continue to be
legal, valid and binding on the parties with an exception, for which, se e “ – Our Contractual
Arrangements – Legality of the PRC Contractual Arrangements”.
Notwithstanding the above, the Foreign Investment Law stipulates that foreign investment
includes “foreign investors invest in China through any other methods under laws,
administrative regulations or provisions prescribed by the State Council” without elaboration
on the meaning of “other methods”. There are possibilities that future laws, administrative
regulations or provisions prescribed by the State Council may lead to contractual arrangements
being regarded as a form of foreign investment, at which time it will be uncertain whether the
PRC Contractual Arrangements will be deemed to be in violation of the foreign investment
access requirements and how the above-mentioned PRC Contractual Arrangements will be
handled. Therefore, there is no guarantee that the PRC Contractual Arrangements and the
business of the Consolidated Affiliated Entities will not be materially and adversely affected
in the future due to changes in PRC laws and regulations. See “Risk Factors – Risks related
to our Corporate Structure – Our current corporate structure and business operations in the PRC
may be substantially affected by the PRC Foreign Investment Law and implementing rules.”
COMPLIANCE WITH THE PRC CONTRACTUAL ARRANGEMENTS
The PRC laws and regulations over the PRC Contractual Arrangements are subject to change
and the Group will monitor future changes in the relevant laws and regulations. In addition, our
Group has adopted the following measures to ensure the effective operation of our Group with
the implementation of the PRC Contractual Arrangements and our compliance with the PRC
Contractual Arrangements:
1. major issues arising from the implementation and compliance with the PRC Contractual
Arrangements or any regulatory enquiries from government authorities will be submitted
to our Board, if necessary, for review and discussion as and when they arise;
2. our Board will review the overall performance of and compliance with the PRC
Contractual Arrangements at least once a year;
3. our Company will disclose the overall performance of and compliance with the PRC
Contractual Arrangements in our annual reports; and
4. our Company will engage external legal advisers or other professional advisers, if
necessary, to assist the Board in reviewing the implementation of the PRC Contractual
Arrangements, in reviewing the legal compliance of the PRC WFOE and Shanghai
Yishangshiye and in dealing with specific issues or matters arising from the PRC
Contractual Arrangements.
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ACCOUNTING ASPECTS OF THE PRC CONTRACTUAL ARRANGEMENTS
Consolidation of financial results of operating entities
As a result of the PRC Contractual Arrangements among the PRC WFOE, Shanghai
Yishangshiye and its shareholders, the PRC WFOE has rights to exercise power over Shanghai
Yishangshiye and its subsidiaries, receives variable returns from its involvement in Shanghai
Yishangshiye and its subsidiaries, has the ability to affect those returns through its power over
Shanghai Yishangshiye and its subsidiaries and is considered to control Shanghai Yishangshiye
and its subsidiaries. Consequently, the Company regards Shanghai Yishangshiye and its
subsidiaries as consolidated affiliated entities and consolidates the assets, liabilities, and
results of operations of Shanghai Yishangshiye and its subsidiaries in the consolidated financial
information of the Group (as set out in Note 1.2 of Appendix I to this prospectus).
INDONESIA CONTRACTUAL ARRANGEMENTS
Regulatory Background
Foreign investment in Indonesia is primarily governed under Law of the Republic of Indonesia
No. 25 of 2007 regarding Investment, issued on April 26, 2007, as partially amended by Law
of the Republic of Indonesia No. 6 of 2023 on the Stipulation of the Government Regulation
in Lieu of Law No. 2 of 2022 on Job Creation into a Law, dated March 31, 2023 (the “Job
Creation Law,” together with Law No. 25 of 2007, the “ Investment Law ”), as implemented
further under the 2021 Investment List (as defined below), and Indonesia Investment
Coordinating Board (Badan Koordinasi Penanaman Modal, “ BKPM ”) Regulation No. 4 of
2021 and BKPM Regulation No. 5 of 2021. The Investment Law provides that all business
sectors or business lines in Indonesia are open to foreign investments, except those business
sectors or business lines that are expressly closed to, or restricted from, foreign investments or
that can only be carried out by the central government. The business sectors that are opened
to foreign investments consist of: (i) priority business sectors, (ii) business sectors allocated to
be conducted via joint cooperation with Cooperatives and Micro, Small and Medium
Enterprises, (iii) business sectors that are open to foreign investments subject to certain
conditions, and (iv) business sectors that are not included in the abovementioned
classifications. The Investment Law also stipulates that foreign direct investment in Indonesia
must be in the form of a limited liability company with a minimum investment value (excluding
investment amount in land and building) of more than IDR10,000,000,000 (ten billion
Indonesian Rupiah) and a paid-up capital of at least IDR10,000,000,000 (ten billion Indonesian
Rupiah), established under the laws of and domiciled in the Republic of Indonesia.
The Indonesian government maintains a list of business activities that are open to foreign
investments, that are open but subject to certain conditions, or that are closed to foreign
investments, which is known as the “ Investment List .” The current Investment List is set forth
in President Regulation of the Republic of Indonesia No. 10 of 2021 regarding Investment
Business Activities, dated February 2, 2021, as amended by PR No. 49 of 2021 dated May 24,
2021 (as amended, the “ 2021 Investment List ”). The 2021 Investment List was issued to
implement the Job Creation Law. Foreign investors who intend to invest in Indonesia are
obligated to structure their investments in accordance with the restrictions or requirements
applicable to their intended business activities under the 2021 Investment List.
In addition to the 2021 Investment List, foreign investments are also regulated under the
sectoral regulations of the relevant government institutions. Postal services in Indonesia are
generally regulated under the Indonesian Postal Law. “ Postal Services ” are defined under
Article 1 (1) of the Indonesian Postal Law as services relating to written communication and/or
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electronic letter, package, logistics, financial transaction, and postal agency service for public
purposes. In addition to restrictions under the Investment Law, Postal Services are subject to
other foreign ownership restrictions under the Indonesian Postal Law.
Restrictions on Foreign Ownership in Postal Activities
In general, foreign investors cannot make equity investments in an Indonesian company that
engages in Postal Services (a “ Postal Services Company ” as defined under the Indonesian
Postal Law), subject to limited exceptions for investing in certain companies that engage in
certain types postal activities.
Under Article 11 (2) of the Indonesian Postal Law, a Foreign Postal Operator is allowed to own
certain equity interest in an Indonesian Postal Services Company only if: (i) a “ Foreign Postal
Operator ” forms a joint venture company with a Postal Services Company that is an
Indonesian domestic company, and (ii) the joint venture company’s Postal Services operations
must be limited to the areas of provincial capitals, and the joint venture company does not
engage in any inter-city courier services outside such provincial capitals (the “ Partnership
Requirements ”). The Indonesian Postal Law defines a “Foreign Postal Operator” as a foreign
company that provides postal services outside Indonesia, which requires that such foreign
company directly engages in postal activities outside Indonesia and does not take into
consideration any operations engaged by its affiliates.
Under the Indonesian Postal Law and the Investment Law, if these conditions are met, foreign
ownership in an Indonesian joint venture with a courier business classified under Indonesia
Standard Industrial Classification (Klasikasi Baku Lapangan Usaha Indonesia) (“ KBLI ”)
53201 may be held up to 49% direct foreign shares.
The types of activities that are permitted under KBLI 53201 (Courier Activities) include
commercial courier services such as collection, processing, transporting and delivery of
parcels, goods, and packages, both domestic and international. For any non-compliance with
the foregoing conditions, BKPM, the Indonesian Minister of Communication and Informatics
(“MOCI ”) or the relevant authority (e.g. provincial investment agency, municipal investment
agency) may impose tiered administrative sanctions to be given in stages, i.e. first-and-final
written warning or temporary or permanent suspensions of business activities. If the relevant
authority upon providing a warning or temporary suspension regarding a non-compliant
activity and no remedy or follow-up action is taken to address the concern, then the relevant
authority is empowered to revoke the applicable license and suspend the business activity.
The Group has significant operations providing courier services outside provincial capitals in
Indonesia (including, in particular, distributing packages to and connecting a vast majority of
lower-tier cities, counties and towns), and such operations are indispensable to the Group’s
overall courier services in Indonesia. Furthermore, the Group has maintained an integrated
nationwide express delivery network and it is practically impossible for the Group to split off
its inter-capital operations and divested from PT Global Jet Express (“ Indonesian Opco ”) and
be conducted separately. For the first nine months of 2021, the Group delivered a total of
604,971,327 packages in Indonesia, of which only approximately 4.69% were between
provincial capitals. If the Company were to hold any direct equity interest in a Postal Services
Company, the Company may only hold equity interest in a joint venture company to be formed
in accordance with the Partnership Requirements and the joint venture company would not be
permitted to engage in any operation outside the provincial capitals, which would
fundamentally change the Group’s current operations in Indonesia.
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Other than KBLI 53201 (Courier Activities) which is subject to foreign ownership restrictions
under the Indonesian Postal Law and Investment Law, the Indonesian Opco also rents its vacant
properties that are still within the lease period and reserved for future office use to other third
parties, which is business activity under KBLI 68111 (Privately Owned or Rented Real
Estates), a business activity currently not subject to Indonesian foreign investment restrictions.
The revenue contribution of the KBLI 68111 business under the Indonesian Contractual
Arrangements to our Group is minimal. The Company confirms that it will (and will have
measures in place to) ensure the KBLI 68111 business under the Indonesian Contractual
Arrangements will remain immaterial after the Listing and its annual revenue contribution
relative to the Group will be below 5%. Our finance department will monitor the proportion of
revenue generated from the KBLI 68111 business and report the status to our senior
management on a quarterly basis, and our audit committee will review the proportion of the
revenue generated from the KBLI 68111 business on a quarterly basis, to ensure it will remain
below 5% and will make adequate disclosure on an ongoing basis in our Company’s annual
report after the Listing.
OUR CONTRACTUAL ARRANGEMENTS
Due to the restrictions on foreign ownership for companies engaged in Postal Services, we
currently hold 100% of our equity interests in the Indonesian Opco through PT Cakrawala
Lintas Benua and PT Sukses Indo Investama (collectively, the “ Indonesian Corporate
Registered Shareholders ”). To consolidate control over and derive the economic benefits
from the Indonesian Opco to our Group, we have entered into the following contractual
arrangements with the Indonesian Individual and Indonesian Corporate Registered
Shareholders.
The following diagram illustrates the structure of the Indonesian Contractual Arrangements:
Indonesian Opco
Winner Star Holdings Limited
(HK)
Indonesian Corporate
Registered Shareholders(2)
100%
Offshore
Onshore
Indonesian Individual
Registered Shareholders(1)
Indonesian
WFOE(3)
99.9%
Contractual Arrangements
Flying Jet Express Limited
0.1%
100%
Notes:
 The Indonesian Opco refers to PT Global Jet Express, which is wholly-owned by the Indonesian Corporate
Registered Shareholders, which are in turn wholly-owned by our affiliates, Mr. Effendy and Mr. Robin Lo (the
“Indonesian Individual Registered Shareholders ”), namely as to 50% by Mr. Effendy and 50% by Mr. Robin
Lo. Mr. Robin Lo is the chief executive officer of PT Global Jet Express and Mr. Effendy is the assistant to
chief executive officer of PT Global Jet Express. Both Robin Lo and Effendy have been the Group’s Indonesia
regional senior managers since the Group entered the Indonesia market. Considering their deep understanding
of the Indonesia market, their long time commitment to and in-depth understanding of the Group, the Company
considers that they are suitable to be the Indonesian Individual Registered Shareholders.
CONTRACTUAL ARRANGEMENTS
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 The Indonesian Corporate Registered Shareholders executed a number of agreements in favor of the
Indonesian WFOE to allow the Indonesian WFOE to consolidate control over the Indonesian Opco and derive
the full economic benefits from the Indonesian Opco. See “– Summary of the Agreements under the Indonesian
Contractual Arrangements and other key terms thereunder” in this section.
 The Indonesian WFOE refers to PT Cahaya Global Berjaya, an indirect wholly-owned subsidiary of the
Company. It provides technical support, business support and relevant consulting services in exchange for
service fees from the Indonesian Opco. See “– Summary of the Agreements under the Indonesian Contractual
Arrangements and other key terms thereunder – Exclusive Technical Service Agreement” in this section.
Our Group will adopt the following measures to further enhance our Group’s control over the
Indonesian Opco: (a) as part of the internal control measures, major issues arising from
implementation of the Indonesian Contractual Arrangements with the Indonesian Opco will be
regularly reviewed, at least on an annual basis, by the Board upon Listing. Our Board will
determine, as part of its periodic review process, whether legal advisors and/or other
professionals will be retained to assist the Group to deal with specific issues arising from the
Indonesian Contractual Arrangements; and (b) the relevant business units and operation
divisions of our Group will report regularly to the senior management of our Company in
relation to compliance and performance conditions under the Indonesian Contractual
Arrangements and other related matters.
We will continue to monitor the status and developments of relevant Indonesian laws, rules and
regulations. If there are any regulatory or policy changes that would allow the Group to
restructure or terminate the Indonesian Contractual Arrangements to directly hold equity
interest in the Indonesian Opco, we will adjust the shareholding structure or terminate the
Indonesian Contractual Arrangements in accordance with applicable laws and regulations.
Summary of the agreements under the Indonesian Contractual Arrangements and other
key terms thereunder
A description of each of the specific agreements that comprise the Indonesian Contractual
Arrangements is set out below.
Loan Agreement
Pursuant to a loan agreement entered into between the Indonesian WFOE and the Indonesian
Opco on March 29, 2022 (the “ Loan Agreement ”), the Indonesian WFOE extended a loan in
the principal amount of Rp. 3,000,000,000.00 (three billion Indonesian Rupiah) to the
Indonesian Opco (the “ Loan ”). The Loan Agreement has a term of ten years and will be
renewed automatically at the end of such terms for another ten years unless the lender delivers
a written notice of termination. The Loan bears an interest of 9.00% per annum and was
secured by the Guarantee Agreement, Share Pledge Agreements, the Power of Attorneys and
the Exclusive Call Option Agreements (collectively, the “ Security Documents ”).
The Loan can only be repaid or settled by Indonesian Opco by transferring or selling the shares
registered under the name of the Indonesian Individual Registered Shareholders and the
Indonesian Corporate Registered Shareholders to the Indonesian WFOE or a party designated
by the Indonesian WFOE.
If an event of default occurs under the Loan Agreements (including, among others, the
Indonesian Opco fails to perform or otherwise violates the Loan Agreement or the Security
Documents, the Pledgors (as defined below) fail to be the registered shareholders of the
Indonesian Opco or the Indonesian Corporate Registered Shareholders, occurrence of an event
of default under the Exclusive Technical Service Agreement, or the Indonesian Opco or any
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parties to the Securities Documents is declared bankrupt or insolvent), the Indonesian WFOE
may (i) declare the Loan to be immediately due and payable; and (ii) immediately enforce all
of its rights under the Loan Agreements and the Security Documents (to the extent permitting
the Indonesian WFOE to (a) transfer the shares of Indonesian Opco to any qualified party, (b)
deal with the assets of Indonesian Opco, and (c) manage the business and right to revenue of
Indonesian Opco).
Guarantee Agreement
Pursuant to the guarantee agreements entered by (i) the Indonesian Corporate Registered
Shareholders and the Indonesia WFOE, and (ii) the Indonesian Individual Registered
Shareholders and the Indonesian WFOE, both on March 29, 2022 (the “ Guarantee
Agreements ”), the Indonesian Individual Registered Shareholders and Indonesian Corporate
Registered Shareholders (together, the “ Pledgors ”) unconditionally and irrevocably guaranteed
to the Indonesian WFOE the payment obligation by Indonesian Opco under the Loan
Agreement and the Exclusive Technical Service Agreement. The Guarantee Agreements remain
effective until the earlier of (i) the full repayment of amounts outstanding (including the Loans,
any outstanding service fees and any outstanding amounts from time-to-time) under the Loan
Agreement and the Exclusive Technical Service Agreement or (ii) the exercise of the call
option rights pursuant to the Exclusive Call Option Agreements.
In the event of defaults under the Loan Agreement or the Exclusive Technical Service
Agreement, the Indonesian WFOE shall be entitled to seek the Indonesian Individual
Registered Shareholders and Indonesian Corporate Registered Shareholders to perform their
obligations under the Security Documents. For more details, see “– Exclusive Call Option
Agreement” in this section.
Exclusive Call Option Agreement
Pursuant to the call option agreements entered into between the Indonesian WFOE, the
Indonesian Individual Registered Shareholders and the Indonesian Corporate Registered
Shareholders on March 29, 2022 (the “ Exclusive Call Option Agreement ”), the Indonesian
WFOE has the exclusive right to (i) require the Indonesian Corporate Registered Shareholders
to transfer all shares in Indonesian Opco, (ii) require the Indonesian Individual Registered
Shareholders to transfer all shares in the Indonesian Corporate Registered Shareholders, or (iii)
require the Indonesian Corporate Registered Shareholders to transfer all assets in Indonesian
Opco, in each case to the Indonesian WFOE or a third party designated by the Indonesian
WFOE (as the case may be and in accordance with Indonesian Laws). The transfer price will
be equal to the amount of par value of such transferred shares or such price set forth in an
equity transfer agreement to be executed among relevant parties, as applicable. The Exclusive
Call Option Agreements remain effective until the full payment of Indonesian Opco’s
obligations under the Loan Agreement. The Indonesian Individual Registered Shareholders and
the Indonesian Corporate Registered Shareholders agree to return to the Indonesian WFOE (or
the entity designated by the Indonesian WFOE) any consideration they receive in the event that
any of the options under the exclusive call option agreements is exercised.
To the extent permitted by Indonesian laws, the Indonesian WFOE shall have the right to
exercise the exclusive option right against the Indonesian Individual and Indonesian Corporate
Registered Shareholders or the legitimate successors or representatives of the Indonesian
Individual and Indonesian Corporate Registered Shareholders pursuant to the terms and
CONTRACTUAL ARRANGEMENTS
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conditions of the Exclusive Call Option Agreement in the event of death, incapacity,
bankruptcy of the Indonesia Individual and Corporate Registered Shareholders or other
circumstances which causes his inability to exercise his rights as a shareholder of the Indonesia
Opco.
Share Pledge Agreements
Pursuant to the share pledge agreements entered into between the Indonesian WFOE, the
Indonesian Individual Registered Shareholders and the Indonesian Corporate Registered
Shareholders on March 29, 2022 (the “ Share Pledge Agreements ”), the Share Pledge
Agreements have the following terms:
 the Indonesian Individual Registered Shareholders pledged all of the shares in Indonesian
Corporate Registered Shareholders to the Indonesian WFOE, and
 the Indonesian Corporate Registered Shareholders pledged all the shares in the
Indonesian Opco to the Indonesian WFOE,
to guarantee the performance of obligations by the Indonesian Individual Registered
Shareholders and Indonesian Corporate Registered Shareholders under the Guarantee
Agreements, as well as the performance of obligations by Indonesian Opco under the Loan
Agreement.
Pursuant to the Share Pledge Agreements, Pledgors are required deliver to Indonesian WFOE
all share certificates and other evidence of ownership in relation to the shares in Indonesian
Individual Registered Shareholders and Indonesian Opco. Each of the Pledgors undertook that
during the term of the Shares Pledge Agreements, shall not, among others, sell, dispose of,
assign, transfer, pledge or encumber the pledged shares, or allow any other pledge or
encumbrance to be created with respect to the pledged shares.
The Share Pledge Agreements remain effective until the full payment of Indonesian Opco’s
obligations under the Loan Agreement.
Exclusive Technical Service Agreement
Pursuant to the exclusive technical service agreement entered into between the Indonesian
WFOE and the Indonesian Opco on March 29, 2022 (the “ Exclusive Technical Service
Agreement ”), in exchange for service fees, the Indonesian Opco agreed to engage the
Indonesian WFOE as its exclusive provider to provide advice, guidance on business operations
and other organizational and management issues, such as (i) strategic and organizational
planning; (ii) decisions related to finance; (iii) marketing objectives and policies; (iv) human
resource planning, practices and policies; (v) planning scheduling and controlling production,
advisory assistance, guidance and operation of various management functions; (vi) design of
accounting methods and procedures, cost accounting programs, budget monitoring procedures;
and (vii) advice and assistance for business and community services.
Under the Exclusive Technical Service Agreement, the service fee payable to the Indonesian
WFOE will be equal to the consolidated net profits of the Indonesian Opco and its subsidiaries
(revenue deducted by turnover taxes, total expenses and retained profits), subject to
adjustments at the Indonesian WFOE’s discretion.
CONTRACTUAL ARRANGEMENTS
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Without the Indonesian WFOE’s prior written consent, during the term of the Exclusive
Technical Service Agreement, the Indonesian Opco will not, directly or indirectly, accept
services pertaining to the Exclusive Technical Service Agreement provided by any third party.
Unless terminated in accordance with the provisions of the Exclusive Technical Service
Agreement, the Exclusive Technical Service Agreement shall remain effective perpetually.
Pursuant to the Exclusive Technical Service Agreement, all invention, modification, creation,
or design created or developed by The Indonesian WFOE during its performance of the
Exclusive Technical Service Agreement, and all related copyrights, trademarks, patents and all
other intellectual property rights shall be owned by The Indonesian WFOE. Where such
ownership is precluded due to the laws of the Republic Indonesia, Indonesian Opco shall sign
any documents and take, or cause to be taken, any other action necessary, to effect the complete
and irrevocable assignment of the said ownership rights to The Indonesian WFOE.
Power of Attorney
Pursuant to the powers of attorney to vote and powers of attorney to sell by and among the
Indonesian WFOE, the Indonesian Corporate Registered Shareholders and Indonesian Opco
executed on March 29, 2022, each Indonesian Corporate Registered Shareholder irrevocably
appointed the Indonesian WFOE as its attorney to do and perform, among others, the following
actions:
 to exercise all applicable shareholders’ voting and related rights with respect to such
shareholder’s equity interest, including to exercise the voting rights,
 to sign meeting minutes and other relevant documents on behalf of the Indonesian
Corporate Registered Shareholders, and
 to proceed with necessary approvals, registrations, filings or submissions with
governmental authorities.
The power of attorney will be irrevocable and remain continuously effective and valid until the
full payment of Indonesian Opco’s obligations under the Loan Agreement.
Spousal Consent and Undertakings
The spouse of each of the relevant Indonesian Individual Registered Shareholders, where
applicable, has signed undertakings to the effect that (i) she consents to her spouse entering
into the Indonesian Contractual Arrangements; (ii) acknowledges that the Indonesian
Contractual Arrangements entered into by her spouse will also be binding against her, (iii) has
no right to or control over any interests in the Indonesian Corporate Registered Shareholders
and will not have any claim on such interests; and (iv) she will sign all necessary documents
and take all necessary actions to ensure the Indonesian Contractual Arrangements are properly
performed.
Other Key Terms
Dispute Resolution
Each of the Exclusive Technical Service Agreement, the Loan Agreement, the Guarantee
Agreements, the Call Option Agreements and the Share Pledge Agreements provided that all
the disputes arising from the respective agreement, which cannot be resolved amicably, shall
be arbitrated in Hong Kong and submitted to the Hong Kong International Arbitration Center
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for arbitration pursuant to its rules of arbitration. The arbitral award will be final and binding
upon all parties. To the extent permitted by applicable laws, the arbitration tribunal may grant
remedies including injunctive relief, remedies concerning the equity interest or assets of
Indonesian Opco, the Indonesian Corporate Registered Shareholders and orders winding up of
Indonesian Opco and the Indonesian Corporate Registered Shareholders. Under the Indonesian
laws, arbitration awards are final and binding to the parties, and the parties cannot appeal the
arbitration award in the Indonesian courts. Additionally, since the agreed arbitration location
is in Hong Kong (international arbitration award), in order for the award to be executable and
enforceable in Indonesia, such award must be recognized and acknowledged by Central Jakarta
District Court through its ratification or exequatur. The execution may then be carried out by
the district court of the relevant jurisdiction. To the extent permitted by applicable laws, when
awaiting the formation of the arbitral tribunal or otherwise under appropriate conditions,
parties to these agreements may seek preliminary injunctive relief or other interlocutory
remedies that will support the further arbitration process from a court with competent
jurisdiction to facilitate the arbitration. Subject to limitations under applicable laws, the courts
of Hong Kong, the Cayman Islands, China and Indonesia shall be deemed to have competent
jurisdiction.
Loss sharing
None of the agreements constituting the Indonesian Contractual Arrangements provides that
our Company or the Indonesian WFOE is obligated to share the losses of Indonesian Opco, but
if Indonesian Opco or any of its subsidiaries suffers any losses or material difficulties of
business, the Indonesian WFOE may adjust the amount or percentage of service fees at its
discretion to Indonesian Opco under the terms of the Exclusive Technical Service Agreement.
Further, under Indonesia laws and regulations, our Company or the Indonesian WFOE and its
subsidiaries are not expressly required to share the losses of Indonesian Opco or provide
financial support to Indonesian Opco. Despite the foregoing, given the results of operations and
assets and liabilities of the Indonesian Consolidated Affiliated Entities are consolidated into
our results of operations and assets and liabilities under the applicable accounting principles,
our business, financial condition and results of operations would be adversely affected if the
Consolidated Affiliated Entities suffered losses.
Liquidation
Pursuant to the Loan Agreement, in the event of default or a mandatory liquidation/insolvency
required by the Indonesian laws, the Indonesian WFOE shall be entitled to declare the loan
immediately due and payable and enforce the securities granted by the Indonesian Individual
and Indonesian Corporate Registered Shareholders and assets of the Indonesian Opco, which
will be used to settle the loan and be for the benefit of the Indonesian WFOE. The Indonesian
Corporate Registered Shareholders shall give the proceeds they received from liquidation as a
gift to the Indonesian WFOE or its designee(s) to the extent permitted by the Indonesian laws.
A liquidator may seize the relevant assets of the Indonesian Opco through the Indonesian
WFOE based on the Indonesian Contractual Arrangements for the benefit of our
creditors/shareholders.
Conflicts of interest
To ensure our effective control over the Indonesian Opco, we have incorporated terms in the
Indonesian Contractual Arrangements to protect against the potential conflicts of interest
between the Indonesian Individual and Indonesian Corporate Registered Shareholders and the
Indonesian WFOE. Under the Power of Attorney to Sell and the Power of Attorney to V ote, the
Indonesian Individual and Indonesian Corporate Registered Shareholders have irrevocably
CONTRACTUAL ARRANGEMENTS
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appointed the Indonesian WFOE to exercise its rights in connection with matters concerning
its rights as a shareholder of the Indonesian Opco, including the rights to vote in a
shareholders’ meeting, to sign minutes and to sell its shares. For further details, see “– Power
of Attorney” in this section.
Based on the above, our Directors are of the view that the measures we have adopted are
sufficient to mitigate the risks associated with the potential conflicts of interest between our
Group and the Indonesian Individual and Indonesian Corporate Registered Shareholders.
Death, bankruptcy and/or divorce of the Indonesian Individual Registered Shareholders
Pursuant to Article 3 paragraph 1 of Law Number 40 of 2007 on Limited Liability Company
as partially amended by the Job Creation Law (the “ Indonesian Company Law ”), unless the
company is not incorporated properly and the shareholders conduct any unlawful and bad faith
acts, the shareholders of a limited liability company are not personally liable for any contracts
entered by the company and the company’s losses extending beyond the value of their shares.
The shareholders of a limited liability company are also not personally liable for the
obligations of the company because the limited liability company is a separate legal body and
independent with its shareholders. Therefore, the shareholders are only liable for up to the
amount of capital they invest into the company.
As confirmed by our Indonesian Legal Adviser, (i) the Indonesian Opco is incorporated
properly in accordance with the Indonesian Company Law, and (ii) the Indonesian Contractual
Arrangements have complied with the requirement of Article 98 of the Indonesian Company
Law and the Indonesian Opco’s articles of association. Therefore, the Indonesian Contractual
Arrangements entered into remain binding against the Indonesian Opco in the occurrence of the
death, bankruptcy and/or divorce of the Indonesian Individual Registered Shareholders and/or
the Indonesian Corporate Registered Shareholders and their successors (as the case may be).
In particular, the Indonesian Contractual Arrangements shall prevail over their respective wills,
divorce agreements, debt arrangements and other legal instruments entered into by him/her.
Accordingly, there are appropriate arrangements in place to protect the interest of the
Indonesian WFOE in the event of death, bankruptcy and/or divorce of the Indonesian
Individual Registered Shareholders and/or the Indonesian Corporate Registered Shareholders
(as the case may be), and practical difficulties in enforcing the Indonesian Contractual
Arrangements have been avoided.
Insurance
We do not maintain an insurance policy to cover the risks relating to the Indonesian Contractual
Arrangements.
Legality of the Indonesian Contractual Arrangements
Our Indonesian Legal Adviser, after taking reasonable enquiries and due diligence, has
confirmed that the Indonesian Contractual Arrangements are legally binding and enforceable
on the Indonesian Individual Registered Shareholders and the Indonesian Corporate Registered
Shareholders, comply in fact and in good faith with all relevant laws and regulations of
Indonesia, and will not be deemed as “concealing illegal intentions with a lawful form” and be
voided under the laws and regulations currently prevailing in Indonesia and are only used to
the extent necessary and are narrowly tailored to minimize potential conflict under the
applicable laws and regulations to address the relevant foreign shareholding or ownership
limits or restrictions under Indonesian laws.
CONTRACTUAL ARRANGEMENTS
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Pursuant to Article 33 Paragraph 1 of the Investment Law, domestic and foreign investors are
prohibited from entering into an agreement or and/or issuing a statement to confirm that their
ownership of shares in a limited liability company is held for and in the name of another
person. Where a domestic investor and a foreign investor enter into an agreement and/or make
a statement to the effect that their ownership of shares in a company is held for and in the name
of another person, such an agreement and/or statement will be declared to be void by operation
of law.
Our Indonesian Legal Adviser confirms that none of the Indonesian Contractual Arrangements
entered into by our Indonesian Individual Registered Shareholders and Indonesian Corporate
Registered Shareholders contains any statement that their direct or indirect ownership of shares
in our Indonesian Opco is for and in the name of our Indonesian WFOE. The Indonesian
Contractual Arrangements are common loan transactions whereby the Indonesian Corporate
Registered Shareholders still remain as the registered and legal owners of 100% of the shares
in the Indonesian Opco, notwithstanding that 100% of the shares in the Indonesian Opco have
been pledged to the Indonesian WFOE and all the shares in the Indonesian Corporate
Registered Shareholders have also been pledged to the Indonesian WFOE as security for the
Loan Agreements and the Indonesian Corporate Registered Shareholders have also: (i) assigned
their dividends; (ii) granted an exclusive call option; and (iii) executed powers of attorney to
sell its shares in the Indonesian Opco to the Indonesian WFOE to secure the loans.
Furthermore, the Indonesian Corporate Registered Shareholders has also executed a power of
attorney in favor of the Indonesian WFOE to allow for the Indonesian WFOE to exercise its
voting rights as shareholders of the Indonesian Opco.
In the occurrence of an event of default under the Indonesian Contractual Arrangements, the
Indonesian WFOE will have the right to enforce the security documents including without
limitation to cause the shares registered under the name of the Indonesian Corporate Registered
Shareholders in the Indonesian Opco to be transferred to the Indonesian WFOE or any party
it designates.
The Indonesian Contractual Arrangements have met the elements required to establish a
contract as stipulated in Article 1320 of the Indonesian Civil Code, which includes: (i) consent,
where both the Indonesian WFOE and the Indonesian Individual and Indonesian Corporate
Registered Shareholders have agreed to enter into the series of Indonesian Contractual
Arrangements; (ii) capacity, whereby both the Indonesian WFOE and the Indonesian Individual
and Indonesian Corporate Registered Shareholders possess the legal capacity to enter into the
Indonesian Contractual Arrangements; (iii) subject, whereby the subject of the Indonesian
Contractual Arrangements is loan transactions; and (iv) lawful cause, the Indonesian
Contractual Arrangements are not contrary to public order in Indonesia.
After taking reasonable actions and steps, our Indonesian Legal Adviser is of the opinion that
there are no laws and regulations in Indonesia specifically disallowing foreign investors to
provide loan facilities to Indonesian shareholders to gain contractual control of a foreign
restricted business, and neither the execution of the Indonesian Contractual Arrangements, nor
the compliance by the Indonesian WFOE and the Indonesian Individual and Indonesian
Corporate Registered Shareholders with or performance of the terms and provisions thereof
would: (a) contravene any judgment, decree or order of any court, arbitrator, administrative
agency or other governmental institution to which the Indonesian WFOE and the Indonesian
Individual Registered Shareholders and Indonesian Corporate Registered Shareholders or any
of its assets are subject; (b) violate any provisions of the Indonesian Opco’s articles of
association; and (c) violate or contravene any provisions of the laws, rules or regulations in
CONTRACTUAL ARRANGEMENTS
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Indonesia by the Indonesian WFOE, the Indonesian Individual Registered Shareholders and
Indonesian Corporate Registered Shareholders and the Indonesian Opco, each being a party to
the Indonesian Contractual Arrangements.
Our Indonesian Legal Adviser has further opined that the Indonesian Contractual Arrangements
have not encountered any interference or encumbrance from any governing bodies of Indonesia
and are in compliance with the prevailing laws and regulations of Indonesia during the Track
Record Period and up to the Latest Practicable Date. Our Indonesian Legal Adviser have also
confirmed that given the Contractual Arrangements are within the domain of private law in
Indonesia which focuses on legal relationship between two parties based on the principle of
freedom of contract under Article 1338 of Indonesian Civil Code that all agreements made
legally shall apply as the law between the parties thereto, the Indonesian government will not
be involved in the use of the Indonesian Contractual Arrangements or any disputes with regards
to its legality.
In January 2022, we have also, with our Indonesian Legal Adviser, conducted a formal
interview with the relevant government authority, namely (i) the Coordinator of Commercial
Postal Services; (ii) an officer of the Directorate of Postal Affairs; (iii) an officer of the
Directorate of Postal Affairs; (iv) the Sub-coordinator of the Governance of Commercial Postal
Services; (v) the Sub-coordinator of the Tariff of Commercial Postal Services; (vi) the
Sub-coordinator of Data and Information of Commercial Postal Services; (vii) the Sub-
coordinator of the Postal Industry Development; and (viii) the Sub-coordinator of Postal
Cooperation, all of whom are from the MOCI which is the main supervising authority of our
operations in Indonesia, and obtained verbal guidance from a contact center service officer
from BKPM, which is the agency overseeing foreign investments in Indonesia.
During the consultation with the MOCI and BKPM, the officers confirmed that: (i) a foreign
investor who is not a Foreign Postal Operator cannot hold any equity interest in an Indonesian
Postal Services Company, (ii) in limited circumstances, a Foreign Postal Operator can hold
equity interest in a Postal Services Company by forming a joint venture company with an
Indonesian domestic company in compliance with the Partnership Requirements, (iii) the
Foreign Postal Operators can only obtain shares in a new joint venture to engage in Postal
Services, and should not subscribe or purchase shares in an existing domestic Indonesian Postal
Services Company with a nationwide coverage, and (iv) when all conditions under the
Partnership Requirements are met, the Foreign Postal Operator can hold up to 49% of equity
interest in the joint venture entity that provides KBLI 53201 courier services. Officers from
both MOCI and BKPM have further confirmed that the Indonesian Contractual Arrangements
are under the domain of private law in Indonesia, and MOCI does not regulate, supervise or
intervene in the use or any dispute over the legality or enforceability of the Contractual
Arrangements. BKPM advised that that BKPM would only supervise whether companies
conduct their business in accordance with their licenses. BKPM does not supervise, and will
not intervene in, the business arrangements adopted by private parties or any privately
executed agreements.
This effectively allows the Company, as a foreign investor, to indirectly control an Indonesian
company which engages in Postal Services. After making reasonable enquiries and due
diligence, our Indonesian Legal Adviser has opined that the adoption of the Indonesian
Contractual Arrangements by the Company is unlikely to be deemed ineffective or invalid
under the applicable laws and regulations in Indonesia. Further, our Indonesian Legal Adviser
is of the view that the Contractual Arrangements are used to the extent necessary under the
applicable laws and regulations in Indonesia to address the relevant foreign shareholding or
CONTRACTUAL ARRANGEMENTS
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ownership limits or restrictions only, and have been narrowly tailored to minimize the potential
conflict with relevant Indonesian laws and regulations and enables the Group to achieve the
contractual control over Indonsian Opco which engages in postal services within Indonesia.
Our Indonesian Legal Adviser has confirmed that it has taken all possible actions and steps to
enable it to reach the above legal conclusions and opinions. In light of the above opinion from
our Indonesian Legal Adviser and as the Indonesian Contractual Arrangements have not
encountered any interference or encumbrance from any governing bodies of Indonesia during
the Track Record Period and up to the Latest Practicable Date, our Directors are of the view
that the Indonesian Contractual Arrangements are enforceable under the relevant Indonesian
laws and regulations.
ACCOUNTING ASPECTS OF THE INDONESIAN CONTRACTUAL ARRANGEMENTS
Consolidation of financial results of operating entities
According to IFRS 10 – Consolidated Financial Statements, a subsidiary is an entity that is
controlled by another entity (known as the parent). An investor controls an investee when it is
exposed, or has rights to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee.
As a result of the Indonesian Contractual Arrangements among the Indonesian WFOE,
Indonesian Opco and the Indonesian Individual Registered Shareholders and Corporate
Registered Shareholders, the Indonesian WFOE has rights to exercise power over Indonesian
Opco and its subsidiaries, receives variable returns from its involvement in Indonesian Opco
and its subsidiaries, has the ability to affect those returns through its power over Indonesian
Opco and its subsidiaries and is considered to control Indonesian Opco and its subsidiaries.
Consequently, the Company regards Indonesian Opco and its subsidiaries as controlled entities
and consolidates the assets, liabilities and results of operations of Indonesian Opco and its
subsidiaries in the consolidated financial information of the Group.
COMPLIANCE WITH THE INDONESIAN CONTRACTUAL ARRANGEMENTS
Our Group has adopted the following measures to ensure the effective operation of our Group
with the implementation of the Indonesian Contractual Arrangements and our compliance with
the Indonesian Contractual Arrangements:
1. major issues arising from the implementation and compliance with the Indonesian
Contractual Arrangements or any regulatory enquiries from government authorities will
be submitted to our Board, if necessary, for review and discussion as and when they arise;
2. our Board will review the overall performance of and compliance with the Indonesian
Contractual Arrangements at least once a year;
3. our Company will disclose the overall performance of and compliance with the
Indonesian Contractual Arrangements in our annual reports; and
4. our Company will engage external legal advisers or other professional advisers, if
necessary, to assist the Board to review the implementation of the Indonesian Contractual
Arrangements, to review the legal compliance of the Indonesian WFOE and Indonesian
Opco and to deal with specific issues or matters arising from the Indonesian Contractual
Arrangements.
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OVERVIEW
We have in the past conducted certain transactions with entities that will become our connected
persons upon Listing. The transactions disclosed in this section will continue after Listing and
will therefore constitute our non-exempt continuing connected transactions under the Listing
Rules.
SUMMARY OF OUR NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
We have entered into the following transactions that will constitute non-exempt continuing
connected transactions under Rule 14A.31 of the Listing Rules upon Listing.
Proposed annual cap for the
years ending December 31,
Transactions
Applicable
Listing Rules Waivers sought 2023 2024 2025
(RMB in millions)
Contractual
Arrangements
14A.34, 14A.35,
14A.36, 14A.52,
14A.53 to 59,
14A.71 and
14A.105
Announcement,
independent
shareholders’
approval, annual
cap, and three
year term
requirements
N/A N/A N/A
Contractual Arrangements
Background
As disclosed in “Contractual Arrangements”, due to regulatory restrictions on foreign
ownership in the PRC and Indonesia, we conduct a substantial portion of our business through
our Consolidated Affiliated Entities in the PRC and Indonesia.
We do not hold any equity interests in our Consolidated Affiliated Entities. Rather, through the
Contractual Arrangements, we effectively control these Consolidated Affiliated Entities and are
able to derive substantially all of their economic benefits, and expect to continue to do so.
See “Contractual Arrangements” for further detailed terms of the Contractual Arrangements.
Listing Rules implications
For the purpose of Chapter 14A of the Listing Rules, and in particular the definition of
‘connected person’, our Consolidated Affiliated Entities will be treated as our Company’s
subsidiaries, but at the same time, the directors, chief executives or substantial shareholders of
the Consolidated Affiliated Entities and its associates will be treated as connected persons of
our Company as applicable under the Listing Rules (excluding for this purpose, the
Consolidated Affiliated Entities themselves). Therefore, the transactions contemplated under
the Contractual Arrangements constitute continuing connected transactions of our Company
under the Listing Rules upon Listing.
CONTINUING CONNECTED TRANSACTIONS
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The highest applicable percentage ratios (other than the profits ratio) under the Listing Rules
in respect of the transactions associated with the Contractual Arrangements are expected to be
more than 5%. As such, the transactions will be subject to the reporting, annual review,
announcement and independent shareholders’ approval requirements under Chapter 14A of the
Listing Rules.
Reasons for the transaction and the waiver application
Our Directors (including the independent non-executive Directors) are of the view that the
Contractual Arrangements and the transactions contemplated therein are fundamental to our
legal structure and business operations. Our Directors also believe that our structure, whereby
the financial results of our Consolidated Affiliated Entities are consolidated into our financial
statements as if they were our Company’s wholly-owned subsidiaries, and all the economic
benefits of their business flows to our Group, places our Group in a special position in relation
to the connected transactions rules. Accordingly, notwithstanding that the transactions
contemplated under the Contractual Arrangements and any new transactions, contracts and
agreements or renewal of existing transactions, contracts and agreements to be entered into,
among others, by our Consolidated Affiliated Entities and any member of our Group from time
to time (including Consolidated Affiliated Entities) (the “ New Intergroup Agreements ”)
technically constitute continuing connected transactions under Chapter 14A of the Listing
Rules, our Directors consider that it would be unduly burdensome and impracticable, and
would add unnecessary administrative costs to our Company, for all such transactions to be
subject to strict compliance with the requirements set out under Chapter 14A of the Listing
Rules, including, among other things, the announcement and independent shareholders’
approval requirements.
WAIVERS
In respect of the Contractual Arrangements and New Intergroup Agreements, we have applied
to the Stock Exchange for, and the Stock Exchange has granted us, a waiver from strict
compliance with (i) the announcement, circular and independent Shareholders’ approval
requirements under Rule 14A.105 of the Listing Rules, (ii) the requirement to set a term of
three years or less under Rule 14A.52 of the Listing Rules, and (iii) the requirement of setting
annual caps for the transaction under the Contractual Arrangements under Rule 14A.53 of the
Listing Rules, for so long as our Class B Shares are listed on the Stock Exchange, subject,
however, to the following conditions:
(a) No change without independent non-executive Directors’ approval
No change to the Contractual Arrangements (including with respect to any fees payable
to the PRC and Indonesian WFOEs thereunder) will be made without the approval of our
independent non-executive Directors.
(b) No change without independent Shareholders’ approval
Save as described below, no change to the agreements governing the Contractual
Arrangements will be made without the independent Shareholders’ approval. Once
independent Shareholders’ approval of any change has been obtained, no further
announcement or approval of the independent Shareholders will be required under
Chapter 14A of the Listing Rules unless and until further changes are proposed. The
periodic reporting requirement regarding the Contractual Arrangements in the annual
reports of our Company will, however, continue to be applicable.
CONTINUING CONNECTED TRANSACTIONS
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(c) Economic benefit flexibility
The Contractual Arrangements shall continue to enable our Group to receive the
economic benefits derived by the Consolidated Affiliated Entities through (i) our Group’s
option (to the extent permitted under the applicable PRC and Indonesian laws) to acquire
all or part of the entire equity interests and assets at a consideration which shall be the
higher of (a) a nominal price or (b) the lowest price as permitted under applicable PRC
and Indonesian laws, (ii) the business structure under which the profit generated by the
Consolidated Affiliated Entities is substantially retained by our Group, such that no
annual cap shall be set on the amount of service fees payable to the WFOEs by the
Consolidated Affiliated Entities under the Contractual Arrangements, and (iii) our
Group’s right to control the management and operation of, as well as the substance of, all
of the voting rights of the Consolidated Affiliated Entities.
(d) Renewal and reproduction
On the basis that the Contractual Arrangements provide an acceptable framework for the
relationship between the Company and its subsidiaries in which the Company has
shareholding, on the one hand, and the Consolidated Affiliated Entities, on the other hand,
such framework may be renewed and/or reproduced without an announcement, circular,
or obtaining the approval of the Shareholders (i) upon the expiry of the existing
arrangements, (ii) in connection with any changes to the shareholders or directors of, or
of their shareholdings in, the Consolidated Affiliated Entities, or (iii) in relation to any
existing, new or acquired wholly foreign-owned enterprise or operating company
(including branch companies) engaging in a business similar or relating to those of the
Group, on substantially the same terms and conditions as the existing Contractual
Arrangements. The directors, chief executive or substantial shareholders of any existing
or new wholly foreign-owned enterprise or operating company (including branch
companies) engaging in the same business as that of our Group which our Group may
establish will, upon renewal and/or reproduction of the Contractual Arrangements,
however, be treated as connected persons of our Company and transactions between these
connected persons and our Company other than those under similar contractual
arrangements shall comply with Chapter 14A of the Listing Rules. This condition is
subject to relevant PRC or Indonesian laws, regulations and approvals.
(e) Ongoing reporting and approvals
We will disclose details relating to the Contractual Arrangements on an on-going basis as
follows:
 The Contractual Arrangements in place during each financial period will be
disclosed in our Company’s annual reports and accounts in accordance with the
relevant provisions of the Listing Rules.
 Our independent non-executive Directors will review the Contractual Arrangements
annually and confirm in our Company’s annual reports for the relevant years that (i)
the transactions carried out during such year have been entered into in accordance
with the relevant provisions of the Contractual Arrangements, (ii) no dividends or
other distributions have been made by the Consolidated Affiliated Entities to the
holders of its equity interests which are not otherwise subsequently assigned or
transferred to our Group, and (iii) any new contracts entered into, renewed or
reproduced between our Group and the Consolidated Affiliated Entities during the
relevant financial period under paragraph (d) above are fair and reasonable, or
advantageous to our Shareholders, so far as our Group is concerned and in the
interests of our Company and our Shareholders as a whole.
CONTINUING CONNECTED TRANSACTIONS
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 Our Company’s auditors will carry out review procedures annually on the
transactions, pursuant to the Contractual Arrangements, and will provide a letter to
our Directors with a copy to the Stock Exchange confirming that the transactions
have received the approval of our Directors, have been entered into in accordance
with the relevant Contractual Arrangements, and that no dividends or other
distributions have been made by our Consolidated Affiliated Entities to the holders
of its equity interests which are not otherwise subsequently assigned or transferred
to our Group.
 For the purpose of Chapter 14A of the Listing Rules, and in particular the definition
of “connected person”, our Consolidated Affiliated Entities will be treated as our
Company’s subsidiaries, and at the same time, the directors, chief executives or
substantial shareholders of the Consolidated Affiliated Entities and their respective
associates will be treated as connected persons of our Company (excluding, for this
purpose, the Consolidated Affiliated Entities), and transactions between these
connected persons and our Group (including, for this purpose, the Consolidated
Affiliated Entities), other than those under the Contractual Arrangements, will be
subject to requirements under Chapter 14A of the Listing Rules.
 Our Consolidated Affiliated Entities will undertake that, for so long as the Class B
Shares are listed on the Stock Exchange, the Consolidated Affiliated Entities will
provide our Group’s management and our Company’s auditors full access to its
relevant records for the purpose of our Company’s auditors’ review of the connected
transactions.
In the event of any future amendments to the Listing Rules imposing more stringent
requirements than those applicable as of the Latest Practicable Date on the continuing
connected transactions referred to in this section, we will take immediate steps to ensure
compliance with such new requirements within a reasonable time.
DIRECTORS’ CONFIRMATION
Our Directors (including independent non-executive Directors) are of the view that the
Contractual Arrangements and the transactions contemplated therein are fundamental to our
Group’s legal structure and business, that such transactions have been and will be entered into
in the ordinary and usual course of business of our Group, are on normal commercial terms and
are fair and reasonable and in the interests of our Company and the Shareholders as a whole,
and it is normal business practice for the Contractual Arrangements to be of a term greater than
three years. Accordingly, notwithstanding that the transactions contemplated under the
Contractual Arrangements technically constitute continuing connected transactions under
Chapter 14A of the Listing Rules, the Directors consider that, given that our Group is placed
in a special situation in relation to the connected transactions rules under the Contractual
Arrangements, it would be unduly burdensome and impracticable, and would add unnecessary
administrative costs to our Company if such transactions are subject to strict compliance with
the requirements set out under Chapter 14A of the Listing Rules.
CONFIRMATION BY THE JOINT SPONSORS
The Joint Sponsors have (i) reviewed the relevant documents and information provided by the
Group, and (ii) participated in the due diligence and discussion with the management of the
Company. Based on the above, the Joint Sponsors are of the view that the continuing connected
transactions set out above have been and will continue to be carried out in the ordinary and
usual course of business of the Company and on normal commercial terms or better, and are
fair and reasonable and in the interests of the Company and its Shareholders as a whole; and
it is normal business practice for the Contractual Arrangements to be of a term greater than
three years.
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DIRECTORS AND SENIOR MANAGEMENT
Upon Listing, our Board will consist of seven Directors, including one executive Director,
three non-executive Directors and three independent non-executive Directors. The following
table provides certain information about our Directors:
Name Age Position(s)
Date of
joining the
Group
Date of
appointment
as a Director
of the
Company
Roles and
responsibilities
Mr. Jet Jie Li
(ҽ௫΋͛)
48 Founder, Executive
Director, chairman
of the Board and
Chief Executive
Officer
June 2015 May 15, 2020 Overall strategic
planning and
business
direction
Ms. Alice
Y u-fen Cheng
(ɾɻ)
62 Non-executive
Director
May 2020 May 15, 2020 Provide strategic
advice to
the Board
Ms. Qinghua Liao
(࿋૶ശɾɻ)
53 Non-executive
Director
March 2022 March 3, 2022 Provide strategic
advice to
the Board
Mr. Y uan Zhang
(ੵ๕΋͛)
55 Non-executive
Director
May 2020 May 15, 2020 Provide strategic
advice to
the Board
Mr. Charles
Zhaoxuan Y ang
(ᴚ΋͛)
40 Independent
non-executive
Director
Listing Date* Listing Date* Provide
independent
opinion and
judgment to the
Board
Mr. Erh Fei Liu
(΋͛)
64 Independent
non-executive
Director
Listing Date* Listing Date* Provide
independent
opinion and
judgment to the
Board
Mr. Peng Shen
(ӏᘄ΋͛)
36 Independent
non-executive
Director
Listing Date* Listing Date* Provide
independent
opinion and
judgment to the
Board
* Note: The appointments of Mr. Erh Fei Liu, Mr. Peng Shen and Mr. Charles Zhaoxuan Y ang as our independent
non-executive Directors will take effect on the Listing Date.
DIRECTORS AND SENIOR MANAGEMENT
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Executive Director
Mr. Jet Jie Li ( ҽ௫΋͛)
Mr. Jet Jie Li (“ Mr. Li ”), aged 48, is our founder, executive Director, Chief Executive Officer
and chairman of the Board. Mr. Li is responsible for setting the strategic vision, direction and
goals of our Group.
Mr. Li founded the J&T brand in Indonesia in June 2015 and has since leveraged on the
Group’s success to expand globally. Mr. Li used his extensive sales and entrepreneurial
experience including his comprehensive understanding of Southeast Asian culture to drive our
Group’s rapid growth. Currently, our Group’s core operations span across China and seven
Southeast Asian countries, including Vietnam, Malaysia, the Philippines, Thailand, Cambodia
and Singapore. We have also recently made forays into other foreign markets including Saudi
Arabia, UAE, Mexico, Brazil and Egypt.
Prior to founding our Group, Mr. Li spent more than 15 years of his career with OPPO, a
Chinese consumer electronics and mobile communications company, where he was responsible
for leading its global expansion efforts into Indonesia as well as other Asian markets such as
Singapore, Malaysia and Japan. He served as the founder and Chief Executive Officer of
OPPO’s first overseas exclusive sales agent, PT. Indonesia OPPO Electronics from February
2013 to June 2015. Previously, Mr. Li also served as general manager of Nanjing Baisheng
Oppo Communication Equipment Co., Ltd. (ʮ̡) from February
2008 to February 2013, where he was responsible for the distribution of OPPO products in the
Jiangsu and Anhui provinces; and as department manager at Jiangsu Baisheng Electronic Co.,
Ltd (ʮ̡) from January 1999 to February 2008, where he was responsible
for the sales of audiovisual products. In recognition of Mr. Li’s significant contribution, the
OPPO headquarters established the “Jet Lee” award in honor of Mr. Li to reward top
salespeople in the global sales agencies.
Mr. Li obtained his bachelor’s degree in marketing from the University of Science and
Technology Beijing, the PRC, in 1998.
Non-executive Directors
Ms. Alice Yu-fen Cheng (
ɾɻ)
Ms. Alice Y u-fen Cheng (“ Ms. Cheng ”), aged 62, is our non-executive Director. She is
primarily responsible for providing strategic advice to the Board.
Previously, Ms. Cheng held various positions with Acer Inc., a Taiwanese computer
manufacturer, culminating in the position of financial controller, from August 1988 to
December 2002. From December 2002 to May 2005, Ms. Cheng served as a financial controller
of Wistron Corporation, a Taiwanese original design manufacturer of notebook computers and
other electronics. From May 2005 to July 2021, Ms. Cheng served as the chief financial officer
of Guangdong BBK Electronics Industry Co., Ltd. (ʮ̡), a PRC-
based manufacturer of audio-visual equipment, telephones and learning machines.
Ms. Cheng has been serving as an independent director of NetEase, Inc. (NASDAQ: NTES;
HKEX: 9999) since June 2007 and is currently a member of their audit committee,
compensation committee, nominating committee, and Environmental, Social and Governance
Committee.
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Ms. Cheng received a Bachelor’s of Accounting from the Chinese Culture University in Taiwan
in June 1983 and a Master of Business Administration in International Management from
Thunderbird, the American Graduate School of International Management, the United States in
December 2003. Ms. Cheng also received her license as a certified public accountant in Taiwan
and the PRC in August 1993 and December 1994, respectively.
Ms. Qinghua Liao (
࿋૶ശɾɻ)
Ms. Qinghua Liao (“ Ms. Liao ”), aged 53, is our non-executive Director. She is primarily
responsible for providing strategic advice to the Board.
Prior to joining our Group, Ms. Liao held various positions in Zhongshan Xiaobawang
Electronic Industry Co., Ltd. (ʮ̡), including development officer
and assistant general manager, from April 1994 to July 1995. Ms. Liao then joined Guangdong
BBK Electronics Industry Co., Ltd. (ʮ̡), where she spent more
than 10 years of her career from August 1995 to October 2005, in different roles including the
head of the human resources department, head of the adjustment and planning department,
general manager, assistant factory director for the electronic gaming branch and head of the
total quality management department for the electronic gaming branch, where she oversaw the
operations and quality control processes within the Company. She then joined BBK Education
Electronics Co., Ltd. (ʮ̡), where she served as head of the systems
management department from November 2005 to July 2015 and chief information officer from
July 2015 to March 2020. Ms. Liao has served as the operations manager of Guangdong
Xiaotiancai Technology Co., Ltd. (ʮ̡) since March 2020.
Ms. Liao obtained her bachelor’s degree in Information Management from Central China
Normal University, the PRC in July 1992.
Mr. Yuan Zhang (
ੵ๕΋͛)
Mr. Y uan Zhang (“ Mr. Zhang ”), aged 55, is our non-executive Director. He is primarily
responsible for providing strategic advice to the Board.
Mr. Zhang served as the general manager of the Nanjing Branch of Zhongshan Xiaobawang
Electronic Industry Co., Ltd. (ԯʱʮ̡) from December
1991 to December 1996. He has served as the founder, chairman and general manager of
Jiangsu Baisheng Electronic Co., Ltd (ʮ̡) since January 1997.
Mr. Zhang obtained a bachelor’s degree in electronic engineering where he majored in radio
technology, from Shanghai Jiao Tong University, the PRC, in July 1990.
Independent Non-executive Directors
Mr. Charles Zhaoxuan Yang (
ᴚ΋͛)
Mr. Charles Zhaoxuan Y ang (“ Mr. Yang ”), aged 40, has been appointed as an independent
non-executive Director of our Company and his appointment will take effect from the Listing
Date. He is primarily responsible for supervising and providing independent judgement to the
Board and serving as chairman and members of certain committees of the Board.
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He has served as chief financial officer of NetEase, Inc. (NASDAQ: NTES; HKEX: 9999)
since June 2017. Prior to that, Mr. Y ang was an executive director in the Global Investment
Banking Department at J.P . Morgan Securities (Asia Pacific) Limited and was based in Hong
Kong for almost a decade. Mr. Y ang has served as an independent director on the board of
So-Y oung International Inc. (NASDAQ: SY), since May 2019; and Kanzhun Limited
(NASDAQ: BZ and HKEX: 2076) since June 2021.
Mr. Y ang obtained a bachelor’s degree from Wesleyan University, the United States, with
majors in economics and mathematics in May 2007 and a master’s degree in business
administration from the University of Hong Kong in November 2016. Mr. Y ang is a Certified
Public Accountant licensed in the State of Michigan and Hong Kong.
Mr. Erh Fei Liu (
΋͛)
Mr. Erh Fei Liu (“ Mr. Liu ”), aged 64, has been appointed as an independent non-executive
Director of our Company and his appointment will take effect from the Listing Date. He is
primarily responsible for supervising and providing independent judgement to the Board and
serving as chairman and members of certain committees of the Board.
Mr. Liu is currently Chief Executive Officer and Founding Partner at Asia Investment Capital
Ltd. and Chief Executive Officer of Asia Investment Fund. He was previously a co-founder of
Cindat Capital Management Limited (“ Cindat ”), a global real estate investment platform. Prior
to founding Cindat, Mr. Liu had a successful career as an investment banker. Mr. Liu worked
as senior management in various financial institutions such as the head of investment banking
for China at Goldman Sachs Group, Inc., the Managing Director of Merrill Lynch (Asia
Pacific) Limited and the chairman of China region of Merrill Lynch Group. He was awarded
the Asian Banker Skills-based Achievements Award in investment banking in 2006 by The
Asian Banker.
Mr. Liu has been an independent non-executive director of Qingling Motors Co. Ltd (HKEX:
1122) and VNET Group, Inc. (formerly known as 21Vianet Group, Inc., NASDAQ: VNET)
since May 2015; and Frontage Holdings Corporation (HKEX: 1521) since April 2018. Mr. Erh
Fei Liu was an independent non-executive director of Fortunet e-Commerce Group Limited
(now known as Changyou Alliance Group Limited, HKEX: 1039), from March 2015 to April
2017; and Jiangxi Copper Company Limited from July 2016 to October 2022 (HKEX: 0358 and
listed on the Shanghai Stock Exchange with stock code 600362).
Mr. Liu graduated from Harvard Business School, the United States, in June 1987 with a
master’s degree in business administration.
Mr. Peng Shen (
ӏᘄ΋͛)
Mr. Peng Shen (“ Mr. Shen ”), aged 36, has been appointed as an independent non-executive
Director of our Company and his appointment will take effect from the Listing Date. He is
primarily responsible for supervising and providing independent judgement to the Board and
serving as chairman and members of certain committees of the Board.
Mr. Shen is the founder and currently serves as the chairman of board of directors and chief
executive officer of Waterdrop Inc. (NYSE: WDH). Prior to founding Waterdrop in 2016, in
January 2010, Mr. Shen joined Meituan (HKSE: 03690), a leading e-commerce platform in
China, at its early stage. He was also one of the founding team members of Meituan Waimai,
which provides food delivery services. Mr. Shen participated in the operations of Meituan
Waimai from September 2013 to April 2016, where he was responsible for different matters
DIRECTORS AND SENIOR MANAGEMENT
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--- page 310 ---
including internet R&D, formulating operational rules, and establishing and managing the
business systems. In honor of his contributions to China’s insurtech industry, digital clinical
trial solutions business and other fields, as well as the establishment and operation of
Waterdrop, Mr. Shen was named to Fortune China’s list of the “2020 40 under 40 in China” and
World Economic Forum’s list of “2022 Y oung Global Leaders.”
Mr. Shen received a master’s degree in retail management from NEOMA Business School,
France, in October 2013, an EMBA from Tsinghua University School of Economics and
Management, PRC, in July 2019 and the degree of Doctor of Hotel and Tourism Management
from the Hong Kong Polytechnic University in September 2022.
In September 2021, a securities class action against, among others, Waterdrop Inc.
(“Waterdrop ”) was filed in the U.S. District Court for the Southern District of New Y ork (the
“Court ”), Sidney Sandoz, et al. v. Waterdrop Inc., et al., 1:21-cv-07683 (the “ Waterdrop
Class Action ”) alleging violations of the Securities Act of 1933 in relation to Waterdrop’s
initial public offering in May 2021 in the US (the “ Waterdrop IPO ”). Mr. Shen in his capacity
as chief executive officer and, together with certain other executives and directors of
Waterdrop and the underwriters (together with Waterdrop, the “ Defendants ”) of Waterdrop
IPO, was named as one of the Defendants in the case. However, Mr. Shen has never been served
with the summons or complaint for this case and therefore need not participate and has not
participated in the Waterdrop Class Action. To the best of the Company’s knowledge and
according to published court records, the plaintiffs alleged that the Defendants, among others,
failed to make adequate disclosures in connection with Waterdrop IPO, in breach of Sections
11 and 15 of the U.S. Securities Act of 1933. Specifically, the plaintiffs alleged that the
registration statement of Waterdrop IPO failed to make adequate disclosures regarding, among
others, (i) increased scrutiny over internet-based insurance companies by Chinese authorities
and its impact on Waterdrop’s financials and business operations; (ii) the true reasons for
Waterdrop’s discontinuance of its mutual aid program; and (iii) the rapid suffering of
Waterdrop accelerating operating losses in the first quarter of 2021. The complaint seeks
damages allegedly suffered by the plaintiffs as a result of failure to make adequate disclosures.
Waterdrop filed a motion to dismiss on April 22, 2022. On February 3, 2023, the Court issued
an order granting Waterdrop’s motion to dismiss as “ the Registration Statement adequately
warned investors of their risk associated with Waterdrop and its IPO, including the increase
in operating costs, the regulatory regime and the closure of Mutual Aid .” The case was
dismissed with prejudice. In addition, the order also verdicts that the claims against the
remaining defendants (including Mr. Shen) will also be dismissed and there is no basis to find
that the claims against the remaining Defendants, who have yet to be served, are
distinguishable and would survive.
On March 7, 2023, the plaintiffs filed a notice appealing the Court’s dismissal order (the
“Appeal ”) in the U.S. Court of Appeals, Second Circuit (the “ Circuit Court ”). As of the Latest
Practicable Date, the Appeal is at a preliminary stage and no decision has been made by the
Circuit Court.
As of the Latest Practicable Date, the Company has no basis to believe that either of the
Waterdrop Class Action or the Appeal impugn the integrity and suitability of Mr. Shen to act
as the Company’s director, because the mere naming of an individual director as a defendant
in these actions does not form a basis for doubting his integrity or suitability to discharge his
duties as a director of a public company. In addition, to the best knowledge of the Company,
(i) the Court ruled in favour of Waterdrop’s motion and dismissed the Waterdrop Class Action;
(ii) as of the Latest Practical Date, the Appeal is still at a preliminary stage and the Circuit
Court has not ruled on the substance of the plaintiffs’ claims; (iii) as of the Latest Practicable
DIRECTORS AND SENIOR MANAGEMENT
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--- page 311 ---
Date, no evidence showing, or dispositive court ruling on, Mr. Shen’s personal involvement in
making or directing Waterdrop to make any alleged misstatements in a manner that would raise
concerns as to his character, experience, integrity and ability to discharge his duties as a
director, including fiduciary duties and duties to exercise skill, care and diligence to a standard
that commensurate with his position as a director of a listed company in Hong Kong; and (iv)
Mr. Shen has never been served with the summons or complaint for this case and therefore need
not participate and has not participated in the Waterdrop Class Action. Taking into account all
the above, the Directors are of the view that the Waterdrop Class Action and the Appeal would
not affect the suitability of Mr. Shen as a Director of the Company under Rules 3.08 and 3.09
of the Listing Rules.
After due consideration of (i) the current information in relation to the Waterdrop Class Action
and the Appeal available to the Joint Sponsors, (ii) the views of the Directors, (iii) background
search and litigation search on Mr. Shen and (iv) enquiries with Mr. Shen in relation to, among
others, the Waterdrop Class Action and the Appeal, the Joint Sponsors are not aware of any
material findings from the independent due diligence work conducted that would reasonably
cause the Joint Sponsors to disagree with the views of our directors as set out above. The
Company will closely monitor the developments of the Waterdrop Class Action and the Appeal
and will review the above should the facts change, new information become available or the
case proceed further.
SENIOR MANAGEMENT
The following table provides information about members of the senior management of the
Company:
Name Age Position(s)
Date of
joining the
Group
Roles and
responsibilities
Mr. Jet Jie Li
(ҽ௫΋͛)
48 Founder, Executive
Director, chairman
of the Board and
Chief Executive
Officer
June 2015 Overall strategic
planning and
business direction
Mr. Steven
Suzhou Fan
(΋͛)
37 Executive President June 2015 Overall strategic
planning,
organizational
development and
overseeing
business
operations of our
Group
Mr. Charles
Junyi Hou
(ᄃ΋͛)
54 Vice President October 2019 Overall strategic
planning, general
management and
execution of
business
operations of our
Group
DIRECTORS AND SENIOR MANAGEMENT
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--- page 312 ---
Name Age Position(s)
Date of
joining the
Group
Roles and
responsibilities
Mr. Dylan Say
Keong Tey
(ቍ˰੶΋͛)
45 Chief Financial
Officer
August 2021 Responsible for
overseeing our
Group’s finance,
legal, investments
and capital
market activities
Mr. Jet Jie Li ( ҽ௫΋͛)
Mr. Jet Jie Li, aged 48 is our founder, executive Director, chairman of the Board and Chief
Executive Officer of our Company. For details of his biography, see “– Directors and Senior
Management – Executive Director” in this section.
Mr. Steven Suzhou Fan (΋͛)
Mr. Steven Suzhou Fan (“ Mr. Fan ”), aged 37, is our Executive President and is responsible for
the overall strategic planning, organizational development and overseeing the business
operations of our Group.
Mr. Fan joined our Group and served as the regional sponsor in Bandung of West Java,
Indonesia from June 2015 to September 2019, where he was responsible for coordinating the
express delivery business in that region. Mr. Fan has served as our Executive President since
January 2019.
Prior to joining our Group, Mr. Fan was a business supervisor at Nanjing Baisheng Oppo
Communication Equipment Co., Ltd. (ʮ̡) from January 2009 to
March 2013, where he was responsible for the distribution of OPPO’s products in the Jiangsu
province. He served as general manager of West Java at PT. Indonesia OPPO Electronics from
February 2013 to June 2015.
Mr. Fan obtained a bachelor’s degree in marketing from Henan Normal University, the PRC,
in July 2008.
Mr. Charles Junyi Hou (ᄃ΋͛)
Mr. Charles Junyi Hou (“ Mr. Hou ”), aged 54, is our Vice President. Mr. Hou joined our Group
in October 2019 as Vice President and is responsible for the overall strategic planning, general
management and execution of the business operations of our Group.
Mr. Hou has extensive experience in the logistics and international and domestic express
delivery industries. He spent more than 15 years of his career with DHL – Sinotrans Ltd.
(“DHL Express ”), where he held various roles across multiple business units spanning
information technology, gateway operations and ground operations before culminating in the
position of Greater China Area Senior Adviser.
Mr. Hou then joined Shunfeng Express (Group) Limited ( නᔮ஺༶(ණྠ)ʮ̡), where he
served as operations director from October 2010 to October 2013. He then served as senior
operations director of YTO Express (Logistics) Co., Ltd (“ YTO Express ”) (ʮ
̡) from April 2014 to September 2015. Mr. Hou then expanded his career experience as an
DIRECTORS AND SENIOR MANAGEMENT
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independent management consultant before serving as the co-founder and vice president of
Shanghai Baisong Internet of Things Technology Co., Ltd. (ʮ̡)
from April 2017 to July 2018. From July 2018 to October 2019, he served as deputy general
manager of On Time Promise (ፕ༺तҞ) business unit in the YTO Group ( ෥ஷ൉Ꮂණྠ).
Mr. Hou obtained his bachelor’s degree in computer science from Shanghai Science and
Technology University (currently known as Shanghai University), the PRC, in July 1989. He
further obtained a master’s degree of business administration from the joint MBA program
between Webster University, the United States and Shanghai University of Finance and
Economics, in December 2009.
Mr. Dylan Say Keong Tey ( ቍ˰੶΋͛)
Mr. Dylan Say Keong Tey (“ Mr. Tey ”), aged 45, joined our Group in August 2021 as Chief
Financial Officer of the Company. He is responsible for overseeing our Group’s finance, legal,
investments and capital market activities. He has more than 20 years of financial and
industry-related experience.
Mr. Tey started his career with Ernst &Y oung, Malaysia in January 1999 to October 2004, and
last held the position of audit manager. He joined PricewaterhouseCoopers ZhongTian LLP
(“PwC China ”) in November 2004 as audit manager, and was admitted to partnership in July
2011. From July 2011 to March 2018, Mr. Tey served as an audit partner in PwC China
focusing on the technology industry, while also managing the firm’s relationship with a number
of venture capital firms, and was a member of its private equity leadership team. He was the
Chief Financial Officer of We Doctor Holdings Limited, an online healthcare services company
in China, from April 2018 to April 2019. Mr. Tey was the co-Chief Financial Officer and Senior
Vice President of Hello Inc from May 2019 to August 2021, responsible for its finance and
legal functions.
Mr. Tey received his bachelor’s degree with a double major in accounting and finance from
University of New South Wales, Australia in December 1998. He has been a member of the
Chartered Accountants Australia & New Zealand and member of Malaysian Institute of
Accountants since June 2002 and July 2002, respectively. Mr. Tey became a Certified Public
Accountant in Hong Kong in January 2012 and he was admitted as a Fellow of Chartered
Accountants Australia & New Zealand in November 2017.
INTERESTS OF OUR DIRECTORS AND SENIOR MANAGEMENT
Save as disclosed above, none of our Directors holds any other directorships in public
companies, the securities of which are listed on any securities market in Hong Kong or
overseas during the three years immediately preceding the date of this prospectus. See
“Statutory and General Information” in Appendix V to this prospectus for further information
about the Directors, including the particulars of their service contracts and remuneration, and
details of the interests of the Directors in the Shares (within the meaning of Part XV of the
SFO).
None of our Directors and members of senior management are related to other Directors or
members of senior management. There is no material matter relating to our directors that needs
to be brought to the attention of our shareholders and the information of our directors disclosed
in this prospectus comply with the requirements under Rule 13.51(2) of the Listing Rules in
all material aspects.
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COMPANY SECRETARY
Ms. Yin Shan Hui (ɾɻ) is a senior manager of corporate services of Tricor Services
Limited, a global professional services provider specializing in integrated business corporate
and investor services. She has over 18 years of experience in the corporate secretarial field. Ms.
Hui is currently the company secretary of OneForce Holdings (HKEX: 1933), Shanghai
MicroPort MedBot (Group) Co., Ltd. (HKEX: 2252) and MicroPort NeuroTech Limited
(HKEX: 2172) and the joint company secretary of Honliv Healthcare Management Group
Company Limited (HKEX: 9906).
Ms. Hui graduated from Hong Kong Polytechnic University in Hong Kong with a bachelor’s
degree in applied mathematics in November 1994. She received her master’s degree in finance
from Curtin University of Technology in Australia in December 2002. Ms. Hui obtained a
bachelor’s degree in law from University of London in the United Kingdom in August 2017.
Ms. Hui is an associate member of the Hong Kong Chartered Governance Institute as well as
the Chartered Governance Institute in the United Kingdom.
MANAGEMENT AND CORPORATE GOVERNANCE
Board Committees
The Company has established the audit committee, the remuneration committee, the
nomination committee and corporate governance committee in compliance with the Listing
Rules. These committees operate in accordance with their respective terms of reference
established by our Board.
Audit Committee
We have established the audit committee in compliance with Rule 3.21 of the Listing Rules
(with effect from the Listing) and with written terms of reference in compliance with the
Corporate Governance Code as set out in Appendix 14 of the Listing Rules.
The primary duties of the audit committee are to review and supervise our financial reporting
progress and the internal control system of our Group, review and approve connected
transactions, manage risk, perform internal audit, provide advice and comments to our Board
and perform other duties and responsibilities as may be assigned by our Board. The audit
committee consists of three members, namely Mr. Charles Zhaoxuan Y ang, Ms. Alice Y u-fen
Cheng and Mr. Erh Fei Liu. The chairman of the audit committee is Mr. Charles Zhaoxuan
Y ang, who is an independent non-executive Director with the appropriate accounting and
related financial management expertise as required under Rules 3.10(2) and 3.21 of the Listing
Rules.
Remuneration Committee
We have established the remuneration committee in compliance with Rule 3.25 of the Listing
Rules (with effect from the Listing) and with written terms of reference in compliance with the
Corporate Governance Code as set out in Appendix 14 of the Listing Rules. The primary duties
of the remuneration committee are to establish, review and provide advice to our Board on the
structure of remuneration of our Directors and senior management and on the establishment of
a formal and transparent procedure for developing policies concerning remuneration, make
recommendation to the board the terms of the specific remuneration package for each executive
Director and senior management and review and recommend performance-based remuneration
by reference to corporate goals and objectives resolved by our Directors from time to time. The
remuneration committee comprises three members, namely Mr. Peng Shen, Mr. Jet Jie Li and
Mr. Erh Fei Liu. The chairman of the remuneration committee is Mr. Erh Fei Liu.
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Nomination Committee
We have established the nomination committee with written terms of reference in compliance
with the Corporate Governance Code as set out in Appendix 14 to the Listing Rules and
Chapter 8A of the Listing Rules. The primary duties of the nomination committee are to review
the structure, size and composition of our Board on a regular basis and make recommendations
to our Board regarding any proposed changes to the composition of our Board; identify, select
and make recommendations to our Board on the selection of individuals nominated for
directorship, and ensure the diversity of our Board members; assess the independence of our
independent non-executive Directors and make recommendations to our Board on relevant
matters relating to the appointment, reappointment and removal of our Directors and
succession planning for our Directors. The nomination committee comprises three members,
namely Mr. Erh Fei Liu, Mr. Jet Jie Li and Mr. Peng Shen. The chairman of the nomination
committee is Mr. Erh Fei Liu.
Corporate Governance Committee
We have established a corporate governance committee in compliance with Chapter 8A of the
Listing Rules. The primary duties of the corporate governance committee are to ensure that the
Company is operated and managed for the benefit of all shareholders and to ensure the
Company’s compliance with the Listing Rules and safeguards relating to the weighted voting
rights structures of the Company.
The corporate governance committee comprises three independent non-executive Directors,
namely Mr. Erh Fei Liu, Mr. Peng Shen and Mr. Charles Zhaoxuan Y ang. Mr. Peng Shen is the
chairman of the corporate governance committee. For details of their experience in corporate
governance related matters, see the biographies of our independent non-executive Directors in
“– Directors and Senior Management – Independent Non-Executive Directors” in this section.
In accordance with Rule 8A.30 of the Listing Rules and the Corporate Governance Code set
out in Appendix 14 of the Listing Rules, the work of our corporate governance committee as
set out in its terms of reference includes:
(a) to develop and review the Company’s policies and practices on corporate governance and
make recommendations to the Board;
(b) to review and monitor the training and continuous professional development of Directors
and senior management;
(c) to review and monitor the Company’s policies and practices on compliance with legal and
regulatory requirements;
(d) to develop, review and monitor the code of conduct and compliance manual (if any)
applicable to employees and directors;
(e) to review the Company’s compliance with the Corporate Governance Code and disclosure
in the Corporate Governance Report;
(f) to review and monitor whether the Company is operated and managed for the benefit of
all of its shareholders;
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(g) to confirm, on an annual basis, that the WVR Beneficiary has been members of the
Company’s board of Directors throughout the year and that no matters under Rule 8A.17
of the Listing Rules have occurred during the relevant financial year;
(h) to confirm, on an annual basis, whether or not the WVR Beneficiary has complied with
Rules 8A.14, 8A.15, 8A.18 and 8A.24 of the Listing Rules throughout the year;
(i) to review and monitor the management of conflicts of interests and make a
recommendation to the board of Directors on any matter where there is a potential conflict
of interest between the Company, its subsidiary or consolidated affiliated entity and/or
shareholder on one hand and the WVR Beneficiary on the other;
(j) to review and monitor all risks related to the Company’s WVR structure, including
connected transactions between the Company and/or its subsidiary or consolidated
affiliated entity on one hand and the WVR Beneficiary on the other and make a
recommendation to the board of Directors on any such transaction;
(k) to make a recommendation to the board of Directors as to the appointment or removal of
the Compliance Adviser;
(l) to seek to ensure effective and on-going communication between the Company and its
shareholders, particularly with regards to the requirements of Rule 8A.35 of the Listing
Rules;
(m) to report on the work of the corporate governance committee on at least a half- yearly and
annual basis covering all areas of its terms of reference, including disclosing, on a comply
or explain basis, its recommendations to the Board in respect of the matters in items (i)
to (k) above.
Pursuant to Rule 8A.32 of the Listing Rules, the Corporate Governance Report prepared by our
Company for inclusion in our interim and annual reports after Listing will include a summary
of the work of the corporate governance committee for the relevant period.
DISCLOSURE UNDER RULE 8.10 OF THE LISTING RULES
Each of our executive and non-executive Directors confirms that as of the Latest Practicable
Date, he/she did not have any interest in a business which competes or is likely to compete,
directly or indirectly, with our business, and requires disclosure under Rule 8.10 of the Listing
Rules.
Role of our Independent Non-executive Directors
Pursuant to Rule 8A.26 of the Listing Rules, the role of the independent non-executive
directors of a listed company with WVR structure must include, but is not limited to, the
functions described in code provisions C.1.2, C.1.6 and C.1.7 of the Corporate Governance
Code. The functions of our independent non-executive Directors include:
(a) participating in board meetings to bring an independent judgment to bear on issues of
strategy, policy, performance, accountability, resources, key appointments and standards
of conduct;
(b) taking the lead where potential conflicts of interests arise;
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(c) serving on the audit, remuneration, nomination and corporate governance committees, if
invited;
(d) scrutinizing our Company’s performance in achieving agreed corporate goals and
objectives, and monitoring performance reporting;
(e) giving the Board and any committees on which they serve the benefit of their skills,
expertise and varied backgrounds and qualifications through regular attendance and
active participation;
(f) making a positive contribution to the development of the Company’s strategy and policies
through independent, constructive and informed comments; and
(g) attending general meetings and developing a balanced understanding of the views of our
Shareholders.
Corporate Governance Code
We aim to achieve high standards of corporate governance which are crucial to our
development and safeguard the interests of our Shareholders. In order to accomplish this, we
expect to comply with the Corporate Governance Code set out in Appendix 14 of the Listing
Rules after the Listing save for the below.
Code provision C.2.1 of Part 2 of the Corporate Governance Code as set out in Appendix 14
to the Listing Rules recommends, but does not require, that the roles of chairman and chief
executive should be separate and should not be performed by the same person. The Company
deviates from this provision because Mr. Li performs both the roles of the Chairman of the
Board and the Chief Executive Officer of the Company. Mr. Li is the founder of the Group and
has extensive experience in the business operations and management of our Group. Our Board
believes that vesting the roles of both chairman and chief executive officer to Mr. Li has the
benefit of ensuring consistent leadership within our Group and enables more effective and
efficient overall strategic planning. This structure will enable our Company to make and
implement decisions promptly and effectively. Our Board considers that the balance of power
and authority will not be impaired due to this arrangement. In addition, all major decisions are
made in consultation with members of the Board, including the relevant Board committees, and
three independent non-executive Directors. Our Board will reassess the division of the roles of
chairman and the chief executive officer from time-to-time, and may recommend dividing the
two roles between different people in the future, taking into account the circumstances of our
Group as a whole.
BOARD DIVERSITY POLICY
Our Company has adopted a board diversity policy which sets out the approach to achieve
diversity of the Board. Our Company recognizes and embraces the benefits of having a diverse
Board and sees increasing diversity at the Board level, including gender diversity, as an
essential element in maintaining the Company’s competitive advantage and enhancing its
ability to attract, retain and motivate employees from the widest possible pool of available
talent. Pursuant to the board diversity policy, in reviewing and assessing suitable candidates to
serve as a director of the Company, the nomination committee will consider a number of
factors, including but not limited to gender, age, cultural and educational background,
professional qualifications, skills, knowledge and industry experience. Pursuant to the board
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diversity policy, the nomination committee will discuss periodically and when necessary, agree
on the measurable objectives for achieving diversity, including gender diversity, on the Board
and recommend them to the Board for formal adoption.
We recognize the particular importance of gender diversity. Our Board currently comprises 7
Directors, including two female Directors. We aim to maintain the current gender ratio of our
Board following Listing. We have taken and will continue to take steps to promote and enhance
gender diversity at all levels of our Company, including but not limited to at our Board and
senior management levels. We will also ensure that there is gender diversity when recruiting
staff at mid to senior level, as well as engage more resources in training more female staff with
the aim of providing a pipeline of female senior management and potential successors to our
Board going forward. it is our objective to maintain an appropriate balance of gender diversity
with reference to the stakeholders’ expectation and international and local recommended best
practices.
MANAGEMENT PRESENCE
Pursuant to Rule 8.12 of the Listing Rules, an issuer must have a sufficient management
presence in Hong Kong. This will normally mean that at least two of its executive directors
must be ordinarily resident in Hong Kong. We do not have sufficient management presence in
Hong Kong for the purposes of Rule 8.12 of the Listing Rules.
Accordingly, we have applied for, and the Stock Exchange has granted, a waiver from strict
compliance with Rule 8.12 of the Listing Rules. See “Waivers” for further details.
DIRECTORS’ REMUNERATION
For details of the service contracts and appointment letters that we have entered into with our
Directors, see “Statutory and General Information – 3. Further Information about Our Directors
and Substantial Shareholders – 3.3 Directors’ service contracts and appointment letter” in
Appendix V to this prospectus.
The remuneration of our Directors are paid in the form of salaries, allowances, benefits in kind,
pension scheme contributions and share-based compensation. The aggregate amount of
remuneration (including wages, salaries, bonuses, pension costs, other employee benefits, but
excluding share-based compensation expenses) for our Directors for the years ended December
31, 2020, 2021 and 2022 and the six months ended June 30, 2023 were approximately US$1.83
million, US$12.85 million, US$5.03 million and US$2.15 million, respectively. Further
information on the remuneration of each Director during the Track Record Period is set out in
the Accountant’s Report in Appendix I to this prospectus.
The five highest paid individuals of our Group include one Director for each of the years ended
December 31, 2020, 2021 and 2022 and the six months ended June 30, 2023, whose
remuneration is included in the aggregate amount of salaries, allowances, benefits in kind and
pension scheme contributions we paid to the relevant Directors as set out above.
For the years ended December 31, 2020, 2021 and 2022 and the six months ended June 30,
2023, the aggregate amount of remuneration (including wages, salaries, bonuses, pension costs,
other employee benefits, but excluding share-based compensation expenses) for the remaining
four highest paid individuals who are neither a Director nor chief executive of the Group were
US$11.85 million, US$14.19 million, US$8.03 million and US$4.20 million, respectively.
DIRECTORS AND SENIOR MANAGEMENT
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Save as disclosed above, no other payments have been paid or are payable in respect of the
Track Record Period to our Directors by our Group.
It is estimated that remuneration and benefits-in-kind (excluding share-based compensation,
which may be paid to any Directors) equivalent to approximately US$4.39 million in aggregate
will be paid to our Directors by us in respect of the year ending December 31, 2023 under
arrangements in force.
During the Track Record Period, no remuneration was paid to any Director or any of the five
highest paid individuals of our Group as an inducement to join or upon joining our Group. No
compensation was paid to or receivable by any Director or any of the five highest paid
individuals during the Track Record Period for the loss of any office in connection with the
management of the affairs of any member of our Group. None of our Directors waived any
emoluments during the Track Record Period.
COMPLIANCE ADVISER
We have appointed Somerley Capital Limited as the compliance adviser (the “ Compliance
Adviser ”) pursuant to Rule 8A.33 of the Listing Rules. The Compliance Adviser will provide
us with guidance and advice as to compliance with the requirements under the Listing Rules
and applicable Hong Kong laws. Pursuant to Rules 3A.23 and 8A.34 of the Listing Rules, the
Compliance Adviser will advise our Company, among others, in the following circumstances:
(a) before the publication of any regulatory announcement, circular, or financial report;
(b) where a transaction, which might be a notifiable or connected transaction, is
contemplated, including share issues and share repurchases;
(c) where we propose to use the proceeds of the Global Offering in a manner different from
that detailed in this prospectus or where the business activities, development or results of
our Company deviate from any forecast, estimate or other information in this prospectus;
(d) where the Stock Exchange makes an inquiry to the Company regarding unusual
movements in the price or trading volume of its listed securities or any other matters in
accordance with Rule 13.10 of the Listing Rules;
(e) the WVR structure;
(f) transactions in which the beneficiary of weighted voting rights in the Company has an
interest; and
(g) where there is a potential conflict of interest between the Company, its subsidiary and/or
Shareholders (considered as a group) on one hand and the beneficiary of weighted voting
rights in the Company on the other.
The term of appointment of the Compliance Adviser shall commence on the Listing Date.
Pursuant to Rule 8A.33 of the Listing Rules, the Company is required to engage a compliance
adviser on a permanent basis.
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CONTROLLING SHAREHOLDERS
Immediately after the completion of the Global Offering, Mr. Li, our co-founder, executive
Director, chairman of the Board and Chief Executive Officer, will be interested in and will
control the 979,333,410 Class A Shares held by Jumping Summit Limited, through Topping
Summit Limited, Mr. Li’s wholly-owned entity, which holds 5% equity interest in Jumping
Summit Limited, the remaining 95% equity interest in Jumping Summit Limited is held by
Exceeding Summit Holding Limited, the entire equity interest of which is held by Vistra Trust
(Singapore) Pte. Limited as trustee for the family trust established by Mr. Li for himself and
his family. Each Class A Share shall entitle its holder to ten votes and each Class B Share shall
entitle its holder to one vote on each resolution subject to a vote at general meetings on a poll
(except for resolution on the Reserved Matters, each Class A Share and each Class B Share
shall entitle its holder to one vote on a poll at a general meeting).
Assuming (a) the Over-allotment Option is not exercised; and (b) the Reclassification,
Redesignation and Share Subdivision are completed:
(1) Mr. Li’s aggregated shareholding will be approximately 11.11% of our total issued share
capital and he will hold approximately 55.56% of the total voting rights in the Company
through shares beneficially owned by him capable of being exercised on resolutions at
general meetings (except for resolutions with respect to the Reserved Matters, in relation
to which each Class A Share and each Class B Share shall entitle its holder to one vote
on a poll at a general meeting).
(2) In relation to the Reserved Matters, each Class A Share beneficially owned by Mr. Li and
each Class B Share shall entitle its holder to one vote on a poll at a general meeting, and
the total voting rights in the Company that Mr. Li may exercise in respect of the Reserved
Matters is approximately 11.11%.
Therefore, Mr. Li, Jumping Summit Limited, Topping Summit Limited and Exceeding Summit
Holding Limited together will constitute Controlling Shareholders of our Company after the
Listing.
For further information about the weighted voting rights attached to the Class A Shares, see
“Share Capital.”
Our Group operates independently of our Controlling Shareholders. Our Controlling
Shareholders may, from time to time, make minority investments or hold non-executive board
positions in entities that operate in, or have subsidiaries that operate in, the broader industries
in which our business segments also operate. As our Controlling Shareholders and/or directors
have no executive or shareholding control over any of these entities, and these entities have
separate businesses with separate management and shareholder bases that control their entities,
our Controlling Shareholders will not inject any of their interested entities into our Group; and
to the extent our directors hold non-executive board positions or make minority investments in
these entities, we believe that this strengthens the experience and diversity of our directors, as
a group, and signifies their passion for the industries in which we operate.
DISCLOSURE UNDER RULE 8.10 OF THE HONG KONG LISTING RULES
Our Controlling Shareholders confirm that, as of the Latest Practicable Date, they did not have
any interest in a business, apart from the business of our Group, which competes or is likely
to compete, directly or indirectly, with our business that would require disclosure under Rule
8.10 of the Listing Rules.
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INDEPENDENCE FROM CONTROLLING SHAREHOLDERS
Having considered the following factors, our Directors are satisfied that we are capable of
carrying on our business independently from our Controlling Shareholders and their close
associates after the Listing.
Management Independence
Our business is managed and conducted by our Board and senior management. Upon Listing,
our Board will consist of seven Directors comprising one executive Director, three non-
executive Directors and three independent non-executive Directors. For more information, see
“Directors and Senior Management”.
Our Directors consider that our Board and senior management will function independently of
our Controlling Shareholders because:
(a) each Director is aware of his fiduciary duties as a Director which require, among other
things, that he acts for the benefit and in the interest of our Company and does not allow
any conflict between his duties as a Director and his personal interests;
(b) our daily management and operations are carried out by a senior management team, all
of whom have substantial experience in the industry in which our Company is engaged,
and will therefore be able to make business decisions that are in the best interests of our
Group;
(c) we have three independent non-executive Directors and certain matters of our Company
must always be referred to the independent non-executive Directors for review;
(d) in the event that there is a potential conflict of interest arising out of any transaction to
be entered into between our Group and our Directors or their respective associates, the
interested Director(s) is required to declare the nature of such interest before voting at the
relevant Board meetings of our Company in respect of such transactions; and
(e) we have adopted a series of corporate governance measures to manage conflicts of
interest, if any, between our Group and our Controlling Shareholders which would
support our independent management. See “– Corporate Governance Measures” in this
section for further information.
Based on the above, our Directors believe that our Board as a whole and together with our
senior management team are able to perform the managerial role independently from our
Controlling Shareholders.
Operational Independence
We have full rights to make business decisions and to carry out our business independently
from our Controlling Shareholders and their respective associates. On the basis of the
following reasons, our Directors consider that our Company will continue to be operationally
independent from our Controlling Shareholders and their respective associates after the
Listing:
(a) we are not reliant on trademarks owned by our Controlling Shareholders, or by other
companies controlled by our Controlling Shareholders;
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(b) we are the holder of all relevant licenses material to the operation of our business;
(c) we have independent access to our users, customers and suppliers;
(d) we have sufficient capital, facilities, equipment and employees to operate our business
independently from our Controlling Shareholders;
(e) we have our own administrative and corporate governance infrastructure, including our
own accounting, legal and human resources departments; and
(f) none of our Controlling Shareholders or their respective associates have any interests in
any business which competes or is likely to compete with the business of our Group.
Based on the above, our Directors believe that we are able to operate independently of our
Controlling Shareholders.
Financial Independence
We have independent internal control and accounting systems. We also have an independent
finance department responsible for discharging the treasury function. We are capable of
obtaining financing from third parties, if necessary, without reliance on our Controlling
Shareholders.
No loans or guarantees provided by, or granted to, our Controlling Shareholders or their
respective associates will be outstanding as of the Listing Date.
Based on the above, our Directors are of the view that they and our senior management are
capable of carrying on our business independently of, and do not place undue reliance on, our
Controlling Shareholders and their respective close associates after the Listing.
CORPORATE GOVERNANCE MEASURES
Our Company and Directors are committed to upholding and implementing the highest
standards of corporate governance and recognize the importance of protecting the rights and
interests of all Shareholders, including the rights and interests of our minority Shareholders. In
light of this, our Company has established a corporate governance committee pursuant to Rule
8A.30 which has adopted terms of reference consistent with Code Provision A.2.1 in Part 2 of
Appendix 14 to, and Rule 8A.30 of, the Listing Rules. The members of the corporate
governance committee are independent non-executive Directors with extensive experience in
overseeing corporate governance related functions of private and Hong Kong listed companies.
The primary duties of the corporate governance committee are to ensure that the Company is
operated and managed for the benefit of all Shareholders and to ensure the Company’s
compliance with the Listing Rules and safeguards relating to the weighted voting rights
structure of the Company.
Under the Articles of Association, extraordinary general meetings of the Company may be
convened on the written requisition of any one or more members holding, as of the date of
deposit of the requisition, in aggregate not less than one-tenth of the voting rights (on a one
vote per share basis) in the share capital of the Company. In addition, pursuant to the
Shareholder communication policy to be adopted by the Company upon Listing, Shareholders
are encouraged to put governance related matters to the Directors and to the Company directly
in writing.
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We have adopted the following measures to ensure good corporate governance standards and
to avoid potential conflicts of interest between our Group and our Controlling Shareholders:
(a) under the Articles, where a Shareholders’ meeting is to be held for considering proposed
transactions in which our Controlling Shareholders or any of their associates has a
material interest, the Controlling Shareholders or associates will not vote on the relevant
resolutions;
(b) our Company has established internal control mechanisms to identify connected
transactions. Upon the Listing, if our Company enters into connected transactions with
our Controlling Shareholders or any of its associates, our Company will comply with the
applicable Listing Rules;
(c) the independent non-executive Directors will review, on an annual basis, whether there
are any conflicts of interests between the Group and our Controlling Shareholders and
provide impartial and professional advice to protect the interests of our minority
Shareholders;
(d) our Controlling Shareholders will undertake to provide all information necessary,
including all relevant financial, operational and market information and any other
necessary information as required by the independent non-executive Directors for the
purpose of their annual review;
(e) our Company will disclose decisions on matters reviewed by the independent non-
executive Directors either in its annual reports or by way of announcements as required
by the Listing Rules;
(f) where our Directors reasonably request the advice of independent professionals, such as
financial advisers, the appointment of such independent professionals will be made at our
Company’s expense;
(g) we have appointed Somerley Capital Limited as our compliance adviser to provide advice
and guidance to us in respect of compliance with the applicable laws and regulations, as
well as the Listing Rules, including various requirements relating to corporate
governance; and
(h) we have established our audit committee, remuneration committee, nomination committee
and corporate governance committee with written terms of reference in compliance with
the Listing Rules and the Code on Corporate Governance and Corporate Governance
Report in Appendix 14 to the Listing Rules.
Based on the above, our Directors are satisfied that sufficient corporate governance measures
have been put in place to manage conflicts of interest that may arise between our Group and
our Controlling Shareholders, and to protect our minority Shareholders’ interests after the
Listing.
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AUTHORIZED AND ISSUED SHARE CAPITAL
The following is a description of our authorized share capital and the amount in issue and to
be issued as fully paid or credited as fully paid immediately prior to and following completion
of the Global Offering.
1. Share capital at the date of this prospectus
(i) Authorized share capital
Number Description of Shares
Approximate
aggregate
nominal value
of shares
3,719,302,324 Class A Ordinary Shares of US$0.00001 par
value each
US$37,193.02
195,866,682 Class B Ordinary Shares of US$0.00001 par
value each
US$1,958.67
1,084,830,994 Pre-IPO Preferred Shares of US$0.00001 par
value each
US$10,848.31
Total US$50,000.00
(ii) Issued, fully paid or credited to be fully paid
Number Description of Shares
Approximate
aggregate
nominal value
of shares
463,150,842 Class A Ordinary Shares of US$0.00001 par
value each
US$4,631.50
195,866,682 Class B Ordinary Shares of US$0.00001 par
value each
US$1,958.67
1,038,105,643 Pre-IPO Preferred Shares of US$0.00001 par
value each
US$10,381.06
Total US$16,971.23
2. Share capital immediately following the completion of the Global Offering
Pursuant to the resolutions of the Shareholders on October 11, 2023, subject to the Global
Offering becoming unconditional and with effect immediately prior to the Listing: the
Reclassification, Redesignation and Share Subdivision will be effected.
The tables below assumes (i) the Reclassification, Redesignation and Share Subdivision are
completed, (ii) the Global Offering becomes unconditional and the Offer Shares are issued
pursuant to the Global Offering, (iii) the Over-allotment Option is not exercised, and (iv) no
Class A Shares are converted into Class B Shares.
SHARE CAPITAL
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(i) Authorized share capital
Number Description of Shares
Approximate
aggregate
nominal value
of shares
979,333,410 Class A Shares US$1,958.67
24,020,666,590 Class B Shares US$48,041.33
Total US$50,000.00
(ii) Issued and to be issued, fully paid or credited to be fully paid
Number Description of Shares
Approximate
aggregate
nominal value
of shares
979,333,410 Class A Shares in issue US$1,958.67
7,506,282,425 Class B Shares in issue US$15,012.56
326,550,400 Class B Shares to be issued pursuant
to the Global Offering
US$653.10
Total US$17,624.33
The tables above do not take into account any Class B Shares that may be issued or repurchased
by the Company under the general mandates granted to our Directors referred to below.
WEIGHTED VOTING RIGHTS STRUCTURE
The Company is proposing to adopt a WVR Structure effective immediately upon the
completion of the Global Offering. Under this structure, the Company’s share capital will
comprise Class A Shares and Class B Shares. Each Class A Share shall entitle its holder to ten
votes, and each Class B Share shall entitle its holder to one vote, on each resolution subject
to a vote at the Company’s general meetings on a poll, except for resolutions with respect to
the Reserved Matters, in relation to which each Class A Share and each Class B Share shall
entitle its holder to one vote on a poll at a general meeting.
The Reserved Matters are:
(i) any amendment to the Memorandum or Articles, including the variation of the rights
attached to any class of shares;
(ii) the appointment, election or removal of any independent non-executive Director;
(iii) the appointment or removal of the Company’s auditors; or
(iv) the voluntary liquidation or winding-up of the Company.
In addition, one or more Shareholders, including holders of Class B Shares, holding, as of the
date of deposit of the requisition, in aggregate not less than one-tenth of the voting rights
(on a one vote per share basis) in the share capital of the Company are entitled to make a
requisition to convene an extraordinary general meeting of the Company and/or add resolutions
to the meeting agenda.
SHARE CAPITAL
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See “Summary of the Constitution of Our Company and the Company Laws of the Cayman
Islands – 2. Articles of Association” in Appendix IV to this prospectus for further details.
The table below sets out the ownership and voting rights to be held by the WVR Beneficiary
upon the completion of the Global Offering:
Number
of Shares
Approximate
percentage of
issued share
capital (1)
Approximate
percentage
of voting
rights (1)(2)
Class A Shares held by the WVR
Beneficiary 979,333,410 11.11% 55.56%
Class B Shares held by the WVR
Beneficiary Nil Nil Nil
Total 979,333,410 11.11% 55.56%
Notes:
(1) Assuming (i) that the Reclassification, Redesignation and Share Subdivision are completed, and (ii) the
Over-allotment Option is not exercised.
(2) On the basis that each Class A Share shall entitle its holder to ten votes and each Class B Share shall entitle
its holder to one vote on each resolution subject to a vote at general meetings on a poll, except for resolutions
with respect to the Reserved Matters for which each Class A Share and each Class B Share shall entitle its
holder to one vote on a poll at a general meeting.
Class A Shares may be converted into Class B Shares on a one to one ratio. Upon the
completion of the Reclassification, Redesignation and Share Subdivision, the Company will
issue 979,333,410 Class A Shares, representing approximately 11.11% of the total number of
issued and outstanding Shares (assuming the Over-allotment Option is not exercised.)
The weighted voting rights attached to our Class A Shares will cease when the WVR
Beneficiary ceases to have beneficial ownership of any of our Class A Shares, in accordance
with Listing Rule 8A.22. This may occur:
(i) upon the occurrence of any of the circumstances set out in Listing Rule 8A.17, in
particular where the WVR Beneficiary is: (1) deceased; (2) no longer a member of our
Board; (3) deemed by the Stock Exchange to be incapacitated for the purpose of
performing his duties as a director; or (4) deemed by the Stock Exchange to no longer
meet the requirements of a director set out in the Listing Rules;
(ii) when the holders of Class A Shares have transferred to another person the beneficial
ownership of, or economic interest in, all of the Class A Shares or the voting rights
attached to them, other than in the circumstances permitted by Listing Rule 8A.18;
(iii) where a vehicle holding Class A Shares on behalf of a WVR Beneficiary no longer
complies with Listing Rule 8A.18(2); or
(iv) when all of the Class A Shares have been converted to Class B Shares.
SHARE CAPITAL
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WVR Beneficiary
Immediately upon the completion of the Global Offering, the WVR Beneficiary will be Mr. Li.
Assuming (i) the Over-allotment Option is not exercised, and (ii) the Reclassification,
Redesignation and Share Subdivision are completed:
 Mr. Li will beneficially own 979,333,410 Class A Shares, representing approximately
55.56% of the total voting rights in the Company with respect to shareholder resolutions
relating to matters other than the Reserved Matters.
 The Class A Shares beneficially owned by Mr. Jet Jie Li are held by Jumping Summit
Limited, a company jointly owned by Topping Summit Limited and Exceeding Summit
Holding Limited. Topping Summit Limited, wholly-owned by Mr. Li, holds 5% of the
equity interest in Jumping Summit Limited. Exceeding Summit Holding Limited, the
entire equity interest of which is held by Vistra Trust (Singapore) Pte. Limited as trustee
for the family trust established by Mr. Li for the benefit of himself and his family, holds
the remaining 95% equity interest in Jumping Summit Limited.
The Company confirms that the holding arrangement through which the WVR Beneficiary
holds the Class A Shares as described above meets the requirements in Rule 8A.18 of the
Listing Rules and the holding arrangement is permitted under the “Consultation Conclusions
– a listing regime for companies from emerging and innovative sectors” issued by the Stock
Exchange in April 2018, namely: (a) a partnership of which the WVR Beneficiary is a partner
and the terms of which must expressly specify that the voting rights attached to any and all of
the Class A Shares held by such partnership are solely dictated by the WVR Beneficiary; (b)
a trust of which the WVR Beneficiary is a beneficiary and that meets the following conditions:
(i) the WVR Beneficiary must in substance retain an element of control of the trust and any
immediate holding companies of, or, if not permitted in the relevant tax jurisdiction, retain a
beneficial interest in any and all of the Class A Shares held by such trust; and (ii) the purpose
of the trust must be for estate planning and/or tax planning purposes; or (c) a private company
or other vehicle wholly owned and wholly controlled by the WVR Beneficiary or by a trust
referred to in paragraph (b) above.
To ensure that there will not be any circumvention of Rule 8A.18(1), each of the Company and
Mr. Li undertakes that so long there is any weighted voting rights attached to the Shares held
by Jumping Summit Limited, Mr. Li will not transfer any beneficial ownership of or economic
interest in Jumping Summit Limited or the control over the voting rights attached to the Shares
held by Jumping Summit Limited to another person. In the event that there is any change in
the beneficial ownership of or economic interest in the Shares held by Jumping Summit
Limited or the control over the voting rights attached to the Shares held by Jumping Summit
Limited, and/or change in beneficiary, and settlor of Vistra Trust (Singapore) Pte. Limited as
trustee for the family trust established by Mr. Li to another person, resulting in change of
beneficial ownership of, or economic interest in, the Shares held under the trust or the control
over the voting rights attached to the Shares held under the trust, the Company and/or Mr. Li
will notify the Stock Exchange pursuant to Rule 8A.19 of Listing Rules and comply with the
relevant statutory obligations including obligations of disclosure of interests under the SFO,
and the weighted voting rights attached to the Class A Shares held by Jumping Summit Limited
shall cease upon such transfer accordingly. The Company will also comply with Rule 8A.30 of
the Listing Rules to confirm, on an annual basis, that the WVR Beneficiary has complied with
Rule 8A.18 of the Listing Rules.
SHARE CAPITAL
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The Company is adopting the WVR Structure to enable the WVR Beneficiary to exercise
voting control over the Company. This will enable the Company to benefit from the continuing
vision and leadership of the WVR Beneficiary who will control the Company with a view to
its long-term prospects and strategy.
Prospective investors are advised to be aware of the potential risks of investing in companies
with weighed voting rights structures, in particular that interests of the WVR Beneficiary may
not necessarily always be aligned with those of our Shareholders as a whole, and that the WVR
Beneficiary will be in a position to exert significant influence over the affairs of our Company
and the outcome of shareholders’ resolutions, irrespective of how other shareholders vote.
Prospective investors should make the decision to invest in the Company only after due and
careful consideration. For further information about the risks associated with the WVR
structure adopted by the Company, see “Risk Factors – Risks Related to the WVR Structure.”
Save for the voting rights and conversion rights attached to Class A Shares, the Class A Shares
and the Class B Shares shall rank pari passu in all other respects and shall have the same rights,
preferences, privileges and restrictions. For further information about the rights, preferences,
privileges and restrictions of the Class A Shares and Class B Shares, see “Summary of the
Constitution of Our Company and the Company Laws of the Cayman Islands – 2. Articles of
Association” in Appendix IV to this prospectus for further details.
Undertakings by the WVR Beneficiary
Pursuant to Rule 8A.43 of the Listing Rules, the WVR Beneficiary is required to give a legally
enforceable undertaking to the Company that he will comply with the relevant requirements as
set out in Rule 8A.43, which is intended to be for the benefit of and enforceable by
the Shareholders. On July 19, 2023, Mr. Li made an undertaking to the Company
(the “ Undertaking ”), that for so long as he is a WVR Beneficiary:
1. he shall comply with (and, if the shares to which the weighted voting rights that he is
beneficially interested in are attached are held through a limited partnership, trust, private
company or other vehicle, use his best endeavors to procure that such limited partnership,
trust, private company or other vehicle complies with) all applicable requirements under
Rules 8A.09, 8A.14, 8A.15, 8A.17, 8A.18 and 8A.24 of the Listing Rules from time to
time in force (the “ Requirements ”); and
2. he shall use his best endeavors to procure that the Company complies with all applicable
Requirements.
For the avoidance of doubt, the Requirements are subject to Rule 2.04 of the Listing Rules. The
WVR Beneficiary acknowledged and agreed that the Shareholders rely on the Undertaking in
acquiring and holding their shares. The WVR Beneficiary acknowledged and agreed that the
Undertaking is intended to confer a benefit on the Company and all Shareholders and may be
enforced by the Company and/or any Shareholder against the WVR Beneficiary.
The Undertaking shall automatically terminate upon the earlier of (i) the date of delisting of
the Company from the Stock Exchange; and (ii) the date on which the WVR Beneficiary ceases
to be a beneficiary of weighted voting rights in the Company. For the avoidance of doubt, the
termination of the Undertaking shall not affect any rights, remedies, obligations or liabilities
of the Company and/or any Shareholder and/or the WVR Beneficiary himself that have accrued
up to the date of termination, including the right to claim damages and/or apply for any
injunction in respect of any breach of the Undertaking which existed at or before the date of
termination.
SHARE CAPITAL
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The Undertaking shall be governed by the laws of Hong Kong and all matters, claims or
disputes arising out of the Undertaking shall be subject to the exclusive jurisdiction of the
courts of Hong Kong.
RANKING
The Offer Shares will rank pari passu in all respects with all Class B Shares currently in issue
or to be issued as mentioned in this prospectus, and will qualify and rank equally for all
dividends or other distributions declared, made or paid on the Shares on a record date which
falls after the date of this prospectus.
ALTERATIONS OF CAPITAL
Pursuant to the Cayman Companies Act and the terms of the Memorandum of Association and
Article of Association, our Company may from time to time by ordinary resolution of
Shareholders (i) increase its share capital; (ii) consolidate and divide all or any of its share
capital into shares of a larger amount than its existing shares; (iii) subdivide its existing shares
or any of them into shares of smaller amount than is fixed by the Memorandum of Association
or into shares without par value; and (iv) cancel any shares which have not been taken. In
addition, our Company may, subject to the provisions of the Cayman Companies Act, reduce
its share capital or undistributable reserve by its shareholders passing a special resolution. See
“Summary of the Constitution of Our Company and the Company Laws of the Cayman Islands
– 2. Articles of Association – 2.1 Shares – (d) Alteration of capital” in Appendix IV to this
prospectus for further details.
SHARE INCENTIVE SCHEME
The Company has adopted the Pre-IPO Share Incentive Plan. See “Statutory and General
Information – 4. Pre-IPO Share Incentive Plan” in Appendix V to this prospectus for further
details.
GENERAL MANDATE TO ISSUE SHARES
Subject to the Global Offering becoming unconditional, our Directors have been granted a
general unconditional mandate, to allot, issue and deal with Class B Shares with a total nominal
value of not more than the sum of:
 20% the aggregate nominal value of the Shares in issue immediately following
completion of the Global Offering (excluding (i) the additional Class B Shares which may
be issued pursuant to the exercise of the Over-allotment Option; and (ii) the Class B
Shares that are issuable upon conversion of the Class A Shares into Class B Shares on a
one to one basis); and
 the aggregate nominal value of Shares repurchased by the Company under the authority
referred to in “– General Mandate to Repurchase Shares” in this section.
SHARE CAPITAL
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This general mandate to issue Class B Shares will expire at the earliest of:
 the conclusion of the next annual general meeting of our Company unless otherwise
renewed by an ordinary resolution of our Shareholders in a general meeting, either
unconditionally or subject to conditions; or
 the expiration of the period within which our Company’s next annual general meeting is
required by the Articles of Association or any other applicable laws to be held; or
 the date on which it is varied or revoked by an ordinary resolution of our Shareholders
in general meeting.
See “Statutory and General Information – 1. Further Information about our Group
– 1.5 Resolutions passed in the meeting of our Shareholders dated October 11, 2023” in
Appendix V to this prospectus for further details of the general mandate.
GENERAL MANDATE TO REPURCHASE SHARES
Subject the Global Offering becoming unconditional, our Directors have been granted a general
unconditional mandate, to exercise all the powers of our Company to repurchase our own
securities with nominal value of up to 10% of the aggregate nominal value of our Shares in
issue immediately following the completion of the Global Offering (excluding (i) the
additional Class B Shares which may be issued pursuant to the exercise of the Over-allotment
Option; and (ii) the Class B Shares that are issuable upon conversion of the Class A Shares into
Class B Shares on a one to one basis).
The repurchase mandate only relates to repurchases made on the Stock Exchange, or on any
other stock exchange on which our Shares are listed (and which are recognized by the SFC and
the Stock Exchange for this purpose), and which are in accordance with the Listing Rules. A
summary of the relevant Listing Rules is set out in “Statutory and General Information – 1.
Further Information about our Group – 1.6 Explanatory statement on repurchase of our own
securities” in Appendix V to this prospectus.
This general mandate to repurchase Shares will expire at the earliest of:
 the conclusion of the next annual general meeting of our Company unless otherwise
renewed by an ordinary resolution of our Shareholders in a general meeting, either
unconditionally or subject to conditions; or
 the expiration of the period within which our Company’s next annual general meeting is
required by the Articles of Association or any other applicable laws to be held; or
 the date on which it is varied or revoked by an ordinary resolution of our Shareholders
passed in a general meeting.
See “Statutory and General Information – 1. Further Information about our Group – 1.6
Explanatory statement on repurchase of our own securities” in Appendix V to this prospectus
for further details of the repurchase mandate.
SHARE CAPITAL
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THE CORNERSTONE PLACING
We have entered into cornerstone investment agreements (each a “ Cornerstone Investment
Agreement ”, and together the “ Cornerstone Investment Agreements ”) with the cornerstone
investors set out below (each a “ Cornerstone Investor ”, and together the “ Cornerstone
Investors ”), pursuant to which the Cornerstone Investors have agreed to, subject to certain
conditions, subscribe, or cause their designated entities to subscribe, for such number of Offer
Shares (rounded down to the nearest whole board lot of 200 Class B Shares) that may be
purchased with an aggregate amount of US$199,524,030 (approximately HK$1,563 million)
(exclusive of brokerage, SFC transaction levy, AFRC transaction levy and Stock Exchange
trading fee) at the Offer Price (the “ Cornerstone Placing ”).
Based on the Offer Price of HK$12.00 per Offer Share, immediately after the completion of the
Global Offering, the total number of Offer Shares to be subscribed for by the Cornerstone
Investors would be 130,231,000 Class B Shares, representing (i) approximately 39.88% of the
Offer Shares and approximately 1.48% of the total issued share capital of our Company
(assuming the Over-allotment Option is not exercised); and (ii) approximately 34.68% of the
Offer Shares and approximately 1.47% of the total issued share capital of our Company
(assuming the Over-allotment Option is fully exercised).
Our Company is of the view that the Cornerstone Placing will help to raise the profile of our
Company and to signify that the Cornerstone Investors have confidence in our business and
prospects.
The Cornerstone Placing will form part of the International Offering, and the Cornerstone
Investors will not acquire any Offer Shares under the Global Offering other than pursuant to
the Cornerstone Investment Agreements. The Offer Shares to be subscribed by the Cornerstone
Investors will rank pari passu in all respects with the fully paid Class B Shares in issue
following the completion of the Global Offering and will be listed on the Stock Exchange, and
will be counted towards the public float of our Company.
All of the Cornerstone Investors are existing shareholders of our Company or their close
associates. Each of the Cornerstone Investors has been granted a waiver from strict compliance
with the requirements under Rule 10.04 of, and a consent under paragraph 5(2) of Appendix
6 to, the Listing Rules by the Stock Exchange and the Guidance Letter HKEX-GL85-16. For
further details, please refer to the section headed “Waiver – Subscription and allocation of
Offer Shares to existing Shareholders and their close associates” in this prospectus.
Several Cornerstone Investors have provided an undertaking to the Company to subscribe for
Offer Shares at the Offer Price in the Global Offering, further details of which have been set
out in the section headed “History and Corporate Structure – 10. Subscription Commitment by
Existing Shareholders” in this prospectus. Other than a guaranteed allocation of the relevant
Offer Shares at the Offer Price, the Cornerstone Investors do not have any preferential rights
under each of their respective Cornerstone Investment Agreements, as compared with other
public Shareholders. There are no side arrangements between us and the Cornerstone Investors
or any benefit, direct or indirect, conferred on the Cornerstone Investors by virtue of or in
relation to the Cornerstone Placing, other than a guaranteed allocation of the relevant Offer
Shares at the Offer Price, following the principles as set out in the Guidance Letter
HKEX-GL51-13.
CORNERSTONE INVESTORS
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To the best knowledge of our Company, each of the Cornerstone Investors is (i) not accustomed
to take instructions from our Company, our Directors, chief executive of our Company, our
Controlling Shareholders, substantial Shareholders of our Company or other existing
Shareholders of our Company or any of its subsidiaries or their respective close associates in
relation to the acquisition, disposal, voting or other disposition of the Shares registered in their
name or otherwise held by them; (ii) not financed by us, our Directors, chief executive, our
Controlling Shareholders, substantial Shareholders or other existing Shareholders of our
Company or any of its subsidiaries or their respective close associates; and (iii) independent
of the other Cornerstone Investors, our Group, our connected persons and their respective
associates, and is not a close associate of our Group. Further, immediately after the completion
of the Global Offering, none of the Cornerstone Investors will have any Board representation
in our Company, and none of the Cornerstone Investors will become a substantial shareholder
of our Company.
There will be no delayed delivery or all Cornerstone Investors do not have deferred settlement
of Offer Shares to be subscribed by the Cornerstone Investors and the consideration will be
settled by the Cornerstone Investors before the Listing Date. The Offer Shares to be subscribed
by the Cornerstone Investors may be affected by reallocation in the event of over-subscription
under the Hong Kong Public Offering, as described in the section headed “Structure of the
Global Offering – The Hong Kong Public Offering – Reallocation” in this prospectus. Details
of the actual number of Offer Shares to be allocated to the Cornerstone Investors will be
disclosed in the allotment results announcement to be issued by us on or around October 26,
2023.
If the total demand of Offer Shares in the Hong Kong Public Offering falls within the
circumstances as set out in the section headed “Structure of the Global Offering – the Hong
Kong Public Offering – reallocation” in this prospectus, the number of Offer Shares under the
International Offering may be deducted to be satisfied the public demand under the Hong Kong
Public Offering. Further, the Overall Coordinators and the Company can adjust the allocation
of the number of Offer Shares to be subscribed by the Cornerstone Investors in their sole and
absolute discretion for the purpose of satisfying Rule 8.08(3) of the Listing Rules, which
provides that no more than 50% of the Shares in public hands on the Listing Date can be
beneficially owned by the three largest public Shareholders.
As confirmed by each of the Cornerstone Investors, its subscription under the Cornerstone
Placing would be financed by its own internal financial resources or financial resources of its
controlling shareholders. Each of the Cornerstone Investors has confirmed that all necessary
approvals have been obtained with respect to the Cornerstone Placing and that no specific
approval from any stock exchange (if relevant) or its shareholders or other regulatory authority
is required for the relevant Cornerstone Placing.
CORNERSTONE INVESTORS
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The table below sets forth details of the Cornerstone Placing:
Offer Price of HK$12.00 per Offer Share
Cornerstone Investor
Subscription
amount
Number of
Offer
Shares (1)
Assuming the
Over-allotment Option is
not exercised
Assuming the
Over-allotment Option is
fully exercised
(US$)
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
issued share
capital (2)
Approximate
%o ft h e
Offer Shares
Approximate
%o ft h e
issued share
capital (2)
Aspex Master Fund 10,000,000 6,527,000 2.00% 0.07% 1.74% 0.07%
Jallion Global Limited 11,000,000 7,179,800 2.20% 0.08% 1.91% 0.08%
Joyous Tempinis Limited 16,261,530 10,614,000 3.25% 0.12% 2.83% 0.12%
D1 SPV Jupiter
(Hong Kong) Limited 10,766,491.65 7,027,400 2.15% 0.08% 1.87% 0.08%
D1 SPV Master Holdco I
(Hong Kong) Limited 29,496,008.35 19,252,400 5.90% 0.22% 5.13% 0.22%
Hidden Hill SPV VIII 5,000,000 3,263,400 1.00% 0.04% 0.87% 0.04%
SC GGF III Holdco, Ltd. 5,000,000 3,263,400 1.00% 0.04% 0.87% 0.04%
CELESTIAL OCEAN
INVESTMENTS LIMITED 30,000,000 19,581,400 6.00% 0.22% 5.21% 0.22%
Dahlia Investments
Pte. Ltd. 10,000,000 6,527,000 2.00% 0.07% 1.74% 0.07%
Parallel Cluster Investment
Limited 12,000,000 7,832,600 2.40% 0.09% 2.09% 0.09%
Eternal Earn Holding
Limited 15,000,000 9,790,600 3.00% 0.11% 2.61% 0.11%
Huang River Investment
Limited 35,000,000 22,845,000 7.00% 0.26% 6.08% 0.26%
JNRY III HOLDINGS
LIMITED 10,000,000 6,527,000 2.00% 0.07% 1.74% 0.07%
Total 199,524,030 130,231,000 39.88% 1.48% 34.68% 1.47%
THE CORNERSTONE INVESTORS
The information about our Cornerstone Investors set forth below has been provided by the
Cornerstone Investors in connection with the Cornerstone Placing.
1. Aspex Master Fund
Aspex Master Fund (“ Aspex ”) is a Cayman Islands exempted company incorporated with
limited liability operating as a private investment fund, which is managed by Aspex
Management (HK) Limited (“ Aspex Management ”). Aspex Management is a licensed
corporation established in Hong Kong to carry out type 9 (asset management) regulated
activities under the SFO in Hong Kong and serves as investment manager to Aspex.
AMF-9 Holdings Limited, an existing Shareholder of our Company holding
approximately 0.77% of the issued share capital of our Company as of the date of this
prospectus, is wholly-owned by Aspex. Therefore, Aspex is a close associate of AMF-9
Holdings Limited.
CORNERSTONE INVESTORS
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2. Jallion Global Limited and Joyous Tempinis Limited
Jallion Global Limited (“ Jallion ”) is an exempted company with limited liability
incorporated under the laws of the British Virgin Islands. Joyous Tempinis Limited
(“Joyous ”) is an exempted company with limited liability incorporated under the laws of
the Cayman Islands. Both Jallion and Joyous are controlled by Boyu Capital Fund IV ,
L.P ., an exempted limited partnership registered under the laws of the Cayman Islands.
Boyu Capital Fund IV , L.P . is advised by Boyu Capital Group Management Ltd. (together
with its affiliates, “ Boyu ”). Boyu provides growth and transformational capital for
leading businesses and entrepreneurs in areas that include technology, healthcare,
consumer and business services.
Each of Jallion and Joyous is an existing Shareholder of our Company, holding in
aggregate approximately 2.08% of the issued share capital of our Company as of the date
of this prospectus.
3. D1
D1 SPV Master Holdco I (Hong Kong) Limited, a company organized under the laws of
Hong Kong, is wholly owned by D1 Master Holdco I LLC, a limited liability company
organized under the laws of the State of Delaware, which is wholly owned by D1 Capital
Partners Master LP , an exempted limited partnership organized under the laws of the
Cayman Islands. D1 Capital Partners Master LP’s general partner is D1 Capital Partners
GP Sub LLC, a limited liability company organized under the laws of the State of
Delaware, and which is ultimately controlled by D1 Capital Partners GP LLC, a limited
liability company organized under the laws of the State of Delaware. D1 Capital Partners
Master LP’s limited partners are D1 Capital Partners Onshore LP , a limited partnership
organized under the laws of the State of Delaware, and D1 Capital Partners Intermediate
LP , an exempted limited partnership organized under the laws of the Cayman Islands. D1
Capital Partners Onshore LP’s general partner is D1 Capital Partners GP LLC, and it has
raised capital from limited partners that include high net worth individuals as well as
institutional investors. D1 Capital Partners Intermediate LP’s general partner is D1
Capital Partners GP LLC, and its sole limited partner is D1 Capital Partners Offshore LP ,
an exempted limited partnership organized under the laws of the Cayman Islands. D1
Capital Partners Offshore LP’s general partner is D1 Capital Partners GP LLC and it has
raised capital from limited partners that include high net worth individuals as well as
institutional investors.
D1 SPV Jupiter (Hong Kong) Limited, a company organized under the laws of Hong
Kong, is owned by (1) D1 Capital Series LLC – Series Jupiter, a separate series of D1
Capital Series LLC, a limited liability company organized under the laws of the State of
Delaware, which is controlled by its investment manager, D1 Capital Partners L.P ., a
limited partnership organized under the laws of the State of Delaware, and by its
managing member, Daniel Sundheim, and which is wholly-owned by employees of D1
Capital Partners L.P . and (2) D1 Jupiter Holdings LP , a limited partnership organized
under the laws of the State of Delaware. D1 Jupiter Holdings LP’s general partner is D1
Jupiter Holdings GP LLC, a limited liability company organized under the laws of the
State of Delaware, and which is ultimately controlled by D1 Capital Partners GP LLC. D1
Jupiter Holdings LP’s limited partners include institutional investors.
CORNERSTONE INVESTORS
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D1 SPV Master Holdco I (Hong Kong) Limited, D1 Capital Partners Master LP , D1
Capital Partners Onshore LP , D1 Capital Partners Intermediate LP , D1 Capital Partners
Offshore LP , D1 SPV Jupiter (Hong Kong) Limited and D1 Jupiter Holdings LP are
directly or indirectly controlled by D1 Capital Partners GP LLC, as well as their
investment manager, D1 Capital Partners L.P ., both of which are ultimately controlled by
Daniel Sundheim. D1 Capital Partners L.P . manages private investment vehicles and other
accounts which invest globally, in both public and private companies, primarily in the
technology, media and telecom, industrials, healthcare, consumer, real estate and
financial services sectors.
Each of D1 SPV Master Holdco I (Hong Kong) Limited and D1 SPV Jupiter (Hong Kong)
Limited is an existing Shareholder of our Company, holding in aggregate approximately
3.11% of the issued share capital of our Company as of the date of this prospectus.
4. Hidden Hill SPV VIII
Hidden Hill SPV VIII is a special purpose vehicle wholly-owned by Hidden Hill
Foundation Fund L.P . Hidden Hill Foundation Fund L.P . is a private equity fund
registered in the Cayman Islands. Hidden Hill SPV VIII is ultimately controlled by GLP
Pte. Ltd. GLP Pte. Ltd. is a leading global business builder, investor, developer and
operator in logistics real estate, data centres, renewable energy and related technologies.
Hidden Hill SPV VIII is an existing Shareholder of our Company holding approximately
0.39% of the issued share capital of our Company as of the date of this prospectus.
5. Sequoia
SC GGF III Holdco, Ltd. is an exempted company with limited liability incorporated
under the laws of the Cayman Islands. SC GGF III Holdco, Ltd. is wholly-owned by
Sequoia Capital Global Growth Fund III – Endurance Partners, L.P ., whose general
partner is SCGGF III – Endurance Partners Management, L.P . The general partner of
SCGGF III – Endurance Partners Management, L.P . is SC US (TTGP), Ltd. The directors
and stockholders of SC US (TTGP), Ltd. who exercise voting and investment discretion
with respect to the shares held by SC GGF III Holdco, Ltd. are Messrs. Roelof Botha and
Douglas Leone. As a result, and by virtue of the relationship described, each such person
may be deemed to share voting and dispositive power with respect to the shares held by
SC GGF III Holdco, Ltd. Sequoia Capital Global Growth Fund III – Endurance Partners,
L.P . is an investment fund whose primary purpose is to make equity investments in private
companies.
SC GGF III Holdco, Ltd. is an existing Shareholder of our Company holding
approximately 1.62% of the issued share capital of our Company as of the date of this
prospectus.
6. CELESTIAL OCEAN INVESTMENTS LIMITED
CELESTIAL OCEAN INVESTMENTS LIMITED is a company incorporated under the
Laws of the British Virgin Islands and is indirectly wholly owned by S.F. Holding Co.,
Ltd. (ʮ̡)( “ SF Holding ”). SF Holding is a joint stock company
established in the PRC, whose shares are listed on the Shenzhen Stock Exchange (stock
code: 002352.SZ). According to SF Holding, it is the largest integrated logistics service
provider in China and Asia and the fourth largest in the world.
CORNERSTONE INVESTORS
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CELESTIAL OCEAN INVESTMENTS LIMITED is an existing Shareholder of our
Company holding approximately 1.54% of the issued share capital of our Company as of
the date of this prospectus.
7. Dahlia Investments Pte. Ltd.
Dahlia Investments Pte. Ltd. (“ Dahlia ”) is an indirect wholly owned subsidiary of
Temasek Holdings (Private) Limited (“ Temasek ”). Temasek is a global investment
company with a net portfolio value of S$382 billion (RMB1.98 trillion) as at 31 March
2023. Its Purpose “So Every Generation Prospers” guides it to make a difference for
today’s and future generations. As an active investor, forward looking institution and
trusted steward, it is committed to deliver sustainable value over the long term. Temasek
has overall corporate credit ratings of Aaa/AAA by rating agencies Moody’s Investors
Service and S&P Global Ratings respectively. Headquartered in Singapore, it has 13
offices in 9 countries around the world: Beijing, Hanoi, Mumbai, Shanghai, Shenzhen,
and Singapore in Asia; and London, Brussels, Paris, New Y ork, San Francisco,
Washington DC, and Mexico City outside Asia.
Dahlia is an existing Shareholder of our Company holding approximately 0.77% of the
issued share capital of our Company as of the date of this prospectus.
8. Eternal Earn Holding Limited, Parallel Cluster Investment Limited and Huang
River Investment Limited
Eternal Earn Holding Limited is an exempted company incorporated in the Cayman
Islands with limited liability and a wholly-owned subsidiary of TPP Fund II, L.P ., whose
general partner is TPP GP II, Ltd, which is ultimately controlled by Tencent Holdings
Limited, a company listed on the Main Board of the Stock Exchange (HKEX: 00700,
“Tencent ”). Tencent is a leading provider of Internet value-added services in China,
including communications and social networks, games, digital content, advertising,
fintech and cloud services.
Parallel Cluster Investment Limited is an exempted company incorporated in the Cayman
Islands with limited liability and a wholly-owned subsidiary of Parallel Cluster
Investment L.P ., whose general partner is Parallel Cluster GP Limited, which is ultimately
controlled by Tencent.
Huang River Investment Limited is a company incorporated in the British Virgin Islands,
and is wholly-owned by Tencent.
Each of Eternal Earn Holding Limited and Parallel Cluster Investment Limited is an
existing Shareholder of our Company, holding in aggregate approximately 2.08% of the
issued share capital of our Company as of the date of this prospectus.
9. Hillhouse
JNRY III HOLDINGS LIMITED is an exempted company with limited liability
incorporated under the laws of the Cayman Islands and is engaged in investment holding.
JNRY III HOLDINGS LIMITED is ultimately managed and controlled by Hillhouse
Investment Management, Ltd. (“ Hillhouse Investment ”), an exempted company
incorporated under the laws of the Cayman Islands. Founded in 2005, Hillhouse
Investment is a global private equity firm of investment professionals and operating
executives who are focused on building and investing in high quality business franchises
CORNERSTONE INVESTORS
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that achieve sustainable growth. Independent proprietary research and industry expertise,
in conjunction with world-class operating and management capabilities, are key to
Hillhouse’s investment approach. Hillhouse partners with exceptional entrepreneurs and
management teams to create value, often with a focus on innovation and growth.
Hillhouse invests in the fields of healthcare, business services, broad consumption and
industrials. Hillhouse manages assets on behalf of institutional clients from across the
globe.
JNRY III HOLDINGS LIMITED is an existing Shareholder of our Company holding
approximately 2.00% of the issued share capital of our Company as of the date of this
prospectus.
CLOSING CONDITIONS
The subscription obligation of each Cornerstone Investor under the respective Cornerstone
Investment Agreement is subject to, among other things, the following closing conditions (as
the case may be):
(a) the Underwriting Agreements being entered into and having become effective and
unconditional (in accordance with their respective original terms or as subsequently
waived or varied by agreement of the parties thereto) by no later than the time and date
as specified in the Underwriting Agreements, and neither of the Underwriting Agreements
having been terminated;
(b) the Stock Exchange having granted the listing of, and permission to deal in, the Class B
Shares (including the Class B Shares subscribed for by each of the Cornerstone Investors)
as a well as other applicable waivers and approvals, and such approval, permission or
waiver having not been revoked prior to the commencement of dealings in the Class B
Shares on the Stock Exchange;
(c) no Laws shall have been enacted or promulgated by any governmental authority which
prohibits the consummation of the transactions contemplated in the Global Offering or in
the respective Cornerstone Investment Agreement and there shall be no orders or
injunctions from a court of competent jurisdiction in effect precluding or prohibiting
consummation of such transactions; and
(d) the respective representations, warranties, undertakings and confirmations of such
Cornerstone Investor under the respective Cornerstone Investment Agreement are
accurate and true in all respects or all material respects (as the case may be) and not
misleading or deceptive and that there is no material breach of such Cornerstone
Investment Agreement on the part of such Cornerstone Investor.
RESTRICTIONS ON DISPOSALS BY THE CORNERSTONE INVESTORS
Each of the Cornerstone Investors has agreed that it will not, whether directly or indirectly, at
any time during the period of six months from the Listing Date (the “ Lock-up Period ”),
dispose of any of the Offer Shares they have purchased pursuant to the relevant Cornerstone
Investment Agreements, save for certain limited circumstances, such as transfers to any of its
wholly-owned subsidiaries who will be bound by the same obligations of such Cornerstone
Investor, including the Lock-up Period restriction.
CORNERSTONE INVESTORS
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SUBSTANTIAL SHAREHOLDERS
So far as our Directors are aware, immediately following the completion of the Global
Offering, assuming (i) the Over-allotment Option is not exercised, and (ii) completion of the
Reclassification, Redesignation and Share Subdivision, the following persons will have
interests and/or short positions (as applicable) in the Shares or underlying shares of our
Company that (i) would fall to be disclosed to the Company and the Stock Exchange pursuant
to the provisions of Divisions 2 and 3 of Part XV of the SFO, or, (ii) will be, directly or
indirectly, interested in 10% or more of the nominal value of any class of our share capital
carrying rights to vote in all circumstances at general meetings of our Company:
Name of substantial
shareholder
Capacity/Nature
of Interest
Number and class
of shares held
(1)
Approximate
percentage of
shareholding
of each class
of shares
in our
Company (1)
Class A Shares
Jumping Summit Limited Beneficial interest 979,333,410
Class A Shares
100%
Mr. Jet Jie Li (2) Interest in controlled
corporation
979,333,410
Class A Shares
100%
Class B Shares
Team Spirit Group Limited (3) Beneficial interest 373,175,910
Class B Shares
4.76%
Mr. Chen Mingyong (3) Interest in a
controlled
corporation
373,175,910
Class B Shares
4.76%
Interest of spouse 327,712,070
Class B Shares
4.18%
Starlight Hero Limited
(3) Beneficial interest 327,712,070
Class B Shares
4.18%
Ms. Liang Xiaojing (3) Interest in a
controlled
corporation
327,712,070
Class B Shares
4.18%
Interest of spouse 373,175,910
Class B Shares
4.76%
SUBSTANTIAL SHAREHOLDERS
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Name of substantial
shareholder
Capacity/Nature
of Interest
Number and class
of shares held (1)
Approximate
percentage of
shareholding
of each class
of shares
in our
Company (1)
Tencent
Deep Red Holdings Limited (4) Beneficial interest 130,718,955
Class B Shares
1.67%
Rhododendron Investment
Limited (4)
Beneficial interest 130,713,270
Class B Shares
1.67%
TB RACING RABBITS
INVESTMENT HOLDINGS
L.P .
(4)
Beneficial interest 98,039,215
Class B Shares
1.25%
Eternal Earn Holding
Limited (4)
Beneficial interest 98,039,215
Class B Shares
1.25%
Parallel Cluster Investment
Limited (4)
Beneficial interest 78,431,370
Class B Shares
1.00%
Boyu
Jaunty Global Limited (5) Beneficial interest 341,411,525
Class B Shares
4.36%
Joyous Tempinis Limited (5) Beneficial interest 104,561,995
Class B Shares
1.33%
Jallion Global Limited (5) Beneficial interest 71,895,425
Class B Shares
0.92%
ATM Capital
Fast Creative Zone Limited (6) Beneficial interest 399,966,340
Class B Shares
5.11%
Ultra Height Fund L.P . (6) Beneficial interest 66,116,490
Class B Shares
0.84%
Notes:
(1) The table above assumes that (i) the Over-allotment Option is not exercised, and (ii) completion of the
Reclassification, Redesignation and Share Subdivision, and not taking into account any Offer Shares to be
subscribed for by the existing Shareholders.
(2) Topping Summit Limited, an entity wholly-owned by Mr. Li, owns 5% equity interest of Jumping Summit
Limited; Exceeding Summit Holding Limited, which is held by Vistra Trust (Singapore) Pte. Limited as a
trustee for a trust established by Mr. Li for the benefit of Mr. Li and his family members, owns the remaining
95% equity interest in Jumping Summit Limited. Accordingly, Mr. Li is deemed to be interested in the
979,333,410 Class A Shares held by Jumping Summit Limited under the SFO.
SUBSTANTIAL SHAREHOLDERS
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(3) Team Spirit Group Limited is approximately 65.9% owned by the Labor Union Committee of Guangdong
OPlus Holdings Co., Ltd; approximately 33.6% owned by GLORY HILL HOLDINGS LIMITED ( ৷ᘴණྠϞ
ʮ̡) and approximately 0.5% owned by Jin Leqin, an independent third party. The Labor Union Committee
of Guangdong OPlus Holdings Co., Ltd is deemed to be controlled by Mr. Chen Mingyong. Accordingly, Mr.
Chen Mingyong is deemed to be interested in the 373,175,910 Class B Shares held by Team Spirit Group
Limited under the SFO.
Ms. Liang Xiaojing does not hold any legal or beneficial interest in the share capital of Team Spirit Group
Limited; however, solely pursuant to Part XV of the SFO, Ms. Liang Xiaojing is deemed to be interested in
the 373,175,910 Class B Shares interested by her spouse, Mr. Chen Mingyong, although she does not
personally hold such shares as a direct shareholder.
Starlight Hero Limited is wholly-owned by Ms. Liang Xiaojing.
Mr. Chen Mingyong does not hold any legal or beneficial interest in the share capital of Starlight Hero Limited;
however, solely pursuant to Part XV of the SFO, Mr. Chen Mingyong is deemed to be interested in the
327,712,070 Class B Shares interested by his spouse, Ms. Liang Xiaojing, although he does not personally hold
such shares as a direct shareholder.
(4) Rhododendron Investment Limited, Deep Red Holdings Limited and TB Racing Rabbits Investment Holdings
L.P . are all wholly owned by Tencent Holdings Limited, a company listed on the Main Board of the Stock
Exchange (HKEX; 00700, “ Tencent ”). Eternal Earn Holding Limited is a wholly-owned subsidiary of TPP
Fund II, L.P ., whose general partner is TPP GP II, Ltd, which is ultimately controlled by Tencent. Parallel
Cluster Investment Limited is a wholly-owned subsidiary of Parallel Cluster Investment L.P ., whose general
partner is Parallel Cluster GP Limited, which is ultimately controlled by Tencent. Accordingly, Tencent is
deemed to be interested in the 535,942,025 Class B Shares held by Deep Red Holdings Limited, Rhododendron
Investment Limited, TB Racing Rabbits Investment Holdings L.P ., Eternal Earn Holding Limited and Parallel
Cluster Investment Limited under the SFO.
(5) Joyous Tempinis Limited, Jaunty Global Limited and Jallion Global Limited are directly or indirectly
controlled by Boyu Capital Fund IV , L.P ., an exempted limited partnership registered under the laws of the
Cayman Islands. Boyu Capital Fund IV , L.P . is advised by Boyu Capital Group Management Ltd. (together
with its affiliates, “ Boyu ”). Accordingly, Boyu is deemed to be interested in the 517,868,945 Class B Shares
held by Jaunty Global Limited, Joyous Tempinis Limited and Jallion Global Limited under the SFO.
(6) Fast Creative Zone Limited is majority held by Global Express Fund L.P . Global Express Fund L.P . and Ultra
Height Fund L.P . are managed by Global Express GP Limited and Global Freight Limited, respectively, both
of which are A TM Capital’s management entities. Accordingly, A TM Capital is deemed to be interested in the
466,082,830 Class B Shares held by Fast Creative Zone Limited and Ultra Height Fund L.P . under the SFO.
Except as disclosed above, our Directors are not aware of any other person who will,
immediately following the completion of the Global Offering (assuming (i) the Over-allotment
Option is not exercised, and (ii) completion of the Reclassification, Redesignation and Share
Subdivision) have any interest and/or short positions in the Shares or underlying shares of our
Company which would fall to be disclosed to the Company pursuant to the provisions of
Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 10%
or more of the nominal value of any class of our share capital carrying rights to vote in all
circumstances at general meetings of our Company. Our Directors are not aware of any
arrangement which may at a subsequent date result in a change of control of our Company.
SUBSTANTIAL SHAREHOLDERS
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You should read the following discussion and analysis in conjunction with our audited
consolidated financial statements included in “Appendix I – Accountant’s Report” to this
prospectus, together with the accompanying notes. Our consolidated financial statements
have been prepared in accordance with International Financial Reporting Standards
(“IFRSs”), which may differ in material aspects from generally accepted accounting
principles in other jurisdictions. You should read the entire Accountant’s Report and not
merely rely on the information contained in this section.
This discussion and analysis contain forward-looking statements that reflect our current
views with respect to future events and our financial performance and involves risks and
uncertainties. These statements are based on our assumptions and analysis in light of our
experience and perception of historical trends, current conditions and expected future
developments, as well as other factors we believe are appropriate under the
circumstances. However , whether actual outcomes and developments will meet our
expectations and predictions depends on a number of risks and uncertainties. Our actual
results may differ materially from those anticipated in these forward looking statements
as a result of any number of factors. In evaluating our business, you should carefully
consider the information provided in this prospectus, including “Risk Factors” and
“Business” in this prospectus.
For the purpose of this section, unless the context otherwise requires, references to 2020,
2021 and 2022 refer to our financial years ended December 31 of such years. Unless the
context otherwise requires, financial information described in this section is described on
a consolidated basis.
OVERVIEW
We are a global logistics service provider with the leading express delivery business in
Southeast Asia, a competitive position in China and an expanding footprint in Latin America
and the Middle East. Our express delivery services span 13 countries, which include the largest
and fastest-growing emerging express delivery markets globally. We commenced operations in
2015 in Indonesia, and leveraged our success there to expand into other Southeast Asian
countries, including Vietnam, Malaysia, the Philippines, Thailand, Cambodia and Singapore,
and became the number one express delivery operator in Southeast Asia, with a 22.5% market
share in 2022 by parcel volume, according to Frost & Sullivan. In Southeast Asia, we handled
2,513.2 million domestic parcels in 2022, representing a CAGR of 47.6% from 1,153.8 million
in 2020, and we handled 1,438.3 million domestic parcels in the six months ended June 30,
2023, representing an increase of 18.4% from 1,215.0 million domestic parcels in the six
months ended June 30, 2022. We tapped into the express delivery market in China in 2020, and
handled 12,025.6 million domestic parcels in 2022, achieving a market share of 10.9% by
parcel volume, according to Frost & Sullivan. In China, we handled 6,445.6 million parcels in
the six months ended June 30, 2023, representing an increase of 15.1% from 5,602.3 million
parcels in the six months ended June 30, 2022. As of June 30, 2023, we had full network
coverage across the seven Southeast Asia countries and a geographic coverage of over 99% by
counties and districts in China. We are also the first Asian express delivery operator of scale
to have expanded into Saudi Arabia, UAE, Mexico, Brazil and Egypt, according to Frost &
Sullivan, supporting our e-commerce partners as they expand into new markets. To better
capture cross-border logistics opportunities and enhance the connectivity among the countries
we serve, we have expanded our cross-border logistics services, which include small parcels,
freight forwarding and warehousing solutions.
FINANCIAL INFORMATION
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We provide express delivery services to leading e-commerce platforms enabling the rapid
development of our partners as they expand into new markets. We have historically helped
e-commerce platforms access regions that were underserved by traditional logistics service
providers. We provide a suite of express delivery services to merchants and consumers on
leading e-commerce platforms, such as Shopee, Lazada, Tokopedia, Pinduoduo, Taobao, Tmall,
Shein and Noon, as well as short video and live streaming platforms, such as TikTok, Douyin
and Kuaishou. As e-commerce continues to evolve, we believe that we are well positioned to
enable further development of the e-commerce markets in which we operate by leveraging our
broad network, extensive know-how and strong execution capabilities. We expect to provide
services to cross-border logistics with our ever expanding global footprint.
We have built an adaptive business model by leveraging our partners whom we refer to as our
regional sponsors, and we are currently the only player in Southeast Asia and China that has
successfully adopted this model at scale. By employing this model in geographically diverse
countries with unique operational challenges in each of the countries where we provide express
delivery services, we have expanded rapidly, serving a geographically dispersed base of
merchants and consumers across the regions and enabling the growth of e-commerce
transactions. Regional sponsors play an important role by working with our country
headquarters to execute our strategies in various markets. Our regional sponsors typically hold
equity interest in our country headquarters and/or regional operating entities. Our country
headquarters formulate the overall operational strategy and execution plans in each market,
including density and geographic locations of sorting centers, line-haul routes and network
capacity, of which regional sponsors assume the role of managing regional daily operations.
Regional sponsors manage our network partners through the relevant regional operating
entities. Regional sponsors in certain locations also undertake the management of directly
operated pickup and delivery outlets and service stations through the relevant regional
operating entities. The management responsibilities of regional sponsors encompass the set-up
of local operations, sales and marketing, customer service, and employee and network partner
training.
As of June 30, 2023, we had a portfolio of 104 regional sponsors and approximately 8,700
network partners. We operated 265 sorting centers and over 8,400 line-haul vehicles, including
more than 4,400 self-owned line-haul vehicles, with approximately 3,900 line-haul routes, as
well as over 18,600 pickup and delivery outlets as of June 30, 2023. Through collaboration
with international and local partners, we also provide cross-border services across Asia, North
America, South America, Europe, Africa and Oceania.
BASIS OF PRESENTATION
Our historical financial information has been prepared in accordance with IFRS and
interpretations issued by the International Accounting Standards Board (“ IASB ”). The
historical financial information has been prepared on a historical cost basis, except for certain
financial assets and liabilities measured at fair value through profit or loss.
The preparation of the historical financial information in conformity with IFRS requires the use
of certain critical accounting estimates. It also requires management to exercise its judgment
in the process of applying our accounting policies. The areas involving a higher degree of
judgment or complexity, or areas where assumptions and estimates are significant to the
historical financial information, are disclosed in Note 4 to the Accountant’s Report in Appendix
I to this prospectus. Regarding the change in accounting policy and disclosures, see Note 2 to
the Accountant’s Report in Appendix I to this prospectus.
FINANCIAL INFORMATION
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MAJOR FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our results of operations are affected by general factors affecting the overall economic growth
and level of per capita disposable income, the growth of e-commerce, governmental policies
and initiatives affecting express and delivery companies in the regions where we operate, and
competition from various competitors globally. Unfavorable changes in any of these general
industry conditions could negatively affect demand for our services and materially and
adversely affect our results of operations. Our results of operations are affected by certain
company-specific factors.
Macroeconomic trends and demand for express delivery and other logistics services in the
regions where we operate
Our results of operations and financial condition are affected by the factors driving the
economies in the jurisdictions where we operate, particularly in Southeast Asia and China, the
e-commerce industry and the express delivery service market. These factors include levels of
per capita disposable income, levels of consumer spending, rate of Internet and smartphone
penetration, adoption of e-commerce and other general economic conditions that affect
consumption and business activities in general in the jurisdictions where we operate.
We anticipate additional growth in the express delivery industry driven by, among other things,
further adoption of e-commerce in Southeast Asia and the New Markets, new retail trends in
China, and the rise of social e-commerce, such as emerging short video and live streaming
social e-commerce platforms. According to Frost & Sullivan, the Southeast Asia express
delivery market grew from 3.3 billion in parcel volume in 2018 to 11.1 billion in 2022,
representing a CAGR of 36.0%, and is expected to reach 23.5 billion in parcel volume by 2027
from 13.2 billion in 2023, representing a CAGR of 15.5%. According to Frost & Sullivan, the
express delivery market in China has been growing at a CAGR of 21.5% over the past five
years (from 2018 to 2022) in terms of parcel volume. The China express delivery market is
expected to reach 188.0 billion parcels in 2027 from 125.1 billion parcels in 2023, representing
a CAGR of 10.7%, according to Frost & Sullivan. In addition, the express delivery market in
the New Markets is also expected to reach 7,137.7 million in parcel volume in 2027 from
3,733.5 million in 2023, at a CAGR of 17.6%, according to Frost & Sullivan.
Our results of operations are also affected by the growth and increasing demand in other
logistics services, such as cross-border services, warehousing and other logistics solutions.
These trends may affect the demand for our services and our business opportunities going
forward.
Competition, further penetration in existing markets and expansion in the New Markets
We have maintained a competitive edge and driven growth in the markets where we operate.
For instance, according to Frost & Sullivan, we are the number one express delivery operator
in Southeast Asia by parcel volume from 2020 to 2022, delivering 1,153.8 million domestic
parcels with a 16.4% market share in 2020 and 2,160.8 million domestic parcels with a 22.3%
market share in 2021, and further extending our leading position to a 22.5% market share with
a parcel volume of 2,513.2 million in 2022. We entered into the China market in March 2020
and are the fastest among our peers to achieve an industry milestone of 50 million daily parcel
volume. We have become a leading express delivery operator with a market share of 10.9% in
China by total parcel volume in 2022, according to Frost & Sullivan. We also have recently
expanded operations into the New Markets including Saudi Arabia, UAE, Mexico, Brazil, and
Egypt. Our revenue and operating income are affected by the competitive landscape, market
FINANCIAL INFORMATION
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environment and our market position. In each of our regions of operations, we compete with
the leading domestic express delivery companies in those regions. We also compete with
international carriers operating in the jurisdictions where we operate in connection with our
cross-border services.
Our competitive position also depends on our ability to maintain relationships with and expand
the scope of our customers and partners, which depends on our capabilities to differentiate
ourselves through our continuous innovation, operational capabilities, and service quality. For
instance, we serve merchants and consumers on leading e-commerce platforms, such as
Shopee, Lazada, Tokopedia, Pinduoduo, Taobao, Tmall, Shein and Noon, as well as short video
and live streaming platforms which have adopted social e-commerce services, such as TikTok,
Douyin and Kuaishou. Our ability to compete for and maintain a leading market position in our
regions of operations, as well as to maintain cooperation with and expand our customer base
will depend on our ability to differentiate through innovation, operational capabilities and
service quality.
Effectiveness of our unique regional sponsor model
We have adopted a unique regional sponsor model which provides us with effective
management over our network, aligned incentives and a shared culture among regional
sponsors while maintaining competitiveness, flexibility and excellent operating leverage. Our
results of operations are affected by our ability to take full advantage of our regional sponsor
model to expand our operations in a cost-effective manner, leverage the resources and
operating capabilities of our regional sponsors, while maintaining effective management over
our network. Our regional sponsor model enables us to expand and capture market share
rapidly, reaching markets that have limited express delivery alternatives rapidly and efficiently,
while minimizing capital expenditures. Through this adaptive business model, we have
improved and will continue to improve our unit cost structure, and we will increase our
operating leverage to maintain market-leading positions in Southeast Asia, compete effectively
with longer-established players in China, and continue to grow in the New Markets.
Costs efficiency
Our results of operations are affected by our ability to control costs, which may be subject to
factors such as fluctuations in wage rates, fuel prices, toll fees, and leasing costs, among other
things. For example, our cost of revenue significantly increased in 2021 and 2022 primarily due
to the launch and ramping-up of our service offerings in China and the New Markets. The
continued growth of our business and expansion of our market shares in countries where we
operate will impact our ability to benefit from economies of scale, including optimization of
our delivery service network, reduction of unit costs and the strengthening of our bargaining
power with suppliers and service providers. Furthermore, as we continue to expand our
business, we apply our best practices in markets where we operate, which affects our ability
to enhance and expand our services at optimized costs and efficiency.
Effective investment in network and technology
We have made investments in developing our express delivery network, proprietary technology
and infrastructure. We believe our ability to provide quality services across multiple
geographic regions, as well as our ability to provide tailored services to meet the needs of
e-commerce partners, have been a key factor for our success. We have rapidly scaled our
network while satisfying the local needs in each of the markets we operate in through organic
growth as well as strategic acquisitions. As of June 30, 2023, we had a portfolio of 104 regional
sponsors and approximately 8,700 network partners. We operated 265 sorting centers and over
8,400 line-haul vehicles with approximately 3,900 line-haul routes, as well as over 18,600
pickup and delivery outlets as of June 30, 2023.
FINANCIAL INFORMATION
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We believe continuous enhancement of our network and technology infrastructure is important
to our future performance. We expect to continue to make investments in the development and
implementation of new technologies. We believe these investments will improve our parcel
handling capacity, IT system efficiency, market penetration and customer experience, which
ultimately affect our results of operations and drive overall long-term growth.
Strategic relationships, partnerships and investment acquisitions
We have, in the past, pursued strategic acquisitions and made strategic investments to grow our
business. For example, in 2021, we completed the acquisitions of the SEA entities, which
allowed us to achieve synergies under our regional sponsor business model through these
acquisitions. In December 2021, we completed the acquisition of BEST Express China, and in
June 2023, we completed the acquisition of Fengwang Information. See “History and
Corporate Structure – Major Acquisitions, Disposals and Mergers – Acquisition of Fengwang
Information.” Our financial performance was and will continue to be impacted by our
acquisitions and investments. Additionally, our ability to successfully integrate sorting centers,
supply chains and service offerings will affect the synergies we are able to achieve through
relevant acquisitions.
Going forward, we may continue to selectively pursue acquisitions, investments, and other
forms of cooperation that we believe are strategic and complementary and technology, all of
which may affect our results of operations.
Foreign exchange rate fluctuations
We operate in multiple jurisdictions, which exposes us to the effects of fluctuations in foreign
exchange rates. Our historical financial information is presented in U.S. dollars, our
presentation currency. For each Group entity, items included in its financial statements are
generally recorded in the currency of the country where such Group entity operates, which may
be, among others, Renminbi, Indonesian Rupiah, Malaysian Ringgit, Vietnamese Dong, Thai
Baht, Philippine Pesos, Singapore dollars, Brazilian Real or Mexican Peso. Our financial
information as expressed in U.S. dollars may be significantly affected by fluctuations in
foreign exchange rates, and the figures may be materially higher or lower than would be the
case if exchange rates were stable.
MAJOR BUSINESS COMBINATIONS
In June 2021, to encourage regional sponsors in Thailand to share our vision of long-term
growth and value propositions, we acquired the majority interest of 13 entities from Thai
regional sponsors (the “ Thai entities ”). Similarly, in August 2021, we made capital increases
in 25 entities established by Indonesian regional sponsors (the “ Indonesian entities ” and,
together with the Thai entities, the “ SEA entities ”) and acquired 70% of their equity interests
in these Indonesian entities.
On December 8, 2021, we completed our acquisition of the 100% equity interest in BEST
Express China, at an enterprise value of approximately RMB6.8 billion with a cash
consideration of US$715.5 million paid by us in 2021. We used cash on hand to finance the
transaction.
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The above acquisitions were accounted for as a business combination using the acquisition
method of accounting in accordance with IFRS. For more information regarding our
acquisitions of the SEA entities and the acquisition of BEST Express China, see Notes 36 to
38 to the Accountant’s Report in Appendix I to this prospectus, and “History and Corporate
Structure – Major Acquisitions, Disposals and Mergers – Acquisition of BEST Express China.”
IMPACT OF COVID-19 PANDEMIC ON OPERATIONS
Our results of operations and financial condition have been affected by the COVID-19
pandemic during the Track Record Period. Countries where we have our operations were
subject to the impact of the COVID-19 pandemic and various governmental measures from
time to time. Our facilities in all Southeast Asia countries were under sporadic closures and
reopening in 2020 and 2021. In addition, our facilities are spread out across China and the
pickup and delivery outlets across cities experienced different levels of labor shortages,
closures or capacity reductions due to the pandemic in many cities from 2020 to 2022. Our
offices, sorting centers and outlets closed and opened in accordance with applicable measures.
The timelines for business resumption varied across different localities and countries. On a
global level, our business operations started to return to normal levels in the first quarter of
2023.
The temporary, periodic closure of our facilities, labor shortages or delay in the delivery
process did not have material adverse impact on our operational results given our vast network.
Despite an initial drop in our business activities at the start of the COVID-19 outbreak due to
restrictive measures across different jurisdictions, many consumers, especially those in
Southeast Asia, started to shop on e-commerce platforms to minimize exposure to public
premises and potential spread of virus during the COVID-19 pandemic. Consequently, we
experienced certain surge in demand for express delivery services across the countries where
we operate. In addition, certain impacts from the COVID-19 pandemic on our financial
performance might be one-off and non-recurring. For example, after the COVID-19 pandemic
ends, we are not able to receive benefits from the COVID-19 related government policy
support, such as one-off subsidies for social insurance or tax relief, which we believe are not
material to our results of operations.
Despite the impact of the COVID-19 pandemic, our revenue increased by 216.0% from
US$1,535.4 million in 2020 to US$4,851.8 million in 2021, and further increased by 49.8% to
US$7,267.4 million in 2022. In addition, our revenue increased by 18.5% from US$3,402.5
million for the six months ended June 30, 2022 to US$4,030.4 million for the six months ended
June 30, 2023.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We have identified the accounting policies that we believe are the most significant to the
preparation of our consolidated financial statements. Some of our critical accounting policies
involve subjective assumptions and estimates and complex judgments by our management
relating to accounting items. Our significant accounting policies are set out in detail in the
Accountant’s Report in Appendix I to this prospectus.
The estimates and associated assumptions, which we believe are reasonable under the
circumstances, are based on our historical experience and other factors, and form the basis of
our judgments about matters that are not readily apparent from other sources. When reviewing
our financial results, you should consider (i) our selection of critical accounting policies, (ii)
the judgment and other uncertainties affecting the application of such policies, and (iii) the
sensitivity of reported results to changes in conditions and assumptions. The determination of
these items requires management judgments based on information and financial data that may
change in future periods, and as a result, actual results could differ from those estimates.
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Revenue Recognition
Revenue is recognized when (or as) a performance obligation is satisfied, i.e. when control of
the goods or services underlying the particular performance obligation is transferred to the
customer.
Control is transferred over time and revenue is recognized over time by reference to the
progress towards complete satisfaction of the relevant performance obligation if one of the
following criteria is met:
 The customer simultaneously receives and consumes the benefits provided by our
performance as we perform;
 Our performance creates or enhances an asset that the customer controls as we perform;
or
 Our performance does not create an asset with an alternative use to us and we have an
enforceable right to payment for performance completed to date.
Otherwise, revenue is recognized at a point in time when the customer obtains control of the
distinct goods or services.
A contract asset represents our right to consideration in exchange for goods or services that we
transferred to a customer that is not yet unconditional. It is assessed for impairment in
accordance with IFRS 9. In contrast, a receivable represents our unconditional right to
consideration, i.e. only the passage of time is required before payment of that consideration is
due.
A contract liability represents our obligation to transfer goods or services to a customer for
which we have received consideration (or an amount of consideration is due) from the
customer. A contract asset and a contract liability relating to a contract are accounted for and
presented on a net basis.
(1) Express delivery services
(i) Services provided to pick-up outlets of network partners
We offer express delivery services to network partners in China and other countries,
including sorting, line-haul transportation, delivery and other relevant network
management services. We generally involve other network partners in delivery. We
act as principal in providing the entire express delivery service as we control the
dispatching services from other network partners to integrate into one complete
express delivery service and are primarily responsible for the fulfilment of the
express delivery service.
We charge pickup outlets fees based on the parcel’s weight and route to the end
recipient’s destination, and generally require prepayment of such service fees. We
satisfy the performance obligation of express delivery service and recognize revenue
over time and use an output method of progress based on time-in-transit for express
delivery service.
In addition, we also charge network partners fees for initial operating training and
other initial services to network partners, and such fees are generally recognized as
revenue when the services are completed.
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(ii) Services provided to unconsolidated operating entities of regional sponsors
We provide network services to unconsolidated operating entities of regional
sponsors, which include technology system support, training, access to our logos
and brand names, and general network arrangement services. We are not responsible
or acting as principal for relevant express delivery services regarding orders made
by the operating entities of regional sponsors through the network and performed by
other operating entities of regional sponsors. We charge fees from operating entities
of regional sponsors based on parcel volumes. The network service is considered as
a series of network management and oversight services as they are substantially the
same and have the same pattern of transfer to the customers. The revenue from the
network service is recognized on a monthly basis according to monthly fees
chargeable to the operating entities of regional sponsors.
In some routes, the unconsolidated operating entities of regional sponsors will use
the sorting centers operated by us, and in such situations, we are responsible for the
express delivery service provided by our sorting centers, including parcel sorting,
line-haul transportation and other services contained in the service contracts, and
charge for such service based on the size, weight, route to the end recipient’s
destination and other factors of a parcel. Such express delivery service is considered
a separated performance obligation in addition to the network service. We satisfy the
performance obligation of such express delivery service and recognize revenue over
time and use an output method of progress based on time-in-transit for the express
delivery service.
We issue billings on a monthly basis and grant certain credit periods to such
operating entities of regional sponsors.
During the Track Record Period, we provided services to unconsolidated regional
operating entities in Indonesia, Thailand and other countries. As of December 31,
2022, we had acquired all of the unconsolidated regional operating entities in
Indonesia and Thailand, and after such acquisitions, we directly and substantially
provide our integrated express delivery service to our enterprise and individual
customers in these countries.
(iii) Services provided to enterprise customers/individual customers
We also provide an integrated express delivery service directly to certain enterprise
customers and directly to individual customers. We involve outlets of network
partners or operating entities of regional sponsors in pickup, dispatching and other
services. We act as principal in providing the entire express delivery service as we
control the relevant services provided by other outlets of network partners or
operating entities of regional sponsors to integrate into one complete express
delivery service, and we are primarily responsible for the fulfilment of the express
delivery service.
We charge the customers based on the size, weight, route to the end recipient’s
destination and other factors of a parcel. We generally issue billings on a regular
basis and grant certain credit periods to such customers. We satisfy the performance
obligation of such express delivery service and recognize revenue over time and use
an output method of progress based on time-in-transit for the express delivery
service.
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(iv) Cash on delivery services
For cash on delivery services, we are generally engaged by customers (normally
online shopping e-commerce platforms or online merchants) to collect cash
payments for the merchandise from end users, then disburse the cash to such
customers, and charge certain proportion of the cash payments as service fees as a
value-added service on top of the express delivery services. Generally all of such
service contracts include only one performance obligation as normally the
abovementioned or other relevant promises contained in the service contracts are not
considered to be separately identifiable due to the fact that such promises are highly
interrelated, and generally the customer expects us to deliver services with
integration of such promises.
For cash on delivery services, we generally satisfy a performance obligation and
recognize revenue at a point in time once such services are completed.
We provide customers with certain volume-based incentives in relation to express
delivery services, which represent variable considerations and are recorded as reductions
to the related revenue. We estimate the variable considerations to the extent that it is
highly probable that a significant reversal in the amount of cumulative revenue
recognized will not occur. As the incentives are generally determined on a monthly basis,
the uncertainty in estimating the variable considerations to be recorded is very limited.
(2) Cross-border services
For our cross-border services provided to customers, we are generally acting as principal
in providing cargo or parcel collection, customs clearances, and dispatching services to
such customers as we are primarily responsible for and have control over the services. A
substantial part of such service contracts includes only one performance obligation as
normally the abovementioned or other relevant promises contained in the service
contracts are considered to be not separately identifiable due to the fact that such
promises are highly interrelated, and generally the customer expects us to deliver services
with integration of such promises.
For such service, we generally satisfy a performance obligation and recognize revenue
over time as we transfer control of such service over time, since the customers receive the
benefit of the service as the goods are transported from one location to another. Revenue
is recognized based on the extent of progress towards completion of the performance
obligation. We use an output method of progress based on time-in-transit as it best depicts
the transfer of control to the customers.
(3) Other services
Revenue also includes sales of accessories, such as J&T-branded packing supplies and
apparel. Revenue is recognized when control of the product is transferred to the customer
and in an amount we expect to earn in exchange for the product.
Subsidiaries and controlled affiliated entities
Subsidiaries and controlled affiliated entities are all entities under our control. We control an
entity where our Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to our Group. They are deconsolidated from the date that control ceases.
FINANCIAL INFORMATION
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Inter-company transactions, balances, and unrealized gains on transactions between Group
companies are eliminated. Unrealized losses are also eliminated unless the transaction provides
evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted by us.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the
consolidated income statement, statement of comprehensive income, statement of changes in
equity and balance sheet respectively.
There are entities controlled by us under certain contractual arrangements. We do not have
legal ownership in equity of these entities or their subsidiaries. There are also entities
controlled by us where we hold less than 50% of their equity interests respectively due to
certain local restrictions on foreign ownership of companies that provide express delivery
services. Nevertheless, under certain contractual arrangements or shareholder’s agreements
entered into with the registered owners or together with other local owners of these entities, we
control these entities by way by controlling their major corporate governance and decision-
making processes and directing the results of such processes, governing their major operating,
investment, and financing policies and etc.
Although we indirectly own only 40% equity interests in PH GJE during certain periods in the
Track Record Period, through certain agreements and arrangements, PH GJE’s major business
activities are carried out under our discretion, we have rights to exercise power over PH GJE,
receives variable returns from its involvement in PH GJE, have the ability to affect those
returns through its power over PH GJE. As a result, we are considered, from an accounting
perspective, to have control over PH GJE.
Contract assets and liabilities
Contract assets mainly include unbilled receivables resulting from uncompleted services and
contract liabilities mainly include deferred revenue.
Share-based compensation
We operate share incentive plans, under which we receive services from employees as
consideration for our equity instruments. The fair value of the equity instruments received in
exchange for the services is recognized as an expense on the consolidated income statement
with a corresponding increase in equity.
In terms of the equity instruments awarded to employees, the total amount to be expensed is
determined by reference to the fair value of equity instruments granted. The total amount
expensed is recognized over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied if applicable.
At the end of each reporting period, we revise our estimates of the number of equity
instruments that are expected to vest based on the non-marketing vesting and service
conditions. We recognize the impact of the revision to original estimates, if any, in the
consolidated income statement, with a corresponding adjustment to equity.
In some circumstances, employees may provide services in advance of the grant date and
therefore the grant date fair value is estimated for the purposes of recognizing the expense
during the period between the service commencement period and grant date.
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Business combination
The acquisition method of accounting is used to account for all business combinations,
regardless of whether equity instruments or other assets are acquired. The consideration
transferred for the acquisition of a subsidiary comprises the:
 fair values of the assets transferred,
 liabilities incurred to the former owners of the acquired business,
 equity interests issued by us,
 fair value of any asset or liability resulting from a contingent consideration arrangement,
and
 fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are, with limited exceptions, measured initially at their fair values at the
acquisition date. We recognize any non-controlling interest in the acquired entity on an
acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s
proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the: (i) consideration transferred, (ii) amount of any non-controlling interest in
the acquired entity, and (iii) acquisition-date fair value of any previous equity interest in the
acquired entity over the fair value of the net identifiable assets acquired is recorded as
goodwill. If those amounts are less than the fair value of the net identifiable assets of the
business acquired, the difference is recognized directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the
future are discounted to their present value as of the date of exchange. The discount rate used
is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could
be obtained from an independent financier under comparable terms and conditions. Contingent
consideration is classified either as equity or financial liability. Amounts classified as a
financial liability are subsequently remeasured to fair value with changes in fair value
recognized in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the
acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the
acquisition date. Any gains or losses arising from such remeasurement are recognized in profit
or loss.
Property, plant and equipment
All property, plant and equipment are stated at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the acquisition of the items. Cost may also
include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign
currency purchases of property, plant and equipment.
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Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item
will flow to us and the cost of the item can be measured reliably. The carrying amount of any
component accounted for as a separate asset is derecognized when replaced. All other repairs
and maintenance are charged to profit or loss during the reporting period in which they are
incurred.
Depreciation is calculated using the straight-line method to allocate their costs to their residual
values over their estimated useful lives as follows:
Buildings and warehouses 10-20 years
Logistics equipment 3-10 years
V ehicles 3-10 years
Office equipment 2-5 years
Lands Infinite useful life
Leasehold improvements Estimated useful lives or remaining lease terms,
whichever is shorter
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end
of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount.
These are included in profit or loss.
Financial liabilities at fair value through profit or loss
Before and during the Track Record Period, we entered into a series of share purchase
agreements with certain investors and issued Series Pre-A1 Preferred Shares, Series Pre-A2
Preferred Shares, Series A Preferred Shares, Series B Preferred Shares. Series B+ Preferred
Shares, Series C1 Preferred Shares, Series C2 Preferred Shares and Jet Global Series A
Preferred Shares.
We designated the convertible preferred shares as financial liabilities, of which the host
contracts are financial liabilities, at fair value through profit or loss, which are initially
recognized at fair value. Any directly attributable transaction costs are recognized as finance
costs in profit or loss.
The component of fair value changes relating to our own credit risk is recognized in other
comprehensive income/(loss). Amounts recorded in other comprehensive income/(loss) related
to credit risk are not subject to recycling in profit or loss, but are transferred to retained
earnings when realized. Fair value changes relating to market risk are recognized in profit or
loss.
The convertible preferred shares are classified as current liabilities unless we have an
unconditional right to defer settlement of the liability for at least 12 months after the reporting
period.
Derivatives are initially recognized at fair value on the date a derivative contract is entered into
and are subsequently remeasured to their fair value at the end of each reporting period.
FINANCIAL INFORMATION
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Impairment of investments and other financial assets
We assess on a forward-looking basis the expected credit loss associated with our debt
instruments carried at amortized cost and FVOCI. The impairment methodology applied
depends on whether there has been a significant increase in credit risk.
For trade receivables, we apply the simplified approach permitted by IFRS 9, which requires
expected lifetime losses to be recognized from initial recognition of the receivables, see Note
26 to the Accountant’s Report in Appendix I to this prospectus.
Goodwill
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not
amortized, but is tested for impairment annually, or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an entity include the carrying amount
of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The
allocation is made to those cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the goodwill arose. The units or
groups of units are identified at the lowest level at which goodwill is monitored for internal
management purposes, being the operating segments.
Fair value measurement of level 3 financial instruments
Our level 3 financial instruments mainly represent both assets and liabilities at fair value
through profit or loss, including (i) investments in the convertible bonds of Huisen Global
Limited (assets), (ii) investments in Windfall T&L SPC (assets), (iii) convertible preferred
shares of our Company (liabilities), (iv) certain preferred shares or redeemable shares of our
subsidiaries (liabilities), and (v) liabilities related to commitment to repurchase our preferred
shares. As these instruments are not traded in active markets, their fair values have been
determined by using applicable valuation techniques, which involve a significant degree of
management judgment and are inherently uncertain.
We applied the discounted cash flow method to determine the underlying equity value and
adopted option pricing method and equity allocation model (if applicable) to determine the
value of the abovementioned level 3 financial instruments. Considerable judgment is required
to interpret market data used in the valuation techniques. The use of different market
assumptions and/or estimation methodologies may have a material effect on the estimated fair
value amounts.
In relation to the valuation of our financial assets and financial liabilities measured within level
3 fair value measurement, our Directors adopted the following procedures: (i) engaged
independent external valuer, provided necessary financial and nonfinancial information so as
to enable the valuer to perform valuation procedures and discussed with the valuer on relevant
assumptions; (ii) carefully considered all information especially those non-market related
information input, which require management team’s assessments and estimates; and (iii)
reviewed the valuation results prepared by the valuer and inquire to understand whether
methodology is in compliance with valuation standards established by the International
V aluation Standards Council. Based on the above procedures, our Directors are of the view that
the value of our level 3 financial assets and financial liabilities is fair and reasonable, and our
financial statements are properly prepared.
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The Joint Sponsors have conducted relevant due diligence work, including but not limited to,
(i) reviewed the relevant notes in the Accountant’s Report as set out in Appendix I to this
prospectus for the valuation of certain financial assets and financial liabilities categorized as
level 3 fair value measurement; (ii) conducted interviews with us and the independent valuer
of our Company (the “ Independent Valuer ”) about the valuation methodology, the key basis
and assumptions for the valuation of financial assets and financial liabilities categorized as
level 3 fair value measurement; (iii) conducted interview with PricewaterhouseCoopers to
understand the work they have performed in relation to the valuation of the level 3 financial
assets and financial liabilities for the purpose of reporting on the historical financial
information, as a whole, of us; (iv) obtained and reviewed the valuation report prepared by the
Independent V aluer; and (v) obtained and reviewed the credentials of the Independent V aluer.
Details of the fair value measurement of financial instruments, particularly the fair value
hierarchy, the valuation techniques and key inputs, including significant unobservable inputs,
the relationship of unobservable inputs to fair value are disclosed in Notes 3, Note 24 and Note
29 of the Accountant’s Report in Appendix I to this prospectus which was issued by the
Reporting Accountant in accordance with Hong Kong Standard on Investment Circular
Reporting Engagement 200 “Accountants’ Reports on Historical Financial Information in
Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants for
the purpose of expressing an opinion on our historical financial information for the Track
Record Period as a whole in Appendix I to this prospectus. The Reporting Accountant’s opinion
on our historical financial information for the Track Record Period as a whole is set out on page
I-2 of Appendix I to this prospectus.
RESULTS OF OPERATIONS
The following table sets forth our consolidated income statements, both in absolute amounts
and as percentages of our total revenue, for the periods indicated. This information should be
read together with our consolidated financial statements and related notes included elsewhere
in this prospectus. The operating results in any period are not necessarily indicative of the
results that may be expected for any future period.
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Revenue ........... 1,535,425 100.0 4,851,800 100.0 7,267,428 100.0 3,402,543 100.0 4,030,439 100.0
Cost of revenue ....... (1,796,913) (117.0) (5,396,544) (111.2) (7,537,666) (103.7) (3,468,602) (101.9) (3,836,899) (95.2)
Gross (loss)/profit ...... (261,488) (17.0) (544,744) (11.2) (270,238) (3.7) (66,059) (1.9) 193,540 4.8
Selling, general and
administrative expenses . . (365,869) (23.8) (1,129,024) (23.3) (1,095,528) (15.1) (526,328) (15.5) (1,767,875) (43.9)
Research and development
expenses .......... (14,129) (0.9) (41,031) (0.8) (44,483) (0.6) (20,912) (0.6) (18,874) (0.5)
Net impairment losses on
financial assets ...... (9,488) (0.6) (41,320) (0.9) (37,219) (0.5) (25,033) (0.7) (11,814) (0.3)
Other income ........ 17,056 1.1 82,542 1.7 98,149 1.4 48,080 1.4 12,228 0.3
Other gains/(losses), net . . . 27,474 1.8 26,370 0.5 (40,246) (0.6) (31,659) (0.9) (43,423) (1.1)
FINANCIAL INFORMATION
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Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Operating loss ........ (606,444) (39.5) (1,647,207) (34.0) (1,389,565) (19.1) (621,911) (18.3) (1,636,218) (40.6)
Finance income ....... 1,965 0.1 9,476 0.2 22,002 0.3 8,025 0.2 11,367 0.3
Finance costs ......... (13,831) (0.9) (99,077) (2.0) (99,499) (1.4) (44,647) (1.3) (56,002) (1.4)
Finance cost, net ....... ( 1 1,866) (0.8) (89,601) (1.8) (77,497) (1.1) (36,622) (1.1) (44,635) (1.1)
Fair value change of
financial assets and
liabilities at fair value
through profit or loss . . . – – (4,383,532) (90.3) 3,050,694 42.0 2,028,151 59.6 1,020,747 25.3
Share of results of
associates ......... (323) (0.0) 1,208 (0.0) (302) (0.0) (222) 0.0 (84) 0.0
(Loss)/profit before
income tax ........ (618,633) (40.3) (6,119,132) (126.1) 1,583,330 21.8 1,369,396 40.2 (660,190) (16.4)
Income tax
(expense)/credit ...... (45,530) (3.0) (73,126) (1.5) (10,763) (0.2) 2,876 0.1 (6,579) (0.1)
(Loss)/profit for the
year/period ........ (664,163) (43.3) (6,192,258) (127.6) 1,572,567 21.6 1,372,272 40.3 (666,769) (16.5)
Attributable to:
Owners of the Company . . . (564,836) (36.8) (6,046,983) (124.6) 1,656,168 22.8 1,413,479 41.5 (640,967) (15.9)
Non-controlling interests . . . (99,327) (6.5) (145,275) (3.0) (83,601) (1.2) (41,207) (1.2) (25,802) (0.6)
(664,163) (43.3) (6,192,258) (127.6) 1,572,567 21.6 1,372,272 40.3 (666,769) (16.5)
NON-IFRS MEASURES
To supplement our consolidated results which are prepared and presented in accordance with
IFRS, we use adjusted (loss)/profit (a non-IFRS measure) and adjusted EBITDA (a non-IFRS
measure) as additional financial measures, which are not required by, or presented in
accordance with, IFRS. We believe that these non-IFRS measures facilitate comparisons of
operating performance from period to period and company to company by eliminating the
potential impact of items, such as certain non-cash items, transactions and items associated
with the Listing. The use of these non-IFRS measures has limitations as an analytical tool, and
you should not consider them in isolation from, as a substitute for, or superior to, our results
of operations or financial conditions as reported under IFRS. In addition, these non-IFRS
financial measures may be defined differently from similar terms used by other companies, and
may not be comparable to other similarly titled measures used by other companies.
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We define our adjusted loss for the year/period (a non-IFRS measure) as (loss)/profit for the
year/period adjusted by adding back (i) share-based payments and expenses, (ii) fair value
change of financial liabilities at fair value through profit or loss, and (iii) listing expenses. We
define our adjusted EBITDA for the year/period (a non-IFRS measure) as (loss)/profit for the
year/period adjusted by adding back (i) share-based payments and expenses, (ii) fair value
change of financial liabilities at fair value through profit or loss which will be converted into
equity upon Listing, (iii) listing expenses, (iv) depreciation and amortization, (v) finance
income, (vi) finance costs, and (vii) income tax expense/(credit). Specifically, (i) fair value
change of financial liabilities at fair value through profit or loss are non-cash in nature, because
all the preferred shares of the Company will be automatically converted into ordinary shares
upon the completion of the Listing, (ii) share-based compensation expenses relating to
employee benefits, share-based payments relating to equity transactions and other share-based
compensation expenses are non-cash expenses, (iii) listing expenses are related to Global
Offering, and (iv) depreciation and amortization, finance income, finance costs and income tax
expense/(credit) are items that we believe should be adjusted for when assessing our
underlying core performance, especially in making period-to-period comparisons of, and
assessing the profile of, our operating and financial performance.
The following table sets forth a reconciliation of our non-IFRS financial measures for the years
ended December 31, 2020, 2021 and 2022 and for the six months ended June 30, 2022 and 2023
to the nearest measures prepared in accordance with IFRS:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
(in US$ thousands)
(Unaudited)
(Loss)/Profit for the year/period . . (664,163) (6,192,258) 1,572,567 1,372,272 (666,769)
Add
Share-based payments and
expenses
(1) .............. 188,302 619,012 281,366 260,594 1,426,868
Fair value change of financial
liabilities at fair value through
profit or loss
(2) ........... – 4,383,532 (3,352,590) (2,061,022) (1,029,661)
Listing expenses ............ – 12,048 10,360 9,173 5,536
Adjusted loss for the year/period
(a non-IFRS measure) ...... (475,861) (1,177,666) (1,488,297) (418,983) (264,026)
Notes:
(1) Include share-based compensation expenses related to employee benefits, share-based payments related to
equity transactions and other share-based compensation expenses.
(2) Includes financial instruments which will be converted into equity upon Listing.
FINANCIAL INFORMATION
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--- page 357 ---
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
(in US$ thousands)
(Unaudited)
(Loss)/Profit for the
year/period ............. (664,163) (6,192,258) 1,572,567 1,372,272 (666,769)
Add
Share-based payments and
expenses
(1) ............. 188,302 619,012 281,366 260,594 1,426,868
Fair value change of financial
liabilities at fair value through
profit or loss
(2) .......... – 4,383,532 (3,352,590) (2,061,022) (1,029,661)
Depreciation and amortization . . 97,302 220,489 505,947 246,512 251,981
Listing expense ........... – 12,048 10,360 9,173 5,536
Finance income ........... (1,965) (9,476) (22,002) (8,025) (11,367)
Finance costs ............. 13,831 99,077 99,499 44,647 56,002
Income tax expense ......... 45,530 73,126 10,763 (2,876) 6,579
Adjusted EBITDA (a non-IFRS
measure) .............. (321,163) (794,450) (894,090) (138,725) 39,169
Southeast Asia ........... 266,561 427,436 331,582 156,737 184,060
China ................ (616,227) (1,206,014) (722,658) (222,158) (44,967)
Others
(3) .............. 1,652 (14,028) (168,789) (45,613) (66,431)
Unallocated (4) ........... 26,851 (1,844) (334,225) (27,691) (33,493)
Notes:
(1) Include share-based compensation expenses related to employee benefits, share-based payments related to
equity transactions and other share-based compensation expenses.
(2) Includes financial instruments which will be converted into equity upon Listing.
(3) Include our cross-border services and express delivery services in the New Markets.
(4) Represents (i) certain expenses, gains and losses, including general and administrative expenses, and exchange
gains and losses incurred at the group and holding company levels, and (ii) fair value change of financial assets
and liabilities of other group entities that will not be re-designated from liabilities to equity upon the
completion of the Global Offering, which amounted to US$301.9 million, US$32.9 million, and US$8.9
million for the year ended December 31, 2022, and the six months ended June 30, 2022 and 2023.
FINANCIAL INFORMATION
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--- page 358 ---
MAJOR COMPONENTS OF RESULTS OF OPERATIONS
Revenue
The following table sets forth breakdown of our revenue by type in absolute amount and as a
percentage of our total revenue, for the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Express delivery
services ..... 1,481,921 96.5 4,513,597 93.0 6,482,977 89.2 3,109,156 91.4 3,546,178 88.0
Cross-border
services ..... 10,074 0.6 291,896 6.0 707,773 9.8 252,644 7.4 448,536 11.1
Sale of
accessories . . . 34,166 2.2 30,350 0.6 23,730 0.3 14,105 0.4 8,465 0.2
Others (1) ...... 9,264 0.7 15,957 0.4 52,948 0.7 26,638 0.8 27,260 0.7
Total ........ 1,535,425 100.0 4,851,800 100.0 7,267,428 100.0 3,402,543 100.0 4,030,439 100.0
Note:
(1) Include our rental income and other revenue.
During the Track Record Period, we generated most of our revenues from express delivery
services we provided to our customers including our network partners, e-commerce platforms,
other enterprise customers and individual customers. Our customers also include our
unconsolidated regional operating entities, such as the SEA entities before we acquired the
controlling interest in them in 2021. In general, our revenue from express delivery services is
driven by our parcel volume and revenue per parcel. For parcels from our network partners, we
collect service fees for the use of our delivery network. Our network partners generally charge
each end customer a delivery service fee directly, and they can determine the price to end
customers based on their own costs which include the service fees paid to us and their own
operating costs. For parcels from unconsolidated regional operating entities, we charge these
entities for the use of our system and network. We also directly provide express delivery
services to certain enterprise customers and e-commerce platforms. In connection with such
services to major customers, we may also provide volume discounts based on various factors
such as seasonality and mix of services they use. Pricing for express delivery services is
generally determined based on parcel size and weight, shipping distance, speed of service and
market conditions. For regional operating entities, whether consolidated or unconsolidated, we
charge network service fees with respect to our technical services and their use of the J&T
brand and platform, among others, for the parcels picked up and delivered by these entities.
While such fees from consolidated regional operating entities are counted as “intra-group” by
nature, network service fees from unconsolidated regional operating entities are recognized as
our revenue. Network service fee per parcel we charge unconsolidated regional operating
entities in Indonesia and Thailand prior to the acquisition of SEA entities was broadly around
US$0.20 to US$0.24, subject to adjustment based on local market conditions and foreign
exchange impact.
FINANCIAL INFORMATION
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--- page 359 ---
Our revenues also include (i) revenues from our cross-border services, which include
cross-border small parcel shipments, freight forwarding, and international warehousing
solutions, (ii) revenues from sale of accessories, such as our J&T branded packing supplies and
apparel, and (iii) other revenues, primarily comprised of rental income from the lease of
reusable materials and logistics properties.
Revenue by geographic segment
The table below sets forth a breakdown of our revenue by geographic segment, in absolute
amount and as a percentage of our total revenue, for the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Southeast Asia . . . 1,046,504 68.2 2,377,544 49.0 2,381,726 32.8 1,177,929 34.6 1,246,076 30.9
China ....... 478,847 31.2 2,181,368 45.0 4,096,177 56.4 1,960,145 57.6 2,203,070 54.7
Others
(1) ...... 10,074 0.6 292,888 6.0 789,525 10.8 264,469 7.8 581,293 14.4
Total ........ 1,535,425 100.0 4,851,800 100.0 7,267,428 100.0 3,402,543 100.0 4,030,439 100.0
Note:
(1) Include revenue from our cross-border services and revenue from express delivery services in the New
Markets.
We generate substantially all of our revenue in Southeast Asia and China from express delivery
services. In Southeast Asia, we generated substantial amount of our revenue from Indonesia,
the Philippines, Malaysia and Thailand, aggregating to approximately 89.5% of our total
revenues from Southeast Asia during the Track Record Period. The table below illustrates the
growth in our parcel volume from express delivery services in Southeast Asia and China for
the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
(in millions)
Southeast Asia ............ 1,153.8 2,160.8 2,513.2 1,215.0 1,438.3
China ................. 2,083.5 8,334.3 12,025.6 5,602.3 6,445.6
FINANCIAL INFORMATION
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The following table sets forth our revenue per parcel for express delivery services in Southeast
Asia and China for the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
(US$ per parcel)
Southeast Asia ............ 0.91 1.10 0.95 0.97 0.87
China ................. 0.23 0.26 0.34 0.35 0.34
During the Track Record Period, our revenue per parcel in Southeast Asia was influenced by
the growth of the e-commerce industry in countries where we operate, market conditions, our
ability to improve pricing terms, the mix of parcel volumes from different countries across
Southeast Asia and fluctuation of foreign exchange rate against U.S. dollars, and our
acquisition of the SEA entities. See “– Period to Period Comparison of Results of Operations
– Y ear ended December 31, 2021 Compared to Y ear ended December 31, 2020 – Revenue” in
this section.
During the Track Record Period, the increase in our revenue per parcel in China was primarily
driven by our expanding network and reach to customers, our ability to provide quality services
and our ability to improve pricing terms, as well as a pricing stabilization trend as a result of
the PRC government’s policy guidance of fair competition in 2021.
Cost of Revenue
Our cost of revenue primarily consists of (i) fulfillment costs, (ii) line-haul costs, (iii) staff
costs, (iv) other labor costs, (v) depreciation and amortization, (vi) impairment losses, and (vii)
other cost of revenue.
The following table sets forth the components of our cost of revenue in absolute amount and
as a percentage, for the periods indicated:
Year ended December 31, Six months ended June 30
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Fulfillment
costs ...... 820,139 45.6 2,385,225 44.2 3,320,187 44.0 1,582,047 45.6 1,790,771 46.7
Line-haul costs . . 368,172 20.5 1,341,433 24.9 2,221,664 29.5 995,370 28.7 1,137,526 29.6
Staff costs .... 306,000 17.0 701,196 13.0 645,682 8.6 349,397 10.1 313,364 8.2
Other labor
costs ...... 93,149 5.2 308,451 5.7 382,250 5.1 179,712 5.2 206,453 5.4
Depreciation and
amortization . . 82,554 4.6 192,207 3.6 443,466 5.9 219,136 6.3 219,137 5.7
Impairment
losses ...... – – 250,292 4.6 219,080 2.9 – – – –
Others ....... 126,899 7.1 217,740 4.0 305,337 4.0 142,940 4.1 169,648 4.4
Total ....... 1,796,913 100.0 5,396,544 100.0 7,537,666 100.0 3,468,602 100.0 3,836,899 100.0
FINANCIAL INFORMATION
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--- page 361 ---
Fulfillment costs mainly include delivery cost we pay to our network partners and pick-up,
transit, sorting and delivery cost we pay to unconsolidated regional operations. Line-haul costs
include costs paid to third-party transportation service providers for additional capacity
utilized during peak periods, vehicle fuel costs and tolls, and air transportation expenses. Staff
costs include salary and benefits of our employees involved in warehousing, sorting, picking
up, packaging, shipping and delivery. Other labor costs primarily include costs in relation to
external labor forces that we use to supplement our internal capacity across our business
processes. Depreciation and amortization include expenses in relation to right of use assets in
relation to the operating lease of our logistics facilities and certain equipment under IFRS 16.
Impairment losses mainly include impairment of redundant property, plant and equipment that
we identified after the acquisition of BEST Express China. Other cost of revenue mainly
includes (i) cost of packaging materials, (ii) rental costs, comprised of costs for short-term
leases of certain warehouses and vehicles that are not capitalized, (iii) utility costs such as
water and electricity charges, and (iv) other miscellaneous operating costs and maintenance
expenses.
Cost of revenue by geographic segment
The following table sets forth our cost of revenue by geographic segment, in absolute amount
and as a percentage of our total cost of revenue, for the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Southeast
Asia ...... 734,551 40.9 1,715,413 31.8 1,905,724 25.3 954,892 27.5 1,025,958 26.7
China ...... 1,055,581 58.7 3,400,061 63.0 4,760,937 63.2 2,228,024 64.2 2,220,155 57.9
Others (1) .... 6,781 0.4 281,070 5.2 871,005 11.5 285,686 8.3 590,786 15.4
Total....... 1,796,913 100.0 5,396,544 100.0 7,537,666 100.0 3,468,602 100.0 3,836,899 100.0
Note:
(1) Include cost of revenue for our cross-border services and express delivery services in the New Markets.
Gross Profit/(Loss)
Gross profit/(loss) represents the difference between revenue and cost of revenue. We had a
gross loss of US$261.5 million in 2020, US$544.7 million in 2021 and US$270.2 million in
2022. Our negative gross margin was 17.0% in 2020, 11.2% in 2021 and 3.7% in 2022,
respectively. We had a gross profit of US$193.5 million for the six months ended June 30,
2023, compared to a gross loss of US$66.1 million for the six months ended June 30, 2022. Our
gross margin for the six months ended June 30, 2023 was 4.8%, compared to a negative gross
margin of 1.9% for the same period in 2022.
FINANCIAL INFORMATION
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--- page 362 ---
The following table sets forth our gross profit/(loss) and (negative) gross margin of our express
delivery services and our cross-border services for the period indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
Gross
profit/
(loss)
(Negative)
gross
margin
Gross
profit/
(loss)
(Negative)
gross
margin
Gross
profit/
(loss)
(Negative)
gross
margin
Gross
profit/
(loss)
(Negative)
gross
margin
Gross
profit/
(loss)
(Negative)
gross
margin
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Express delivery
services . . . (212,113) (14.3) (99,220) (2.2) 106,286 1.6 (44,299) (1.4) 237,360 6.7
Cross-border
services . . . 3,293 32.7 11,945 4.1 (62,397) (8.8) (10,590) (4.2) 5,718 1.3
In 2022, we incurred a gross loss in connection with our cross-border service primarily due to
our initiatives to expand our market shares and geographic coverage, which led to an increase
in our revenue and, to a greater extent, an increase in our cost of revenue for the cross-border
operations (mainly including an increase in air transportation expenses and fuel costs).
The following table sets forth our gross profit/(loss) and (negative) gross margin by geographic
segment for the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
Gross
profit/
(loss)
(Negative)
gross
margin
Gross
profit/
(loss)
(Negative)
gross
margin
Gross
profit/
(loss)
(Negative)
gross
margin
Gross
profit/
(loss)
(Negative)
gross
margin
Gross
profit/
(loss)
(Negative)
gross
margin
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Southeast Asia. . 311,953 29.8 662,131 27.8 476,002 20.0 223,037 18.9 220,118 17.7
China ..... (576,734) (120.4) (1,218,693) (55.9) (664,760) (16.2) (267,879) (13.7) (17,085) (0.8)
Others (1) .... 3,293 32.7 11,818 4.0 (81,480) (10.3) (21,217) (8.0) (9,493) (1.6)
Total ...... (261,488) (17.0) (544,744) (11.2) (270,238) (3.7) (66,059) (1.9) 193,540 4.8
Note:
(1) Include our cross-border services and express delivery services in the New Markets.
FINANCIAL INFORMATION
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--- page 363 ---
Selling, General and Administrative Expenses
Our selling, general and administrative expenses primarily consist of (i) staff costs, including
salaries, bonus, other compensation and share-based compensation expenses to our staff, (ii)
share-based payments related to equity transactions, (iii) other share-based compensation
expenses, (iv) office related expenses, (v) professional service fees including auditor’s
remuneration, listing-related service fees and fees for other consulting services, (vi) promotion
and marketing expenses relating to branding initiatives and advertising activities, (vii)
depreciation and amortization of our right-of-use assets in relation to the leases of our offices,
(viii) one-off impairment of goodwill based on peers’ performance and general industry trend,
and (ix) other selling, general and administrative expenses. The following table sets forth the
components of our selling, general and administrative expenses, in absolute amount and as a
percentage of our total selling, general and administrative expenses, for the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Staff costs ...... 288,059 78.8 722,309 64.0 695,065 63.4 427,376 81.2 232,979 13.2
Share-based payments
related to equity
transactions .... 27,229 7.4 236,418 20.9 37,262 3.4 16,490 3.1 1,258,131 71.2
Other share-based
compensation
expenses ..... – – – – – – – – 158,442 9.0
Office related
expenses ...... 12,339 3.4 24,072 2.1 42,624 3.9 19,960 3.8 15,120 0.9
Professional service
fees ........ 2,530 0.7 23,146 2.1 29,228 2.7 23,243 4.4 28,577 1.6
Promotion and
marketing
expenses ...... 15,509 4.2 18,036 1.6 24,709 2.3 3,775 0.7 24,795 1.4
Depreciation and
amortization .... 14,189 3.9 27,493 2.4 59,566 5.4 26,143 5.0 30,878 1.7
Impairment of
goodwill ...... – – – – 1 17,502 10.7 – – – –
Others ........ 6,014 1.6 77,550 6.9 89,572 8.2 9,341 1.8 18,953 1.0
Total ......... 365,869 100.0 1,129,024 100.0 1,095,528 100.0 526,328 100.0 1,767,875 100.0
Our staff costs during the Track Record Period included share-based compensation expenses
related to employee benefits of US$161.1 million, US$367.3 million, US$244.1 million,
US$244.1 million and US$10.3 million in 2020, 2021, 2022 and for the six months ended
June 30, 2022 and 2023, respectively. These share-based compensation expenses included
expenses related to share-based awards granted to employees and management under our share
incentive plan and shares granted to certain regional sponsors outside of our share incentive
plan in 2021. To determine the fair value of the shares granted, we appointed an external valuer
to provide assistance in the valuation of the fair value of the ordinary shares and equity
interests. The discounted cash flow method is adopted to determine the underlying equity fair
value of our Group and the equity allocation model is applied to determine the fair value of the
underlying ordinary share. See Note 26 to the Accountant’s Report in Appendix I to this
prospectus for the key assumptions in determining the fair value of the ordinary shares and
equity interests.
FINANCIAL INFORMATION
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Our share-based payments related to equity transactions were US$27.2 million, US$236.4
million, US$37.3 million, US$16.5 million and US$1,258.1 million in 2020, 2021, 2022 and
for the six months ended June 30, 2022 and 2023, respectively, which included expenses
related to (i) repurchases of Class A Shares and Class B Shares from certain key management
personnel and a shareholder in 2021, (ii) ordinary shares and preferred shares repurchased or
to be repurchased accompanying Series C2 Preferred Share issuances in 2021 and 2022, and
(iii) the fair value difference of certain preferred shares issued in financings and the total
consideration received due to lengthy settlement periods during the Track Record Period.
In addition, in the six months ended June 30, 2023, we also incurred other share-based
compensation expenses of US$158.4 million as we granted Class A Shares to certain regional
sponsors. See Note 26 to the Accountant’s Report in Appendix I for more details.
Research and Development Expenses
Our research and development expenses primarily consist of (i) staff cost, including salaries,
bonuses and share-based compensation expenses to our research and development personnel,
(ii) depreciation and amortization of intangible assets and (iii) others, primarily including
utilities, rent and other expenses necessary to support our research and development activities.
The following table sets forth the components of our research and development expenses, in
absolute amount and as a percentage of our total research and development expenses, for the
periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Staff cost (1) .... 1 1,196 79.2 38,256 93.3 39,332 88.4 18,884 90.3 16,684 88.4
Depreciation and
amortization . . 559 4.0 789 1.9 2,915 6.6 1,233 5.9 1,966 10.4
Others ....... 2,374 16.8 1,986 4.8 2,236 5.0 795 3.8 224 1.2
Total ........ 14,129 100.0 41,031 100.0 44,483 100.0 20,912 100.0 18,874 100.0
Note:
(1) Includes share-based compensation expenses related to employee benefits of nil, US$15.3 million, nil, nil and
nil, respectively, in 2020, 2021, 2022 and for the six months ended June 30, 2022 and 2023.
FINANCIAL INFORMATION
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--- page 365 ---
Net Impairment Losses on Financial Assets
Our net impairment losses on financial assets primarily consist of impairment losses on trade
receivables and other receivables and impairment losses on other non-current assets. The
following table sets forth the components of our net impairment losses on financial assets, in
absolute amount and as a percentage of our total net impairment losses on financial assets, for
the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Impairment losses
recognized, net of
reversal, on
– trade receivables ...... 3,694 38.9 39,004 94.4 34,997 94.0 29,539 118.0 9,225 78.1
– other receivables and
other non-current assets . . 5,794 61.1 2,316 5.6 2,222 6.0 (4,506) 18.0 2,589 21.9
Total ............... 9,488 100.0 41,320 100.0 37,219 100.0 25,033 100.0 11,814 100.0
Fair Value Change of Financial Liabilities at Fair Value Through Profit or Loss
Since our inception, we have completed several rounds of financing by issuing different classes
of convertible preferred shares. We accounted the preferred shares as financial liabilities at fair
value through profit or loss. The convertible preferred shares are typically recognized at fair
value, and subsequent to the initial recognition, the preferred shares are carried at fair value,
with changes in fair value recognized in the consolidated income statements. Fair value change
of financial liabilities at fair value through profit or loss was nil in 2020. We recorded a fair
value loss of financial liabilities at fair value through profit or loss of US$4,383.5 million in
2021, compared to a fair value gain of financial liabilities at fair value through profit or loss
of US$3,086.7 million in 2022 and US$2,032.0 million and US$1,027.5 million for the six
months ended June 30, 2022 and 2023, respectively.
Prior to the Global Offering, the preferred shares are not traded in any active market and the
fair value at respective reporting dates is determined using valuation techniques with the
assistance from an external valuer. We applied the discounted cash flow method to determine
the underlying equity value of our Group and adopted option-pricing method and equity
allocation model to determine the fair value of the preferred shares. See Note 29A to the
Accountant’s Report in Appendix I to this prospectus for the key assumptions in determining
the fair value of the preferred shares.
FINANCIAL INFORMATION
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Other Income
Other income primarily consists of (i) subsidy income, (ii) interest income on loans to related
parties and (iii) interest income on loans to third parties. The following table sets forth the
components of our other income, in absolute amount and as a percentage of our total other
income, for the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
US$ % US$ % US$ % US$ % US$ %
(in thousands, except for percentages)
(Unaudited)
Subsidy income ........ 1 1,466 67.2 71,415 86.5 87,035 88.7 42,497 88.4 10,791 88.2
Interest income on loans to
related parties ........ 1,305 7.7 4,412 5.4 10,175 10.4 5,088 10.6 – –
Interest income on loans to
third parties ......... 4,285 25.1 6,715 8.1 939 0.9 495 1.0 1,437 11.8
Total ............... 17,056 100.0 82,542 100.0 98,149 100.0 48,080 100.0 12,228 100.0
Our subsidy income was mainly related to (i) incentives in the PRC provided by local
governments based on the amounts of value-added tax paid, and (ii) subsidies provided by local
governments for economic recovery plans in Southeast Asian countries. We have received all
the subsidy income and there was no future obligation related to such subsidy income at the
end of each of the reporting period during the Track Record Period.
Other Gains/(Losses), Net
Our other gains/(losses), net, primarily consist of provisions for legal claims, exchange
gains/(losses), net, and net loss on disposal of property, plant and equipment during normal
course of business. The following table sets forth the components of our other gains/(losses),
net, for the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
(in US$ thousands)
(Unaudited)
Provisions for legal claims ..... – – (19,330) (17,164) –
Exchange gains/(losses), net .... 29,362 19,887 (17,338) (25,073) (12,686)
Net loss on disposal of property,
plant and equipment ....... (37) (1,424) (1,873) 3,470 (21,306)
Others ................. (1,851) 7,907 (1,705) 7,108 (9,431)
Total .................. 27,474 26,370 (40,246) (31,659) (43,423)
FINANCIAL INFORMATION
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Finance Costs, Net
Our finance costs, net, are primarily influenced by our finance income and finance costs. The
following table sets forth the components of our finance costs, net, for the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
(in US$ thousands)
(Unaudited)
Interest income ............ 1,965 9,476 22,002 8,025 11,367
Interest expenses on convertible
preferred shares .......... – (81,602) – – –
Interest expenses on lease
liabilities .............. (6,007) (13,860) (37,318) (18,239) (19,015)
Interest expenses on borrowings . (7,824) (3,615) (62,181) (26,408) (36,987)
Total .................. ( 1 1,866) (89,601) (77,497) (36,622) (44,635)
Income Tax Expenses
The enacted income tax rates applicable to our entities may fluctuate because of the
preferential tax treatments and changes in income before taxes. For more details, see
“– Taxation” in this section. In 2020, 2021, 2022 and the six months ended June 30, 2023, we
had income tax expenses of US$45.5 million, US$73.1 million, US$10.8 million and US$6.6
million, respectively. In the six months ended June 30, 2022, we had an income tax credit of
US$2.9 million.
Taxation
We are subject to various rates of income tax under different jurisdictions. The following
summarizes major factors affecting our applicable tax rates in the Cayman Islands, the BVI,
Hong Kong, the PRC, Indonesia, Malaysia, Vietnam, Thailand, Singapore, Cambodia and the
Philippines, which we believe are significant.
Cayman Islands
We were incorporated as an exempted company with limited liability under the Cayman
Companies Act and accordingly are not subject to income tax in the Cayman Islands.
BVI
Our subsidiaries established under the BVI Business Companies Act 2004, as amended, are not
subject to income tax in the BVI.
Hong Kong
Our subsidiaries incorporated in Hong Kong are subject to Hong Kong profits tax at a rate of
8.25% on assessable profits up to HK$2,000,000 and 16.5% on any part of assessable profits
over HK$2,000,000 for the years ended December 31, 2020, 2021 and 2022 and the six months
ended June 30, 2023.
FINANCIAL INFORMATION
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PRC
Our PRC subsidiaries, as well as our consolidated affiliated entities and their subsidiaries, were
subject to a statutory tax rate of 25% on the assessable profits for the years ended December
31, 2020, 2021 and 2022 and the six months ended June 30, 2023 based on the existing
legislation, interpretation and practices in respect thereof and under the PRC Enterprise Income
Tax Law (“ EIT Law ”), subject to preferential tax treatments available to qualified enterprises
in certain encouraged sectors of the economy.
Shenzhen Y unlu Information Technology Co., Ltd., our subsidiary in China, is qualified as a
software enterprise under the relevant PRC laws and regulations. Accordingly, it is exempted
from PRC enterprise income tax for two years since the first profit-making year, followed by
a 50% reduction in the tax rate of 25% for the next three years.
In addition, certain of our subsidiaries will benefit from a preferential tax rate of 15% if they
are located in certain PRC regions, such as certain western regions and special economic zones,
as specified in the relevant catalog of encouraged industries, subject to certain general
restrictions described in applicable laws and regulations.
During the Track Record Period, several subsidiaries in PRC were qualified as small and micro
enterprises under applicable PRC tax laws and enjoyed a 50% to 87.5% reduction in certain
statutory taxable income, and a preferential income tax rate of 20%.
Indonesia
For the years ended December 31, 2020, 2021 and 2022 and the six months ended June 30,
2023, entities incorporated in Indonesia were subject to the corporate income tax calculated
based on the applicable tax rate of 22% on the assessable profits of the subsidiaries in
accordance with the Indonesia tax laws and regulations.
Malaysia
Our subsidiaries in Malaysia are subject to Malaysia corporate income tax calculated based on
the applicable tax rate, the highest of which is at a rate of 24% on the assessable profits of the
subsidiaries in accordance with Malaysia tax laws and regulations.
Vietnam
Our subsidiaries in Vietnam are subject to Vietnam corporate income tax calculated based on
the applicable tax rate of 20% on the assessable profits of the subsidiaries in accordance with
Vietnam tax laws and regulations.
Thailand
Our subsidiaries in Thailand are subject to Thailand corporate income tax calculated based on
the applicable tax rate of 20% on the assessable profits of the subsidiaries in accordance with
Thailand tax laws and regulations.
FINANCIAL INFORMATION
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The Philippines
For the six months period ended June 30, 2020, our subsidiaries in the Philippines were subject
to the Philippines CIT, which was calculated based on the applicable tax rate of 30% on the
assessable profits of the subsidiaries in accordance with the Philippines tax laws and
regulations. The applicable CIT tax rate has been decreased from 30% to 25% since July 1,
2020.
EFFECTS OF FOREIGN EXCHANGE RATE FLUCTUATIONS
Our financial information as expressed in U.S. dollars may be materially affected by
fluctuations in foreign exchange rates, and the figures may be higher or lower than would be
the case if exchange rates were stable.
The following table sets forth the data of revenue, cost of revenue and gross profit/(loss) by
geographic segment for the year ended December 31, 2021 if exchange rates were the same as
in the year ended December 31, 2020:
Year ended December 31, 2021
Per financial statements Excluding currency translation effect Currency translation difference (1)
Revenue
Cost of
revenue
Gross
profit/(loss) Revenue
Cost of
revenue
Gross
profit/(loss) Revenue
Cost of
revenue
Gross
profit/(loss)
(in US$ thousands)
Southeast Asia .... 2,377,544 (1,715,413) 662,131 2,404,871 (1,735,969) 668,902 27,327 (20,556) 6,771
China ....... 2,181,368 (3,400,061) (1,218,693) 2,084,346 (3,248,833) (1,164,487) (97,022) 151,228 54,206
Others (2) ...... 292,888 (281,070) 11,818 292,887 (281,070) 11,817 (1) – (1)
Total ........ 4,851,800 (5,396,544) (544,744) 4,782,104 (5,265,872) (483,768) (69,696) 130,672 60,976
Notes:
(1) Represents, for each item, the difference between the amount as in our consolidated financial statements and
the amount excluding currency translation effect from 2020 to the period indicated.
(2) Include our cross-border services and express delivery services in the New Markets.
The table below illustrates the average revenue per parcel and average cost of revenue in
Southeast Asia and China for the year ended December 31, 2021 if exchange rates were the
same as the previous year:
Year ended December 31,
2021
(per financial
statements)
2021
(excluding
currency
translation effect)
(US$, per parcel)
Southeast Asia
– revenue per parcel .............................. 1.10 1.11
– cost of revenue per parcel .......................... 0.79 0.80
China
– revenue per parcel .............................. 0.26 0.25
– cost of revenue per parcel .......................... 0.41 0.39
FINANCIAL INFORMATION
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The following table sets forth the data of revenue, cost of revenue and gross profit/(loss) by
geographic segments for the year ended December 31, 2022 if exchange rates were the same
as in the year ended December 31, 2021:
Year ended December 31, 2022
Per financial statements Excluding currency translation effect Currency translation difference (1)
Revenue
Cost of
revenue
Gross
profit/(loss) Revenue
Cost of
revenue
Gross
profit/(loss) Revenue
Cost of
revenue
Gross
profit/(loss)
(in US$ thousands)
Southeast Asia .... 2,381,726 (1,905,724) 476,002 2,518,383 (2,013,010) 505,373 136,657 (107,286) 29,371
China ....... 4,096,177 (4,760,937) (664,760) 4,235,739 (4,923,178) (687,439) 139,562 (162,241) (22,679)
Others (2) ...... 789,525 (871,005) (81,480) 790,764 (872,328) (81,564) 1,239 (1,323) (84)
Total ........ 7,267,428 (7,537,666) (270,238) 7,544,886 (7,808,516) (263,630) 277,458 (270,850) 6,608
Notes:
(1) Represents, for each item, the difference between the amount as in our consolidated financial statements and
the amount excluding currency translation effect from 2021 to the period indicated.
(2) Include our cross-border services and express delivery services in the New Markets.
The table below illustrates the average revenue and cost per parcel in Southeast Asia and China
for the year ended December 31, 2022 if exchange rates were the same as the previous year:
Year ended December 31,
2022
(per financial
statements)
2022
(excluding
currency
translation effect)
(US$, per parcel)
Southeast Asia
– revenue per parcel .............................. 0.95 1.00
– cost of revenue per parcel .......................... 0.76 0.80
China
– revenue per parcel .............................. 0.34 0.35
– cost of revenue per parcel .......................... 0.40 0.41
FINANCIAL INFORMATION
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The following table sets forth the data of revenue, cost of revenue and gross profit/(loss) by
geographic segments for the six months ended June 30, 2023 if exchange rates were the same
as the six months ended June 30, 2022:
Six months ended June 30, 2023
Per financial statements Excluding currency translation effect Currency translation difference (1)
Revenue
Cost of
revenue
Gross
profit/(loss) Revenue
Cost of
revenue
Gross
profit/(loss) Revenue
Cost of
revenue
Gross
profit/(loss)
(in US$ thousands)
Southeast Asia .... 1,246,076 (1,025,958) 220,118 1,297,215 (1,065,735) 231,480 51,139 (39,777) 11,362
China ....... 2,203,070 (2,220,155) (17,085) 2,388,779 (2,407,319) (18,540) 185,709 (187,164) (1,455)
Others (2) ...... 581,293 (590,786) (9,493) 577,855 (587,608) (9,753) (3,438) 3,178 (260)
Total ........ 4,030,439 (3,836,899) 193,540 4,263,849 (4,060,663) 203,187 233,410 (223,763) 9,647
Notes:
(1) Represents for each item the difference between the amount as in our consolidated financial statements and the
amount excluding currency translation effect from 2022 to the period indicated.
(2) Include our cross-border services and express delivery services in the New Markets.
The table below illustrates the average revenue and cost per parcel in Southeast Asia and China
for the six months ended June 30, 2023 if exchange rates were the same as the six months ended
June 30, 2022:
Six months ended June 30,
2023
(per financial
statements)
2023
(excluding
currency
translation effect)
(US$, per parcel)
Southeast Asia
– revenue per parcel .............................. 0.87 0.90
– cost of revenue per parcel .......................... 0.71 0.74
China
– revenue per parcel .............................. 0.34 0.37
– cost of revenue per parcel .......................... 0.34 0.37
FINANCIAL INFORMATION
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PERIOD TO PERIOD COMPARISON OF RESULTS OF OPERATIONS
Six Months ended June 30, 2023 Compared to Six Months ended June 30, 2022
Revenue
Our revenue increased by 18.5% from US$3,402.5 million for the six months ended June 30,
2022 to US$4,030.4 million for the same period in 2023. The increase was primarily
attributable to the growth of our express delivery services and cross-border delivery services.
Express delivery services. The growth in our revenue from express delivery services is
primarily driven by parcel volume in Southeast Asia and China, since we generate substantially
all of our revenue from express delivery services in these two geographic segments. Our
revenue from express delivery services increased by 14.1% from US$3,109.2 million for the
six months ended June 30, 2022 to US$3,546.2 million for the same period in 2023, primarily
due to a 16.9% increase in our total parcel volume from 6.8 billion in the six months ended
June 30, 2022 to 8.0 billion for the same period in 2023, primarily driven by the growth of our
parcel volume in China and, to a lesser extent, the growth of our parcel volume in Southeast
Asia. For more details on the growth of our revenue from express delivery services in
Southeast Asia and China, see “– Revenue by geographic segment.”
Cross-border services. Our revenue from cross-border services increased by 77.5% from
US$252.6 million for the six months ended June 30, 2022 to US$448.5 million for the same
period in 2023, primarily attributable to the growth of our cross-border business and expanding
relationship with e-commerce platforms.
Sale of accessories. Revenue from our sale of accessories decreased by 40.0% from US$14.1
million for the six months ended June 30, 2022 to US$8.5 million for the same period in 2023,
despite the increase in our parcel volume, because we continued to promote green express
delivery practice, participated in more environmental initiatives and further encouraged the use
of reusable transfer bags and parcel boxes throughout our network for the six months ended
June 30, 2023.
Others. Our revenue from other services remained relatively stable at US$26.6 million for the
six months ended June 30, 2022 and US$27.3 million for the same period in 2023.
Revenue by geographic segment
Southeast Asia. Our revenue from Southeast Asia was US$1,177.9 million for the six months
ended June 30, 2022, compared to US$1,246.1 million for the same period in 2023. Our parcel
volume in Southeast Asia increased by 18.4% from 1,215.0 million for the six months ended
June 30, 2022 to 1,438.3 million for the same period in 2023, primarily attributable to the
increasing demand of delivery services and further diversification of our customer base
through various e-commerce and social e-commerce platform partners. Our revenue per parcel
in Southeast Asia was US$0.97 for the six months ended June 30, 2022 and US$0.87 for the
same period in 2023. The change in revenue per parcel was primarily attributable to (i) our
strategic pricing adjustments to stay advantageous in the highly competitive market in
Southeast Asia, and (ii) our continued efforts to expand the e-commerce platform customer
base and increase our parcel volume.
FINANCIAL INFORMATION
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China. Our revenue from China increased from US$1,960.1 million for the six months ended
June 30, 2022 to US$2,203.1 million for the same period in 2023, primarily driven by an
increase in parcel volume in China. Our parcel volume in China increased by 15.1% from
5,602.3 million for the six months ended June 30, 2022 to 6,445.6 million for the same period
in 2023, driven by our deepening cooperation with major e-commerce platforms. Our revenue
per parcel in China stayed relatively stable at US$0.35 and US$0.34 for the six months ended
June 30, 2020 and 2023, respectively.
Others. Other revenue increased from US$264.5 million for the six months ended June 30,
2022 to US$581.3 million for the same period in 2023, primarily attributable to the expansion
of our operations in the New Markets and our cross-border services.
Cost of Revenue
Our cost of revenue increased by 10.6% from US$3,468.6 million for the six months ended
June 30, 2022 to US$3,836.9 million for the same period in 2023, primarily attributable to
increases in our fulfillment costs and line-haul costs in line with the growing parcel volume.
Fulfillment costs. Our fulfillment costs increased by 13.2% from US$1,582.0 million for the
six months ended June 30, 2022 to US$1,790.8 million for the same period in 2023, consistent
with the expansion of our network and the increase in parcel volume, especially in China. Our
fulfillment costs accounted for 45.6% and 46.7% of our total cost of revenue for the six months
ended June 30, 2022 and 2023, respectively.
Line-haul costs. Our line-haul costs increased by 14.3% from US$995.4 million for the six
months ended June 30, 2022 to US$1,137.5 million for the same period in 2023. Our line-haul
costs accounted for 29.3% and 28.2% of our revenue for the six months ended June 30, 2022
and 2023, respectively. The increase was primarily due to (i) the growth of our cross-border
business, which incurred substantial air transportation expenses, and (ii) the expansion of our
fleets and increased usage of third-party transportation service providers to support our express
delivery operations.
Staff costs. Our staff costs decreased by 10.3% from US$349.4 million for the six months
ended June 30, 2022 to US$313.4 million for the same period in 2023. Our staff costs
accounted for 10.3% and 7.8% of our total revenue for the six months ended June 30, 2022 and
2023, respectively. The decrease was because we optimized our operations across our pickup
and delivery, sorting and transportation processes.
Other labor costs. Our other labor costs increased by 14.9% from US$179.7 million for the six
months ended June 30, 2022 to US$206.5 million for the same period in 2023, consistent with
the increase in our parcel volume. Other labor costs accounted for 5.3% and 5.1% of our
revenue for the six months ended June 30, 2022 and 2023, respectively.
Depreciation and amortization. Our depreciation and amortization costs remained stable at
US$219.1 million for the six months ended June 30, 2022 and for the same period in 2023,
because our depreciation and amortization costs relating to operations in China slightly
decreased after we fully integrated BEST Express China while our depreciation and
amortization relating to operations in Southeast Asia and the New Markets slightly increased
in the six months ended June 30, 2023.
Impairment losses . We did not record any impairment losses for the six months ended June 30,
2022 and 2023.
FINANCIAL INFORMATION
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Others. Our other cost of revenue increased by 18.7% from US$142.9 million for the six
months ended June 30, 2022 to US$169.6 million for the same period in 2023, primarily
attributable to an increase in miscellaneous costs including short-term rentals and utility costs,
among others.
Cost of revenue by geographic segment
Our cost of revenue for Southeast Asia increased from US$954.9 million for the six months
ended June 30, 2022 to US$1,026.0 million for the same period in 2023, primarily driven by
an increase in parcel volume in Southeast Asia from 1,215.0 million to 1,438.3 million in the
corresponding periods.
Our cost of revenue for China remained relatively stable at US$2,228.0 million for the six
months ended June 30, 2022 and US$2,220.2 million for the same period in 2023 despite the
growth in our parcel volume, as we optimized our operation structure, sorting network and
management to achieve economies of scale.
Our other cost of revenue increased by 106.8% from US$285.7 million for the six months
ended June 30, 2022 to US$590.8 million for the same period in 2023, primarily attributable
to an increase in parcel volume in the New Markets and growth of our cross-border services.
Gross profit/(loss)
As a result of the foregoing, we recorded a gross profit of US$193.5 million for the six months
ended June 30, 2023, compared to a gross loss of US$66.1 million for the six months ended
June 30, 2022, and we achieved a gross profit margin of 4.8% for the six months ended June
30, 2023, compared to a negative gross margin of 1.9% for the six months ended June 30, 2022.
Our gross profit from Southeast Asia decreased slightly from US$223.0 million for the six
months ended June 30, 2022 to US$220.1 million for the same period in 2023. Our gross
margin in Southeast Asia decreased slightly from 18.9% to 17.7% in the corresponding periods.
For China, we recorded a gross loss of US$267.9 million and US$17.1 million for the six
months ended June 30, 2022 and 2023, respectively. We expect our gross margin from our
express delivery services in China to improve in the future. See “Business – Business
Sustainability.”
For others, we had a gross loss of US$21.2 million for the six months ended June 30, 2022 and
a gross loss of US$9.5 million for the same period in 2023.
Selling, general and administrative expenses
Our selling, general and administrative expenses increased by 235.9% from US$526.3 million
for the six months ended June 30, 2022 to US$1,767.9 million for the same period in 2023. The
increase was primarily attributable to (i) a significant increase in share-based payments with
respect to our issuance of preferred shares to existing shareholders, and (ii) an increase in our
other share based compensation expenses relating to Class A Shares that we issued to regional
sponsors in the six month ended June 30, 2023, partially offset by a decrease of US$233.8
million in share-based compensation to staff. See “History and Corporate Structure – Pre-IPO
Investments” for more details. Our selling, general and administrative expenses, excluding
share-based compensation and share-based payments, increased from US$265.7 million for the
six months ended June 30, 2022 to US$341.0 million for the same period in 2023, primarily
due to an increase in promotion and marketing expenses that we incurred to enhance our brand
image, partially offset by a decrease in our staff cost driven by our optimized operations.
FINANCIAL INFORMATION
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Research and development expenses
Our research and development expenses were US$20.9 million for the six months ended June
30, 2022 and US$18.9 million in the same period in 2023.
Net impairment losses on financial assets
Our net impairment losses on financial assets decreased by 52.8% from US$25.0 million for
the six months ended June 30, 2022 to US$11.8 million for the same period in 2023, primarily
due to a decrease in impairment losses on trade receivables, which we recorded in the six
months ended June 30, 2022 for trade receivables that we consolidated into our financial
positions after our acquisition of BEST Express China.
Other income
Our other income decreased by 74.6% from US$48.1 million for the six months ended June 30,
2022 to US$12.2 million for the same period in 2023, primarily due to a decrease in our
subsidy income.
Other losses, net
Our other losses, net, decreased from US$31.7 million for the six months ended June 30, 2022
and to US$43.4 million for the same period in 2023, primarily due to (i) a decrease in
provisions for lawsuits arising from pre-acquisition operations of BEST Express China, and (ii)
a decrease in foreign exchange loss we recognized in 2023 of US$12.4 million, offset by an
increase in net losses on disposal of property, plant and equipment.
Operating loss
As a result of the foregoing, we had an operating loss of US$621.9 million for the six months
ended June 30, 2022 and an operating loss of US$1,636.2 million for the same period in 2023.
Fair value change of financial assets and liabilities at fair value through profit or loss
We recorded a fair value gain of financial assets and liabilities at fair value through profit or
loss of US$2,028.2 million and US$1,020.7 million for the six months ended June 30, 2022 and
2023, respectively, due to changes in the valuation of our Company. See Notes 24 and 29 to
the Accountant’s Report in Appendix I to this prospectus for details regarding the changes in
fair value changes of financial assets and liabilities at fair value through profit or loss.
Finance income
Our finance income increased by 42.5% from US$8.0 million for the six months ended June
30, 2022 to US$11.4 million for the same period in 2023, due to an increase in interest income
from bank deposits.
Finance costs
Our finance costs increased by 25.6% from US$44.6 million for the six months ended June 30,
2022 to US$56.0 million for the same period in 2023, primarily attributable to interest
expenses with respect to our borrowings from financial institutions.
FINANCIAL INFORMATION
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Income tax expense
We recorded an income tax credit of US$2.9 million and an income tax expense of US$6.6
million for the six months ended June 30, 2022 and for the same period in 2023, respectively.
The change was primarily attributable to the improved profitability in certain regions where we
operated, which led to income tax expenses instead of deferred tax assets.
(Loss)/profit for the period
As a result of the foregoing, we recorded a profit of US$1,372.3 million for the six months
ended June 30, 2022 and a loss of US$666.8 million for the same period in 2023.
Year ended December 31, 2022 Compared to Year ended December 31, 2021
Revenue
Our revenues increased by 49.8% from US$4,851.8 million in 2021 to US$7,267.4 million in
2022. The increase was primarily attributable to the growth of our express delivery services
and cross-border delivery services.
Express delivery services. The growth in our revenue from express delivery services is
primarily driven by parcel volume and revenue per parcel in Southeast Asia and China, since
we generate substantially all of our revenue from express delivery services in these two
geographic segments. Our revenue from express delivery services increased by 43.6% from
US$4,513.6 million in 2021 to US$6,483.0 million in 2022, primarily due to (i) a 39.0%
increase in our total parcel volume from 10.5 billion in 2021 to 14.6 billion in 2022, primarily
driven by growth of parcel volume in both Southeast Asia and China and, particularly, an
increase in our market share in China, and (ii) improved revenue per parcel in China, partially
offset by a decrease in revenue per parcel in Southeast Asia. For more details on the growth
of our revenue from express delivery services in Southeast Asia and China, see “– Revenue by
geographic segment.”
Cross-border services. Our revenue from cross-border services increased by 142.5% from
US$291.9 million in 2021 to US$707.8 million in 2022, primarily attributable to increased
market demands and our efforts in developing the business.
Sale of accessories. Revenue from our sale of accessories decreased by 21.8% from US$30.4
million in 2021 to US$23.7 million in 2022, despite the growth in our parcel volume, as we
encouraged the use of environmentally friendly practices such as reusable materials.
Others. Our revenue from other services increased by 231.8% from US$16.0 million in 2021
to US$52.9 million in 2022 primarily due to an increase in our rental income from the lease
of reusable materials and logistics properties.
Revenue by geographic segment
Southeast Asia. Our revenue from Southeast Asia was US$2,377.5 million in 2021, compared
to US$2,381.7 million in 2022. Our parcel volume in Southeast Asia increased by 16.3% from
2,160.8 million in 2021 to 2,513.2 million in 2022 while our market share remained relatively
stable at 22.3% and 22.5% in 2021 and 2022, respectively. The growth in our parcel volume
was attributable to the diversification of our customer base through additions of new
e-commerce and social e-commerce platform partners. Our revenue per parcel in Southeast
Asia was US$1.10 in 2021 and US$0.95 in 2022. The industry average revenue per parcel in
FINANCIAL INFORMATION
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--- page 377 ---
Southeast Asia is expected to be around US$1.0 in 2023 and 2024, according to Frost &
Sullivan. The change in revenue per parcel is primarily attributable to (i) our strategic pricing
adjustment to stay competitive in light of the market conditions in Southeast Asia, where
e-commerce platforms usually procure services from express delivery companies in bulk with
volume discounts, and (ii) the negative impact of currency translation on revenue from
Southeast Asia, see “– Effects of Fluctuations in Currency Exchange Rates.”
China. Our revenue from China increased by 87.8% from US$2,181.4 million in 2021 to
US$4,096.2 million in 2022, primarily driven by our increased parcel volume and revenue per
parcel in China. Our parcel volume in China increased by 44.3% from 8,334.3 million in 2021
to 12,025.6 million in 2022, and our market share increased from 7.7% in 2021 to 10.9% in
2022. The increases in our parcel volume and market share were driven by (i) our expanding
partnership with additional e-commerce platforms after our acquisition of BEST Express China
and addition of social e-commerce partners such as Douyin and Kuaishou, which led to more
diversified sources of parcels, and (ii) improved service quality and enhanced brand image that
facilitated the client sourcing abilities of ours and our network partners. Our revenue per parcel
in China increased from US$0.26 to US$0.34 in the same period, attributable to (i) our access
to additional e-commerce platforms and ability to source parcels from high-quality customers
or merchants, (ii) government policies and guidance supporting the stabilization of pricing in
China, and (iii) our continued efforts to optimize the management of our network partners and
improve service quality after we completed the integration of BEST Express China in the six
months ended June 30, 2022. The average revenue per parcel of express delivery operators with
network partner model in China is expected to be around US$0.3 in 2023 and 2024, according
to Frost & Sullivan.
Others. Other revenue increased from US$292.9 million in 2021 to US$789.5 million in 2022,
primarily attributable to the growth in our cross-border services.
Cost of revenue
Our cost of revenue increased by 39.7% from US$5,396.5 million in 2021 to US$7,537.7
million in 2022, primarily attributable to increases in our fulfillment costs, line-haul costs and
staff costs in line with the increased parcel volume.
Fulfillment costs. Our fulfillment costs increased by 39.2% from US$2,385.2 million in 2021
to US$3,320.2 million in 2022, consistent with the expansion of our network and the increase
in parcel volume. Our fulfillment costs accounted for 44.2% and 44.0% of our total cost of
revenue in the corresponding periods.
Line-haul costs. Our line-haul costs increased by 65.6% from US$1,341.4 million in 2021 to
US$2,221.7 million in 2022. Our line-haul costs accounted for 27.6% and 30.6% of our
revenue in the corresponding periods. The increase is primarily due to (i) the growth of our
cross-border business, which incurred substantial air transportation expenses upfront, (ii) the
expansion of our fleets and increased usage of third-party transportation services to support the
growth of our express delivery services across markets, including the New Markets that we
entered into in 2022, and (iii) the acquisition of the SEA entities in the second half of 2021,
after which we consolidated the line-haul costs incurred by the SEA entities into our results of
operations.
Staff costs. Our staff costs decreased by 7.9% from US$701.2 million in 2021 to US$645.7
million in 2022. Our staff costs accounted for 14.5% and 8.9%, respectively, of our total
revenue in 2021 and 2022. The decrease was primarily due to a decrease in headcount and other
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employee benefits as we optimized our operations globally and increased parcel volume from
regions where we cooperate with network partners, partially offset by an increase in staff costs
incurred in connection with our expansion in the New Markets in 2022.
Other labor costs. Our other labor costs increased by 23.9% from US$308.5 million in 2021
to US$382.3 million in 2022, in line with the increase in our parcel volume. Other labor costs
accounted for 6.4% and 5.3%, respectively, of our revenue in the corresponding periods.
Depreciation and amortization. Our depreciation and amortization increased by 130.7% from
US$192.2 million in 2021 to US$443.5 million in 2022, primarily attributable to depreciation
and amortization we recorded in relation to certain property, plant and equipment.
Impairment losses. We had impairment losses of US$250.3 million and US$219.1 million in
2021 and 2022, respectively, which we recorded primarily in connection with property, plants
and equipment that we identified as redundant and planned to dispose of in connection with our
integration of BEST Express China.
Others . Our other cost of revenue increased by 40.2% from US$217.7 million in 2021 to
US$305.3 million in 2022, which is mainly relating to increased utility expenses in relation to
our expanding infrastructure network and network capacity in China and the New Markets,
consistent with our expansion.
Cost of revenue by geographic segment
Our cost of revenue for Southeast Asia increased by 11.1% from US$1,715.4 million in 2021
to US$1,905.7 million in 2022, primarily driven by an increase in parcel volume in Southeast
Asia from 2,160.8 million to 2,513.2 million in the corresponding periods.
Our cost of revenue for China increased by 40.0% from US$3,400.1 million in 2021 to
US$4,760.9 million in 2022, consistent with the expansion of our business and the
corresponding increase in our parcel volume in China from 8.3 billion to 12.0 billion in the
corresponding periods.
Our other cost of revenue increased by 209.9% from US$281.1 million in 2021 to US$871.0
million in 2022, primarily attributable to the growth of our cross-border services and expansion
into the New Markets in 2022.
Gross profit/(loss)
As a result of the foregoing, our gross loss narrowed from US$544.7 million in 2021 to
US$270.2 million in 2022, and our negative gross margin narrowed from 11.2% in 2021 to
3.7% in 2022, primarily driven by the improving gross margin performance in China.
Our gross profit from Southeast Asia decreased from US$662.1 million in 2021 to US$476.0
million in 2022. Our gross margin in Southeast Asia decreased slightly from 27.8% to 20.0%
in 2022.
For China, we recorded a gross loss of US$1,218.7 million and US$664.8 million in 2021 and
2022, respectively. We expect our gross margin from our express delivery services in China to
improve in the future. See “Business – Business Sustainability.”
For others, we had a gross profit of US$11.8 million in 2021 and a gross loss of US$81.5
million in 2022.
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Selling, general and administrative expenses
Our selling, general and administrative expenses decreased by 3.0% from US$1,129.0 million
in 2021 to US$1,095.5 million in 2022. The decrease was primarily attributable to (i) a
decrease in share-based compensation as part of our staff cost of US$123.2 million and (ii) a
decrease in share-based payments related to equity transaction of US$199.2 million, offset
mainly by (i) impairment of goodwill that we recorded in 2021, see “– Analysis of Key Balance
Sheet Items – Assets – Intangible assets” in this section, (ii) increased depreciation and
amortization costs in relation to right-of-use assets, driven by an expansion of our office
premise during the same period, (iii) increased consumer advertising and marketing activities
including the engagement of our global brand ambassador, and (iv) an increase in other costs,
primarily driven by increased office expenses and IT services fees as we further expanded.
Research and development expenses
Our research and development expenses were US$41.0 million in 2021 and US$44.5 million
in 2022. Our research and development expenses, excluding share-based compensation, were
US$25.7 million and US$44.5 million in 2021 and 2022, respectively, and the change was
primarily attributable to an increase in employee benefits in relation to the expansion of our
research and development headcounts to support our global expansion since late 2021.
Net impairment losses on financial assets
Our net impairment losses on financial assets were US$41.3 million in 2021 and US$37.2
million in 2022. Our impairment losses on financial assets in 2021 and 2022 mainly consisted
of impairment on trade receivables in relation to certain terminated network partners and
impairment losses that were consolidated into our balance sheets primarily in connection with
the acquisition of BEST Express China.
Other income
Our other income increased by 18.9% from US$82.5 million in 2021 to US$98.1 million in
2022, primarily due to an increase in our subsidy income from the PRC government.
Other gains/(losses), net
We had other gains, net of US$26.4 million in 2021 and other losses, net of US$40.2 million
in 2022, primarily due to (i) provisions for lawsuits in relation to the restructuring and
integration of acquired operations of BEST Express China, and (ii) a foreign exchange loss we
recognized in 2022 of US$17.3 million due to fluctuations in exchange rates of local currencies
in countries where we operate against U.S. dollars.
Operating loss
As a result of the foregoing, we had an operating loss of US$1,647.2 million in 2021 and an
operating loss of US$1,389.6 million in 2022.
Fair value change of financial assets and liabilities at fair value through profit or loss
We recorded a fair value gain of financial assets and liabilities at fair value through profit or
loss of US$3,050.7 million in 2022, compared to a fair value loss of financial liabilities at fair
value through profit or loss of US$4,383.5 million in 2021. The fair value change of financial
liabilities at fair value through profit or loss was primarily influenced by the fair value of our
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convertible preferred shares, and the change in 2021 and 2022 was primarily attributable to the
changes in the valuation of our Company. See Note 29 to the Accountant’s Report in Appendix
I to this prospectus for details regarding the changes in fair value changes of financial
liabilities at fair value.
Finance income
Our finance income increased by 132.2% from US$9.5 million in 2021 to US$22.0 million in
2022, due to increased interest income from bank deposits.
Finance costs
Our finance costs stayed relatively stable at US$99.1 million in 2021 and US$99.5 million in
2022, primarily due to (i) an increase in interest expense on borrowings from US$3.6 million
in 2021 to US$62.2 million in 2022, driven by the interest expense in relation to the senior
notes we issued and certain credit facility we utilized in 2022, and (ii) an increase in interest
expense on lease liabilities from US$13.9 million in 2021 to US$37.3 million in 2022, partially
offset by a decrease in interest expense on convertible preferred shares from US$81.6 million
in 2021 to nil in 2022. In 2021, we declared a special dividend and accounted for such
distribution to holders of preferred shares as interest expenses.
Income tax expense
We recorded an income tax expense of US$73.1 million in 2021 and US$10.8 million in 2022,
and the decrease was mainly because we utilized the previous unrecognized tax losses in 2022.
(Loss)/profit for the year
As a result of the foregoing, we recorded a loss of US$6,192.3 million in 2021 and a profit of
US$1,572.6 million in 2022.
Year ended December 31, 2021 Compared to Year ended December 31, 2020
Revenue
Our revenues increased by 216.0% from US$1,535.4 million in 2020 to US$4,851.8 million in
2021. The increase was primarily attributable to the growth of our express delivery services
and cross-border services.
Express delivery services . The growth in our revenue from express delivery services is
primarily driven by parcel volume and revenue per parcel in Southeast Asia and China, since
we generate substantially all of our revenue from express delivery services in these two
geographic segments. Our revenue from express delivery services increased by 204.6% from
US$1,481.9 million in 2020 to US$4,513.6 million in 2021, primarily due to (i) a 224.2%
increase in our total parcel volume from 3.2 billion in 2020 to 10.5 billion in 2021 driven by
increases in parcel volume and market share in both Southeast Asia and China, and (ii) the
increase in revenue per parcel, in both Southeast Asia and China. For more details on the
growth of our revenue from express delivery services in Southeast Asia and China, see “–
Revenue by geographic segment”.
Cross-border services. Our revenue from cross-border services increased by 2,797.5% from
US$10.1 million in 2020 to US$291.9 million in 2021, primarily attributable to the ramping-up
of our cross-border services in 2021.
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Sale of accessories. Revenue from our sale of accessories decreased by 11.2% from US$34.2
million in 2020 to US$30.4 million in 2021, despite the increase in our parcel volume, because
we encouraged the use of reusable and durable packaging materials and packaging efficiency
throughout our network.
Others. Our revenue from other services increased by 72.2% from US$9.3 million in 2020 to
US$16.0 million in 2021, primarily driven by an increase in the rental income we generated
from properties we owned in Indonesia. In 2020 and 2021, some of the SEA entities in
Indonesia were leasees of our properties in Indonesia. After we acquired the SEA entities, such
revenue became intra-group income and we no longer recognize rental income in connection
with these properties rented and used by these SEA entities.
Revenue by geographic segment
Southeast Asia. Our revenue from Southeast Asia increased by 127.2% from US$1,046.5
million in 2020 to US$2,377.5 million in 2021, primarily driven by our increased parcel
volume and revenue per parcel. Our parcel volume in Southeast Asia increased by 87.3% from
1,153.8 million in 2020 to 2,160.8 million in 2021, and our market share increased from 16.4%
in 2020 to 22.3% in 2021. The increases in our parcel volume and market share were
attributable to (i) the rapid expansion of our network and operations through the regional
sponsor model in countries such as Indonesia, the Philippines, Malaysia and Thailand, which
together accounted for a majority of our total revenues from Southeast Asia during the Track
Record Period, and (ii) enhanced cooperation and relationship with e-commerce platforms as
we helped our e-commerce partners expand their business into multiple Southeast Asian
countries by providing critical e-commerce logistics and parcel delivery infrastructure.
Our revenue per parcel in Southeast Asia increased from US$0.91 in 2020 to US$1.10 in 2021,
despite certain volume discount we provided to major e-commerce customers. The increase in
revenue per parcel was primarily attributable to change of the service provided by us as a whole
after our acquisition and consolidation of the SEA entities in Indonesia and Thailand.
Historically, a portion of the express delivery orders were placed with and handled by the SEA
entities directly before we acquired them. Such parcel were delivered under our J&T brand. For
such parcels, the SEA entities were primarily responsible for the entire express delivery service
while we provided them with network services for our technology system support, training and
the SEA entities’ access to our logos and brand names, as well as sorting services in some
routes. In early 2021, after the SEA entities demonstrated their abilities to carry out stable
operations, we initiated the process to acquire the SEA entities, and began to consolidate the
operational capacities of the SEA entities and enhance our abilities to provide consistent,
quality customer services. As a result, we streamlined and standardized our delivery services
and other arrangements. After the acquisitions were consummated and the SEA entities became
part of us, we became primarily responsible for the entire express delivery service to customers
and charged full express delivery service fee for all parcels that were delivered through our
network.
China. Our revenue from China increased by 355.5% from US$478.8 million in 2020 to
US$2,181.4 million in 2021, primarily driven by our increased parcel volume and revenue per
parcel in China. Our parcel volume in China increased by 300.0% from 2,083.5 million in 2020
to 8,334.3 million in 2021, and our market share increased from 2.5% in 2020 to 7.7% in 2021.
The increases in our parcel volume and market share were attributable to expansion of our
collaboration with e-commerce platforms, competitive pricing and expanded network of
network partners, which allowed us to acquire a wide range of merchants across China. Our
revenue per parcel in China increased from US$0.23 to US$0.26 in the same period, primarily
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attributable to (i) the fast establishment and expansion of our network in China since we
entered into the market in 2020, leading to improved bargaining power with network partners,
and (ii) government policies and guidance supporting the stabilization of pricing in China.
Others. Our other revenue increased from US$10.1 million in 2020 to US$292.9 million in
2021, primarily attributable to our preparation activities in the New Markets and our expansion
of cross-border service offerings.
Cost of revenue
Our cost of revenue increased by 200.3% from US$1,796.9 million in 2020 to US$5,396.5
million in 2021, primarily attributable to increases in our fulfillment costs, line-haul costs and
employee benefits.
Fulfillment costs. Our fulfillment costs increased by 190.8% from US$820.1 million in 2020
to US$2,385.2 million in 2021, consistent with the expansion of our network and increase in
parcel volume. Our fulfillment costs accounted for 53.4% and 49.2% of our total revenue in the
corresponding periods. The slight decrease was primarily due to our acquisition of the SEA
entities in 2021, as we no longer incur fulfillment costs but incurred line-haul costs, staff costs
and other costs for parcels picked up or delivered by such entities.
Line-haul costs. Our line-haul costs increased by 264.3% from US$368.2 million in 2020 to
US$1,341.4 million in 2021, as we expanded our fleets and used more transportation services
from third-party service providers to support our rapid growth. Our line-haul costs accounted
for 24.0% and 27.6% of our total revenue in the corresponding periods, respectively. The
increase was primarily because (i) we continued to expand our transportation capacity in 2021,
and (ii) we acquired the SEA entities in 2021 and accounted for costs in relation to parcels
picked up and delivered by such entities as line-haul costs, whereas we recorded fulfillment
costs for services performed by the SEA entities before the acquisition.
Staff costs. Our staff costs increased by 129.1% from US$306.0 million in 2020 to US$701.2
million in 2021, primarily due to an increase in the number of operational employees globally
as we continued to expand our business. Our staff costs accounted for 19.9% and 14.5%,
respectively, of our total revenue in 2020 and 2021. The decrease was primarily attributable to
the expansion of our operations in China, where we predominantly relied on network partners
– instead of our own staff – to pick up and deliver parcels.
Other labor costs. Our other labor costs increased by 231.1% from US$93.1 million in 2020
to US$308.5 million in 2021, consistent with the significant increase in our parcel volume and
revenue. Other labor costs accounted for 6.1% and 6.4% respectively, of our revenue in the
corresponding periods.
Depreciation and amortization. Our depreciation and amortization costs increased by 132.8%
from US$82.6 million in 2020 to US$192.2 million in 2021, primarily due to the expansion of
our network, which included the addition of new sorting centers and warehouses leading to
increased depreciation costs of right-of-use assets and plant and equipment.
Impairment. Our impairment increased from nil in 2020 to US$250.3 million in 2021, primarily
due to the impairment losses we recorded in connection with certain redundant property, plant
and equipment in connection with the process to integrate BEST Express China.
Others . Our other cost of revenue increased by 71.6% from US$126.9 million in 2020 to
US$217.7 million in 2021, mainly relating to increased utility expenses and other
miscellaneous expenses in relation to our expansion into the China market.
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Cost of revenue by geographic segment
Southeast Asia. Our cost of revenue for Southeast Asia increased from US$734.6 million in
2020 to US$1,715.4 million in 2021, primarily because (i) our parcel volume in Southeast Asia
increased from 1,153.8 million to 2,160.8 million in the corresponding period, and (ii) we
accounted for all costs in relation to parcels collected and delivered by the SEA entities after
we acquired them in 2021, whereas we paid service fees, including pickup, sorting and delivery
fees, for the portion of service that the SEA entities provided to us before the acquisition.
China. Our cost of revenue for China increased from US$1,055.6 million in 2020 to
US$3,400.1 million in 2021, consistent with the expansion of our network and the increase in
our parcel volume from 2.1 billion to 8.3 billion in the corresponding period.
Others. Our cost of revenue for other operations increased by 4,045.0% from US$6.8 million
in 2020 to US$281.1 million in 2021, primarily attributable to the expansion of our
cross-border services and, to a lesser extent, our activities in the New Markets in preparation
for entering into these markets.
Gross profit/(loss)
As a result of the foregoing, our gross loss increased by 108.3% from US$261.5 million in
2020 to US$544.7 million in 2021, primarily attributable to the ramping-up of our service
offerings in China.
Our gross profit from Southeast Asia increased from US$312.0 million in 2020 to US$662.1
million in 2021, primarily due to the growth in the express delivery markets and the increase
in our market shares in Southeast Asian countries. Our gross margin in Southeast Asia
decreased slightly from 29.8% to 27.8% in 2021, primarily because we offered certain volume
discount to our major e-commerce customers as we delivered increased volumes of parcels for
them in 2021.
For China, we recorded a gross loss of US$576.7 million and US$1,218.7 million in 2020 and
2021, respectively. The increase in our gross loss in China is primarily attributable to (i)
intense competition in China’s express delivery market that we faced during the expansion of
our network and (ii) expenditures in relation to our expansion, such as costs of operating
equipment and facilities, costs of leases and other operating costs. Our negative gross margin
improved from 120.4% in 2020 to 55.9% in 2021, reflecting our improved operational
efficiency with strong network effects, economies of scale and adjustments to our pricing
terms.
Our gross profit from other geographical segments increased by 258.9% from US$3.3 million
in 2020 to US$11.8 million in 2021.
Selling, general and administrative expenses
Our selling, general and administrative expenses increased by 208.6% from US$365.9 million
in 2020 to US$1,129.0 million in 2021, primarily due to (i) an increase in our staff costs,
primarily attributable to increased employee benefit expenses in relation to share-based awards
granted to employees and management, shares granted to certain regional sponsors, and (ii) an
increase in share-based payments related to equity transactions, attributable to (A) repurchases
of Class A Shares and Class B Shares from certain shareholders in 2021, (B) Ordinary Shares
and preferred shares repurchased or to be repurchased accompanying Series C2 preferred share
issuances in 2021, and (C) the difference between the fair value of certain preferred shares
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issued in financings and the total consideration received due to lengthy settlement periods in
2020 and 2021 and (iii) an increase in other selling, general and administrative expenses,
driven by growth of expenses such as IT service fees that we incurred to expand our network.
Research and development expenses
Our research and development expenses increased by 190.4% from US$14.1 million in 2020
to US$41.0 million in 2021, primarily due to share-based expenses of US$15.3 million in
relation to share-based awards we granted to our research and development personnel and
increased wage expense driven by an increase in research and development headcount.
Net impairment losses on financial assets
Our net impairment losses on financial assets increased by 335.5% from US$9.5 million in
2020 to US$41.3 million in 2021, primarily due to an increase of 955.9% in loss allowance for
trade receivables from US$3.7 million in 2020 to US$39.0 million in 2021, primarily in
relation to trade receivables we consolidated into our balance sheet as part of the acquisition
of BEST Express China.
Other income
Our other income increased by 383.9% from US$17.1 million in 2020 to US$82.5 million in
2021, primarily due to an increase in our subsidy income from the Chinese government and
local governments in Southeast Asian countries.
Other gains, net
Our other gains, net decreased by 4.0% from US$27.5 million in 2020 to US$26.4 million in
2021, primarily due to a decrease in our exchange gains, net, driven by the fluctuation in
exchange rates of local currencies in countries where we operate against U.S. dollars.
Operating loss
As a result of the foregoing, we had an operating loss of US$606.4 million in 2020 and an
operating loss of US$1,647.2 million in 2021.
Fair value change of financial assets and liabilities at fair value through profit or loss
We recorded fair value changes of financial assets and liabilities at fair value through profit or
loss of nil and US$4,383.5 million in 2020 and 2021, respectively, primarily due to an increase
of the fair value of our convertible preferred shares, as a result of an increase in our Company’s
equity value and adjustment of certain rights and obligations of our convertible preferred
shares.
Finance income
Our finance income increased by 382.2% from US$2.0 million in 2020 to US$9.5 million in
2021, primarily due to an increase in interest income from bank deposits.
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Finance costs
Our finance costs increased by 616.3% from US$13.8 million in 2020 to US$99.1 million in
2021, primarily due to (i) an increase in interest expense on convertible preferred shares from
nil to US$81.6 million, as we declared a special dividend in 2021 and accounted for such
distribution to holders of preferred shares as interest expense, and (ii) an increase in interest
expense on lease liabilities from US$6.0 million in 2020 to US$13.9 million in 2021, partially
offset by a decrease in interest expense on borrowings from US$7.8 million in 2020 to US$3.6
million in 2021.
Income tax expense
Our income tax expense was US$45.5 million and US$73.1 million in 2020 and 2021,
respectively. The increase was primarily due to the increase in our taxable income, particularly
for some of our regional operating entities in Southeast Asia.
Loss for the year
As a result of the foregoing, our loss was US$664.2 million in 2020 and US$6,192.3 million
in 2021.
ANALYSIS OF KEY BALANCE SHEET ITEMS
The table below sets forth selected information from our consolidated statements of financial
position as of the dates indicated, which have been extracted from our audited consolidated
financial statements included in Appendix I to this prospectus:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Total non-current assets ............ 628,286 3,028,218 3,089,262 3,325,390
Total current assets ............... 1,614,754 3,516,424 2,846,297 2,747,389
Total assets .................... 2,243,040 6,544,642 5,935,559 6,072,779
Total non-current liabilities .......... 1,966,519 10,975,327 9,188,190 9,681,802
Total current liabilities ............. 1,147,020 2,205,739 1,731,617 1,920,567
Total liabilities ................. 3 , 1 13,539 13,181,066 10,919,807 11,602,369
Net current assets ............... 467,734 1,310,685 1,114,680 826,822
Share capital ................... 7 1 4 1 4 1 7
Share premium .................. 33,184 607,734 603,829 598,256
Other reserves .................. (166,468) (525,822) (434,108) (243,798)
Accumulated losses . .............. (625,953) (6,672,936) (5,016,768) (5,657,735)
Equity attributable to owners of
the Company ................. (759,230) (6,591,010) (4,847,033) (5,303,260)
Non-controlling interests ........... ( 1 1 1,269) (45,414) (137,215) (226,330)
Total deficits ................... (870,499) (6,636,424) (4,984,248) (5,529,590)
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The following table sets forth our assets and liabilities as of the dates indicated:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Non-current assets
Investment properties .............. 53,065 718 507 314
Property, plant and equipment ......... 303,032 1,107,564 1,052,884 1,102,229
Right-of-use assets ............... 186,762 604,212 481,207 574,687
Intangible assets ................. 6,014 1,129,194 963,569 981,970
Investments accounted for using the equity
method ..................... 3 1 9 5,552 3,590 2,545
Deferred income tax assets .......... 5,001 9,848 43,107 51,576
Other non-current assets ............ 74,093 171,130 63,348 79,750
Financial assets at fair value through profit
or loss ..................... – – 481,050 532,319
628,286 3,028,218 3,089,262 3,325,390
Current assets
Inventories .................... 15,954 29,359 29,120 21,956
Trade receivables ................ 180,760 334,876 513,954 622,560
Prepayments, other receivables and other
assets ...................... 745,363 882,190 703,010 801,815
Financial assets at fair value through profit
or loss ..................... 71,324 41,581 16,440 9,493
Restricted cash .................. 9 2 8 125,970 79,725 96,301
Cash and cash equivalents ........... 600,425 2,102,448 1,504,048 1,195,264
Total current assets .............. 1,614,754 3,516,424 2,846,297 2,747,389
Total assets .................... 2,243,040 6,544,642 5,935,559 6,072,779
Non-current liabilities
Borrowings .................... 36,917 29,062 1,020,897 1,010,871
Lease liabilities ................. 1 1 1,378 391,232 341,471 359,559
Deferred tax liabilities ............. 3,051 33,084 22,407 15,528
Employee benefit obligations ......... 2,258 9,185 7,765 11,322
Financial liabilities – redemption liabilities
of shares of JNT KSA (1) .......... – 25,458 30,583 33,495
Financial liabilities at fair value through
profit or loss .................. 1,812,915 10,487,306 7,765,067 8,251,027
Total non-current liabilities ......... 1,966,519 10,975,327 9,188,190 9,681,802
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Year ended December 31,
As of
June 30
2020 2021 2022 2023
(in US$ thousands)
Current liabilities
Trade payables .................. 225,452 577,065 484,215 471,666
Advances from customers ........... 137,224 291,362 209,925 241,441
Accruals and other payables .......... 304,362 915,352 776,378 829,146
Lease liabilities ................. 63,639 207,490 151,195 196,583
Current income tax liabilities ......... 9,200 20,756 32,424 20,152
Borrowings .................... 407,143 59,965 77,480 151,563
Financial liabilities at fair value through
profit or loss .................. – – – 10,016
Financial liabilities – ordinary share
redemption liabilities ............. – 133,749 – –
Total current liabilities ............ 1,147,020 2,205,739 1,731,617 1,920,567
Note:
(1) Relating to certain shares in JNT KSA (one of our regional operating entities), which are held by a third-party
investor entitled to certain exit rights. See Note 26 to the Accountant’s Report in Appendix I to this prospectus.
Assets
Trade receivables
Our trade receivables are primarily amounts due from customers for goods sold or services
performed in relation to services provided to certain e-commerce platforms customers and
cross-border customers.
The following table sets forth our trade receivables as of the dates indicated:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Trade receivables ................ 187,083 379,447 561,166 666,650
Less: provision for impairment ........ (6,323) (44,571) (47,212) (44,090)
Total ........................ 180,760 334,876 513,954 622,560
Our trade receivables increased by 85.3% from US$180.8 million as of December 31, 2020 to
US$334.9 million as of December 31, 2021, and further increased by 53.5% to US$514.0
million as of December 31, 2022, and continued to increase by 18.8% to US$622.6 million as
of June 30, 2023, primarily due to the growth of the express delivery services provided directly
to e-commerce platforms during the Track Record Period and the growth of our cross-border
business in 2021, 2022 and the six months ended June 30, 2023.
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We generally allow a credit period of 30 to 120 days to our e-commerce and other customers.
The following table sets forth an aging analysis of our trade receivables, based on the invoice
date, as of the dates indicated:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Within 1 month ................. 124,814 297,578 366,405 464,976
1 – 4 months ................... 56,255 58,437 156,515 167,461
4 – 6 months ................... 5,006 11,835 768 2,888
6 – 9 months ................... 7 0 5 5,302 1,702 9,295
9 – 12 months .................. 1 0 5 2,425 4,917 2,393
Above 12 months ................ 1 9 8 3,870 30,859 19,637
Less: provision for impairment ........ (6,323) (44,571) (47,212) (44,090)
Total ........................ 180,760 334,876 513,954 622,560
We apply the simplified approach under IFRS 9, which requires expected lifetime losses to be
recognized from our initial recognition of the receivables. The provision matrix is based on
historical observed default rates over the expected life of the trade receivables with similar
credit risk characteristics and forward-looking estimates. As of December 31, 2020, 2021 and
2022 and June 30, 2023, we made provisions for the impairment of our trade receivables of
US$6.3 million, US$44.6 million, US$47.2 million and US$44.1 million, respectively. Our
provisions as of December 31, 2021 and 2022 and June 30, 2023 were primarily related to
receivables from terminated network partners of BEST Express China after the acquisition and
during the subsequent integration of BEST Express China.
The following table sets forth the turnover days of our trade receivables for the periods
indicated:
Year ended December 31,
Six months
ended
June 30,
2020 2021 2022 2023
Trade receivables turnover days (1) ...... 27.6 19.4 21.3 25.5
Note:
(1) Calculated by dividing the average balance of trade receivables by revenues for the relevant period multiplied
by the number of days during the period. Average balance equals the sum of the beginning balance and ending
balance for the period divided by two.
Our trade receivables turnover days decreased from 27.6 days in 2020 to 19.4 days in 2021,
primarily due to the significant increase in our revenue from operations in China while the
beginning balance of trade receivables in 2021 was relatively small as we were still ramping
up our operations in China at that time. Our trade receivables turnover days slightly increased
from 19.4 days in 2021 to 21.3 days in 2022, due to the growth of express delivery business
provided to certain e-commerce platforms in Southeast Asia and the growth in cross-border
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business. Our trade receivables turnover days further increased to 25.5 in the six months ended
June 30, 2023, primarily because of the continuous growth of our cross-border operations,
which typically have longer credit terms due to the nature of the operation, and the credit terms
we granted to new e-commerce platform partners.
As of August 31, 2023, we had settled approximately US$536.6 million, or 86.2%, of our trade
receivables as of June 30, 2023.
Prepayments, other receivables and other assets
Our prepayments, other receivables and other assets primarily consist of deposits, prepaid
taxes, receivables from our financing activity consideration, loans to related parties, loans to
third parties, prepaid expenses and others. During the Track Record Period, we entered into
loans agreements with our related parties and third parties. We expect that substantially all the
non-trade balances with related parties will be settled prior to Listing. During the Track Record
Period, loans to related parties and third parties comply with relevant laws and regulations,
including but not limited to the required interest rate cap as well as other relevant terms and
conditions of loans between enterprises that are not financial institutions.
The following table sets forth our prepayments, other receivables and other assets as of the
dates indicated:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Loans to related parties ............. 70,453 47,364 – –
Loans to third parties .............. 248,553 16,155 1,674 3,225
Receivable of Series A Preferred Share
consideration .................. 236,862 – – –
Receivable of Series C1 Preferred Share
consideration .................. – 30,000 – –
Receivable of Series C2 Preferred Share
consideration .................. – 159,922 – –
Prepaid V A T and other taxes ......... 71,911 422,339 482,667 512,000
Deposits ...................... 37,356 81,379 77,151 98,487
Prepaid expenses ................. 22,431 65,333 76,255 97,389
Others ....................... 64,211 66,298 66,302 92,446
Less: allowance for credit losses ....... (6,414) (6,600) (1,039) (1,732)
Total ........................ 745,363 882,190 703,010 801,815
Our prepayments, other receivables and other assets increased by 18.4% from US$745.4
million as of December 31, 2020 to US$882.2 million as of December 31, 2021, primarily due
to (i) an increase in deposits, which primarily represent deposits for our leased properties and
transportation services and reflected our consolidation of the financial position of BEST
Express China, (ii) an increase in prepaid V A T and other taxes from US$71.9 million as of
December 31, 2020 to US$422.3 million as of December 31, 2021, reflecting the prepaid tax
that was recorded by BEST Express China in 2021 and consolidated into our financial positions
and the prepaid tax relating our own operations in 2020, (iii) a decrease in loans to third parties,
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as a one-year loan of US$248.6 million with an interest rate of 0.4% that we extended to
support the development and growth of our business, particularly for the SEA entities, was
fully repaid in 2021, and (iv) a decrease in loans to related parties from US$70.5 million to
US$47.4 million.
Our prepayments, other receivables and other assets decreased from US$882.2 million as of
December 31, 2021 to US$703.0 million as of December 31, 2022, primarily due to (i) a
decrease in our loans extended to related parties from US$47.4 million to nil, (ii) a decrease
in our loans extended to third parties from US$16.2 million to US$1.7 million, and (iii)
settlement of the receivable of Series C1 Preferred Share consideration and Series C2 Preferred
Share consideration of US$30.0 million and US$159.9 million, respectively, partially offset by
an increase in prepaid V A T and other taxes from US$422.3 million to US$482.7 million.
Our prepayments, other receivables and other assets increased from US$703.0 million as of
December 31, 2022 to US$801.8 million as of June 30, 2023, primarily due to (i) an increase
in prepaid V A T and other taxes from US$482.7 million to US$512.0 million, driven by the V A T
we paid in connection with our purchase of materials, goods equipments and professional
services to support our expansion, (ii) an increase in deposits of US$21.3 million as
performance security deposits in relation to the construction of certain facilities in China and
our performance of express delivery services during the June promotional season, (iii) an
increase in prepaid expenses of US$21.1 million mainly attributable to the increasing operating
cost and expenses and (iv) an increase in others, attributable to the advance payments to
Fengwang network partners who decided to exit the network.
As of August 31, 2023, we had settled approximately US$329.0 million, or 41.0%, of our
prepayments, other receivables and other assets outstanding as of June 30, 2023, and
approximately US$309.6 million, or 69.1%, of our prepaid V A T as of June 30, 2023. As of
August 31, 2023, we did not have loans to third parties in prepayments, other receivables and
other assets.
Inventories
Our inventories primarily consist of the accessories such as our J&T-branded packing supplies
and apparels, as well as consumables including handheld terminals and packing materials.
Our inventories increased by 84.0% from US$16.0 million as of December 31, 2020 to
US$29.4 million as of December 31, 2021, due to our consolidation of the financial position
of BEST Express China. Our inventories stayed relatively stable at US$29.1 million as of
December 31, 2022 compared to US$29.4 million as of December 31, 2021. Our inventories
decreased from US$29.1 million as of December 31, 2022 to US$22.0 million as of June 30,
2023 due to our more efficient inventory management.
Our inventories turnover days were 2.2 days in 2020, 1.5 days in 2021, 1.4 days in 2022 and
1.2 days for the six months ended June 30, 2023. The decrease was primarily driven by the
increased cost of revenue consistent with the expansion of our business, while our average
balance of inventories remained relatively stable. The inventories turnover day is calculated by
dividing the average balance of inventories by cost of revenue for the relevant period
multiplied by the number of days during the period. Average balance equals the sum of the
beginning balance and ending balance for the period divided by two.
As of August 31, 2023, we had utilized US$22.0 million, or 100.0%, of our inventories as of
June 30, 2023.
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Investment properties
Our investment properties primarily consist of buildings and warehouses that we hold and lease
to certain third parties including certain SEA entities before we acquired them in 2021.
Our investment properties decreased from US$53.1 million as of December 31, 2020 to US$0.7
million as of December 31, 2021. In 2021, all investment properties that were used and leased
to SEA entities became our properties, plant and equipment after our acquisition of the SEA
entities and rent paid by the SEA entities became intra-group by nature. We continued to lease
our spare building and warehouses we owned in Indonesia to certain third parties. Our
investment properties amounted to US$0.3 million as of June 30, 2023.
Property, plant and equipment
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Logistics equipment ............... 60,137 425,576 471,066 498,983
V ehicles ...................... 144,492 292,170 280,810 268,809
Construction in progress ............ 36,406 208,457 88,879 87,290
Office equipment ................ 33,158 53,672 61,385 64,176
Land, Building and warehouses ........ 15,320 69,066 113,224 148,024
Others ....................... 13,519 58,623 37,520 34,947
Total ........................ 303,032 1,107,564 1,052,884 1,102,229
Our property, plant and equipment further increased by 265.5% from US$303.0 million as of
December 31, 2020 to US$1,107.6 million as of December 31, 2021, primarily due to (i) an
increase in the value of logistic equipment from US$60.1 million as of December 31, 2020 to
US$425.6 million as of December 31, 2021, (ii) an increase in vehicle from US$144.5 million
as of December 31, 2020 to US$292.2 million as of December 31, 2021, and (iii) an increase
in construction in progress from US$36.4 million as of December 31, 2020 to US$208.5
million as of December 31, 2021, which were primarily due to our investment in sorting centers
to support the expansion of our network and our consolidation of the financial position of
BEST Express China since December 8, 2021.
Our property, plant and equipment was US$1,107.6 million as of December 31, 2021 and
US$1,052.9 million as of December 31, 2022 and US$1,102.2 million as of June 30, 2023,
primarily attributable to an increase in logistic equipment, as well as land, building warehouse
to support our business expansion, partially offset by a decrease in construction in progress
reflecting the completion of certain construction and renovation projects.
In 2021 and 2022, subsequent to the acquisition and integration of BEST Express China, we
identified certain sorting centers which would be closed upon the termination of relevant lease
and correspondingly recorded impairment losses of US$250.3 million and US$219.1 million in
the years ended December 31, 2021 and 2022, respectively.
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Right-of-use assets
We lease various offices, warehouses and vehicles on a wide range of lease terms and
conditions. The following table sets forth our right-of-use assets as of the dates indicated:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Buildings and warehouses ........... 182,789 578,085 460,258 495,218
V ehicles ...................... 3 , 1 1 7 10,099 11,320 14,375
Land ........................ 6 8 2 3,138 2,471 60,432
Equipment and others .............. 1 7 4 12,890 7,158 4,662
Total ........................ 186,762 604,212 481,207 574,687
Our right-of-use assets increased by 223.5% from US$186.8 million as of December 31, 2020
to US$604.2 million as of December 31, 2021, primarily due to an increase in right-of-use
assets related to buildings and warehouses from US$182.8 million as of December 31, 2020 to
US$578.1 million as of December 31, 2021 attributable to (i) new lease agreements we entered
into in 2021 to expand our existing facilities and support our expansion, and (ii) the lease we
assumed in connection with our acquisition of BEST Express China.
Our right-of-use assets decreased by 20.4% from US$604.2 million as of December 31, 2021
to US$481.2 million as of December 31, 2022, primarily due to a decrease in our right-of-use
assets related to buildings and warehouses as we optimized our operation after we fully
integrated BEST Express China and adjusted our network density by removing certain
redundant facilities.
Our right-of-use assets increased by 19.4% from US$481.2 million as of December 31, 2022
to US$574.7 million as of June 30, 2023, primarily due to an increase in land and buildings and
warehouses, pursuant to additional lease agreements we entered into in China, the Philippines
and the New Markets.
Intangible assets
Our intangible assets primarily consist of goodwill, customer relationship and others including
software and trademarks and licenses.
Our intangible assets increased significantly from US$6.0 million as of December 31, 2020 to
US$1,129.2 million as of December 31, 2021, primarily due to the increased goodwill we
recorded in relation to the acquisition of BEST Express China. Our intangible assets decreased
from US$1,129.2 million as of December 31, 2021 to US$963.6 million as of December 31,
2022, primarily due to (i) an one-off impairment of goodwill in 2022, and (ii) fluctuations in
foreign currency exchange rates. As of June 30, 2023, our intangible assets remained relatively
stable at US$982.0 million.
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Goodwill is allocated to our CGUs or groups of CGUs identified according to the territories in
which we operate. The movement of carrying amount of goodwill for each respective CGUs is
set out below:
China Indonesia Thailand Brazil
(in US$ thousands)
As of December 31, 2019 ........ – 1,194 – –
Acquisition of subsidiaries ........ 2 2 0–––
Impairment of goodwill .......... ––––
Exchange differences ........... ––––
As of December 31, 2020 ........ 2 2 0 1,194 – –
Acquisition of subsidiaries ....... 630,458 215,487 98,320 –
Impairment of goodwill .......... ––––
Exchange differences ........... ( 2 ) (274) (2,027) –
As of December 31, 2021 ........ 630,676 216,407 96,293 –
Acquisition of subsidiaries ........ – – – 51,829
Impairment of goodwill .......... ( 1 17,502) – – –
Exchange differences ........... (53,746) (17,395) (5,356) –
As of December 31, 2022 ........ 459,428 199,012 90,937 51,829
Acquisition of subsidiaries ........ 33,629 – – –
Impairment of goodwill .......... ––––
Exchange differences ........... (16,820) 9,375 (2,411) 4,584
As of June 30, 2023 ............ 476,237 208,387 88,526 56,413
The recoverable amount of our CGUs or groups of CGUs is determined based on value-in-use
calculations. The key assumptions used for value-in-use calculations are as follows:
2020
China Indonesia
Annual growth rate within the period .................... 2.5%-195.5% 3.0%-42.6%
Growth rate to extrapolate cash flows beyond the period ........ 2.5% 3.0%
Gross margin ................................... -9.7%-13.4% 25.8%-28.8%
Pre-tax discount rate .............................. 19.84% 23.66%
Excess of recoverable amount over carrying value
(in US$ thousands) .............................. 273,880 643,169
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2021
China Indonesia Thailand
Annual growth rate within the period ............ 5.4%-105.0% 5.5%-29.2% 10.7%-64.2%
Growth rate to extrapolate cash flows beyond
the period ............................ 2.5% 3.0% 2.0%
Gross margin ........................... 0.0%-13.4% 24.8%-28.9% (12.0%)-33.0%
Pre-tax discount rate ...................... 18.14% 19.87% 20.24%
Excess of recoverable amount over carrying value
(in US$ thousands) ...................... 5,297,516 2,294,940 508,299
2022
China Indonesia Thailand Brazil
Annual growth rate within the period .... 2.4%-33.3% 5.3%-28.0% 10.2%-40.6% 27.6%-302.9%
Growth rate to extrapolate cash flows
beyond the period ............... 2.2% 3.0% 2.0% 3.0%
Gross margin ................... 3.2%-8.2% 23.1%-28.5% 12.7%-30.3% -4.4%-20.5%
Pre-tax discount rate .............. 17.48% 19.17% 21.45% 24.85%
Excess of recoverable amount over
carrying value (in US$ thousands) .... – 1,987,918 580,469 129
Six months ended June 30, 2023
China Indonesia Thailand Brazil
Annual growth rate within the period .... 2.4-40.5% 5.0%-28.0% 10.2%-39.6% 10.5%-328.1%
Growth rate to extrapolate cash flows
beyond the period ............... 2.2% 2.5% 2.0% 3.0%
Gross margin ................... 2.0%-8.5% 24.0%-28.3% 12.7%-30.1% -3.1%-19.8%
Pre-tax discount rate .............. 17.58% 19.31% 20.49% 26.48%
Excess of recoverable amount over
carrying value (in US$ thousands) .... 20,504 2,244,912 599,514 40,052
The recoverable amount of the following CGUs would equal its carrying amount if the key
assumptions were to change relatively as follows:
As of December 31, 2020
China Indonesia
Decrease in annual growth rate within the period ............. (8%) (196%)
Decrease in growth rate to extrapolate cash flows
beyond the period ............................... N / A (ii) N/A(ii)
Decrease in gross margin ........................... (13%) (73%)
Increase in pre-tax discount rate ....................... 2 6 % 2,721%
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As of December 31, 2021
China Indonesia Thailand
Decrease in annual growth rate within the period ..... (37%) (152%) (59%)
Decrease in growth rate to extrapolate cash flows
beyond the period (2) ..................... N / A N / A N / A
Decrease in gross margin ................... (51%) (61%) (46%)
Increase in pre-tax discount rate ............... 128% 221% 64%
As of December 31, 2022
China Indonesia Thailand Brazil (1)
Decrease in annual growth rate within the
period ...................... N / A (155%) (88%) N/A
Decrease in growth rate to extrapolate cash
flows beyond the period (2) ......... N / A N / A N / A N / A
Decrease in gross margin ........... N / A (54%) (48%) N/A
Increase in pre-tax discount rate ....... N / A 279% 68% N/A
As of June 30, 2023
China Indonesia Thailand Brazil
Decrease in annual growth rate within the
period ...................... (0.6%) (166%) (96%) (3%)
Decrease in growth rate to extrapolate cash
flows beyond the period (2) ......... (12.2%) N/A (ii) N/A(ii) (301%)
Decrease in gross margin ........... (0.5%) (55%) (50%) (5%)
Increase in pre-tax discount rate ....... 0.9% 298% 104% 9%
Notes:
(1) For the groups of CGUs in Brazil, management has assessed the risk of impairment of goodwill and concluded
that no impairment charge would be required. However, we restructured our structure in Brazil soon after we
launched operations there and completed such restructuring in late 2022 and the relevant key assumptions used
in the valuation as at the acquisition date approximated those used as at December 31, 2022, any adverse
changes in key assumptions would lead to impairment.
(2) As per relevant assessment, the headroom would not decrease to zero even if growth rate in extrapolate cash
flows beyond the Period dropped to minus 10%.
As of December 31, 2021, it is unlikely that any reasonable possible changes in key
assumptions would lead to impairment for the goodwill in China, Indonesia and Thailand.
As of December 31, 2022, it is unlikely that any reasonable possible changes in key
assumptions would lead to impairment for the goodwill in Indonesia and Thailand. For the
groups of CGUs in China, according to management’s impairment test performed with the
assistance of an independent valuer, the carrying amount exceeded relevant recoverable
amount. As a result, impairment charges of goodwill amounting to approximately
US$117,502,000 were recognised.
As of June 30, 2023, it is unlikely that any reasonable possible changes in key assumptions
would lead to impairment for our goodwill.
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Other non-current assets
Our other non-current assets primarily consist of (i) loans we extended to third parties
(ii) prepayment of construction projects and (iii) deposit receivable.
The following table sets forth our other non-current assets as of the dates indicated:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Loans to related parties – non-current
portion ..................... 1 6 7 146,299 – –
Loans to third parties – non-current
portion ..................... 58,829 2,127 37,428 68,806
Prepayments for constructions ........ 15,713 13,918 19,778 7,677
Deposits receivable ............... – 1 1,370 7,363 4,743
Others ....................... – – 3 9 –
Less: allowance for credit losses ....... (616) (2,584) (1,260) (1,476)
Total ........................ 74,093 171,130 63,348 79,750
Our other non-current assets increased from US$74.1 million as of December 31, 2020 to
US$171.1 million as of December 31, 2021, primarily due to an increase in loans to related
parties from US$0.2 million as of December 31, 2020 to US$146.3 million as of December 31,
2021, partially offset by a decrease in loans to third parties which were our SEA entities from
US$58.8 million as of December 31, 2020 to US$2.1 million as of December 31, 2021 due to
the repayment of the loan and the acquisition of SEA entities in 2021. On a consolidated basis,
loans granted to our SEA entities as loans to third parties amounted to US$58.8 million, nil and
and nil as of December 31, 2020, 2021 and 2022, respectively. Our loans to the SEA entities
typically have a term from three to five years, with an interest rate of 7% per annum.
Our other non-current assets decreased by 63.0% from US$171.1 million as of December 31,
2021 to US$63.3 million as of December 31, 2022, primarily due to a decrease in a loan to one
related party from US$146.3 million as of December 31, 2021 to nil as of December 31, 2022,
partially offset by the increased loans to third parties from US$2.1 million as of December 31,
2021 to US$37.4 million as of December 31, 2022.
Our other non-current assets increased by 25.9% from US$63.3 million as of December 31,
2022 to US$79.8 million as of June 30, 2023, primarily due to an increase in loans to third
parties, driven by additional loans we extended to unconsolidated regional operating entities in
Mexico to support our expansion in this jurisdiction. Such loans have a term of three years and
an interest rate of 4%.
For loans to unconsolidated regional operating entities, we determine the credit risk of relevant
loans based on factors including past dealings and experiences with the borrowers, internal or
external credit ratings, overdue status and the nature of the loans, as well as other
forward-looking information including macroeconomic factors. During the Track Record
Period, we managed certain credit losses for these loans in accordance with our credit risk
assessment methods. Impairment is measured as either 12-month expected credit loss or
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lifetime expected credit loss, depending on whether there has been a significant increase in
credit risk since it was initially recognized. If there has been a significant increase in credit risk
since the initial recognition, then impairment is measured as lifetime expected credit loss.
Financial assets at fair value through profit or loss
We had financial assets at fair value through profit or loss of US$71.3 million, US$41.6
million, US$497.5 million and US$541.8 million as of December 31, 2020, 2021, 2022 and
June 30, 2023, respectively.
Our financial assets at fair value through profit or loss as of December 31, 2022 and June 30,
2023 consisted of investments in Windfall T&L SPC, convertible bonds issued by Huisen
Global and bank wealth management products.
The wealth management products classified as other financial assets mainly include short-term
wealth management products issued by major and reputable commercial banks without
guaranteed returns. We manage and evaluate the performance of investments on a fair value
basis in accordance with our risk management and investment strategy. The fair values of part
of the bank wealth management products are based on cash flow discounted using the expected
return based on observable market inputs and are within level 2 of the fair value hierarchy. To
enhance our liquidity position without significantly increasing our exposure to the financial
risks, we will continue to invest in such wealth management products after the Listing. After
the Listing, the investments in wealth management products will be subject to our compliance
with the requirements under Chapter 14 of the Listing Rules.
Our financial assets measured at fair value through profit or loss as of December 31, 2022 also
included our investment in certain unlisted equity and debt instrument, primarily consisting of
our investment in convertible bonds issued by Huisen Global. Huisen Global primarily operates
less-than-truckloads (LTL) transportation services through its PRC subsidiaries, under which
Yimidida and Huisen brands are operated under one integrated network (“ Huisen LTL ”). In
2022, Huisen LTL handled freight aggregating over 7 million tons. Huisen LTL achieved sales
of over RMB5 billion and was loss-making in 2022. Huisen LTL has been expanding into
international markets such as Indonesia and Malaysia in Southeast Asia, and is in the process
of expanding into other countries in Southeast Asia. We have been collaborating with Huisen
LTL network in Southeast Asia and China to provide more value-added services to our
customers. We believe the network of Huisen LTL will allow us to further extend offerings
along the logistics value chain and build a logistics ecosystem. For example, e-commerce
participants in Southeast Asia can access a whole suite of logistics solutions, and we are able
to provide express delivery services for regular parcels whereas Huisen was able to cater to
their needs to transport large-scale or wholesale merchandise. By partnering with Huisan, we
are able to deepen our collaboration with e-commerce participants by expanding touch points
and meeting these participants’ diverse needs.
In addition, we are a capital partner in Windfall, which is a U.S. dollars fund with asset under
management of around US$100 million, focusing on equity investment in emerging assets in
the logistics and industrial development ecosystem. Windfall adopts a segregated portfolio
company structure, where different segregated portfolios are established and independently
operated to meet the preferences and investment profiles of different capital partners. We
believe our investment in Windfall T&L SPC allows it to help us acquire, develop and own
assets that fit our risk-reward profiles while capturing growth opportunities.
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With the assistance from an external valuer appointed by us, we applied the discounted cash
flow method to determine the underlying equity value of Huisen Global and adopted equity
allocation model (if applicable) to determine relevant fair values. In determining such fair
values, one or more of the significant inputs are not based on observable market data, and
therefore we included relevant investments in level 3 financial instruments. Key assumptions
typically include discount rate, discount of lack of marketability, and expected volatility. In
addition to the assumptions adopted above, Huisen Global’s projections of future performance
were also factored into the determination of the underlying equity value of Huisen Global.
Particularly, relevant fair values decreased, substantially as a result of the updated projections
of Huisen Global’s future performance, considering the overall macroeconomic situation, its
industry and market positions, and etc. We have dedicated personnel in place who are
responsible for identifying, reviewing and pursuing strategic investments, including
investments in unlisted companies. These personnel have extensive experience in corporate
finance and M&A in the logistics industry. We make investment decisions on a case-by-case
basis based on the consideration of a number of factors, including the investee’s operating
history, the growth potential of the investee and the industries in which it operates, the quality
of the investee’s management team, as well as the investee’s potential to generate synergies
with our existing operations. We closely monitor the operational and financial performance of
our investee companies.
For more information about valuation of financial assets measured at fair value through profit
or loss, See Note 24 to the Accountant’s Report in Appendix I to this prospectus.
Liabilities
Trade payables
Our trade payables represent payables to our suppliers such as line-haul services and labor
services providers. Our trade payables are recognized initially at fair value and subsequently
measured at amortized cost using the effective interest method.
Our trade payables increased from US$225.5 million as of December 31, 2020 to US$577.1
million as of December 31, 2021, primarily attributable to (i) the growth of our business and
operations, and (ii) our consolidation of the financial position of BEST Express China. Our
trade payables decreased to US$484.2 million as of December 31, 2022, as we settled certain
payables that we consolidated into our liabilities after we integrated BEST Express China. Our
trade payables remained relatively stable at US$484.2 million and US$471.7 million as of
December 31, 2022 and June 30, 2023, respectively.
The following table sets forth an aging analysis of our trade payables, based on invoice or
issuance date, as of the dates indicated:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Trade payables
Within 3 months ................. 212,619 505,960 434,660 404,373
3 to 6 months ................... 9,028 19,200 26,512 44,560
6 to 9 months ................... 1,253 28,286 14,360 13,074
9 to 12 months .................. 1,891 22,903 5,103 3,782
Above 12 months ................ 6 6 1 7 1 6 3,580 5,877
Total ........................ 225,452 577,065 484,215 471,666
FINANCIAL INFORMATION
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The following table sets forth the turnover days of our trade payables for the periods indicated:
Year ended December 31,
Six months
ended
June 30,
2020 2021 2022 2023
Trade payables turnover days (1) ........ 25.5 27.1 25.7 22.5
Note:
(1) Calculated by dividing the average balance of trade payable by cost of revenue for the relevant period
multiplied by the number of days during the period. Average balance equals the sum of the beginning balance
and ending balance for the period divided by two.
Our trade payables turnover days increased from 25.5 in 2020 to 27.1 in 2021, primarily
because our average trade payables increased significantly. This increase was primarily due to
the trade payables that we consolidated from the financial position of BEST Express China as
a result of the acquisition. For our operations in China, we generally settle our trade payables
within 30 days. Outside China, we generally settle our trade payables from 30 to 60 days. Our
trade payables turnover days decreased from 27.1 in 2021 to 25.7 in 2022, primarily due to the
decreased balance of trade payables as of December 31, 2022. Our trade payables turnover days
decreased from 25.7 in 2022 to 22.5 for the six months ended June 30, 2023, mainly because
we continued to settle the trade payables related to pre-acquisition operations of BEST Express
China.
As of August 31, 2023, we settled US$318.8 million or 67.6% of our trade payables
outstanding as of June 30, 2023.
Advances from customers
Advances from customers mainly represent advances from network partners in China for
express delivery services to mitigate potential credit risk. The following table sets forth our
advances from customers as of the dates indicated:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Advances from customers for express
delivery services ............... 137,224 291,362 209,925 241,441
Total ........................ 137,224 291,362 209,925 241,441
Our advances from customers increased from US$137.2 million as of December 31, 2020 to
US$291.4 million as of December 31, 2021, primarily due to (i) the expansion of our network,
and (ii) our consolidation of the financial position of BEST Express China. Our advances from
customers further decreased to US$209.9 million as of December 31, 2022, primarily due to
(i) a decrease in the number of our network partners as we optimized our network and (ii) a
decrease in the average amount of advance per time from network partners corresponding with
an increase in the frequency of their advance payments. Our advances from customers
FINANCIAL INFORMATION
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increased from US$209.9 million as of December 31, 2022 to US$241.4 million as of June 30,
2023, primarily due to the growth of our operations in China, where we collaborated with and
requested advances from network partners to mitigate potential credit risks.
As of August 31, 2023, we had settled approximately US$240.0 million, or 99.4%, of our
advances from customers as of June 30, 2023.
Accruals and other payables
Our accruals and other payables primarily consist of (i) cash on delivery related payables, (ii)
salary and welfare payables, (iii) deposits, (iv) tax payables, (v) payables for purchase of
long-term assets, (vi) consideration payable for repurchase of ordinary shares and preferred
shares, (vii) consideration received pursuant to share incentive scheme, primarily from eligible
network partners who were granted share incentive awards and (viii) others.
The following table sets forth our accruals and other payables as of the dates indicated:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Cash on delivery related payables ...... 137,017 95,047 156,666 167,553
Salary and welfare payables .......... 62,336 219,607 163,637 169,079
Deposits ...................... 25,928 192,734 175,229 192,797
Tax payables ................... 24,284 48,830 40,999 37,237
Payables for purchase of long-term assets . 5,644 110,710 88,587 67,022
Consideration payable for repurchase of
ordinary shares and preferred shares . . . – 159,922 – –
Consideration received pursuant to share
incentive schemes ............... – – 37,886 23,991
Others ....................... 49,153 88,502 113,374 171,467
Total ........................ 304,362 915,352 776,378 829,146
Our accruals and other payables increased by 200.7% from US$304.4 million as of December
31, 2020 to US$915.4 million as of December 31, 2021, primarily due to (i) outstanding
payables of US$159.9 million as consideration for certain ordinary shares and preferred shares
to be repurchased, (ii) an increase in deposits from US$25.9 million as of December 31, 2020
to US$192.7 million as of December 31, 2021, which represented deposits paid by network
partners, and partially offset by a decrease in cash of delivery related payables from US$137.0
million as of December 31, 2020 to US$95.0 million as of December 31, 2021 as we optimized
our settlement procedure and shortened settlement cycle with major e-commerce customers in
2021.
Our accruals and other payables decreased by 15.2% from US$915.4 million as of December
31, 2021 to US$776.4 million as of December 31, 2022, primarily due to (i) a decrease in salary
and welfare payables from US$219.6 million as of December 31, 2021 to US$163.6 million as
of December 31, 2022 driven by decreased compensations to staff, and (ii) a decrease in
consideration payable for repurchase of ordinary shares and preferred shares from US$159.9
million as of December 31, 2021 to US$0 as of December 31, 2022 as we completed the
repurchase and settled the amount, partially offset by an increase in cash on delivery related
payables from US$95.0 million as of December 31, 2021 to US$156.7 million as of December
31, 2022 driven by the growth of our (i) cash on delivery services in Southeast Asia, in line
with the increased parcel volume in Southeast Asia, and (ii) an increase in consideration
received pursuant to share incentives schemes.
FINANCIAL INFORMATION
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Our accruals and other payables increased by 6.8% from US$776.4 million as of December 31,
2022 to US$829.1 million as of June 30, 2023, primarily due to (i) an increase in cash on
delivery related payables of US$10.9 million, due to the expansion of our value-added services
in Southeast Asia, (ii) an increase in deposits, as we consolidated the deposits paid by network
partners of Fengwang into our financial positions, and (iii) an increase in other accruals and
other payables of US$58.1 million, driven by the expansion of our business and, in particular,
additional facilities we plan to add in China, partially offset by a decrease in payables for
purchase of long-term assets and a decrease in consideration received with respect to Class A
Shares granted to network partners.
As of August 31, 2023, we had settled US$470.6 million, or 56.8%, of our accruals and other
payables outstanding as of June 30, 2023.
INDEBTEDNESS
The following table sets forth our indebtedness as of the dates indicated:
As of December 31, As of June 30,
As of
August 31,
2020 2021 2022 2023 2023
(in US$ thousands)
(Unaudited)
Borrowings from financial
institutions .......... 10,808 62,739 1,095,377 1,154,834 1,137,814
Borrowings from related
parties ............ 167,620 14,470 – ––
Borrowings from third
parties ............ 265,632 11,818 3,000 7,600 7,852
Lease liabilities ........ 175,017 598,722 492,666 556,142 503,241
Financial liabilities at fair
value through profit or
loss .............. 1,812,915 10,487,306 7,765,067 8,261,043 8,270,546
Financial liabilities –
ordinary share redemption
liabilities ........... – 159,207 30,583 33,495 34,555
Total ............... 2,431,992 11,334,262 9,386,693 10,013,114 9,954,008
Borrowings from financial institutions
Our borrowings from financial institutions primarily include borrowing from banks and other
financial institutions. During the Track Record Period, our borrowings from financial
institutions were substantially secured, supported by guarantees and debentures including but
not limited to our equity interest in certain Group entities, certain receivables, bank accounts
and other assets. Our outstanding borrowings from financial institutions amounted to US$10.8
million, US$62.7 million, US$1,095.4 million and US$1,154.8 million as of December 31,
2020, 2021 and 2022 and June 30, 2023, respectively. Our outstanding borrowings from
financial institutions as of June 30, 2023 primarily comprised of (i) the senior notes issued by
Winner Star in February 2022, in an aggregate principal amount of US$870 million received
by us, which bear interest at 5.75% per annum and are due 2025, (ii) a loan of US$130 million
received by us on February 24, 2022 under a financing agreement with Winner Star for general
corporate and working capital purposes, and (iii) our other borrowings in relation to vehicles
FINANCIAL INFORMATION
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--- page 402 ---
and other operations in the ordinary course of business. These borrowings were guaranteed by
us and certain subsidiaries of ours. Our borrowings from financial institutions were
US$1,137.8 million as of August 31, 2023. As of the same date, we had unutilized banking
facilities of US$29.2 million.
Borrowings from third parties
In 2020, we had a borrowing of US$236.9 million provided by one of the Series A Preferred
Shareholders but subsequently settled in 2021. Such borrowing was interest free. For details,
please see Note 28 to the Accountant’s Report in Appendix I to this prospectus. During the
Track Record Period, our borrowings from third parties represented interest-bearing
borrowings provided by the minority shareholders of certain Group entities, which had terms
from one month to 5 years, with an interest rate up to 6%. Our borrowings from third parties
amounted to US$265.6 million, US$11.8 million, US$3.0 million and US$7.6 million as of
December 31, 2020, 2021 and 2022 and June 30, 2023, respectively. We had borrowings from
third parties of US$7.9 million as of August 31, 2023. Our borrowings from third parties were
unsecured as of December 31, 2020, 2021 and 2022, June 30, 2023 and August 31, 2023.
Our Directors confirm that there was no delay or default in the repayment of borrowings during
the Track Record Period. Our Directors also confirm that they are not aware of any breach of
any of the covenants contained in our bank loan arrangements and other borrowing
arrangements or any event of default during the Track Record Period and up to the Latest
Practicable Date, nor are they aware of any restrictions that will limit our ability to draw down
on our unutilized facilities.
Borrowings from related parties
Our borrowings from related parties were US$167.6 million, US$14.5 million, nil, nil and nil
as of December 31, 2020, 2021 and 2022, June 30, 2023 and August 31, 2023, respectively. Our
borrowings from related parties were unsecured.
Lease Liabilities
Our lease liabilities primarily arose from lease contracts for office premises and sorting
centers, and vehicles used in our operations. The following table sets forth our lease liabilities
as of the dates indicated:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Lease liabilities
Current lease liabilities ............. 63,639 207,490 151,195 196,583
Non-current lease liabilities .......... 1 1 1,378 391,232 341,471 359,559
Total ........................ 175,017 598,722 492,666 556,142
Our total lease liabilities were US$175.0 million, US$598.7 million, US$492.7 million,
US$556.1 million and US$503.2 million as of December 31, 2020, 2021 and 2022, June 30,
2023 and August 31, 2023, respectively. The increase in our lease liabilities from US$175.0
million in 2020 to US$598.7 million in 2021 was attributable to (i) new lease contracts we
FINANCIAL INFORMATION
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entered into as our business expanded and (ii) our consolidation of the financial position of
BEST Express China as a result of the acquisition. The decrease in our lease liabilities from
December 31, 2021 to December 2022 was primarily due to a decrease in our buildings and
warehouses leases as we optimized our operations after fully integrating BEST Express China
and adjusted our network sorting center density by removing certain redundant sorting centers.
The increase in our lease liabilities from December 31, 2022 to June 30, 2023 was primarily
due to additional lease agreements we entered into in China, the Philippines and the New
Markets.
Financial Liabilities at Fair Value through Profit or Loss
Since our commencement, we have completed several rounds of financing by issuing different
classes of preferred shares. Series Pre-A1 Preferred Shares, Series Pre-A2 Preferred Shares and
Series A Preferred Shares were issued in or prior to 2020 and initially recognized as equity. In
late 2020, along with the issuance of Series B Preferred Shares, we updated our memorandum
of association, and subsequently, reclassified Series Pre-A1 Preferred Shares, Series Pre-A2
Preferred Shares and Series A Preferred Shares as financial liabilities measured at fair value
through profit or loss, with subsequent changes in fair value recognized in the consolidated
income statements. We also designated Series B Preferred Shares, Series B+ Preferred Shares,
Series C1 Preferred Shares and Series C2 Preferred Shares as financial liabilities at fair value
through profit or loss and initially recognized them at fair value, with subsequent changes in
fair value recognized in the consolidated income statements. In 2021, Jet Global, the holding
company of our operations in the New Markets, entered into agreements with third-party
investors to raise Series A financing. We also recognized the Series A Preferred Shares of Jet
Global as financial liabilities at fair value through profit or loss with subsequent changes in fair
value recognized in the consolidated income statements. On December 31, 2021,
accompanying the issuance of the Series C2 Preferred Shares, we entered into agreements with
certain existing shareholders to repurchase a total of 48,607,928 preferred shares and Ordinary
Shares. The expected excess of the repurchase price over the fair value of these preferred
shares and Ordinary Shares was also recognized as financial liabilities at fair value through
profit or loss.
With the assistance from an external valuer, we applied the discounted cash flow method to
determine the underlying equity value of our Group and adopted option-pricing method and
equity allocation model to determine the fair value of the preferred shares. See Note 29A to the
Accountant’s Report in Appendix I to this prospectus for the detailed movements of financial
liabilities at fair value through profit or loss. As of December 31, 2020, 2021 and 2022, June
30, 2023 and August 31, 2023, we had financial liabilities at fair value through profit or loss
of US$1,812.9 million, US$10,487.3 million, US$7,765.1 million, US$8,261.0 million and
US$8,270.5 million, respectively. See Note 29A to the Accountant’s Report in Appendix I to
this prospectus for the key assumptions in determining the fair value of the preferred shares.
Financial liabilities – ordinary share redemption liabilities
Our financial liabilities related to ordinary share redemption liabilities primarily include our
redemption liabilities of shares in JNT KSA which are held by a third-party investor who is
entitled to certain exit rights. JNT KSA is one of our regional operating entities in the New
Markets. See Notes 26 and 29 to the Accountant’s Report in Appendix I to this prospectus. See
also “History and Corporate Structure – Major Shareholding Changes of Our Company and
Major Subsidiaries” for more details on JNT KSA.
FINANCIAL INFORMATION
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No Other Outstanding Indebtedness
Save as disclosed in this “– Indebtedness” in this section, we did not have outstanding
indebtedness or any loan capital issued and outstanding or agreed to be issued, bank overdrafts,
loans or similar indebtedness, liabilities under acceptances (other than normal trade bills),
acceptance credits, debentures, mortgages, charges, finance leases or hire purchase
commitments, guarantees or other contingent liabilities or any covenant in connection
therewith as of August 31, 2023, being the indebtedness statement date.
LIQUIDITY AND CAPITAL RESOURCES
Net Current Assets/(Liabilities)
The following table sets forth our current assets and current liabilities as of the dates indicated:
As of December 31, As of June 30, As of August 31,
2020 2021 2022 2023 2023
(in US$ thousands)
(Unaudited)
Current assets
Inventories ......... 15,954 29,359 29,120 21,956 21,130
Trade receivables ...... 180,760 334,876 513,954 622,560 626,364
Prepayments, other
receivables and
other assets ........ 745,363 882,190 703,010 801,815 797,581
Financial assets at fair
value through profit or
loss ............. 71,324 41,581 16,440 9,493 12,271
Restricted cash ....... 9 2 8 125,970 79,725 96,301 96,819
Cash and cash
equivalents ........ 600,425 2,102,448 1,504,048 1,195,264 1,166,983
Total current assets . . . 1,614,754 3,516,424 2,846,297 2,747,389 2,721,148
Current liabilities
Trade payables ....... 225,452 577,065 484,215 471,666 461,162
Advances from
customers ......... 137,224 291,362 209,925 241,441 267,205
Accruals and other
payables .......... 304,362 915,352 776,378 829,146 873,005
Lease liabilities ....... 63,639 207,490 151,195 196,583 194,045
Current income tax
liabilities ......... 9,200 20,756 32,424 20,152 30,975
Borrowings ......... 407,143 59,965 77,480 151,563 124,165
Financial liabilities at fair
value through profit or
loss ............ – – – 10,016 10,184
Financial liabilities –
ordinary share
redemption liabilities . . – 133,749 – – –
Total current liabilities . 1,147,020 2,205,739 1,731,617 1,920,567 1,960,741
Net current assets ..... 467,734 1,310,685 1,114,680 826,822 760,407
FINANCIAL INFORMATION
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Our net current assets decreased from US$826.8 million as of June 30, 2023 to US$760.4
million as of August 31, 2023, primarily due to (i) a decrease of US$28.3 million in cash and
cash equivalent, and (ii) an increase of US$43.9 million in accruals and other payables.
Our net current assets decreased from US$1,114.7 million as of December 31, 2022 to
US$826.8 million as of June 30, 2023, primarily due to (i) a decrease of US$308.8 million in
cash and cash equivalent, and (ii) an increase in current liabilities driven by increases in
borrowings, accruals and other payables and lease liabilities.
Our net current assets decreased from US$1,310.7 million as of December 31, 2021 to
US$1,114.7 million as of December 31, 2022, primarily due to (i) a decrease of US$598.4
million in cash and cash equivalents, and (ii) a decrease of US$179.2 million in prepayments,
other receivables and other assets.
Our net current assets increased from US$467.7 million as of December 31, 2020 to
US$1,310.7 million as of December 31, 2021, primarily due to (i) an increase of US$136.8
million in prepayments, other receivables and other assets, (ii) an increase of US$154.1 million
in trade receivables as our business grew and (iii) an increase of US$1,502.0 million in cash
and cash equivalents. The increases were partially offset by (i) an increase of US$611.0 million
in accruals and other payables because we increased our purchases in line with our expansion,
and (ii) an increase of US$351.6 million in trade payables.
We have historically met our working capital and other capital requirements primarily through
capital contributions from shareholders, cash generated from the issuance of convertible
preferred shares and cash generated from our operating activities. We had cash and cash
equivalents of US$600.4 million, US$2,102.4 million, US$1,504.0 million, US$1,195.3
million and US$1,167.0 million as of December 31, 2020, 2021 and 2022, June 30, 2023 and
August 31, 2023, respectively.
We believe that our liquidity requirements will be satisfied by a combination of cash generated
from operating activities, the net proceeds received from the Global Offering, and other funds
raised from the capital markets from time to time. We currently do not have any plans for
material additional external financing.
FINANCIAL INFORMATION
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Cash Flow
The following table sets forth a summary of our cash flows for the periods indicated:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
(in US$ thousands)
(Unaudited)
Net cash (used in)/generated
from operating activities ..... (154,700) (967,174) (519,817) (350,120) 2,797
Including:
Operating cash flows before
movements in working
capital .............. (357,995) (617,656) (243,356) (115,949) 80,505
Interest received .......... 3,170 9,319 25,224 7,066 11,405
Income tax paid .......... (40,391) (76,133) (74,232) (36,456) (58,516)
Net cash used in investing
activities .............. (635,086) (1,001,006) (859,757) (551,475) (366,038)
Net cash from financing
activities .............. 1,285,166 3,469,507 881,328 1,000,146 64,171
Net (decrease)/increase in cash
and cash equivalents ....... 495,380 1,501,327 (498,246) 98,551 (299,070)
Cash and cash equivalents at the
beginning of the year/period . . 97,173 600,425 2,102,448 2,102,448 1,504,048
Effects of foreign exchange rate
changes on cash and cash
equivalents ............. 7,872 696 (100,154) (67,768) (9,714)
Cash and cash equivalents at
the end of the year/period. . . 600,425 2,102,448 1,504,048 2,133,231 1,195,264
Working capital sufficiency
Taking into account the financial resources available to us, including our cash and cash
equivalents on hand, our available financing facilities and the estimated net proceeds from the
Global Offering, our Directors are of the view that we have sufficient working capital to meet
our present requirements and for at least the next 12 months from the date of this prospectus.
Taking into account the working capital management policies adopted by us, and the due
diligence work conducted by the Joint Sponsors including but not limited to (i) reviewing the
Accountant’s Report as set out in Appendix I to this prospectus, (ii) the financial due diligence
conducted on our historical financial information during the Track Record Period and
discussions with management on its working capital projections, and (iii) written confirmation
provided by us in respect of working capital sufficiency, nothing material has come to the
attention of the Joint Sponsors that would cast doubt on our conclusion that we have sufficient
working capital to meet its present needs, that is for at least the next 12 months from the date
of this prospectus.
FINANCIAL INFORMATION
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Net cash used in operating activities
We have demonstrated our capacity to improve our net operating cash inflow, and we expect
to further enhance our operating cash flow through improving our profitability in China and the
New Markets as well as cross-border business, as our parcel volume continues to grow across
the regions and we continue to improve our cost efficiency through economies of scale.
For the six months ended June 30, 2023, our net cash generated from operating activities was
US$2.8 million, which was primarily attributable to our loss before income tax of US$660.2
million, adjusted by adding back non-cash items including (i) share-based compensation of
US$1,428.2 million, and (ii) depreciation of right-of-use assets and depreciation of property,
plant and equipment of US$134.0 million and US$104.4 million, respectively, incurred in
relation to the optimization of operation and adjustment of network, partially offset by items
including fair value change of financial assets and liabilities at fair value through profit or loss
of US$1,020.8 million. The amount was further adjusted by changes in working capital, which
primarily comprised of (i) an increase in trade receivables of US$95.1 million, and (ii)
placement of restricted cash of US$16.0 million, offset by (i) a decrease in prepayments, other
receivables, and other assets of US$86.1 million and (ii) a decrease in accruals and other
payables of US$29.3 million.
In 2022, our net cash used in operating activities was US$519.8 million, which was primarily
attributable to our profit before income tax of US$1,583.3 million in 2022, adjusted by adding
back non-cash items including (i) share-based compensation of US$346.6 million, (ii)
depreciation of right-of-use assets and depreciation of property, plant and equipment of
US$257.2 million and US$227.9 million, respectively, incurred in relation to the optimization
of operation and adjustment of network, (iii) impairment losses on long-term assets of
US$219.1 million, (iv) fair value change of financial assets and liabilities at fair value through
profits or loss of US$3,050.7 million, (v) net loss on disposal of property, plant and equipment
of US$1.9 million, and (vi) impairment losses on financial assets of US$37.2 million, partially
offset by items including finance cost of US$99.5 million and foreign exchange losses of
US$17.3 million. The amount was further adjusted by changes in working capital, which
primarily comprised of (i) an increase in trade receivables of US$191.1 million, (ii) a decrease
in trade payables of US$84.7 million, (iii) a decrease in advances from customers of US$73.6
million, and (iv) an increase in prepayments, other receivables, and other assets of US$42.2
million, offset by (i) an increase in accruals and other payables of US$118.2 million, and (ii)
return of restricted cash of US$45.8 million.
In 2021, our net cash used in operating activities was US$967.2 million, which was primarily
attributable to our loss before income tax of US$6,119.1 million in 2021, adjusted by adding
back non-cash items including (i) fair value changes on convertible preferred shares of
US$4,383.5 million, (ii) share-based compensation of US$619.0 million driven by the increase
in the number of employees to support our global expansion, (iii) depreciation of right-of-use
assets of US$113.9 million, (iv) depreciation of property, plant and equipment of US$104.4
million, and (v) impairment losses on long-term assets of US$250.3 million, partially offset by
items including other income of US$82.5 million and foreign exchange gain of US$19.9
million. The amount was further adjusted by changes in working capital, which primarily
comprised (i) a decrease in trade payables of US$305.4 million, (ii) an increase in
prepayments, other receivables and other assets of US$105.5 million, (iii) an increase in
inventories of US$8.6 million, and (iv) an increase in trade receivables of US$4.3 million,
offset by (i) an increase in accruals and other payables of US$128.3 million, and (ii) an
increase in advances from customers of US$62.8 million.
FINANCIAL INFORMATION
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In 2020, our net cash used in operating activities was US$154.7 million, reflecting our loss
before income tax of US$618.6 million, adjusted by non-cash items including (i) share-based
compensation of US$188.3 million driven by the increase in the number of employees to
support our global expansion, (ii) depreciation of right-of-use assets of US$56.0 million, and
(iii) depreciation of property, plant and equipment of US$39.3 million, offset by the foreign
exchange gains of US$29.4 million. The amount was further adjusted by changes in working
capital, which primarily comprised (i) an increase in prepayments, other receivables and other
assets of US$203.9 million, (ii) an increase in trade receivables of US$128.1 million, and (iii)
an increase in inventories of US$9.9 million, offset by (i) an increase in accruals and other
payables of US$324.1 million, (ii) an increase in trade payables of US$189.5 million, and (iii)
an increase in advances from customers of US$68.8 million.
Net cash used in investing activities
For the six months ended June 30, 2023, our net cash used in investing activities was US$366.0
million, which was primarily attributable to (i) purchase of financial assets at fair value
through profit or loss of US$80.3 million, (ii) loans to third parties of US$36.5 million, (iii)
purchase of property, plant and equipment of US$249.5 million, and (iv) net payment for
acquisitions of US$62.0 million, partially offset by (i) redemption of financial assets at fair
value through profit or loss of US$29.3 million and (ii) proceeds from disposal of property,
plant and equipment of US$28.9 million.
In 2022, our net cash used in investing activities was US$859.8 million, which was primarily
attributable to (i) purchase of financial assets at fair value through profit or loss of US$998.4
million, (ii) loans to a related party of US$320.0 million, which was subsequently repaid within
the year, (iii) purchase of property, plant and equipment of US$573.2 million, and (iv) loans
to third parties of US$38.4 million, partially offset by (i) collection of loans to related parties
and interests received of US$516.0 million, (ii) redemption of financial assets at fair value
through profit or loss of US$507.4 million, and (iii) proceeds from disposal of property, plant
and equipment of US$32.0 million.
In 2021, our net cash used in investing activities was US$1,001.0 million, which was primarily
attributable to (i) purchase of financial assets at fair value through profit or loss of US$1,149.1
million, (ii) net payment for acquisitions including the acquisition of BEST Express China of
US$608.7 million, (iii) purchase of property, plant and equipment of US$513.7 million, (iv)
loans to third parties of US$272.4 million, and (v) loans to related parties of US$128.2 million,
partially offset by (i) redemption of financial assets at fair value through profit or loss of
US$1,184.4 million, and (ii) repayment of loans by third parties and interest received of
US$465.7 million.
In 2020, our net cash used in investing activities were US$635.1 million, which was primarily
attributable to (i) purchase of financial assets at fair value through profit or loss of US$306.8
million, (ii) loans to third parties of US$628.5 million, and (iii) purchase of property, plant and
equipment of US$257.7 million, partially offset by (i) the repayment of loans by third parties
of US$376.5 million, and (ii) redemption of financial assets at fair value through profit or loss
of US$243.4 million.
FINANCIAL INFORMATION
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Net cash from financing activities
For the six months ended June 30, 2023, our net cash generated from financing activities was
US$64.2 million, which was primarily attributable to (i) proceeds from borrowings of
US$131.1 million and (ii) net proceeds from issuance of preferred shares of US$200.0 million,
offset by (i) principal elements of lease payments of US$168.4 million, (ii) repayment of
borrowings of US$64.2 million, (iii) interest payment for borrowings of US$33.3 million, and
(iv) interest payment of lease payment of US$19.0 million.
In 2022, our net cash generated from financing activities was US$881.3 million, which was
primarily attributable to (i) proceeds from borrowing of US$1,099.3 million, (ii) net proceeds
from issuance of preferred shares of US$219.0 million, and (iii) net proceeds from issuance of
shares to network partners of US$44.6 million, offset by (i) principal elements of lease
payments of US$262.7 million, (ii) repayment of borrowings of US$105.7 million, (iii) interest
payment for borrowings of US$38.8 million, (iv) interest payment of lease payment of US$37.3
million, and (v) dividends payments of US$28.6 million.
In 2021, our net cash generated from financing activities was US$3,469.5 million, which was
primarily attributable to (i) net proceeds from the issuance of preferred shares of US$3,966.1
million, and (ii) proceeds from borrowing of US$215.2 million, partially offset by (i)
repayment of borrowings of US$610.2 million, (ii) dividends paid of US$120.8 million, and
(iii) payment of principals of leases of US$101.7 million.
In 2020, our net cash generated from financing activities was US$1,285.2 million, primarily
attributable to (i) net proceeds from the issuance of ordinary shares and convertible preferred
shares of US$977.2 million, and (ii) proceeds from borrowings of US$400.9 million, partially
offset by repayment of borrowings of US$137.8 million.
CAPITAL EXPENDITURES
Our capital expenditures consist of our investment in property, plant and equipment, intangible
asset and right of use assets. Our total capital expenditures in 2020, 2021 and 2022 and the six
months ended June 30, 2022 and 2023 amounted to US$263.0 million, US$520.2 million,
US$580.7 million, US$249.1 million and US$250.6 million, respectively.
FINANCIAL INFORMATION
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The following table sets forth our capital expenditures for the periods indicated:
Year ended December 31,
Six months ended
June 30,
2020 2021 2022 2022 2023
(in US$ thousands)
(Unaudited)
Purchase of property, plant and
equipment ............. 257,742 513,675 573,226 246,601 249,471
Purchases of investment
properties .............. 1,678 51 3–––
Purchases of intangible assets . . . 3,570 6,036 7,451 2,464 1,146
Total .................. 262,990 520,224 580,677 249,065 250,617
Other than certain expenses in relating to long-term assets we acquired pursuant to the
acquisition of BEST Express China, our capital expenditures from 2020 to 2022 are primarily
related to the expansion of our network and investment in our equipment and facilities. Our
capital expenditures were primarily funded by our cash and cash equivalents and cash flows
from our operating activities and financing activities, including the issuance of convertible
preferred shares.
We plan to fund our planned capital expenditures with (i) our existing cash and cash
equivalents; (ii) cash flow generated from our operating activities; (iii) proceeds from the
Global Offering; and (iv) other sources of external financings. For more details, see “Business
– Our Strategies” and “Future Plans and Use of Proceeds.” We will continue to make capital
expenditures to support the growth of our business. We may reallocate the fund to be utilized
on capital expenditure based on our ongoing business needs.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
Our commitments primarily comprise capital commitments and operating lease commitments.
Capital Commitments
Our capital commitments during the Track Record Period were primarily relating to our
investment in equipment, facilities significant capital expenditures contracted for at the end of
the reporting period but not recognized as liabilities as of the dates indicated:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Right-of-use asset – land in the PRC .... – 22,052 11,659 11,238
Short-term Lease Commitments
We lease certain warehouses and vehicles under non-cancellable short-term lease agreements.
The lease terms are less than one year. We record all leases with contract terms of over one year
under lease liabilities and right-of-use assets.
FINANCIAL INFORMATION
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The following table sets forth our future aggregate minimum lease payments under non-
cancellable operating leases as of the dates indicated:
As of December 31,
As of
June 30,
2020 2021 2022 2023
(in US$ thousands)
Within one year ................. 9,675 22,575 41,733 20,285
RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the ability, directly or indirectly, to control
the other party or exercise significant influence over the other party in making financial and
operational decisions. Parties are also considered to be related if they are subjected to common
control. Members of our key management and their close family members are also considered
as related parties. During the Track Record Period, we entered into transactions with our
related parties from time to time. As of June 30, 2023, our outstanding trade receivables and
trade payables were trade in nature, while our other receivables and other payables were
non-trade in nature. We expect to settle the remaining outstanding non-trade balance with
related parties prior to the Listing. For a detailed discussion of related party transactions during
the Track Record Period, see Note 39 to the Accountant’s Report in Appendix I to this
prospectus.
Our Directors believe that the related party transactions were carried out on an arm’s length
basis and will not distort our results during the Track Record Period or make such results not
reflective of our future performance.
CONTINGENT LIABILITIES
As of December 31, 2020, 2021 and 2022 and June 30, 2023, we did not have any material
contingent liabilities.
OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS
As of the Latest Practicable Date, we had not entered into any off-balance sheet commitments
or arrangements.
KEY FINANCIAL RATIOS
The following table sets forth certain of our key financial ratios for the periods indicated:
Year ended December 31,
Six months ended
June 30,
2020 2021 2022 2022 2023
Revenue growth (%) ........ 357.7 216.0 49.8 N/A 18.5
Gross profit/(loss) margin (%) (1) . (17.0) (11.2) (3.7) (1.9) 4.8
Notes:
(1) Gross margin represents gross profit/(loss) for the period divided by revenue for the period and multiplied by
100%.
FINANCIAL INFORMATION
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QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISKS
We are exposed to various types of financial risks, including market risk, foreign exchange
risk, credit risk and liquidity risk.
Market Risk
Foreign exchange risk
Our subsidiaries and consolidated affiliated entities primarily operate in China, Indonesia,
Vietnam, Malaysia, the Philippines, Thailand and other countries. Their transactions were
generally settled in local currencies. Our foreign exchange risk primarily arises from
recognized assets and liabilities in our subsidiaries and consolidated affiliated entities from
those countries, when we receive foreign currencies from or pay foreign currencies to overseas
business partners.
For Group entities whose functional currency is RMB, if RMB had strengthened or weakened
by 5% against USD with all other variables held constant, our loss before income tax in 2020,
2021, and 2022 and for the six months ended June 30, 2023, would have been approximately
US$13,322,000 lower or higher, US$351,000 lower or higher, US$29,000 lower or higher and
US$1,206,000 higher or lower, respectively, as a result of net foreign exchange gains or losses
on translation of net monetary assets or liabilities denominated in USD.
For Group entities whose functional currency is IDR, if IDR had strengthened or weakened by
5% against USD with all other variables held constant, our loss before income tax in 2020,
2021 and 2022 and for the six months ended June 30, 2023 would have been approximately
US$6,219,000 higher or lower, US$8,639,000 higher or lower, US$1,000 lower or higher and
US$26,000 higher or lower, respectively, as a result of net foreign exchange gains or losses on
translation of net monetary assets/liabilities denominated in USD.
For Group entities whose functional currency is THB, if THB had strengthened or weakened
by 5% against USD with all other variables held constant, our loss before income tax in 2020,
2021 and 2022 and for the six months ended June 30, 2023 would have been approximately
US$5,915,000 lower or higher, US$13,217,000 lower or higher, US$2,000 higher or lower and
US$19,000 lower or higher, respectively, as a result of net foreign exchange gains or losses on
translation of net monetary assets or liabilities denominated in USD.
For Group entities whose functional currency is VND, if VND had strengthened or weakened
by 5% against USD with all other variables held constant, our loss before income tax in 2020
and 2021 and for the six months ended June 30, 2023 would have been approximately
US$6,231,000 lower or higher, US$8,894,000 lower or higher and US$398,000 lower or
higher, respectively, as a result of net foreign exchange gains or losses on translation of net
monetary assets or liabilities denominated in USD. Impact for year 2022 would have been
minimal. See “Risk Factors – Risks Related to Our Business and Industry – Fluctuations in
exchange rates could adversely affect our financial condition, results of operations and cash
flows.”
Interest rate risk
Interest rate risk primarily arises from borrowings, loans to third parties, and cash and cash
equivalents. Those carried at floating rates expose us to cash flow interest rate risk whereas
those carried at fixed rates expose us to fair value interest rate risk. We regularly monitor our
FINANCIAL INFORMATION
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interest rate risk to ensure there is no undue exposure to significant interest rate movements.
We had limited cash flow interest rate risk as of December 31, 2020, 2021 and 2022, as
substantially all the borrowings and loans to third parties were carried at fixed interest rates.
Credit Risk
Credit risk arises from cash and cash equivalents, trade receivables, contract assets, restricted
cash and financial assets measured at fair value through profit or loss or included in other
receivables and other assets.
We manage risk arising from cash and cash equivalents, restricted cash and financial assets
measured at fair value through profit or loss by only conducting transacts with state-owned or
reputable financial institutions, which have no recent history of default.
We manage risk arising from trade receivables, contract assets and financial assets included in
other receivables and other assets by only conducting transactions only with recognized and
creditworthy third parties, or with other customers who passed our creditability assessment. We
require all customers who wish to trade on credit terms or carry out other transactions to be
subject to certain creditability assessments.
Liquidity Risk
We intend to maintain sufficient cash and cash equivalents. Due to the dynamic nature of our
underlying businesses, we regularly monitor our liquidity risk and maintain adequate cash and
cash equivalents, short-term and long-term time deposits and investments in wealth
management products or adjust financial arrangements to meet our liquidity requirements.
See Note 3.1(c) to the Accountant’s Report in Appendix I to this prospectus for the liquidity
risk to which we are exposed.
WORKING CAPITAL CONFIRMATION
Taking into account the financial resources available to us, including our cash and cash
equivalents on hand, our available financing facilities and the estimated net proceeds from the
Global Offering, our Directors are of the view that we have sufficient working capital to meet
our present requirements and for at least the next twelve months from the date of this
prospectus. Our Directors confirm that we had no material defaults in payment of trade and
non-trade payables during the Track Record Period.
DIVIDEND
We are a holding company incorporated under the laws of the Cayman Islands. As a result, the
payment and amount of any future dividend will also depend on the availability of dividends
received from our subsidiaries.
In August, 2021, the board of directors declared a cash dividend of US$12.0 cent per share, to
be paid to shareholders, including holders of preferred shares, of record as of the close of
business on August 31, 2021. Such dividend was fully settled by cash in November 2021. For
more details, see Note 43 to the Accountant’s Report in Appendix I to this prospectus. We do
not have any dividend policy and have no present plan to pay any dividends to our shareholders
in the foreseeable future. However, we may distribute dividends in the future by way of cash
or by other means that we consider appropriate. A decision to declare and pay any dividends
would require the approval of the Board and will be at their discretion. As advised by our legal
adviser on the laws of the Cayman Islands, Harney Westwood & Riegels, a position of
FINANCIAL INFORMATION
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accumulated losses does not necessarily restrict us from declaring and paying dividends to our
shareholders out of either our profit or our share premium account, provided this would not
result in us being unable to pay its debts as they fall due in the ordinary course of business.
LISTING EXPENSES
Based on the Offer Price of HK$12.00 per Offer Share, the total estimated listing expenses in
relation to the Global Offering is approximately HK$390.7 million, assuming the Over-
allotment Option is not exercised, and the Reclassification, Redesignation and Share
Subdivision are completed. The total estimated listing expenses will represent approximately
10.0% of the total gross proceeds from the Global Offering of approximately HK$3.92 billion
assuming that Over-allotment Option is not exercised. Listing expenses of US$27.9 million
were charged to our consolidated income statements for the years ended December 31, 2021
and 2022 and for the six months ended June 30, 2023. We estimate that an additional listing
expenses of US$6.6 million will be further incurred by our Group. The balance of
approximately US$15.3 million, which mainly includes underwriting commission, is expected
to be accounted for as a deduction from equity upon the completion of the Global Offering.
These listing expenses mainly comprise professional fees paid and payable to the professional
parties for their services rendered in relation to the Listing and the Global Offering and the
underwriting commission and incentive fee payable to the Underwriters in connection with the
offering of Offer Shares under the Global Offering.
The table below sets forth the breakdown of our listing expenses.
Underwriting-related expenses (including commissions and fees) .... HK$137.2 million
Non-underwriting-related expenses ........................... HK$253.6 million
– fees and expenses of legal advisors and accountants ........... HK$192.9 million
– other fees and expenses ................................ HK$60.7 million
Total .................................................. HK$390.7 million
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
Please see the section “Unaudited Pro Forma Financial Information” in Appendix II for our
unaudited pro forma adjusted consolidated net tangible assets per Share information.
DISCLOSURE UNDER RULES 13.13 TO 13.19 OF THE LISTING RULES
Our Directors have confirmed that, as of the Latest Practicable Date, there were no
circumstances which, had we been required to comply with Rules 13.13 to 13.19 in Chapter 13
of the Listing Rules, would have given rise to a disclosure requirement under Rules 13.13 to
13.19 of the Listing Rules.
NO MATERIAL ADVERSE CHANGE
After performing sufficient due diligence work which our Directors consider appropriate and
after due and careful consideration, our Directors confirm that, up to the date of this
prospectus, there has been no material adverse change in our financial or trading position since
June 30, 2023, being the end date of the periods reported in the Accountant’s Report in
Appendix I to this prospectus, and there has been no event since June 30, 2023 that would
materially affect the information as set forth in the Accountant’s Report in Appendix I to this
prospectus.
FINANCIAL INFORMATION
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FUTURE PLANS
See “Business – Our Strategies” for a detailed description of our future plans.
USE OF PROCEEDS
After deducting the underwriting fees, commissions and estimated expenses payable by us in
relation to the Global Offering, we estimate that we will receive net proceeds of approximately
HK$3,527.9 million. We intend to use the net proceeds from the Global Offering for the
following purposes and in the amounts set out below, subject to changes in light of our
evolving business needs and changing market conditions:
 approximately 30%, or HK$1,058.4 million, will be used to expand our logistics
networks, improve our infrastructure, and strengthen our sorting and warehouse
capacity and capabilities in Southeast Asia and other existing markets, including:
o For machinery and equipment upgrade: We plan to increase the number of our
automated sorting machines and equipment, upgrade our hardware and software
with data analytics and AI-enabled intelligent decision making capability at our
sorting centers, to optimize delivery routes and timing and deliver greater estimated
delivery accuracy with real-time visibility, reducing human error and labor costs per
parcel thereby increasing efficiency and optimizing capacity. We will continue to
invest in establishing six new customized integrated logistics centers and upgrading
of our existing sorting centers in China and selected Southeast Asian countries
including the Philippines and Malaysia. We plan to equip our sorting centers with
advanced sorting and loading machines and automation equipment and technologies,
to achieve efficient multi-equipment collaborative operation and fully automated
operation. In the following 12 to 36 months, we plan to set up around 200 sets of
cross-belt sorters with necessary associated equipments such as belt conveyors in
China, and around 60 sets of cross-belt sorters with appropriate numbers of
conveyor lines in Southeast Asia;
o For line-haul network: We plan to further strengthen our line-haul network through
acquiring additional transportation vehicles to expand self-owned fleet, adding
additional line-haul routes and peak network capacity. We plan to invest in acquiring
and upgrading self-owned high-capacity line haul vehicles in China from 2024 to
2027. Specifically, we plan to acquire a total of approximately 2,000 vehicles in
China, including 9.6-meter-length trucks and 16.5-meter-length longer heavier
vehicles. We also plan to focus on expanding and upgrading our vehicles in
Southeast Asian countries including Indonesia, Thailand, Malaysia and Vietnam.
Specifically, we plan to acquire (i) a total of over 700 vehicles in Indonesia, (ii) a
total of over 400 vehicles in Thailand, (iii) over 100 vehicles in Malaysia and (iv)
more than 300 vehicles in Vietnam. We will invest in different models of vehicles
that cater to local demand and operating environment in each market. To enhance
our line-haul transportation efficiency, we will also enhance our line-haul capacities
by selectively engaging transportation service providers with efficient and premium
services; and
FUTURE PLANS AND USE OF PROCEEDS
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o For sorting center and warehouse network expansion: We plan to strategically
acquire land use rights or properties, and enter into lease agreements in certain areas
or locations to expand our sorting center and warehouse network. We have acquired
use of lands with total area of approximately 104,391 square meters and 91,336
square meters in Malaysia and the Philippines, respectively, for construction of new
customized logistics centers in light of the estimated growth of parcel volume in
these countries in the near future. While most of our sorting centers are located on
leased lands or in leased, properties significant investments are required for the
construction of facilities, customization of leased properties and installation of
logistics equipment. We plan to use the proceeds from the Global Offering for the
investments and construction of our customized integrated logistics centers in
China, the Philippines and Malaysia to include a suite of logistics functions as
comprehensive distribution centers and warehouses that offer additional value-
added services to customers and enable us to expand our service offerings solutions.
Currently in China, we are constructing an integrated logistics center covering a
floor area of over 190,000 square meters in Y angzhou, Jiangsu Province, and an
integrated logistics center covering a floor area of approximately 209,242 square
meters in Guangzhou, Guangdong Province. We intend to build three integrated
logistics centers in the Philippines and one integrated logistics center in Malaysia,
the construction period of which is now planned for 2024 and 2025. We expect these
integrated logistics centers, upon completion of construction and commencement of
operation, to significantly increase our sorting capacity in our existing markets,
shorten distance from sorting centers to outlets and our network partners, lower cost
for us and our network partners, and improve our capabilities to serve a more
extensive network.
 approximately 30%, or HK$1,058.4 million, will be used to expand in new markets
and diverse our service offering, including :
o New Markets and geographical service coverage expansion: We plan to replicate our
success in other carefully selected markets including the New Markets that we just
entered into in 2022. We plan to further invest in infrastructure such as sorting
centers, line-haul transportation, facilities and equipment in these markets. We
intend to further invest in building pickup and delivery outlets and capabilities. We
will also explore cooperation with network partners in these areas to acquire the
capability of last-mile pickup and first-mile delivery capacities. To achieve these
goals and capitalize on growth potential in these markets, we expect to invest in
recruitment of dedicated local teams and personnel, lease of offices and facilities,
pre-stage market surveys, as well as advertising to grow our customer base and
brand awareness;
FUTURE PLANS AND USE OF PROCEEDS
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o New service offerings: We plan to invest in the expansion and development of our
business primarily on an organic basis, including expanding our services offerings
in warehousing, transportation, supply chain solutions, etc. We may also consider
selective investment and acquisition opportunities strategically across the logistics
value chain. For a potential acquisition or investment, we will consider various
criteria, including (i) the target’s existing logistics infrastructure and network and if
it is complementary to our geographical coverage, (ii) the target’s service
capabilities and quality, (iii) the target’s existing customer base, operating history
and reputation, (iv) potential synergies with our business and (v) the target’s
financial performance. According to Frost & Sullivan, in 2022, there were around
several thousands of players in Africa, Latin America and Middle East. In 2022, the
penetration rate of the e-commerce market in Africa, Latin America and Middle East
is around 5%, 11% and 11%, respectively, and is expected to increase to around
16%, 23% and 26%, respectively, in 2027. Based on the aforementioned information
as advised by Frost & Sullivan, our knowledge, experience and expertise, our
Directors are of the view that we will be able to identify suitable investment or
acquisition targets in the market that meet the criteria. We might acquire majority or
minority interests in the targets, depending on our commercial needs. As of the
Latest Practicable Date, we had not identified or committed to any investment or
acquisition targets for our use of net proceeds from the Global Offering; and
o Investment in cross-border services: To leverage our well-developed domestic
logistics network in Southeast Asia and other existing markets and better service our
customers and e-commerce platforms, we plan to make select investment in the
cross-border industry, including but not limited to enhancing our cross-border
network by increasing the number of warehouses and deepening business
relationship with logistics service providers.
 approximately 30%, or HK$1,058.4 million, will be used for research and
development and technology innovations, including :
o IT system and infrastructure: We believe that with a strengthened IT system and the
resulting highly efficient operations, we are able to enhance the efficiency and
connectivity of our logistics network and cater to the evolving needs of the market.
We aim to continuously invest in developing and upgrading our IT infrastructure and
equipment. We plan to further invest in build and upgrade our technology equipment
for (i) intelligent and automated weighing, sorting, handling and labeling, (ii)
real-time display of key indicators of orders and parcel delivery in a centralized
system connecting our sorting centers, outlets and back office for management
purpose, (iii) providing data analysis support for our network partners’ daily
management and service quality improvement, and (iv) building up of a global
online settlement platform for key account customers. In addition, we plan to
continually develop our cloud infrastructure and system and develop our proprietary
JMS system to cater to our globalized operations, including adding more customized
modules and functions tailored for different markets and service offerings, for more
effective deployment of the system in new markets we enter into or for new service
offering we launch in the future. We also intend to further develop our integrated
technology platform and enhance functionalities across data management, network
management, service quality management, customer relationship management,
transportation management, and device and materials management, among others.
We will develop more applications and APIs to further improve customer experience
and enhance our operational efficiency;
FUTURE PLANS AND USE OF PROCEEDS
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o Automated sorting: We plan to further develop our automated sorting system and
enhance the connectivity of equipment across sorting centers. We intend to deploy
more AI technologies in our system to increase traceability of the parcels and
improve the accuracy and speed for parcel sortation, in order to further increase
capacity and reliability of our sorting centers and optimize the overall delivery
process;
o AI and data analytics: We plan to further unify the data scattered across our daily
operations through our data management platform and develop more advanced
machine learning and deep learning algorithms. We intend to further improve our
data analytics capabilities based on advanced machine learning in order to
coordinate logistics resources in real time, perform more accurate forecasting of
delivery demands, and optimize delivery routes and allocation of parcels across our
logistics network; we also intend to invest in cloud such as Internet of Things (IoT),
Natural Language Processing (NLP), and computer vision, among others, to employ
AI across our business operations to improve our efficiency and enhance end
customer experience; and
o R&D and IT investment: We plan to invest in our R&D team and in partnership with
other institutions globally for enhanced technology capabilities, R&D and
technology innovations endeavors. We will enhance and strength our talent pool by
incentivizing and retaining our R&D personnel, as well as attracting top experts,
senior engineers and specialized talents in areas such as AI, data analysis, algorithm,
and technology infrastructure. We expect to recruit approximately 270 R&D talents
and 70 management personnel in the next three years. We will also invest in the
training of our employees to improve their skills and provide them with technical
support in order to strengthen our service capabilities.
 approximately 10%, or HK$352.8 million, will be used for general corporate
purposes and working capital needs.
If the Over-allotment Option is exercised in full, the net proceeds that we will receive will be
approximately HK$4,095.0 million. In the event that the Over-allotment Option is exercised in
full, we intent to apply the additional net proceeds to the above purposes in the proportions
stated above (as defined under the Securities and Futures Ordinance) or applicable laws in the
relevant jurisdictions for non-Hong Kong based deposits.
To the extent that the net proceeds of the Global Offering are not immediately required for the
above purposes or if we are unable to put into effect any part of our plan as intended, to the
extent permitted by applicable law and regulations and so long as it is deemed to be in our best
interests, we will hold such funds in short-term interest-bearing accounts at authorized licensed
banks or financial institutions as defined under the Securities and Futures Ordinance, relevant
PRC laws and regulations or other applicable laws and regulations.
We will issue announcements, where required, if there is any material change in the use of
proceeds mentioned above.
FUTURE PLANS AND USE OF PROCEEDS
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HONG KONG UNDERWRITERS
Morgan Stanley Asia Limited
Merrill Lynch (Asia Pacific) Limited
China International Capital Corporation Hong Kong Securities Limited
UBS AG Hong Kong Branch
CCB International Capital Limited
CMB International Capital Limited
Huatai Financial Holdings (Hong Kong) Limited
BOCI Asia Limited
ABCI Securities Company Limited
BOCOM International Securities Limited
ICBC International Securities Limited
Deutsche Bank AG, Hong Kong Branch
Daiwa Capital Markets Hong Kong Limited
Guotai Junan Securities (Hong Kong) Limited
DBS Asia Capital Limited
China Galaxy International Securities (Hong Kong) Co., Limited
Futu Securities International (Hong Kong) Limited
Tiger Brokers (HK) Global Limited
V aluable Capital Limited
Riche Bright Securities Limited
Fosun International Securities Limited
UNDERWRITING
This prospectus is published solely in connection with the Hong Kong Public Offering. The
Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters on a
conditional basis. The International Offering is expected to be fully underwritten by the
International Underwriters.
The Global Offering comprises the Hong Kong Public Offering of initially 32,655,200 Hong
Kong Offer Shares and the International Offering of initially 293,895,200 International Offer
Shares, subject, in each case, to reallocation on the basis as described in “Structure of the
Global Offering” as well as to the Over-allotment Option (in the case of the International
Offering).
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, our Company is offering the Hong Kong
Offer Shares for subscription on the terms and conditions set out in this prospectus and the
Hong Kong Underwriting Agreement at the Offer Price.
UNDERWRITING
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Subject to (a) the Stock Exchange granting approval for the listing of, and permission to deal
in, the Class B Shares in issue (after the Reclassification, Redesignation and Subdivision) and
to be issued (including the additional Class B Shares which may be issued pursuant to the
exercise of the Over-allotment Option) under the Global Offering and the Class B Shares that
may be issued upon conversion of the Class A Shares on the Main Board of the Stock Exchange
and such approval not having been subsequently withdrawn, revoked or withheld prior to the
commencement of trading of the Class B Shares on the Stock Exchange and (b) certain other
conditions set out in the Hong Kong Underwriting Agreement, the Hong Kong Underwriters
have agreed severally but not jointly to procure subscribers for, or themselves to subscribe for,
their respective applicable proportions of the Hong Kong Offer Shares being offered which are
not taken up under the Hong Kong Public Offering on the terms and conditions set out in this
prospectus and the Hong Kong Underwriting Agreement.
The Hong Kong Underwriting Agreement is conditional on, among other things, the
International Underwriting Agreement having been executed and becoming unconditional and
not having been terminated in accordance with its terms.
Grounds for termination
If any of the events set out below occur at any time prior to 8:00 a.m. on the Listing Date, the
Overall Coordinators (for themselves and on behalf of the Hong Kong Underwriters) shall be
entitled by written notice to our Company to terminate the Hong Kong Underwriting
Agreement with immediate effect:
(a) there shall develop, occur, exist or come into effect:
(i) any event, or series of events, in the nature of force majeure (including, without
limitation, any acts of government, declaration of a national, regional or
international emergency or war, calamity, crisis, epidemic, pandemic, outbreaks,
escalation, mutation or aggravation of diseases (including, without limitation,
COVID-19 and Severe Acute Respiratory Syndrome (SARS)), economic sanctions,
strikes, labour disputes, lock-outs, other industrial actions, fire, explosion, flooding,
earthquake, tsunami, volcanic eruption, civil commotion, riots, rebellion, severe
transport disruption, paralysis in government operation, public disorder, acts of war
(whether declared or not), outbreak or escalation of hostilities (whether or not war
is declared), acts of God or acts of terrorism (whether or not responsibility has been
claimed), in or affecting the British Virgin Islands, Cayman Islands, Hong Kong, the
PRC, the United States, the United Kingdom, Japan, Singapore, the European Union
(or any member thereof) or any other jurisdictions relevant to our Group or the
Global Offering (collectively, the “ Relevant Jurisdictions ”); or
(ii) any change, or any development involving a prospective change, or any event or
circumstance or series of events likely to result in any change or development
involving a prospective change, in any local, national, regional or international
financial, economic, political, military, industrial, legal, fiscal, regulatory, currency,
credit or market matters or conditions, equity securities or exchange control or any
monetary or trading settlement system or other financial markets (including, without
limitation, conditions in the stock and bond markets, money and foreign exchange
markets, the interbank markets and credit markets) in or affecting any Relevant
Jurisdictions; or
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(iii) any moratorium, suspension or restriction (including, without limitation, any
imposition of or requirement for any minimum or maximum price limit or price
range) in or on trading in securities generally on the SEHK, the New Y ork Stock
Exchange, the NASDAQ Global Market, the London Stock Exchange, the Shanghai
Stock Exchange, the Shenzhen Stock Exchange, the Tokyo Stock Exchange or the
Singapore Stock Exchange; or
(iv) any general moratorium on commercial banking activities in Hong Kong (imposed
by the Financial Secretary or the Hong Kong Monetary Authority or other competent
authority), New Y ork (imposed at the U.S. Federal or New Y ork State level or by any
other competent authority), London, the PRC, the European Union (or any member
thereof) or any of the other Relevant Jurisdictions (declared by the relevant
authorities) or any disruption in commercial banking or foreign exchange trading or
securities settlement or clearance services, procedures or matters in or affecting any
of the Relevant Jurisdictions; or
(v) any new laws, or any change or any development involving a prospective change or
any event or circumstance likely to result in a change or a development involving
a prospective change in (or in the interpretation or application by any court or other
competent Authorities of) existing laws, in each case, in or affecting any of the
Relevant Jurisdictions; or
(vi) the imposition of sanctions, or the withdrawal of trading privileges, in whatever
form, directly or indirectly, under any sanction laws, or regulations in, Hong Kong,
the PRC or any other Relevant Jurisdiction; or
(vii) any change or development involving a prospective change or amendment in or
affecting taxes or exchange control, currency exchange rates or foreign investment
regulations (including, without limitation, a material devaluation of the Hong Kong
dollar or the Renminbi against any foreign currencies, a change in the system under
which the value of the Hong Kong dollar is linked to that of the United States dollar
or RMB is linked to any foreign currency or currencies), or the implementation of
any exchange control, in any of the Relevant Jurisdictions or affecting an investment
in the Offer Shares; or
(viii) other than with the prior written consent of the Overall Coordinators and the Joint
Sponsors, the issue or requirement to issue by our Company of any supplement or
amendment to this prospectus (or to any other documents issued or used in
connection with the contemplated offer and sale of the Class B Shares) pursuant to
the Companies Ordinance or the Companies (Winding Up and Miscellaneous
Provisions) Ordinance or the Listing Rules or any requirement or request of the
SEHK and/or the SFC; or
(ix) any demand by creditors for repayment of indebtedness or an order or petition for
the winding up or liquidation of any member of our Group or any composition or
arrangement made by any member of our Group with its creditors or a scheme of
arrangement entered into by any member of our Group or any resolution for the
winding-up of any member of our Group or the appointment of a provisional
liquidator, receiver or manager over all or part of the assets or undertaking of any
member of our Group or anything analogous thereto occurring in respect of any
member of our Group; or
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(x) any litigation, dispute, legal action or claim or regulatory or administrative
investigation or action being threatened or instigated against any member of our
Group or any Director; or
(xi) any contravention by any member of our Group or any Director of the Listing Rules
or applicable laws; or
(xii) any of the chairman, chief executive officer or an executive Director of our
Company is vacating his or her office; or
(xiii) any non-compliance of this prospectus, the CSRC filings (or any other documents
used in connection with the contemplated offer and sale of the Offer Shares) or any
aspect of the Global Offering with the Listing Rules, the Trial Administrative
Measures of Overseas Securities Offering and Listing by Domestic Companies, the
Provisions on Strengthening Confidentiality and Archives Administration of
Overseas Securities Offering and Listing by Domestic Companies or any other
applicable laws; or
(xiv) any change or prospective change or development, or a materialisation of, any of the
risks set out in section headed “Risk Factors” in this prospectus,
which, individually or in the aggregate, in the sole and absolute opinion of the Overall
Coordinators (for themselves and on behalf of the Hong Kong Underwriters):
(1) has or will have or may have a material adverse change; or
(2) has or will have or is likely to have a material adverse effect on the success of the
Global Offering or the level of applications under the Hong Kong Public Offering
or the level of interest under the International Offering; or
(3) makes or will make or is likely to make it inadvisable or inexpedient or
impracticable for the Global Offering to proceed or to market the Global Offering
or the delivery or distribution of the Offer Shares on the terms and in the manner
contemplated by the Offer Related Documents (as defined below); or
(4) has or will have or is likely to have the effect of making any material part of Hong
Kong Underwriting Agreement (including underwriting) incapable of performance
in accordance with its terms or preventing or delaying the processing of applications
and/or payments pursuant to the Global Offering or pursuant to the underwriting
thereof; or
(b) there has come to the notice of the Overall Coordinators that:
(i) any statement contained in any of the offering documents and/or in any notices,
announcements, advertisements, communications or other documents (including any
announcement, circular, document or other communication pursuant to the Hong
Kong Underwriting Agreement) issued or used by or on behalf of our Company in
connection with the Hong Kong Public Offering, including any supplement or
amendment thereto (collectively, the “ Offer Related Documents ”) (including any
supplement or amendment thereto) was, when it was issued, or has become, untrue,
incorrect or misleading in any material respect, or that any forecast, estimate,
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expression of opinion, intention or expectation contained in any of the Offer Related
Documents (including any supplement or amendment thereto) is not fair and honest
and based on reasonable assumptions; or
(ii) any matter has arisen or has been discovered which would, had it arisen or been
discovered immediately before the date of this prospectus, constitute a material
misstatement in, or omission from any of the Offer Related Documents; or
(iii) there is a breach of, or any event or circumstance rendering untrue, incorrect,
incomplete or misleading in any respect, any of the warranties given by our
Company in the Hong Kong Underwriting Agreement or the International
Underwriting Agreement, as applicable; or
(iv) there is any material adverse change; or
(v) there is a material breach of any of the obligations imposed on our Company by the
Hong Kong Underwriting Agreement or the International Underwriting Agreement
(including any amendment thereto), as applicable; or
(vi) approval by the Stock Exchange of the listing of, and permission to deal in, the Class
B Shares to be issued or sold (including any additional Class B Shares that may be
sold pursuant to the exercise of the Over-Allotment Option) under the Global
Offering is refused or not granted, other than subject to customary conditions, on or
before the Listing Date, or if granted, the approval is subsequently withdrawn,
qualified (other than by customary conditions) or withheld; or
(vii) the notice of acceptance of the CSRC filings issued by the CSRC and/or the results
of the CSRC filings published on the website of the CSRC is rejected, withdrawn,
revoked or invalidated; or
(viii) any person (other than the Joint Sponsors) has withdrawn or is subject to
withdrawing its consent to the inclusion of its reports, letters and/or opinions (as the
case may be) and being named in this prospectus or to the issue of any of the Hong
Kong public offering documents; or
(ix) our Company withdraws any of the Offer Related Documents or the Global Offering;
or
(x) there is an order or petition for the winding-up of any member of our Group or any
composition or arrangement made by any member of our Group with its creditors or
a scheme of arrangement entered into by any member of our Group or any resolution
for the winding-up of any member of our Group or the appointment of a provisional
liquidator, receiver or manager over all or part of the material assets or undertaking
of any member of our Group or anything analogous thereto occurring in respect of
any member of our Group, or
(xi) a material portion of the orders placed or confirmed in the bookbuilding process, or
of the investment commitments made by any cornerstone investors under the
agreements signed with such cornerstone investors, have been withdrawn,
terminated or cancelled.
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Undertakings to the Stock Exchange pursuant to the Listing Rules
(A) Undertakings by our Company
Pursuant to Rule 10.08 of the Listing Rules, our Company has undertaken to the Stock
Exchange that it will not exercise its power to issue any further Shares, or securities
convertible into equity securities of our Company (whether or not of a class already listed) or
enter into any agreement to such an issue within six months from the Listing Date (whether or
not such issue of Shares or securities will be completed within six months from the Listing
Date), except (a) pursuant to the Global Offering and the Over-allotment Option, (b) pursuant
to any capitalization issue, capital reduction or consolidation or sub-division of shares, or (c)
under any of the circumstances provided under Rule 10.08 of the Listing Rules.
(B) Undertakings by our group of Controlling Shareholders
Pursuant to Rule 10.07 of the Listing Rules, each of the Controlling Shareholders (being a
group of Controlling Shareholders) has undertaken to the Stock Exchange and our Company
that he/it will not and will procure that the relevant registered holder(s) will not:
(i) in the period commencing on the date by reference to which disclosure of his/its holding
of Shares is made in this prospectus and ending on the date which is six months from the
Listing Date, dispose of, nor enter into any agreement to dispose of or otherwise create
any options, rights, interests or encumbrances in respect of, any of the Shares in respect
of which he/it is shown by this prospectus to be the beneficial owner; and
(ii) in the period of six months commencing on the date on which the period referred to in
paragraph (i) above expires, dispose of, nor enter into any agreement to dispose of or
otherwise create any options, rights, interests or encumbrances in respect of, any of the
Shares referred to in paragraph (i) above if, immediately following such disposal or upon
the exercise or enforcement of such options, rights, interests or encumbrances, he/it
would cease to be a Controlling Shareholder of our Company (as defined in the Listing
Rules) or one of the Controlling Shareholders of our Company, or would together with the
other Controlling Shareholders, cease to be the Controlling Shareholders of our Company
(as defined in the Listing Rules), in each case, save as permitted under the Listing Rules.
Pursuant to Note 3 to Rule 10.07(2) of the Listing Rules, each of the Controlling Shareholders
has undertaken to the Stock Exchange and our Company that, within the period commencing
on the date by reference to which disclosure of his/its holding of Shares is made in this
prospectus and ending on the date which is 12 months from the Listing Date, he/it will:
(i) when he/it pledges or charges any Shares beneficially owned by him/it in favor of an
authorized institution (as defined in the Banking Ordinance (Chapter 155 of the Laws of
Hong Kong)) for a bona fide commercial loan pursuant to Note 2 to Rule 10.07(2) of the
Listing Rules, immediately inform our Company in writing of such pledge or charge
together with the number of Shares so pledged or charged; and
(ii) when he/it receives indications, either verbal or written, from the pledgee or chargee of
any Shares that any of the pledged or charged Shares will be disposed of, immediately
inform our Company of such indications.
Undertakings pursuant to the Hong Kong Underwriting Agreement
Our Company has undertaken to each of the Overall Coordinators, the Hong Kong
Underwriters and the Joint Sponsors not to (save for the issue, offer or sale of the Offer Shares
by our Company pursuant to the Global Offering (including pursuant to the Over-allotment
UNDERWRITING
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Option), without the prior written consent of the Overall Coordinators (on behalf of the Hong
Kong Underwriters) and unless in compliance with the requirements of the Listing Rules, at
any time during the period commencing on the date of the Hong Kong Underwriting Agreement
and ending on, and including, the date that is six months after the Listing Date (the “ First
Six-Month Period ”):
(i) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree to
allot, issue or sell, mortgage, charge, pledge, hypothecate, hedge, lend, grant, agree to
grant or sell any option, warrant, contract or right to subscribe for or purchase, grant,
agree to grant or purchase any option, warrant, contract or right to allot, issue or sell, or
otherwise transfer or dispose of or create an encumbrance over, or agree to transfer or
dispose of or create an encumbrance over, either directly or indirectly, conditionally or
unconditionally, any Shares or other securities of our Company, or any interest in any of
the foregoing (including, without limitation, any securities convertible into or
exchangeable or exercisable for or that represent the right to receive, or any warrants or
other rights to subscribe or purchase, any Shares or other securities of our Company, or
any interest in any of the foregoing), or deposit any Shares or other securities of our
Company with a depositary in connection with the issue of depositary receipts; or
(ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any
of the economic consequences of ownership of any Shares or other securities of the
Company, or any interest in any of the foregoing (including, without limitation, any
securities convertible into or exchangeable or exercisable for or that represent the right
to receive, or any warrants or other rights to purchase, any Shares or other securities of
the Company, or any interest in any of the foregoing); or
(iii) enter into any transaction with the same economic effect as any transaction specified in
paragraphs (i) or (ii) above; or
(iv) offer to or agree to or announce any intention to effect any transaction specified in
paragraphs (i), (ii) or (iii) above,
whether any of the transactions specified in paragraphs (i), (ii) or (iii) above is to be settled
by delivery of Shares or other securities of the Company, or in cash or otherwise (whether or
not the issue of such Shares or other shares or securities will be completed within the First
Six-Month Period).
In the event that, during the period of six months commencing on the date on which the First
Six-Month Period expires (the “ Second Six-Month Period ”), our Company enters into any
transactions specified in paragraphs (i), (ii) or (iii) above or offers or agrees to, or announces
any intention to, enter into any such transactions, our Company will take all reasonable steps
to ensure that it will not create a disorderly or false market in the securities of our Company.
Undertakings by our existing Shareholders
Each of the existing shareholders of the Company (the “ Existing Shareholders ”, and each, an
“Existing Shareholder ”) has entered into a deed of lock-up undertaking (the “ Lock-up
Undertakings ”) in favour of the Company, the Joint Sponsors and the Overall Coordinators
(for themselves and on behalf of the Underwriters). Pursuant to the Lock-up Undertakings, the
Existing Shareholders are subject to lock-up arrangements ending on the date which is 6
months after the Listing Date, subject to certain exceptions.
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Hong Kong Underwriters’ interests in our Company
Save as disclosed in the paragraph headed “5.10.2 Save as disclosed in this prospectus” in
Appendix V to this prospectus and for their respective obligations under the Hong Kong
Underwriting Agreement, as of the Latest Practicable Date, none of the Hong Kong
Underwriters was interested, legally or beneficially, directly or indirectly, in any Shares or any
securities of any member of our Group or had any right or option (whether legally enforceable
or not) to subscribe for or purchase, or to nominate persons to subscribe for or purchase, any
Shares or any securities of any member of our Group.
Following the completion of the Global Offering, the Hong Kong Underwriters and their
affiliated companies may hold a certain portion of the Class B Shares as a result of fulfilling
their respective obligations under the Hong Kong Underwriting Agreement.
International Offering
International Underwriting Agreement
In connection with the International Offering, our Company expect to enter into the
International Underwriting Agreement with the International Underwriters on or around
Thursday, October 19, 2023. Under the International Underwriting Agreement and subject to
the Over-allotment Option, the International Underwriters would, subject to certain conditions
set out therein, agree severally but not jointly to procure subscribers for, or themselves to
subscribe for, their respective applicable proportions of the International Offer Shares initially
being offered pursuant to the International Offering. It is expected that the International
Underwriting Agreement may be terminated on similar grounds as the Hong Kong
Underwriting Agreement. Potential investors should note that in the event that the International
Underwriting Agreement is not entered into, the Global Offering will not proceed. See
“Structure of the Global Offering – The International Offering”.
Over-allotment Option
Our Company is expected to grant to the International Underwriters the Over-allotment Option,
exercisable by the Overall Coordinators on behalf of the International Underwriters at any time
from the Listing Date until 30 days after the last day for lodging applications under the Hong
Kong Public Offering, which is expected to be on Saturday, November 18, 2023, pursuant to
which our Company may be required to issue up to an aggregate of 48,982,400 Class B Shares,
representing not more than 15% of the number of Offer Shares initially available under the
Global Offering, at the Offer Price, to cover over-allocations in the International Offering, if
any. See “Structure of the Global Offering – Over-allotment Option”.
Commissions and Expenses
The Underwriters will receive an underwriting commission of 1.96% of the aggregate Offer
Price of all the Offer Shares (including any Offer Shares to be issued pursuant to the exercise
of the Over-allotment Option), out of which they will pay any sub-underwriting commissions
and other fees.
The Underwriters may receive a discretionary incentive fee of up to 1.54% of the aggregate
Offer Price of all the Offer Shares (including any Offer Shares to be issued pursuant to the
exercise of the Over-allotment Option) (the “ Incentive Fee ”).
For the purpose of Listing Rules, assuming full payment of Incentive Fee, the ratio of the fixed
fees and discretionary fees payable to the Underwriters represent 55.86%:44.14%.
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For any unsubscribed Hong Kong Offer Shares reallocated to the International Offering, the
underwriting commission will not be paid to the Hong Kong Underwriters but will instead be
paid, at the rate applicable to the International Offering, to the relevant International
Underwriters.
The aggregate underwriting commissions payable to the Underwriters in relation to the Global
Offering will be approximately HK$137.2 million.
The aggregate underwriting commissions and fees together with the Stock Exchange listing
fees, the SFC transaction levy, the AFRC transaction levy and the Stock Exchange trading fee,
legal and other professional fees and printing and all other expenses relating to the Global
Offering are estimated to be approximately HK$390.7 million, the full payment of the
Incentive Fee and the Over-allotment Option is not exercised) and will be paid by our
Company.
Indemnity
Our Company has agreed to indemnify the Joint Sponsors, the Overall Coordinators, the
Capital Market Intermediaries, the Joint Global Coordinators, the Joint Bookrunners, the Joint
Lead Managers and the Hong Kong Underwriters for certain losses which they may suffer or
incur, including losses arising from their performance of their obligations under the Hong Kong
Underwriting Agreement and any breach by any of our Company.
ACTIVITIES BY SYNDICATE MEMBERS
The underwriters of the Hong Kong Public Offering and the International Offering (together,
the “ Syndicate Members ”) and their affiliates may each individually undertake a variety of
activities (as further described below) which do not form part of the underwriting or stabilizing
process.
The Syndicate Members and their affiliates are diversified financial institutions with
relationships in countries around the world. These entities engage in a wide range of
commercial and investment banking, brokerage, funds management, trading, hedging,
investing and other activities for their own account and for the account of others. In the
ordinary course of their various business activities, the Syndicate Members and their respective
affiliates may purchase, sell or hold a broad array of investments and actively trade securities,
derivatives, loans, commodities, currencies, credit default swaps and other financial
instruments for their own account and for the accounts of their customers. Such investment and
trading activities may involve or relate to assets, securities and/or instruments of our Company
and/or persons and entities with relationships with our Company and may also include swaps
and other financial instruments entered into for hedging purposes in connection with our
Group’s loans and other debt.
In relation to the Class B Shares, the activities of the Syndicate Members and their affiliates
could include acting as agent for buyers and sellers of the Class B Shares, entering into
transactions with those buyers and sellers in a principal capacity, including as a lender to initial
purchasers of the Class B Shares (which financing may be secured by the Class B Shares) in
the Global Offering, proprietary trading in the Class B Shares, and entering into over the
counter or listed derivative transactions or listed or unlisted securities transactions (including
issuing securities such as derivative warrants listed on a stock exchange) which have as their
underlying assets, assets including the Class B Shares. Such transactions may be carried out as
bilateral agreements or trades with selected counterparties. Those activities may require
hedging activity by those entities involving, directly or indirectly, the buying and selling of the
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Class B Shares, which may have a negative impact on the trading price of the Class B Shares.
All such activities could occur in Hong Kong and elsewhere in the world and may result in the
Syndicate Members and their affiliates holding long and/or short positions in the Class B
Shares, in baskets of securities or indices including the Class B Shares, in units of funds that
may purchase the Class B Shares, or in derivatives related to any of the foregoing.
In relation to issues by Syndicate Members or their affiliates of any listed securities having the
Class B Shares as their underlying securities, whether on the Stock Exchange or on any other
stock exchange, the rules of the stock exchange may require the issuer of those securities (or
one of its affiliates or agents) to act as a market maker or liquidity provider in the security, and
this will also result in hedging activity in the Class B Shares in most cases.
All such activities may occur both during and after the end of the stabilizing period described
in “Structure of the Global Offering”. Such activities may affect the market price or value of
the Class B Shares, the liquidity or trading volume in the Class B Shares and the volatility of
the price of the Class B Shares, and the extent to which this occurs from day to day cannot be
estimated.
It should be noted that when engaging in any of these activities, the Syndicate Members will
be subject to certain restrictions, including the following:
(a) the Syndicate Members (other than the Stabilization Manager or any person acting for it)
must not, in connection with the distribution of the Offer Shares, effect any transactions
(including issuing or entering into any option or other derivative transactions relating to
the Offer Shares), whether in the open market or otherwise, with a view to stabilizing or
maintaining the market price of any of the Offer Shares at levels other than those which
might otherwise prevail in the open market; and
(b) the Syndicate Members must comply with all applicable laws and regulations, including
the market misconduct provisions of the SFO, including the provisions prohibiting insider
dealing, false trading, price rigging and stock market manipulation.
Certain of the Syndicate Members or their respective affiliates have provided from time to
time, and expect to provide in the future, investment banking and other services to our
Company and each of its affiliates for which such Syndicate Members or their respective
affiliates have received or will receive customary fees and commissions.
In addition, the Syndicate Members or their respective affiliates may provide financing to
investors to finance their subscriptions of Offer Shares in the Global Offering.
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THE GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part of the
Global Offering, Morgan Stanley Asia Limited, Merrill Lynch (Asia Pacific) Limited. China
International Capital Corporation Hong Kong Securities Limited, UBS AG Hong Kong Branch,
CCB International Capital Limited and CMB International Capital Limited are the Overall
Coordinators of the Global Offering.
The listing of the Class B Shares on the Stock Exchange is sponsored by the Joint Sponsors.
The Joint Sponsors have made an application on behalf of our Company to the Stock Exchange
for the listing of, and permission to deal in, the Class B Shares in issue and to be issued
pursuant to the Global Offering (including the additional Class B Shares which may be issued
pursuant to the exercise of the Over-allotment Option); and the Class B Shares that are issuable
upon conversion of the Class A Shares.
326,550,400 Offer Shares will initially be made available under the Global Offering
comprising:
(a) the Hong Kong Public Offering of initially 32,655,200 Class B Shares (subject to
reallocation) in Hong Kong as described in “– The Hong Kong Public Offering” in this
section; and
(b) the International Offering of initially 293,895,200 Class B Shares (subject to reallocation
and the Over-allotment Option) (i) in the United States solely to QIBs in reliance on Rule
144A or another exemption from, or in a transaction not subject to, the registration
requirements of the U.S. Securities Act and (ii) outside the United States (including to
professional and institutional investors within Hong Kong) in offshore transactions in
reliance on Regulation S, as described in “– The International Offering” in this section.
Investors may either:
(i) apply for Hong Kong Offer Shares under the Hong Kong Public Offering; or
(ii) apply for or indicate an interest for International Offer Shares under the International
Offering,
but may not do both.
The Offer Shares will represent approximately 3.71% of the total Shares in issue immediately
following the completion of the Global Offering, assuming the Over-allotment Option is not
exercised. If the Over-allotment Option is exercised in full, the Offer Shares will represent
approximately 4.24% of the total Shares in issue immediately following the completion of the
Global Offering.
References in this prospectus to applications, application monies or the procedure for
applications relate solely to the Hong Kong Public Offering.
STRUCTURE OF THE GLOBAL OFFERING
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THE HONG KONG PUBLIC OFFERING
Number of Offer Shares initially offered
Our Company is initially offering 32,655,200 Class B Shares for subscription by the public in
Hong Kong at the Offer Price, representing approximately 10.00% of the total number of Offer
Shares initially available under the Global Offering. The number of Offer Shares initially
offered under the Hong Kong Public Offering, subject to any reallocation of Offer Shares
between the International Offering and the Hong Kong Public Offering, will represent
approximately 0.37% of the total Shares in issue immediately following the completion of the
Global Offering (assuming the Over-allotment Option is not exercised).
The Hong Kong Public Offering is open to members of the public in Hong Kong as well as to
institutional and professional investors. Professional investors generally include brokers,
dealers, companies (including fund managers) whose ordinary business involves dealing in
shares and other securities and corporate entities that regularly invest in shares and other
securities.
Completion of the Hong Kong Public Offering is subject to the conditions set out in
“– Conditions of the Global Offering” in this section.
Allocation
Allocation of Offer Shares to investors under the Hong Kong Public Offering will be based
solely on the level of valid applications received under the Hong Kong Public Offering. The
basis of allocation may vary, depending on the number of Hong Kong Offer Shares validly
applied for by applicants. Such allocation could, where appropriate, consist of balloting, which
could mean that some applicants may receive a higher allocation than others who have applied
for the same number of Hong Kong Offer Shares, and those applicants who are not successful
in the ballot may not receive any Hong Kong Offer Shares.
For allocation purposes only, the total number of Hong Kong Offer Shares available under the
Hong Kong Public Offering (after taking into account any reallocation referred to below) will
be divided equally (to the nearest board lot) into two pools: pool A and pool B (with any odd
lot being allocated to pool A). The Hong Kong Offer Shares in pool A will be allocated on an
equitable basis to applicants who have applied for Hong Kong Offer Shares with an aggregate
price of HK$5 million (excluding the brokerage, the SFC transaction levy, the AFRC
transaction levy and the Stock Exchange trading fee payable) or less. The Hong Kong Offer
Shares in pool B will be allocated on an equitable basis to applicants who have applied for
Hong Kong Offer Shares with an aggregate price of more than HK$5 million (excluding the
brokerage, the SFC transaction levy, the AFRC transaction levy and the Stock Exchange
trading fee payable) and up to the total value in pool B.
Investors should be aware that applications in pool A and applications in pool B may receive
different allocation ratios. If any Hong Kong Offer Shares in one (but not both) of the pools
are unsubscribed, such unsubscribed Hong Kong Offer Shares will be transferred to the other
pool to satisfy demand in that other pool and be allocated accordingly. For the purpose of the
immediately preceding paragraph only, the “price” for Hong Kong Offer Shares means the
price payable on application therefor (without regard to the Offer Price as finally determined).
Applicants can only receive an allocation of Hong Kong Offer Shares from either pool A or
pool B and not from both pools. Multiple or suspected multiple applications under the Hong
Kong Public Offering and any application for more than 16,327,600 Hong Kong Offer Shares
is liable to be rejected.
STRUCTURE OF THE GLOBAL OFFERING
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Reallocation
The allocation of the Offer Shares between the Hong Kong Public Offering and the
International Offering is subject to reallocation. Paragraph 4.2 of Practice Note 18 of the
Listing Rules requires a clawback mechanism to be put in place which would have the effect
of increasing the number of Offer Shares under the Hong Kong Public Offering to a certain
percentage of the total number of Offer Shares offered under the Global Offering if certain
prescribed total demand levels are reached.
If the International Offering is fully subscribed or oversubscribed and the number of Offer
Shares validly applied for under the Hong Kong Public Offering represents (a) 15 times or
more but less than 50 times, (b) 50 times or more but less than 100 times and (c) 100 times
or more of the total number of Offer Shares initially available under the Hong Kong Public
Offering, then Offer Shares will be reallocated to the Hong Kong Public Offering from the
International Offering. As a result of such reallocation, the total number of Offer Shares
available under the Hong Kong Public Offering will be increased to 97,965,200 Offer Shares
(in the case of (a)), 130,620,200 Offer Shares (in the case of (b)) and 163,275,200 Offer Shares
(in the case of (c)), representing approximately 30%, approximately 40% and 50% of the total
number of Offer Shares initially available under the Global Offering, respectively (before any
exercise of the Over-allotment Option). In each case, the additional Offer Shares reallocated
to the Hong Kong Public Offering will be allocated between pool A and pool B and the number
of Offer Shares allocated to the International Offering will be correspondingly reduced in such
manner as the Overall Coordinators in their sole discretion consider appropriate.
In addition, the Overall Coordinators may allocate Offer Shares from the International Offer
Shares to the Hong Kong Public Offering to satisfy valid applications under the Hong Kong
Public Offering. In accordance with the Guidance Letter HKEX-GL91-18 issued by the Hong
Kong Stock Exchange, if such allocation is done other than pursuant to the clawback
mechanism above, the maximum total number of Offer Shares that may be allocated to the
Hong Kong Public Offering following such reallocation shall be not more than 65,310,400
Class B Shares, representing approximately 20% of the Offer Shares initially available under
the Global Offering.
If the Hong Kong Public Offering is not fully subscribed, the Overall Coordinators may
reallocate all or any unsubscribed Hong Kong Offer Shares to the International Offering, in
such proportions as the Overall Coordinators deem appropriate.
The Offer Shares to be offered in the Hong Kong Public Offering and the Offer Shares to be
offered in the International Offering may, in certain circumstances, be reallocated between
these offerings at the discretion of the Overall Coordinators.
Applications
Each applicant under the Hong Kong Public Offering will be required to give an undertaking
and confirmation in the application submitted by him that he and any person(s) for whose
benefit he is making the application has not applied for or taken up, or indicated an interest for,
and will not apply for or take up, or indicate an interest for, any International Offer Shares
under the International Offering. Such applicant’s application is liable to be rejected if such
undertaking and/or confirmation is/are breached and/or untrue (as the case may be) or if he has
been or will be placed or allocated International Offer Shares under the International Offering.
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Applicants under the Hong Kong Public Offering are required to pay, on application, the Offer
Price of HK$12.00 per Offer Share in addition to the brokerage, the SFC transaction levy, the
AFRC transaction levy and the Stock Exchange trading fee payable on each Offer Share,
amounting to a total of HK$2,424.20 for one board lot of 200 Class B Shares. Further details
are set out in “How to Apply for Hong Kong Offer Shares”.
THE INTERNATIONAL OFFERING
Number of Offer Shares initially offered
The International Offering will consist of an offering of initially 293,895,200 Class B Shares,
representing approximately 90% of the total number of Offer Shares initially available under
the Global Offering (subject to reallocation and the Over-allotment Option). The number of
Offer Shares initially offered under the International Offering, subject to any reallocation of
Offer Shares between the International Offering and the Hong Kong Public Offering, will
represent approximately 3.34% of the total Shares in issue immediately following the
completion of the Global Offering (assuming the Over-allotment Option is not exercised).
Allocation
The International Offering will include selective marketing of Offer Shares to QIBs in the
United States as well as institutional and professional investors and other investors anticipated
to have a sizeable demand for such Offer Shares in Hong Kong and other jurisdictions outside
the United States in reliance on Regulation S. Professional investors generally include brokers,
dealers, companies (including fund managers) whose ordinary business involves dealing in
shares and other securities and corporate entities that regularly invest in shares and other
securities. Allocation of Offer Shares pursuant to the International Offering will be effected in
accordance with the “book-building” process described in “– Pricing and Allocation” in this
section and based on a number of factors, including the level and timing of demand, the total
size of the relevant investor’s invested assets or equity assets in the relevant sector and whether
or not it is expected that the relevant investor is likely to buy further Class B Shares and/or hold
or sell its Class B Shares after the Listing. Such allocation is intended to result in a distribution
of the Class B Shares on a basis which would lead to the establishment of a solid professional
and institutional shareholder base to the benefit of our Group and the Shareholders as a whole.
The Overall Coordinators (on behalf of the Underwriters) may require any investor who has
been offered Offer Shares under the International Offering and who has made an application
under the Hong Kong Public Offering to provide sufficient information to the Overall
Coordinators so as to allow them to identify the relevant applications under the Hong Kong
Public Offering and to ensure that they are excluded from any allocation of Offer Shares under
the Hong Kong Public Offering.
STRUCTURE OF THE GLOBAL OFFERING
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Reallocation
The total number of Offer Shares to be issued or sold pursuant to the International Offering
may change as a result of the clawback arrangement described in “– The Hong Kong Public
Offering – Reallocation” in this section, the exercise of the Over-allotment Option in whole or
in part and/or any reallocation of unsubscribed Offer Shares originally included in the Hong
Kong Public Offering.
OVER-ALLOTMENT OPTION
In connection with the Global Offering, our Company is expected to grant the Over-allotment
Option to the International Underwriters, exercisable by the Overall Coordinators (on behalf of
the International Underwriters).
Pursuant to the Over-allotment Option, the International Underwriters will have the right,
exercisable by the Overall Coordinators (on behalf of the International Underwriters) at any
time from the Listing Date until 30 days after the last day for lodging applications under the
Hong Kong Public Offering, which is expected to be on Saturday, November 18, 2023, to
require our Company to issue up to an aggregate of 48,982,400 additional Class B Shares,
representing not more than 15% of the total number of Offer Shares initially available under
the Global Offering, at the Offer Price under the International Offering to cover over-
allocations in the International Offering, if any.
If the Over-allotment Option is exercised in full, the additional Offer Shares to be issued
pursuant thereto will represent approximately 0.55% of the total Shares in issue immediately
following the completion of the Global Offering. If the Over-allotment Option is exercised, an
announcement will be made.
STABILIZATION
Stabilization is a practice used by underwriters in some markets to facilitate the distribution of
securities. To stabilize, the underwriters may bid for, or purchase, the securities in the
secondary market during a specified period of time, to retard and, if possible, prevent a decline
in the initial public market price of the securities below the offer price. Such transactions may
be effected in all jurisdictions where it is permissible to do so, in each case in compliance with
all applicable laws and regulatory requirements, including those of Hong Kong. In Hong Kong,
the price at which stabilization is effected is not permitted to exceed the offer price.
In connection with the Global Offering, the Stabilizing Manager (or any person acting for it),
on behalf of the Underwriters, may over-allocate or effect transactions with a view to
stabilizing or supporting the market price of the Class B Shares at a level higher than that
which might otherwise prevail for a limited period after the Listing Date. However, there is no
obligation on the Stabilizing Manager (or any person acting for it) to conduct any such
stabilizing action. Such stabilizing action, if taken, (a) will be conducted at the absolute
discretion of the Stabilizing Manager (or any person acting for it) and in what the Stabilizing
Manager reasonably regards as the best interest of our Company, (b) may be discontinued at
any time and (c) is required to be brought to an end within 30 days of the last day for lodging
applications under the Hong Kong Public Offering, which is expected to be on Saturday,
November 18, 2023.
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Stabilization action permitted in Hong Kong pursuant to the Securities and Futures (Price
Stabilizing) Rules of the SFO includes (a) over-allocating for the purpose of preventing or
minimizing any reduction in the market price of the Class B Shares, (b) selling or agreeing to
sell the Class B Shares so as to establish a short position in them for the purpose of preventing
or minimizing any reduction in the market price of the Class B Shares, (c) purchasing, or
agreeing to purchase, the Class B Shares pursuant to the Over-allotment Option in order to
close out any position established under paragraph (a) or (b) above, (d) purchasing, or agreeing
to purchase, any of the Class B Shares for the sole purpose of preventing or minimizing any
reduction in the market price of the Class B Shares, (e) selling or agreeing to sell any Class
B Shares in order to liquidate any position established as a result of those purchases and (f)
offering or attempting to do anything as described in paragraph (b), (c), (d) or (e) above.
Specifically, prospective applicants for and investors in the Offer Shares should note that:
(a) the Stabilizing Manager (or any person acting for it) may, in connection with the
stabilizing action, maintain a long position in the Class B Shares;
(b) there is no certainty as to the extent to which and the time or period for which the
Stabilizing Manager (or any person acting for it) will maintain such a long position;
(c) liquidation of any such long position by the Stabilizing Manager (or any person acting for
it) and selling in the open market may have an adverse impact on the market price of the
Class B Shares;
(d) no stabilizing action can be taken to support the price of the Class B Shares for longer
than the stabilization period, which will begin on the Listing Date, and is expected to
expire on Saturday, November 18, 2023, being the 30th day after the last day for lodging
applications under the Hong Kong Public Offering. After this date, when no further
stabilizing action may be taken, demand for the Class B Shares, and therefore the price
of the Class B Shares, could fall;
(e) the price of the Class B Shares cannot be assured to stay at or above the Offer Price by
the taking of any stabilizing action; and
(f) stabilizing bids or transactions effected in the course of the stabilizing action may be
made at any price at or below the Offer Price and can, therefore, be done at a price below
the price paid by applicants for, or investors in, the Offer Shares.
Our Company will ensure or procure that an announcement in compliance with the Securities
and Futures (Price Stabilizing) Rules of the SFO will be made within seven days of the
expiration of the stabilization period.
Over-Allocation
Following any over-allocation of Class B Shares in connection with the Global Offering, the
Stabilizing Manager (or any person acting for it) may cover such over-allocations by, among
other methods, exercising the Over-allotment Option in full or in part, by using Class B Shares
purchased by the Stabilizing Manager (or any person acting for it) in the secondary market at
prices that do not exceed the Offer Price.
STRUCTURE OF THE GLOBAL OFFERING
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PRICING AND ALLOCATION
The Offer Price will be HK$12.00 per Offer Share unless otherwise announced, as further
explained below, not later than the morning of the last day for lodging applications under the
Hong Kong Public Offering.
The International Underwriters will be soliciting from prospective investors their indications
of interest in acquiring Offer Shares in the International Offering. Prospective professional and
institutional investors will be required to specify the number of Offer Shares under the
International Offering they would be prepared to acquire either at different prices or at a
particular price. This process, known as “book-building,” is expected to continue up to, and to
cease on or about, the last day for lodging applications under the Hong Kong Public Offering.
The Overall Coordinators (on behalf of the Underwriters) may, where they deem appropriate,
based on the level of interest expressed by prospective investors during the book-building
process in respect of the International Offering, and with the consent of our Company, reduce
the number of Offer Shares offered and/or the Offer Price below that stated in this prospectus
at any time on or prior to the morning of the last day for lodging applications under the Hong
Kong Public Offering. In such a case, our Company will, as soon as practicable following the
decision to make such reduction, and in any event not later than the morning of the last day
for lodging applications under the Hong Kong Public Offering, cause to be published on the
websites of our Company and the Stock Exchange at www.jtexpress.com and
www.hkexnews.hk , respectively, notices of the reduction. Upon the issue of such a notice, the
revised number of Offer Shares and/or the Offer Price will be final and conclusive and the
Offer Price, if agreed upon by the Overall Coordinators (on behalf of the Underwriters) and our
Company, will be fixed at such revised Offer Price. The Company will also, as soon as
practicable following the decision to make such change, issue a supplemental prospectus
updating investors of the change in the number of Offer Shares being offered under the Global
Offering and/or the Offer Price, extend the period under which the Hong Kong Public Offering
was opened for acceptance to allow potential investors sufficient time to consider their
subscriptions or reconsider their submitted subscriptions, and require investors who had
applied for the Hong Kong Offer Shares to positively confirm their applications for Offer
Shares in light of the change in the number of Offer Shares and/or the Offer Price. Upon the
issue of such a notice and supplemental prospectus, the revised number of Offer Shares and/or
the Offer Price will be final and conclusive and the Offer Price, if agreed upon by the Overall
Coordinators (on behalf of the Underwriters) and the Company, will be fixed within such
revised Offer Price.
Before submitting applications for the Hong Kong Offer Shares, applicants should have regard
to the possibility that any announcement of a reduction in the number of Offer Shares and/or
the Offer Price may not be made until the last day for lodging applications under the Hong
Kong Public Offering. Such notice will also include confirmation or revision, as appropriate,
of the working capital statement and the Global Offering statistics as currently set out in this
prospectus, and any other financial information which may change as a result of any such
reduction.
The level of indications of interest in the International Offering, the level of applications in the
Hong Kong Public Offering, the basis of allocations of the Hong Kong Offer Shares and the
results of allocations in the Hong Kong Public Offering are expected to be made available
through a variety of channels in the manner described in “How to Apply for Hong Kong Offer
Shares – D. Publication of Results”.
STRUCTURE OF THE GLOBAL OFFERING
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STOCK BORROWING AGREEMENT
To cover any over-allocation of Class B Shares in connection with the Global Offering, the
Stabilizing Manager (or any person acting for it) may choose to borrow up to 48,982,400 Class
B Shares (being the maximum number of Class B Shares which may be issued pursuant to the
exercise of the Over-allotment Option) from Constant Power Investment Limited pursuant to
the Stock Borrowing Agreement, which is expected to be entered into between the Stabilizing
Manager (or its affiliates or any person acting for it) and Constant Power Investment Limited
on or before Thursday, October 19, 2023.
The Stock Borrowing Agreement will not be subject to the restrictions of Rule 10.07(1)(a) of
the Listing Rules as Constant Power Investment Limited is not our Controlling Shareholder.
The stock borrowing arrangement will strictly comply with the following restrictions: (a) such
stock borrowing arrangement with Constant Power Investment Limited will only be effected by
the Stabilising Manager for settlement of over-allocations in the International Offering and
covering any short position prior to the exercise of the Over-allotment Option; (b) the
maximum number of Class B Shares borrowed from Constant Power Investment Limited under
the Stock Borrowing Agreement will be limited to the maximum number of Class B Shares
which may be issued upon full exercise of the Over-allotment Option; (c) the same number of
Class B Shares so borrowed must be returned to Constant Power Investment Limited or its
nominees, as the case may be, on or before the third business day following the earlier of (i)
the last day on which the Over-allotment Option may be exercised and (ii) the day on which
the Over-allotment Option is exercised in full, or such time as may be otherwise agreed by the
parties; (d) the stock borrowing arrangement under the Stock Borrowing Agreement will be
effected in compliance with all applicable laws, listing rules and regulatory requirements; and
(e) no payment will be made to Constant Power Investment Limited by the Stabilising Manager
or its authorized agents in relation to such stock borrowing arrangement.
UNDERWRITING
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters under
the terms and conditions of the Hong Kong Underwriting Agreement on a conditional basis.
Our Company expects to enter into the International Underwriting Agreement relating to the
International Offering on or about Thursday, October 19, 2023.
These underwriting arrangements, including the Underwriting Agreements, are summarized in
“Underwriting”.
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for Offer Shares will be conditional on:
(a) the Stock Exchange granting approval for the listing of, and permission to deal in, the
Class B Shares in issue (after the Reclassification, Redesignation and Subdivision) and to
be issued (including the additional Class B Shares which may be issued pursuant to the
exercise of the Over-allotment Option under the Global Offering) and the Class B Shares
that may be issued upon conversion of the Class A Shares, on the Main Board of the Stock
Exchange and such approval not subsequently having been withdrawn, revoked or
withheld prior to the Listing Date;
(b) the execution and delivery of the International Underwriting Agreement on or about
Thursday, October 19, 2023; and
STRUCTURE OF THE GLOBAL OFFERING
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(c) the obligations of the Hong Kong Underwriters under the Hong Kong Underwriting
Agreement and the obligations of the International Underwriters under the International
Underwriting Agreement becoming and remaining unconditional and not having been
terminated in accordance with the terms of the respective agreements,
in each case on or before the dates and times specified in the respective Underwriting
Agreements (unless and to the extent such conditions are validly waived on or before such
dates and times) and, in any event, not later than the date which is 30 days after the date of
this prospectus, which is expected to be on Wednesday, November 15, 2023.
The consummation of each of the Hong Kong Public Offering and the International Offering
is conditional upon, among other things, the other offering becoming unconditional and not
having been terminated in accordance with its terms.
If the above conditions are not fulfilled or waived prior to the dates and times specified, the
Global Offering will lapse and the Stock Exchange will be notified immediately. Notice of the
lapse of the Hong Kong Public Offering will be published by our Company on the websites of
our Company and the Stock Exchange at www.jtexpress.com and www.hkexnews.hk ,
respectively, on the next day following such lapse. In such a situation, all application monies
will be returned, without interest, on the terms set out in “How to Apply for Hong Kong Offer
Shares – F. Refund of Application Monies”. In the meantime, all application monies will be
held in separate bank account(s) with the receiving bank(s) or other bank(s) in Hong Kong
licensed under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong).
Share certificates for the Offer Shares will only become valid at 8:00 a.m. on Friday, October
27, 2023, provided that the Global Offering has become unconditional in all respects at or
before that time.
DEALINGS IN THE CLASS B SHARES
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00 a.m.
in Hong Kong on Friday, October 27, 2023, it is expected that dealings in the Class B Shares
on the Stock Exchange will commence at 9:00 a.m. on Friday, October 27, 2023.
The Class B Shares will be traded in board lots of 200 Class B Shares each and the stock code
of the Class B Shares will be 1519.
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IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
Our Company has adopted a fully electronic application process for the Hong Kong
Public Offering. Our Company will not provide any printed copies of this prospectus
or any printed copies of any application forms for use by the public.
This prospectus is available at the website of the Hong Kong Stock Exchange at
www.hkexnews.hk under the “ HKEXnews > New Listings > New Listing Information ”
section, and our Company’s website at www.jtexpress.com . If you require a printed copy
of this prospectus, you may download and print from the website addresses above.
The contents of the electronic version of the prospectus are identical to the printed
prospectus as registered with the Registrar of Companies in Hong Kong pursuant to
section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.
Set out below are procedures through which you can apply for the Hong Kong Offer
Shares electronically. Our Company will not provide any physical channels to accept any
application for the Hong Kong Offer Shares by the public.
If you are an intermediary, broker or agent, please remind your customers, clients or
principals, as applicable, that this prospectus is available online at the website addresses
above.
A. APPLICATIONS FOR THE HONG KONG OFFER SHARES
1. How to Apply
Our Company will not provide any printed application forms for use by the public.
To apply for the Hong Kong Offer Shares, you may:
(1) apply online through the HK eIPO White Form service in the IPO App (which can be
downloaded by searching “ IPO App ” in App Store or Google Play or downloaded at
www.hkeipo.hk/IPOApp or www.tricorglobal.com/IPOApp )o ra t www.hkeipo.hk ;o r
(2) apply through the CCASS EIPO service to electronically cause HKSCC Nominees to
apply on your behalf, including by:
(i) instructing your broker or custodian who is a CCASS Clearing Participant or a
CCASS Custodian Participant to give electronic application instructions via
CCASS terminals to apply for the Hong Kong Offer Shares on your behalf; or
(ii) (if you are an existing CCASS Investor Participant ) giving electronic application
instructions through the CCASS Internet System ( https://ip.ccass.com ) or through
the CCASS Phone System at +852 2979 7888 (using the procedures in HKSCC’s
“An Operating Guide for Investor Participants” in effect from time to time). HKSCC
can also input electronic application instructions for CCASS Investor Participants
through HKSCC’s Customer Service Centre at 1/F., One & Two Exchange Square,
8 Connaught Place, Central, Hong Kong by completing an input request.
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If you apply through channel (1) above, the Hong Kong Offer Shares successfully applied for
will be issued in your own name.
If you apply through channels (2)(i) or (2)(ii) above, the Hong Kong Offer Shares successfully
applied for will be issued in the name of HKSCC Nominees and deposited directly into CCASS
to be credited to your or a designated CCASS Participant’s stock account.
None of you or your joint applicant(s) may make more than one application, except where you
are a nominee and provide the required information in your application.
Our Company, the Overall Coordinators, the HK eIPO White Form Service Provider and their
respective agents may reject or accept any application, in full or in part, for any reason at their
discretion.
2. Who Can Apply
Eligibility for the Application
Y ou can apply for the Hong Kong Offer Shares if you or any person(s) for whose benefit you
are applying:
 are 18 years of age or older;
 have a Hong Kong address; and
 are outside the United States, and are not a United States Person (as defined in Regulation
S under the U.S. Securities Act).
If you are a firm, the application must be in the individual members’ names.
The number of joint applicants may not exceed four.
Unless permitted by the Listing Rules, you cannot apply for any Hong Kong Offer Shares if:
 you are an existing beneficial owner of Shares and/or any of our Company’s subsidiaries;
 you are our Company’s director or chief executive and/or a director or chief executive
officer of its subsidiaries;
 you are a close associate (as defined in the Listing Rules) of any of the above persons;
or
 you have been allocated or have applied for any International Offer Shares or otherwise
participate in the International Offering.
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Items Required for the Application
If you apply for the Hong Kong Offer Shares online through the HK eIPO White Form
service, you must:
 have a valid Hong Kong identity card number/passport number (for individual applicant)
or Hong Kong business registration number/certificate of incorporation number (for body
corporate applicant);
 have a Hong Kong address; and
 provide a valid e-mail address and a contact telephone number.
If you are applying for the Hong Kong Offer Shares online by instructing your broker or
custodian who is a CCASS Clearing Participant or a CCASS Custodian Participant to give
electronic application instructions via CCASS terminals, please contact them for the items
required for the application.
3. Terms and Conditions of an Application
By applying through the application channels specified in this prospectus, you:
 undertake to execute all relevant documents and instruct and authorize our Company
and/or the Overall Coordinators (or their agents or nominees), as their agents, to execute
any documents for you and to do on your behalf all things necessary to register any Hong
Kong Offer Shares allocated to you in your name or in the name of HKSCC Nominees as
required by the Articles of Association;
 agree to comply with our Company’s Memorandum and Articles of Association, the
Companies (Winding Up and Miscellaneous Provisions) Ordinance and the Cayman
Companies Act;
 confirm that you have read the terms and conditions and application procedures set out
in this prospectus, and agree to be bound by them;
 confirm that you have received and read this prospectus and have relied only on the
information and representations in this prospectus in making your application and will not
rely on any other information or representations, except those in any supplement to this
prospectus;
 confirm that you are aware of the restrictions on the Global Offering set out in this
prospectus;
 agree that none of our Company, the Overall Coordinators, the Underwriters, their
respective directors, officers, employees, partners, agents, advisers and any other parties
involved in the Global Offering and the HK eIPO White Form Service Provider is or will
be liable for any information and representations not in this prospectus (and any
supplement to this prospectus);
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 undertake and confirm that you or the person(s) for whose benefit you have made the
application have not applied for or taken up, or indicated an interest for, and will not
apply for or take up, or indicate an interest for, any International Offer Shares nor
participated in the International Offering;
 agree to disclose to our Company, the Hong Kong Share Registrar, the receiving banks,
the Overall Coordinators, the Underwriters and/or their respective advisers and agents
any personal data which any of them may require about you and the person(s) for whose
benefit you have made the application;
 if the laws of any place outside Hong Kong apply to your application, agree and warrant
that you have complied with all such laws and none of our Company, the Overall
Coordinators and the Underwriters nor any of their respective officers or advisers will
breach any laws outside Hong Kong as a result of the acceptance of your offer to
purchase, or any action arising from your rights and obligations under the terms and
conditions in this prospectus;
 agree that once your application has been accepted, you may not rescind it because of an
innocent misrepresentation;
 agree that your application, any acceptance of it and the resulting contract will be
governed by, and construed in accordance with the laws of Hong Kong;
 represent, warrant and undertake that (i) you understand that the Hong Kong Offer Shares
have not been and will not be registered under the U.S. Securities Act; and (ii) you and
any person for whose benefit you are applying for the Hong Kong Offer Shares are
outside the United States (as defined in Regulation S) or are a person described in
paragraph (h)(3) of Rule 902 of Regulation S;
 warrant that the information you have provided is true and accurate;
 agree to accept the Hong Kong Offer Shares applied for or any lesser number allocated
to you under the application;
 authorize (i) our Company to place your name(s) or the name of HKSCC Nominees on
our Company’s register of members as the holder(s) of any Hong Kong Offer Shares
allocated to you and such other registers as required under our Company’s Memorandum
and Articles of Association and (ii) our Company and/or its agents to send any Share
certificate(s) and/or any e-Auto Refund payment instructions and/or any refund check(s)
to you or the first- named applicant for joint applications by ordinary post at your own
risk to the address stated on the application, unless you have fulfilled the criteria
mentioned in “– Personal Collection” below to collect the Share certificate(s) and/or
refund check(s) in person;
 declare and represent that this is the only application made and the only application
intended by you to be made to benefit you or the person for whose benefit you are
applying;
 understand that our Company, our directors and the Overall Coordinators will rely on
your declarations and representations in deciding whether or not to allocate any of the
Hong Kong Offer Shares to you and that you may be prosecuted for making a false
declaration;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 442 ---
 (if the application is made for your own benefit) warrant that no other application has
been or will be made for your benefit by giving electronic application instructions to
HKSCC directly or indirectly or through the HK eIPO White Form service or by any one
as your agent or by any other person; and
 (if you are making the application as an agent for the benefit of another person) warrant
that (i) no other application has been or will be made by you as agent for or for the benefit
of that person or by that person or by any other person as agent for that person by giving
electronic application instructions to HKSCC or to the HK eIPO White Form Service
Provider and (ii) you have due authority to give electronic application instructions on
behalf of that other person as its agent.
For the avoidance of doubt, our Company and all other parties involved in the preparation of
this prospectus acknowledge that each applicant and CCASS Participant who gives or causes
to give electronic application instructions is a person who may be entitled to compensation
under section 40 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (as
applied by section 342E of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance).
4. Minimum Application Amount and Permitted Numbers
Y our application through the HK eIPO White Form service or the CCASS EIPO service must
be for a minimum of 200 Hong Kong Offer Shares and in one of the numbers set out in the
table. Y ou are required to pay the amount next to the number you select.
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
HK$ HK$ HK$ HK$
200 2,424.20 6,000 72,726.12 100,000 1,212,102.00 5,000,000 60,605,100.00
400 4,848.41 7,000 84,847.15 200,000 2,424,204.00 6,000,000 72,726,120.00
600 7,272.61 8,000 96,968.15 300,000 3,636,306.00 7,000,000 84,847,140.00
800 9,696.81 9,000 109,089.18 400,000 4,848,408.00 8,000,000 96,968,160.00
1,000 12,121.02 10,000 121,210.20 500,000 6,060,510.00 9,000,000 109,089,180.00
1,200 14,545.22 20,000 242,420.40 600,000 7,272,612.00 10,000,000 121,210,200.00
1,400 16,969.43 30,000 363,630.60 700,000 8,484,714.00 12,000,000 145,452,240.00
1,600 19,393.63 40,000 484,840.80 800,000 9,696,816.00 14,000,000 169,694,280.00
1,800 21,817.83 50,000 606,051.00 900,000 10,908,918.00 16,327,600
(1) 197,907,166.15
2,000 24,242.05 60,000 727,261.20 1,000,000 12,121,020.00
3,000 36,363.05 70,000 848,471.40 2,000,000 24,242,040.00
4,000 48,484.08 80,000 969,681.60 3,000,000 36,363,060.00
5,000 60,605.10 90,000 1,090,891.80 4,000,000 48,484,080.00
(1) Maximum number of Hong Kong Offer Shares you may apply for.
No application for any other number of the Hong Kong Offer Shares will be considered and any
such application is liable to be rejected.
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5. Applying Through the HK eIPO White Form Service
General
Applicants who meet the criteria in “– Who Can Apply” above may apply through the HK
eIPO White Form service for the Offer Shares to be allocated and registered in their own
names through the IPO App or the designated website at www.hkeipo.hk .
Detailed instructions for application through the HK eIPO White Form service are set out in
the IPO App and on the designated website. If you do not follow the instructions, your
application may be rejected and may not be submitted to our Company. If you apply through
the IPO App or the designated website, you authorize the HK eIPO White Form Service
Provider to apply on the terms and conditions in this prospectus, as supplemented and amended
by the terms and conditions of the HK eIPO White Form service.
Time for Submitting Applications under the HK eIPO White Form Service
Y ou may submit your application through the HK eIPO White Form service in the IPO App
or on the designated website at www.hkeipo.hk (24 hours daily, except on the last day for
applications) from 9:00 a.m. on Monday, October 16, 2023 until 11:30 a.m. on Thursday,
October 19, 2023 and the latest time for completing full payment of application monies in
respect of such applications will be 12:00 noon on Thursday, October 19, 2023, the last day for
applications, or such later time as described in “C. Effect of Bad Weather and/or Extreme
Conditions on the Opening and Closing of the Application Lists” below.
6. Applying Through The CCASS EIPO Service
General
Y ou may instruct your broker or custodian who is a CCASS Clearing Participant or a CCASS
Custodian Participant to give electronic application instructions via CCASS terminals to
apply for the Hong Kong Offer Shares on your behalf. CCASS Participants may give electronic
application instructions to apply for the Hong Kong Offer Shares and to arrange payment of
the money due on application and payment of refunds under their participant agreements with
HKSCC and the General Rules of CCASS and the CCASS Operational Procedures.
If you are a CCASS Investor Participant , you may give these electronic application
instructions through the CCASS Internet System ( https://ip.ccass.com ) or through the CCASS
Phone System by calling +852 2979 7888 (using the procedures in HKSCC’s “An Operating
Guide for Investor Participants” in effect from time to time). HKSCC can also input electronic
application instructions for CCASS Investor Participants though HKSCC’s Customer Service
Centre at 1/F, One & Two Exchange Square, 8 Connaught Place, Central, Hong Kong by
completing an input request.
Y ou will be deemed to have authorized HKSCC and/or HKSCC Nominees to transfer the
details of your application to our Company, the Joint Sponsors, the Overall Coordinators, and
the Hong Kong Share Registrar.
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Applying through the CCASS EIPO Service
Where you have applied through the CCASS EIPO service (either indirectly through a broker
or custodian or directly) and an application is made by HKSCC Nominees on your behalf:
 HKSCC Nominees will only be acting as a nominee for you and is not liable for any
breach of the terms and conditions of this prospectus; and
 HKSCC Nominees will do the following things on your behalf:
 agree that the Hong Kong Offer Shares to be allocated shall be registered in the
name of HKSCC Nominees and deposited directly into CCASS for the credit of the
CCASS Participant’s stock account on your behalf or your CCASS Investor
Participant’s stock account;
 agree to accept the Hong Kong Offer Shares applied for or any lesser number
allocated;
 undertake and confirm that you have not applied for or taken up, or indicated an
interest for, and will not apply for or take up, or indicate an interest for, any
International Offer Shares nor participated in the International Offering;
 (if the electronic application instructions are given for your benefit) declare that
only one set of electronic application instructions has been given for your benefit;
 (if you are an agent for another person) declare that you have only given one set of
electronic application instructions for the other person’s benefit and are duly
authorized to give those instructions as its agent;
 confirm that you understand that our Company, our directors and the Overall
Coordinators will rely on your declarations and representations in deciding whether
or not to allocate any of the Hong Kong Offer Shares to you and that you may be
prosecuted for making a false declaration;
 authorize our Company to place HKSCC Nominees’ name on its register of members
as the holder of the Hong Kong Offer Shares allocated to you, and despatch Share
certificate(s) and/or refund monies in accordance with the arrangements separately
agreed between our Company and HKSCC;
 confirm that you have read the terms and conditions and application procedures set
out in this prospectus and agree to be bound by them;
 confirm that you have received and read this prospectus and have relied only on the
information and representations in this prospectus in causing the application to be
made and will not rely on any other information or representations, except those in
any supplement to this prospectus;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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 agree that none of our Company, the Overall Coordinators, the Underwriters, their
respective directors, officers, employees, partners, agents, advisers and any other
parties involved in the Global Offering is or will be liable for any information and
representations not in this prospectus (and any supplement to this prospectus);
 agree to disclose to our Company, the Hong Kong Share Registrar, the receiving
banks, the Overall Coordinators, the Underwriters and/or their respective advisers
and agents any personal data which they may require about you;
 agree (without prejudice to any other rights which you may have) that once HKSCC
Nominees’ application has been accepted, it cannot be rescinded for innocent
misrepresentation;
 agree that any application made by HKSCC Nominees on your behalf is irrevocable
on or before the fifth day after the time of the opening of the application lists
(excluding any days which is a Saturday, Sunday or public holiday in Hong Kong),
such agreement to take effect as a collateral contract with our Company, and to
become binding when you give the instructions and such collateral contract to be in
consideration of our Company’s agreement that it will not offer any Hong Kong
Offer Shares to any person on or before the fifth day after the time of the opening
of the application lists (excluding any days which is a Saturday, Sunday or public
holiday in Hong Kong) except by means of one of the procedures referred to in this
prospectus. However, HKSCC Nominees may revoke the application on or before
the fifth day after the time of the opening of the application lists (excluding any days
which is a Saturday, Sunday or public holiday in Hong Kong) if a person responsible
for this prospectus under section 40 of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance (as applied by section 342E of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance) gives a public notice under
that section on or before the fifth day after the time of the opening of the application
lists (excluding any day which is a Saturday, Sunday or public holiday in Hong
Kong) which excludes or limits that person’s responsibility for this prospectus;
 agree that once HKSCC Nominees’ application is accepted, neither that application
nor your electronic application instructions can be revoked, and that acceptance of
that application will be evidenced by our Company’s announcement of the results of
the Hong Kong Public Offering;
 agree to the arrangements, undertakings and warranties under the participant
agreement between you and HKSCC, read with the General Rules of CCASS and the
CCASS Operational Procedures, for giving electronic application instructions to
apply for the Hong Kong Offer Shares;
 agree with our Company, for itself and for the benefit of each shareholder (and so
that our Company will be deemed by its acceptance in whole or in part of the
application by HKSCC Nominees to have agreed, for our Company and on behalf of
each shareholder, with each CCASS Participant giving electronic application
instructions ) to observe and comply with its Memorandum and Articles of
Association, the Companies (Winding Up and Miscellaneous Provisions) Ordinance
and the Cayman Companies Act; and
 agree that your application, any acceptance of it and the resulting contract will be
governed by, and construed in accordance with the laws of Hong Kong.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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Effect of Applying through the CCASS EIPO Service
By applying through the CCASS EIPO service, you (and, if you are joint applicants, each of
you jointly and severally) are deemed to have done the following things. Neither HKSCC nor
HKSCC Nominees will be liable to our Company or any other person in respect of the things
mentioned below:
 instructed and authorized HKSCC to cause HKSCC Nominees (acting as nominee for the
relevant CCASS Participants) to apply for the Hong Kong Offer Shares on your behalf;
 instructed and authorized HKSCC to arrange payment of the Offer Price, brokerage, SFC
transaction levy, the AFRC transaction levy and Hong Kong Stock Exchange trading fee
by debiting your designated bank account and, in the case of a wholly or partially
unsuccessful application and/or refund of the application monies (including brokerage,
SFC transaction levy, the AFRC transaction levy and Hong Kong Stock Exchange trading
fee) by crediting your designated bank account; and
 instructed and authorized HKSCC to cause HKSCC Nominees to do on your behalf all the
things stated in this prospectus.
Time for Inputting Electronic Application Instructions
(1)
CCASS Clearing/Custodian Participants can input electronic application instructions at the
following times on the following dates:
Monday, October 16, 2023 – 9:00 a.m. to 8:30 p.m.
Tuesday, October 17, 2023 – 8:00 a.m. to 8:30 p.m.
Wednesday, October 18, 2023 – 8:00 a.m. to 8:30 p.m.
Thursday, October 19, 2023 – 8:00 a.m. to 12:00 noon
CCASS Investor Participants can input electronic application instructions from 9:00 a.m. on
Monday, October 16, 2023 until 12:00 noon on Thursday, October 19, 2023 (24 hours daily,
except on Thursday, October 19, 2023, the last day for applications).
The latest time for inputting your electronic application instructions will be 12:00 noon on
Thursday, October 19, 2023, the last day for applications, or such later time as described in “C.
Effect of Bad Weather and/or Extreme Conditions on the Opening and Closing of the
Application Lists” below.
If you are instructing your broker or custodian who is a CCASS Clearing Participant or a
CCASS Custodian Participant to give electronic application instructions via CCASS
terminals to apply for the Hong Kong Offer Shares on your behalf, you are advised to contact
your broker or custodian for the latest time for giving such instructions which may be different
from the latest time as stated above.
Note:
(1) The times in this subsection are subject to change as HKSCC may determine from time to time with prior
notification to CCASS Clearing Participants, CCASS Custodian Participants and/or CCASS Investor
Participants.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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Personal Data
The following Personal Information Collection Statement applies to any personal data held by
our Company, the Hong Kong Share Registrar, the receiving banks, the Overall Coordinators,
the Underwriters and any of their respective advisers and agents about you in the same way as
it applies to personal data about applicants other than HKSCC Nominees. By applying through
the CCASS EIPO service, you agree to all of the terms of the Personal Information Collection
Statement below.
Personal Information Collection Statement
This Personal Information Collection Statement informs applicant for, and holder of, the
Hong Kong Offer Shares, of the policies and practices of our Company and its Hong Kong
Share Registrar in relation to personal data and the Personal Data (Privacy) Ordinance
(Chapter 486 of the Laws of Hong Kong).
Reasons for the collection of your personal data
It is necessary for applicants and registered holders of the Hong Kong Offer Shares to
supply correct personal data to our Company or our agents and the Hong Kong Share
Registrar when applying for the Hong Kong Offer Shares or transferring the Hong Kong
Offer Shares into or out of their names or in procuring the services of the Hong Kong
Share Registrar.
Failure to supply the requested data may result in your application for the Hong Kong
Offer Shares being rejected, or in delay or the inability of our Company or the Hong Kong
Share Registrar to effect transfers or otherwise render their services. It may also prevent
or delay registration or transfers of the Hong Kong Offer Shares which you have
successfully applied for and/or the dispatch of Share certificate(s) to which you are
entitled.
It is important that the holders of the Hong Kong Offer Shares inform our Company and
the Hong Kong Share Registrar immediately of any inaccuracies in the personal data
supplied.
Purposes
Y our personal data may be used, held, processed, and/or stored (by whatever means) for
the following purposes:
 processing your application and refund check, where applicable, verification of
compliance with the terms and application procedures set out in this prospectus and
announcing results of allocation of the Hong Kong Offer Shares;
 compliance with applicable laws and regulations in Hong Kong and elsewhere;
 registering new issues or transfers into or out of the names of the holders of our
Company’s Shares including, where applicable, HKSCC Nominees;
 maintaining or updating our Company’s Register of Members;
 verifying identities of the holders of our Company’s Shares;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 448 ---
 establishing benefit entitlements of holders of our Company’s Shares, such as
dividends, rights issues, bonus issues, etc.;
 distributing communications from our Company and our subsidiaries;
 compiling statistical information and profiles of the holder of our Company’s
Shares;
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to enable our
Company and the Hong Kong Share Registrar to discharge their obligations to
holders of our Company’s Shares and/or regulators and/or any other purposes to
which the securities’ holders may from time to time agree.
Transfer of personal data
Personal data held by our Company and the Hong Kong Share Registrar relating to the
holders of the Hong Kong Offer Shares will be kept confidential but our Company and
the Hong Kong Share Registrar may, to the extent necessary for achieving any of the
above purposes, disclose, obtain or transfer (whether within or outside Hong Kong) the
personal data to, from or with any of the following:
 our Company’s appointed agents such as financial advisers, receiving bankers and
overseas principal share registrar;
 where applicants for the Hong Kong Offer Shares request a deposit into CCASS,
HKSCC or HKSCC Nominees, who will use the personal data for the purposes of
operating CCASS;
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to our Company or the
Hong Kong Share Registrar in connection with their respective business operation;
 the Hong Kong Stock Exchange, the SFC and any other statutory regulatory or
governmental bodies or otherwise as required by laws, rules or regulations; and
 any persons or institutions with which the holders of the Hong Kong Offer Shares
have or propose to have dealings, such as their bankers, solicitors, accountants or
stockbrokers etc.
Retention of personal data
Our Company and its Hong Kong Share Registrar will keep the personal data of the
applicants and holders of the Hong Kong Offer Shares for as long as necessary to fulfil
the purposes for which the personal data were collected. Personal data which is no longer
required will be destroyed or dealt with in accordance with the Personal Data (Privacy)
Ordinance.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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Access to and correction of personal data
Holders of the Hong Kong Offer Shares have the right to ascertain whether our Company
or the Hong Kong Share Registrar hold their personal data, to obtain a copy of that data,
and to correct any data that is inaccurate. Our Company and the Hong Kong Share
Registrar have the right to charge a reasonable fee for the processing of such requests. All
requests for access to data or correction of data should be addressed to our Company, at
our Company’s registered address disclosed in “Corporate Information” or as notified
from time to time, for the attention of the secretary, or our Company’s Hong Kong Share
Registrar for the attention of the privacy compliance officer.
7. Warning for Electronic Applications
The application for the Hong Kong Offer Shares by the CCASS EIPO service (directly or
indirectly through your broker or custodian ) is only a facility provided to CCASS
Participants. Similarly, the application for the Hong Kong Offer Shares through the HK eIPO
White Form service is only a facility provided by the HK eIPO White Form Service Provider
to public investors. Such facilities are subject to capacity limitations and potential service
interruptions and you are advised not to wait until the last day for applications to make your
electronic application. Our Company, our Group, the Overall Coordinators, the Underwriters
and the HK eIPO White Form Service Provider take no responsibility for such applications
and provide no assurance that any CCASS Participant applying through the CCASS EIPO
service or person applying through the HK eIPO White Form service will be allocated any
Hong Kong Offer Shares.
To ensure that CCASS Investor Participants can give their electronic application instructions ,
they are advised not to wait until the last minute to input their instructions to the systems. In
the event that CCASS Investor Participants have problems in the connection to CCASS Phone
System/CCASS Internet System for submission of electronic application instructions, they
should go to HKSCC’s Customer Service Centre to complete an input request form for
electronic application instructions before 12 noon on Thursday, October 19, 2023.
8. How Many Applications Can You Make
Multiple applications for the Hong Kong Offer Shares are not allowed except by nominees. If
you are a nominee and apply through the HK eIPO White Form service, in the box marked
“For Nominees”, you must include an account number or some other identification code for
each beneficial owner or, in the case of joint beneficial owners, for each joint beneficial owner
when you fill in the application details. If you do not include this information, the application
will be treated as being made for your own benefit.
All of your applications will be rejected if more than one application through the CCASS
EIPO service (directly or indirectly through your broker or custodian ) or through the HK
eIPO White Form service is made for your benefit (including the part of the application made
by HKSCC Nominees acting on electronic application instructions ), and the number of Hong
Kong Offer Shares applied by HKSCC Nominees will be automationally reduced by the
number of Hong Kong Offer Shares for which you have given such instructions and/or for
which such instructions have been given for your behalf.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 450 ---
For the avoidance of doubt, giving an electronic application instruction under the HK eIPO
White Form service more than once and obtaining different application reference numbers
without effecting full payment in respect of a particular reference number will not constitute
an actual application. However, any electronic application instructions to make an
application for the Hong Kong Offer Shares given by you or for your behalf to HKSCC will
be deemed to be an actual application for the purposes of considering whether multiple
applications have been made.
The Hong Kong Share Registrar would record all applications into its system and identify
suspected multiple applications with identical names, identification document numbers and
reference numbers according to the Best Practice Note on Treatment of Multiple/Suspected
Multiple Applications (“ Best Practice Note ”) issued by the Federation of Share Registrars
Limited.
With regard to the announcement of results of allocations under the section headed “Results of
Applications Made by Giving Electronic Application Instructions to HKSCC via CCASS”, the
list of identification document number(s) may not be a complete list of successful applicants,
only successful applicants whose identification document numbers are provided to HKSCC by
CCASS Participants are disclosed. Applicants who applied for the Offer Shares through their
brokers can consult their brokers to enquire about their application results.
Since applications are subject to personal information collection statements, beneficial owner
identification codes displayed are redacted. Applicants with beneficial names only but not
identification document numbers are not disclosed due to personal privacy issue.
If an unlisted company makes an application and:
 the principal business of that company is dealing in securities; and
 you exercise statutory control over that company,
then the application will be treated as being made for your benefit.
“Unlisted company ” means a company with no equity securities listed on the Hong Kong
Stock Exchange.
“Statutory control ” means you:
 control the composition of the board of directors of the company;
 control more than half of the voting power of the company; or
 hold more than half of the issued share capital of the company (not counting any part of
it which carries no right to participate beyond a specified amount in a distribution of
either profits or capital).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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B. HOW MUCH ARE THE HONG KONG OFFER SHARES
The Offer Price is HK$12.00 per Offer Share. Y ou must also pay brokerage of 1.0%, SFC
transaction levy of 0.0027%, the AFRC transaction levy of 0.00015% and Hong Kong Stock
Exchange trading fee of 0.00565%. This means that for one board lot of 200 Hong Kong Offer
Shares, you will pay HK$2,424.20.
Y ou may submit an application through the HK eIPO White Form service or the CCASS
EIPO service in respect of a minimum of 200 Hong Kong Offer Shares. If you make an
electronic application instruction for more than 200 Hong Kong Offer Shares, the number of
Hong Kong Offer Shares you apply for must be in one of the specified numbers set out in “A.
Applications for the Hong Kong Offer Shares – 4. Minimum Application Amount and
Permitted Numbers” in this section, or as otherwise specified in the IPO App or on the
designated website at www.hkeipo.hk .
If your application is successful, brokerage will be paid to the Exchange Participants (as
defined in the Listing Rules), and the SFC transaction levy, the AFRC transaction levy and the
Hong Kong Stock Exchange trading fee will be paid to the Hong Kong Stock Exchange (in the
case of the SFC transaction levy, collected by the Hong Kong Stock Exchange on behalf of the
SFC, and in the case of the AFRC transaction levy, collected by the Stock Exchange on behalf
of the AFRC).
For further details on the Offer Price, see “Structure of the Global Offering – Pricing and
Allocation”.
C. EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE
OPENING AND CLOSING OF THE APPLICATION LISTS
The application lists will not open or close if there is/are:
 a tropical cyclone warning signal number 8 or above;
 a “black” rainstorm warning; and/or
 Extreme Conditions
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Thursday, October
19, 2023. Instead, they will open between 11:45 a.m. and 12:00 noon on the next business day
which does not have any of those warnings and/or Extreme Conditions in force in Hong Kong
at any time between 9:00 a.m. and 12:00 noon.
If the application lists do not open and close on Thursday, October 19, 2023 or if there is/are
a tropical cyclone warning signal number 8 or above, a “black” rainstorm warning signal and/or
Extreme Conditions in force in Hong Kong that may affect the dates mentioned in “Expected
Timetable,” our Company will make an announcement on its website at www.jtexpress.com
and the website of the Hong Kong Stock Exchange at www.hkexnews.hk .
HOW TO APPLY FOR HONG KONG OFFER SHARES
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D. PUBLICATION OF RESULTS
Our Company expects to announce the level of indications of interest in the International
Offering, the level of applications in the Hong Kong Public Offering and the basis of
allocations of the Hong Kong Offer Shares on Thursday, October 26, 2023 on its website at
www.jtexpress.com and the website of the Hong Kong Stock Exchange at www.hkexnews.hk .
The results of allocations and the Hong Kong identity card/passport/Hong Kong business
registration/certificate of incorporation numbers of successful applicants under the Hong Kong
Public Offering will be available at the times and dates and in the manner set out below:
 in the announcement to be posted on our Company’s website and the website of the Hong
Kong Stock Exchange at www.jtexpress.com and www.hkexnews.hk , respectively, by no
later than Thursday, October 26, 2023;
 from the “IPO Results” function in the IPO App and the designated results of allocations
website at www.tricor.com.hk/ipo/result or www.hkeipo.hk/IPOResult with a “search
by ID function” on a 24 hour basis from 8:00 a.m. on Thursday, October 26, 2023 to 12:00
midnight on Wednesday, November 1, 2023; and
 from the allocation results telephone enquiry line by calling +852 3691 8488 between
9:00 a.m. and 6:00 p.m. from Thursday, October 26, 2023 to Tuesday, October 31, 2023
(excluding Saturday, Sunday and public holiday in Hong Kong).
If our Company accepts your offer to purchase (in whole or in part), which our Company may
do by announcing the basis of allocations and/or making available the results of allocations
publicly, there will be a binding contract under which you will be required to purchase the
Hong Kong Offer Shares if the conditions of the Global Offering are satisfied and the Global
Offering is not otherwise terminated. Further details are set out in “Structure of the Global
Offering”.
Y ou will not be entitled to exercise any remedy of rescission for innocent misrepresentation at
any time after acceptance of your application. This does not affect any other right you may
have.
E. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED THE HONG
KONG OFFER SHARES
Y ou should note the following situations in which the Hong Kong Offer Shares will not be
allocated to you:
If your application is revoked:
By applying through the CCASS EIPO service or through the HK eIPO White Form service,
you agree that your application or the application made by HKSCC Nominees on your behalf
cannot be revoked on or before the fifth day after the time of the opening of the application
lists (excluding any days which is a Saturday, Sunday or public holiday in Hong Kong). This
agreement will take effect as a collateral contract with our Company.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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Y our application or the application made by HKSCC Nominees on your behalf may only be
revoked on or before the fifth day after the time of the opening of the application lists
(excluding any days which is a Saturday, Sunday or public holiday in Hong Kong) in the
following circumstances:
 if a person responsible for this prospectus under section 40 of the Companies (Winding
Up and Miscellaneous Provisions) Ordinance (as applied by section 342E of the
Companies (Winding Up and Miscellaneous Provisions) Ordinance) gives a public notice
under that section on or before the fifth day after the time of the opening of the
application lists (excluding any day which is a Saturday, Sunday or public holiday in
Hong Kong) which excludes or limits that person’s responsibility for this Prospectus; or
 if any supplement to this prospectus is issued, in which case our Company will notify
applicants who have already submitted an application that they are required to confirm
their applications. If applicants have been so notified but have not confirmed their
applications in accordance with the procedure to be notified, all unconfirmed applications
will be deemed revoked.
If your application or the application made by HKSCC Nominees on your behalf has been
accepted, it cannot be revoked. For this purpose, acceptance of applications which are not
rejected will be constituted by notification in the press of the results of allocation, and where
such basis of allocation is subject to certain conditions or provides for allocation by ballot,
such acceptance will be subject to the satisfaction of such conditions or results of the ballot,
respectively.
If our Company or our agents exercise their discretion to reject your application:
Our Company, the Overall Coordinators, the HK eIPO White Form Service Provider and their
respective agents or nominees have full discretion to reject or accept any application, or to
accept only part of any application, without giving any reasons.
If the allotment of Hong Kong Offer Shares is void:
The allotment of Hong Kong Offer Shares will be void if the Stock Exchange does not grant
permission to list the Shares either:
 within three weeks from the closing date of the application lists; or
 within a longer period of up to six weeks if the Stock Exchange notifies the Company of
that longer period within three weeks of the closing date of the application lists.
If:
 you make multiple applications or are suspected of making multiple applications;
 you or the person for whose benefit you apply for, have applied for or taken up, or
indicated an interest for, or have been or will be placed or allocated (including
conditionally and/or provisionally) the Hong Kong Offer Shares and the International
Offer Shares;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 454 ---
 your payment is not made correctly;
 your electronic application instructions through the HK eIPO White Form service are
not completed in accordance with the instructions, terms and conditions in the IPO App
or on the designated website at www.hkeipo.hk ;
 you apply for more than 16,327,600 Hong Kong Offer Shares, being 50% of the
32,655,200 Hong Kong Offer Shares initially available under the Hong Kong Public
Offering;
 our Company or the Overall Coordinators believe that by accepting your application, a
violation of applicable securities or other laws, rules or regulations would result; or
 the Underwriting Agreements do not become unconditional or are terminated.
F. REFUND OF APPLICATION MONIES
If an application is rejected, not accepted or accepted in part only, or if the conditions of the
Hong Kong Public Offering are not fulfilled in accordance with “Structure of the Global
Offering – Conditions of the Global Offering” or if any application is revoked, the application
monies, or the appropriate portion thereof, together with the related brokerage, SFC transaction
levy, the AFRC transaction levy and the Stock Exchange trading fee, will be refunded, without
interest.
Any refund of your application monies will be made on or around Thursday, October 26, 2023.
G. DESPATCH/COLLECTION OF SHARE CERTIFICATES/e-AUTO REFUND
PAYMENT INSTRUCTIONS/REFUND CHECKS
Y ou will receive one Share certificate for all Hong Kong Offer Shares allocated to you under
the Hong Kong Public Offering (except pursuant to applications made through the CCASS
EIPO service where the Share certificates will be deposited into CCASS as described below).
Our Company will not issue temporary document of title in respect of the Offer Shares. Our
Company will not issue receipt for sums paid on application.
Subject to arrangement on despatch/collection of Share certificates and refund checks as
mentioned below, any refund checks and Share certificate(s) are expected to be posted on or
around Thursday, October 26, 2023. The right is reserved to retain any Share certificate(s) and
any surplus application monies pending clearance of check(s) or banker’s cashier order(s).
Share certificates will only become valid at 8:00 a.m. on Friday, October 27, 2023, provided
that the Global Offering has become unconditional in all respects at or before that time and the
right of termination described in “Underwriting” has not been exercised.
Investors who trade Class B Shares on the basis of publicly available allocation details or prior
to the receipt of the Share certificates or prior to the Share certificates becoming valid do so
entirely at their own risk.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 455 ---
Personal Collection
 If you apply through the HK eIPO White Form service:
 If you apply for 1,000,000 Hong Kong Offer Shares or more through the HK eIPO
White Form service and your application is wholly or partially successful, you may
collect your Share certificate(s) (where applicable) in person from the Hong Kong
Share Registrar, Tricor Investor Services Limited at 17/F, Far East Finance Centre,
16 Harcourt Road, Hong Kong, from 9:00 a.m. to 1:00 p.m. on Thursday, October
26, 2023, or any other place or date notified by our Company.
If you are an individual who is eligible for personal collection, you must not
authorise any other person to collect for you. If you are a corporate applicant which
is eligible for personal collection, your authorised representative must bear a letter
of authorization from your corporation stamped with your corporation’s chop. Both
individuals and authorised representatives must produce, at the time of collection,
evidence of identity acceptable to the Hong Kong Share Registrar.
 If you do not personally collect your Share certificate(s) within the time specified
for collection, they will be sent to the address specified in your application
instructions by ordinary post and at your own risk.
 If you apply for less than 1,000,000 Hong Kong Offer Shares through the HK eIPO
White Form service, your Share certificate(s) (where applicable) will be sent to the
address specified in your application instructions on or before Thursday, October 26,
2023 by ordinary post and at your own risk.
 If you apply and pay the application monies from a single bank account, any refund
monies will be despatched to that bank account in the form of e-Auto Refund
payment instructions. If you apply and pay the application monies from multiple
bank accounts, any refund monies will be despatched to the address specified in your
application instructions in the form of refund check(s) in favor of the applicant (or,
in the case of joint applications, the first-named applicant) by ordinary post and at
your own risk.
 If you apply through the CCASS EIPO service:
Allocation of the Hong Kong Offer Shares
 For the purposes of allocating the Hong Kong Offer Shares, HKSCC Nominees will
not be treated as an applicant. Instead, each CCASS Participant who gives
electronic application instructions or each person for whose benefit instructions
are given will be treated as an applicant.
Deposit of Share Certificates into CCASS and Refund of Application Monies
 If your application is wholly or partially successful, your Share certificate(s) will be
issued in the name of HKSCC Nominees and deposited into CCASS for the credit
of your designated CCASS Participant’s stock account or your CCASS Investor
Participant stock account on Thursday, October 26, 2023 or on any other date
determined by HKSCC or HKSCC Nominees.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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 Our Company expects to publish the application results of CCASS Participants (and
where the CCASS Participant is a broker or custodian, our Company will include
information relating to the relevant beneficial owner), your Hong Kong identity
card/passport/Hong Kong business registration number or other identification code
(Hong Kong business registration number for corporations) and the basis of
allocations of the Hong Kong Offer Shares in the manner as described in “–
Publication of Results” above on Thursday, October 26, 2023. Y ou should check the
announcement published by our Company and report any discrepancies to HKSCC
before 5:00 p.m. on Thursday, October 26, 2023 or such other date as determined by
HKSCC or HKSCC Nominees.
 If you have instructed your broker or custodian who is a CCASS Clearing
Participant or a CCASS Custodian Participant to give electronic application
instructions via CCASS terminals to apply for the Hong Kong Offer Shares on your
behalf, you can also check the number of the Hong Kong Offer Shares allocated to
you and the amount of refund monies (if any) payable to you with that broker or
custodian .
 If you have applied as a CCASS Investor Participant, you can also check the number
of the Hong Kong Offer Shares allocated to you and the amount of refund monies
(if any) payable to you via the CCASS Phone System and the CCASS Internet
System (under the procedures contained in HKSCC’s “An Operating Guide for
Investor Participants” in effect from time to time) on Thursday, October 26, 2023.
Immediately following the credit of the Hong Kong Offer Shares to your stock
account and the credit of the refund monies to your bank account, HKSCC will also
make available to you an activity statement showing the number of the Hong Kong
Offer Shares credited to your CCASS Investor Participant stock account and the
amount of refund monies (if any) credited to your designated bank account.
 Refund of your application monies (if any) in respect of wholly and partially
unsuccessful applications will be credited to your designated bank account or the
designated bank account of your broker or custodian on Thursday, October 26, 2023.
H. ADMISSION OF THE CLASS B SHARES INTO CCASS
If the Hong Kong Stock Exchange grants the listing of, and permission to deal in, the Class B
Shares and our Company complies with the stock admission requirements of HKSCC, the Class
B Shares will be accepted as eligible securities by HKSCC for deposit, clearance and
settlement in CCASS with effect from the date of commencement of dealings in the Class B
Shares on the Hong Kong Stock Exchange or any other date HKSCC chooses. Settlement of
transactions between Exchange Participants (as defined in the Listing Rules) is required to take
place in CCASS on the second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of CCASS and CCASS
Operational Procedures in effect from time to time.
Investors should seek the advice of their stockbroker or other professional adviser for details
of the settlement arrangements as such arrangements may affect their rights and interests.
Our Company has made all necessary arrangements to enable the Class B Shares to be admitted
into CCASS.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 457 ---
The following is the text of a report set out on pages I-1 to I-3, received from the Company’ s
reporting accountant, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for
the purpose of incorporation in this prospectus. It is prepared and addressed to the directors
of the Company and to the Joint Sponsors pursuant to the requirements of HKSIR 200,
Accountants’ Reports on Historical Financial Information in Investment Circulars issued by
the Hong Kong Institute of Certified Public Accountants.
ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF J&T GLOBAL EXPRESS LIMITED AND MORGAN STANLEY ASIA
LIMITED, MERRILL LYNCH (ASIA PACIFIC) LIMITED AND CHINA
INTERNATIONAL CAPITAL CORPORATION HONG KONG SECURITIES LIMITED
Introduction
We report on the historical financial information of J&T Global Express Limited (the
“Company”) and its subsidiaries (together, the “Group”) set out on pages I-4 to I-154, which
comprises the consolidated balance sheets as at December 31, 2020, 2021 and 2022 and June
30, 2023, the company balance sheets as at December 31, 2020, 2021 and 2022 and June 30,
2023, and the consolidated income statements, the consolidated statements of comprehensive
(loss)/income, the consolidated statements of changes in equity and the consolidated
statements of cash flows for each of the years ended December 31, 2020, 2021 and 2022 and
the six months ended June 30, 2023 (the “Track Record Period”) and material accounting
policy information and other explanatory information (together, the “Historical Financial
Information”). The Historical Financial Information set out on pages I-4 to I-154 forms an
integral part of this report, which has been prepared for inclusion in the prospectus of the
Company dated October 16, 2023 (the “Prospectus”) in connection with the initial listing of
shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited.
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of Historical Financial
Information that gives a true and fair view in accordance with the basis of presentation and
preparation set out in Notes 1.3 and 2.1 to the Historical Financial Information, and for such
internal control as the directors determine is necessary to enable the preparation of Historical
Financial Information that is free from material misstatement, whether due to fraud or error.
Reporting accountant’s responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to report
our opinion to you. We conducted our work in accordance with Hong Kong Standard on
Investment Circular Reporting Engagements 200, Accountants’ Reports on Historical
Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified
Public Accountants (“HKICPA”). This standard requires that we comply with ethical standards
and plan and perform our work to obtain reasonable assurance about whether the Historical
Financial Information is free from material misstatement.
APPENDIX I ACCOUNTANT’S REPORT
– I-1 –


--- page 458 ---
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountant’s judgement, including the assessment of risks of material misstatement
of the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountant considers internal control relevant to the entity’s
preparation of Historical Financial Information that gives a true and fair view in accordance
with the basis of presentation and preparation set out in Notes 1.3 and 2.1 to the Historical
Financial Information in order to design procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. Our work also included evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the
overall presentation of the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the accountant’s
report, a true and fair view of the financial position of the Company as at December 31, 2020,
2021 and 2022 and June 30, 2023 and the consolidated financial position of the Group as at
December 31, 2020, 2021 and 2022 and June 30, 2023 and of its consolidated financial
performance and its consolidated cash flows for the Track Record Period in accordance with
the basis of presentation and preparation set out in Notes 1.3 and 2.1 to the Historical Financial
Information.
Review of stub period comparative financial information
We have reviewed the stub period comparative financial information of the Group which
comprises the consolidated income statement, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash
flows for the six months ended June 30, 2022 and other explanatory information (the “Stub
Period Comparative Financial Information”). The directors of the Company are responsible for
the presentation and preparation of the Stub Period Comparative Financial Information in
accordance with the basis of presentation and preparation set out in Notes 1.3 and 2.1 to the
Historical Financial Information. Our responsibility is to express a conclusion on the Stub
Period Comparative Financial Information based on our review. We conducted our review in
accordance with International Standard on Review Engagements 2410, Review of Interim
Financial Information Performed by the Independent Auditor of the Entity issued by the
International Auditing and Assurance Standards Board (“IAASB”). A review consists of
making inquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in scope than
an audit conducted in accordance with International Standards on Auditing and consequently
does not enable us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on
our review, nothing has come to our attention that causes us to believe that the Stub Period
Comparative Financial Information, for the purposes of the accountant’s report, is not
prepared, in all material respects, in accordance with the basis of presentation and preparation
set out in Notes 1.3 and 2.1 to the Historical Financial Information.
APPENDIX I ACCOUNTANT’S REPORT
– I-2 –


--- page 459 ---
Report on matters under the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “Listing Rules”) and the Companies (Winding Up
and Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying Financial
Statements as defined on page I-4 have been made.
Dividends
We refer to note 43 to the Historical Financial Information which contains information about
the dividends paid by J&T Global Express Limited in respect of the Track Record Period.
No statutory financial statements for the Company
No statutory financial statements have been prepared for the Company since its date of
incorporation.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
October 16, 2023
APPENDIX I ACCOUNTANT’S REPORT
– I-3 –


--- page 460 ---
I HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Preparation of Historical Financial Information
Set out below is the Historical Financial Information which forms an integral part of this
accountant’s report.
The consolidated financial statements of the Group for the Track Record Period, on which the
Historical Financial Information is based, were audited by PricewaterhouseCoopers in
accordance with International Standards on Auditing (“ISAs”) issued by the International
Auditing and Assurance Standards Board (“Underlying Financial Statements”).
The Historical Financial Information is presented in United States Dollars (“USD”) and all
amounts are rounded to the nearest thousand (USD’000) except when otherwise stated.
APPENDIX I ACCOUNTANT’S REPORT
– I-4 –


--- page 461 ---
CONSOLIDATED INCOME STATEMENTS
Year ended December 31,
Six months ended
June 30,
Note 2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Revenue 5 1,535,425 4,851,800 7,267,428 3,402,543 4,030,439
Cost of revenue 9 (1,796,913) (5,396,544) (7,537,666) (3,468,602) (3,836,899)
Gross (loss)/profit (261,488) (544,744) (270,238) (66,059) 193,540
Selling, general and
administrative expenses 9 (365,869) (1,129,024) (1,095,528) (526,328) (1,767,875)
Research and development
expenses 9 (14,129) (41,031) (44,483) (20,912) (18,874)
Net impairment losses on
financial assets 11 (9,488) (41,320) (37,219) (25,033) (11,814)
Other income 6 17,056 82,542 98,149 48,080 12,228
Other gains/(losses) – net 7 27,474 26,370 (40,246) (31,659) (43,423)
Operating loss (606,444) (1,647,207) (1,389,565) (621,911) (1,636,218)
Finance income 10 1,965 9,476 22,002 8,025 11,367
Finance costs 10 (13,831) (99,077) (99,499) (44,647) (56,002)
Finance costs – net (11,866) (89,601) (77,497) (36,622) (44,635)
Fair value change of financial
assets and liabilities at fair
value through profit or loss 24, 29 – (4,383,532) 3,050,694 2,028,151 1,020,747
Share of results of associates (323) 1,208 (302) (222) (84)
(Loss)/Profit before income
tax (618,633) (6,119,132) 1,583,330 1,369,396 (660,190)
Income tax (expense)/credit 12 (45,530) (73,126) (10,763) 2,876 (6,579)
(Loss)/profit for
the year/period (664,163) (6,192,258) 1,572,567 1,372,272 (666,769)
Attributable to:
Owners of the Company (564,836) (6,046,983) 1,656,168 1,413,479 (640,967)
Non-controlling interests (99,327) (145,275) (83,601) (41,207) (25,802)
(664,163) (6,192,258) 1,572,567 1,372,272 (666,769)
(Losses)/earnings per share
for loss attributable to
owners of the Company*:
Basic (losses)/earnings per
share (USD cent) 13 (94.8) (1,175.6) 274.0 235.2 (104.1)
Diluted losses per share
(USD cent) 13 (94.8) (1,175.6) (117.4) (45.0) (110.8)
Note:
* The (losses)/earnings per share presented above have not taken into account the Reclassification,
Redesignation and Share Subdivision pursuant to the resolutions in writing of all shareholders passed on
October 11, 2023 as the Reclassification, Redesignation and Share Subdivision is not yet effective as at the
date of this report.
APPENDIX I ACCOUNTANT’S REPORT
– I-5 –


--- page 462 ---
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
Year ended December 31,
Six months ended
June 30,
Note 2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
(Loss)/profit for
the year/period (664,163) (6,192,258) 1,572,567 1,372,272 (666,769)
Other comprehensive
loss
Item that may be
reclassified
subsequently to profit
or loss
Currency translation
differences (12,479) (15,364) (251,954) (158,504) (15,296)
Item that may not be
reclassified
subsequently to profit
or loss
Fair value changes of
financial liabilities
at fair value
through profit or
loss relating to the
Group’s credit risk 27 – (24,874) 9,875 9,182 5,233
Others (352) 953 1,279 67 241
Other comprehensive
loss for
the year/period,
net of tax (12,831) (39,285) (240,800) (149,255) (9,822)
Total comprehensive
(loss)/income for
the year/period (676,994) (6,231,543) 1,331,767 1,223,017 (676,591)
Attributable to:
Owners of the Company (577,776) (6,084,283) 1,419,781 1,268,295 (652,418)
Non-controlling interests (99,218) (147,260) (88,014) (45,278) (24,173)
(676,994) (6,231,543) 1,331,767 1,223,017 (676,591)
APPENDIX I ACCOUNTANT’S REPORT
– I-6 –


--- page 463 ---
CONSOLIDATED BALANCE SHEETS
As at December 31,
As at
June 30,
Note 2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
ASSETS
Non-current assets
Investment properties 14 53,065 718 507 314
Property, plant and equipment 15 303,032 1,107,564 1,052,884 1,102,229
Right-of-use assets 16 186,762 604,212 481,207 574,687
Intangible assets 17 6,014 1,129,194 963,569 981,970
Investments accounted for using the
equity method 319 5,552 3,590 2,545
Deferred income tax assets 30 5,001 9,848 43,107 51,576
Other non-current assets 20 74,093 171,130 63,348 79,750
Financial assets at fair value through
profit or loss 24 – – 481,050 532,319
628,286 3,028,218 3,089,262 3,325,390
Current assets
Inventories 15,954 29,359 29,120 21,956
Trade receivables 21 180,760 334,876 513,954 622,560
Prepayments, other receivables, and other
assets 22 745,363 882,190 703,010 801,815
Financial assets at fair value through
profit or loss 24 71,324 41,581 16,440 9,493
Restricted cash 23 928 125,970 79,725 96,301
Cash and cash equivalents 23 600,425 2,102,448 1,504,048 1,195,264
1,614,754 3,516,424 2,846,297 2,747,389
Total assets 2,243,040 6,544,642 5,935,559 6,072,779
EQUITY
Equity attributable to owners of the
Company
Share capital 25 71 41 41 7
Share premium 25, 27 33,184 607,734 603,829 598,256
Other reserves 27 (166,468) (525,822) (434,108) (243,798)
Accumulated losses (625,953) (6,672,936) (5,016,768) (5,657,735)
(759,230) (6,591,010) (4,847,033) (5,303,260)
Non-controlling interests (111,269) (45,414) (137,215) (226,330)
Total deficits (870,499) (6,636,424) (4,984,248) (5,529,590)
APPENDIX I ACCOUNTANT’S REPORT
– I-7 –


--- page 464 ---
As at December 31,
As at
June 30,
Note 2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
LIABILITIES
Non-current liabilities
Borrowings 28 36,917 29,062 1,020,897 1,010,871
Lease liabilities 16 111,378 391,232 341,471 359,559
Deferred tax liabilities 30 3,051 33,084 22,407 15,528
Employee benefit obligations 2,258 9,185 7,765 11,322
Financial liabilities – redemption
liabilities of shares of JNT KSA 29 – 25,458 30,583 33,495
Financial liabilities at fair value through
profit or loss 29 1,812,915 10,487,306 7,765,067 8,251,027
1,966,519 10,975,327 9,188,190 9,681,802
Current liabilities
Trade payables 31 225,452 577,065 484,215 471,666
Advances from customers 33 137,224 291,362 209,925 241,441
Accruals and other payables 32 304,362 915,352 776,378 829,146
Lease liabilities 16 63,639 207,490 151,195 196,583
Current income tax liabilities 9,200 20,756 32,424 20,152
Borrowings 28 407,143 59,965 77,480 151,563
Financial liabilities at fair value through
profit or loss 29 – – – 10,016
Financial liabilities – ordinary share
redemption liabilities 29 – 133,749 – –
1,147,020 2,205,739 1,731,617 1,920,567
Total liabilities 3,113,539 13,181,066 10,919,807 11,602,369
Total equity and liabilities 2,243,040 6,544,642 5,935,559 6,072,779
APPENDIX I ACCOUNTANT’S REPORT
– I-8 –


--- page 465 ---
BALANCE SHEETS OF THE COMPANY
As at December 31,
As at
June 30,
Note 2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
ASSETS
Non-current assets
Loans to subsidiaries 20 688,400 4,438,706 4,379,799 4,467,925
Financial assets at fair value through
profit or loss – non current – – 481,050 532,319
Investments in subsidiaries 18 217,958 1,007,478 1,007,478 1,167,256
906,358 5,446,184 5,868,327 6,167,500
Current assets
Prepayments, other receivables, and other
assets 22 466,110 226,460 307 307
Financial assets at fair value through
profit or loss 50,00 7–––
Cash and cash equivalents 23 105,475 222,341 3,347 66,111
621,592 448,801 3,654 66,418
Total assets 1,527,950 5,894,985 5,871,981 6,233,918
EQUITY
Equity attributable to owners of
the Company
Share capital 25 71 41 41 7
Share premium 27 34,510 609,060 605,155 599,582
Other reserves 27 (154,539) (1,566) 294,508 437,417
Accumulated losses (164,943) (5,209,717) (2,246,756) (2,487,155)
Total deficits (284,965) (4,602,209) (1,347,079) (1,450,139)
LIABILITIES
Non-current liability
Financial liabilities at fair value through
profit or loss 29 1,812,915 10,201,544 7,212,933 7,681,637
1,812,915 10,201,544 7,212,933 7,681,637
Current liabilities
Accruals and other payables 32 – 161,901 6,127 2,420
Financial liabilities – ordinary share
redemption liabilities 29 – 133,749 – –
– 295,650 6,127 2,420
Total liabilities 1,812,915 10,497,194 7,219,060 7,684,057
Total equity and liabilities 1,527,950 5,894,985 5,871,981 6,233,918
APPENDIX I ACCOUNTANT’S REPORT
– I-9 –


--- page 466 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to owners of the Company
Note
Share
capital
Share
premium
Other
reserves
Accumulated
losses Total
Non-
controlling
interests
Total
equity
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Balance as at January 1, 2020 4 216,628 (622) (61,117) 154,893 (31,630) 123,263
Comprehensive loss
Loss for the year – – – (564,836) (564,836) (99,327) (664,163)
Other comprehensive loss:
Items that may be reclassified subsequently to
profit or loss
Currency translation differences – – (12,806) – (12,806) 327 (12,479)
Item that will not be reclassified subsequently to
profit or loss
Others – – (134) – (134) (218) (352)
Total comprehensive loss – – (12,940) (564,836) (577,776) (99,218) (676,994)
Transactions with owners in their capacity
as owner:
Issuance of Series A Preferred Shares 25 3 1,186,630 – – 1,186,633 – 1,186,633
Capital injection from non-controlling shareholders – – – – – 21,729 21,729
Reclassification of Series Pre-A1 Preferred Shares, Series
Pre-A2 Preferred Shares and Series A Preferred Shares to
liability 25, 27, 29 – (1,370,074) (315,612) – (1,685,686) – (1,685,686)
Employee benefit expenses – Share-based compensation
expenses 26 – – 161,073 – 161,073 – 161,073
Transaction with non-controlling interests 35 – – 1,633 – 1,633 (914) 719
Others – – – – – (1,236) (1,236)
Total transactions with owners in their capacity
as owner 3 (183,444) (152,906) – (336,347) 19,579 (316,768)
Balance as at December 31, 2020 7 33,184 (166,468) (625,953) (759,230) (111,269) (870,499)
APPENDIX I ACCOUNTANT’S REPORT
– I-10 –


--- page 467 ---
Attributable to owners of the Company
Note
Share
capital
Share
premium
Other
reserves
Accumulated
losses Total
Non-
controlling
interests
Total
equity
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Balance as at January 1, 2021 7 33,184 (166,468) (625,953) (759,230) (111,269) (870,499)
Comprehensive loss
Loss for the year – – – (6,046,983) (6,046,983) (145,275) (6,192,258)
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss
Currency translation differences – – (12,973) – (12,973) (2,391) (15,364)
Item that will not be reclassified subsequently to profit or loss
Other comprehensive loss – resulted from change of credit risk
of financial liabilities measured at fair value 29 – – (24,874) – (24,874) – (24,874)
Others – – 547 – 547 406 953
Total comprehensive loss – – (37,300) (6,046,983) (6,084,283) (147,260) (6,231,543)
Transactions with owners in their capacity as owner:
Issuance of convertible preferred shares 25 4– ( 4 ) –– ––
Capital injection from non-controlling shareholders – – – – – 1,141 1,141
Dividends 43 – (72,244) – – (72,244) – (72,244)
Dividends of subsidiaries – – – – – (494) (494)
Employee benefit expenses – Share-based compensation
expenses 26 1 – 370,037 – 370,038 12,556 382,594
Issuance of Class A Shares pursuant to transactions with non-
controlling interests 35 1 332,528 (514,661) – (182,132) 172,731 (9,401)
Business acquisition of Thai and Indonesian operating entities
of regional sponsors and others 36, 37 1 332,485 – – 332,486 26,931 359,417
Disposal of subsidiaries – – (604) – (604) 250 (354)
Repurchase of ordinary shares and convertible preferred shares 26, 29 – (9,329) (95,710) – (105,039) – (105,039)
Repurchase of ordinary shares – commitment 26, 29 – (8,890) (81,190) – (90,080) – (90,080)
Others – – 78 – 78 – 78
Total transactions with owners in their capacity as owner 7 574,550 (322,054) – 252,503 213,115 465,618
Balance as at December 31, 2021 14 607,734 (525,822) (6,672,936) (6,591,010) (45,414) (6,636,424)
APPENDIX I ACCOUNTANT’S REPORT
– I-11 –


--- page 468 ---
Attributable to owners of the Company
Note
Share
capital
Share
premium
Other
reserves
Accumulated
losses Total
Non-
controlling
interests
Total
equity
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Balance as at January 1, 2022 14 607,734 (525,822) (6,672,936) (6,591,010) (45,414) (6,636,424)
Comprehensive income
Profit/(Loss) for the year – – – 1,656,168 1,656,168 (83,601) 1,572,567
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss
Currency translation differences – – (247,043) – (247,043) (4,911) (251,954)
Item that will not be reclassified subsequently to profit or loss
Other comprehensive loss – resulted from change of credit risk
of financial liabilities measured at fair value 29 – – 9,875 – 9,875 – 9,875
Others – – 781 – 781 498 1,279
Total comprehensive income – – (236,387) 1,656,168 1,419,781 (88,014) 1,331,767
Transactions with owners in their capacity as owner:
Capital injection from non-controlling shareholders – – – – – 520 520
Transactions with non-controlling interests 35 – – 6,025 – 6,025 4,832 10,857
Dividends of subsidiaries – – – – – (15,523) (15,523)
Employee benefit expenses – Share-based compensation
expenses 26 – – 239,521 – 239,521 – 239,521
Repurchase of ordinary shares and convertible preferred shares 25, 26, 29 – (3,905) (25,654) – (29,559) – (29,559)
Issuance of ordinary shares pursuant to the 2022 Incentive Plan 26 – – 71,886 – 71,886 – 71,886
Issuance of ordinary shares of the Company’s subsidiary
pursuant to the acquisition of the operating entity of
Brazilian regional sponsors 17 – – 36,323 – 36,323 6,384 42,707
Total transactions with owners in their capacity as owner – (3,905) 328,101 – 324,196 (3,787) 320,409
Balance as at December 31, 2022 14 603,829 (434,108) (5,016,768) (4,847,033) (137,215) (4,984,248)
APPENDIX I ACCOUNTANT’S REPORT
– I-12 –


--- page 469 ---
Attributable to owners of the Company
Note
Share
capital
Share
premium
Other
reserves
Accumulated
losses Total
Non-
controlling
interests
Total
equity
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Balance as at January 1, 2023 14 603,829 (434,108) (5,016,768) (4,847,033) (137,215) (4,984,248)
Comprehensive income
Loss for the period – – – (640,967) (640,967) (25,802) (666,769)
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss
Currency translation differences – – (16,873) – (16,873) 1,577 (15,296)
Item that will not be reclassified subsequently to profit or loss
Other comprehensive loss – resulted from change of credit risk
of financial liabilities measured at fair value 29 – – 5,233 – 5,233 – 5,233
Others – – 189 – 189 52 241
Total comprehensive income – – (11,451) (640,967) (652,418) (24,173) (676,591)
Transactions with owners in their capacity as owner:
Capital injection from non-controlling shareholders – – – – – 89 89
Transactions with non-controlling interests 35 – – 58,852 – 58,852 (58,852) –
Dividends of subsidiaries – – – – – (6,179) (6,179)
Employee benefit expenses – Share-based compensation
expenses 26 – – 10,295 – 10,295 – 10,295
Repurchase of ordinary shares and convertible preferred shares 25, 26, 29 – (5,573) (39,981) – (45,554) – (45,554)
Issuance of convertible preferred shares 25 3– ( 3 ) –– ––
Issuance of ordinary shares pursuant to the 2022 Incentive Plan 17 – – 172,598 – 172,598 – 172,598
Total transactions with owners in their capacity as owner 3 (5,573) 201,761 – 196,191 (64,942) 131,249
Balance as at June 30, 2023 17 598,256 (243,798) (5,657,735) (5,303,260) (226,330) (5,529,590)
APPENDIX I ACCOUNTANT’S REPORT
– I-13 –


--- page 470 ---
Attributable to owners of the Company
Note
Share
capital
Share
premium
Other
reserves
Accumulated
losses Total
Non-
controlling
interests
Total
equity
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Balance as at January 1, 2022 14 607,734 (525,822) (6,672,936) (6,591,010) (45,414) (6,636,424)
Comprehensive income
Profit for the period – – – 1,413,479 1,413,479 (41,207) 1,372,272
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss
Currency translation differences – – (154,420) – (154,420) (4,084) (158,504)
Item that will not be reclassified subsequently to profit or loss
Other comprehensive loss – resulted from change of credit risk
of financial liabilities measured at fair value 29 – – 9,182 – 9,182 – 9,182
Others – –5 4 –5 4 1 36 7
Total comprehensive income – – (145,184) 1,413,479 1,268,295 (45,278) 1,223,017
Transactions with owners in their capacity as owner:
Capital injection from non-controlling shareholders – – – – – 299 299
Transactions with non-controlling interests 26 – – 6,025 – 6,025 4,832 10,857
Dividends of subsidiaries – – – – – (2,437) (2,437)
Employee benefit expenses – Share-based compensation
expenses 26 – – 239,521 – 239,521 – 239,521
Total transactions with owners in their capacity as owner – – 245,546 – 245,546 2,694 248,240
Balance as at June 30, 2022 14 607,734 (425,460) (5,259,457) (5,077,169) (87,998) (5,165,167)
APPENDIX I ACCOUNTANT’S REPORT
– I-14 –


--- page 471 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
Six months ended
June 30,
Note 2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Cash flows (used
in)/generated from
operating activities
Cash generated (used in)/
generated from operations 34 (117,479) (900,360) (470,809) (320,730) 49,908
Interest received 3,170 9,319 25,224 7,066 11,405
Income tax paid (40,391) (76,133) (74,232) (36,456) (58,516)
(154,700) (967,174) (519,817) (350,120) 2,797
Cash flows used in investing
activities
Purchase of financial assets at
fair value through profit or
loss (306,839) (1,149,051) (998,355) (723,441) (80,327)
Redemption of financial assets
at fair value through profit
or loss 243,388 1,184,448 507,376 213,216 29,281
Investment in associates (1,389) (3,070) – – –
Loans to related parties 39 (57,599) (128,158) (320,000) (320,000) –
Loans to third parties (628,466) (272,410) (38,359) (10,676) (36,522)
Collection of loans to related
parties and interests received 39 1,004 6,611 516,024 514,176 –
Repayment of loans by third
parties and interests received 376,526 465,698 18,658 13,187 5,200
Purchase of property, plant and
equipment (257,742) (513,675) (573,226) (246,601) (249,471)
Purchases of investment
properties (1,678) (513) – – –
Proceeds from disposal of
property, plant
and equipment 2,062 23,846 32,015 11,128 28,888
Purchases of intangible assets (3,570) (6,036) (7,451) (2,464) (1,146)
Acquisition of subsidiaries, net
of cash acquired
17, 36,
37, 38 126 (608,696) 3,561 – (61,984)
Disposals of subsidiaries and
associates (909) – – – 43
(635,086) (1,001,006) (859,757) (551,475) (366,038)
APPENDIX I ACCOUNTANT’S REPORT
– I-15 –


--- page 472 ---
Year ended December 31,
Six months ended
June 30,
Note 2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Cash flows generated from
financing activities
Movement of restricted cash (342) (12) 415 86 (555)
Proceeds from borrowings 400,889 215,162 1,099,253 1,019,986 131,053
Repayment of borrowings (137,795) (610,209) (105,746) (85,102) (64,168)
Interest paid for borrowings (3,004) (8,009) (38,792) (5,635) (33,299)
Interest paid to holders of
preferred shares – (81,602) – – –
Dividends paid – (120,838) (28,558) (8,935) (6,216)
Net proceeds from issuance of
Series B Preferred Shares,
Series B+ Preferred Shares,
Series C1 Preferred Shares,
Series D Preferred Shares
of the Company and other
preferred shares 25, 29 100,000 3,966,126 219,024 219,024 200,000
Net proceeds from issuance
of convertible loan of
JNT KSA 29 –––– 10,000
Net proceeds from issuance of
Series A Preferred Shares of
the Company 977,193 236,862 – – –
Net proceeds received related
to the issuance of shares of
JNT KSA 29 – 20,000 – – 15,000
Net proceeds from issuance of
shares to network partners – – 44,579 – –
Principal elements of lease
payments (61,405) (101,703) (262,668) (127,290) (168,427)
Interest elements of lease
payments (6,007) (13,860) (37,318) (18,239) (19,015)
Capital injection from non-
controlling shareholders 15,637 1,141 520 299 11
Repurchase of ordinary shares 25, 26 – (23,948) (15,294) – –
Listing expenses – (202) (361) (322) (213)
Cash (paid)/received in
transactions with non-
controlling interests 35 – (9,401) 6,274 6,274 –
1,285,166 3,469,507 881,328 1,000,146 64,171
Net increase/(decrease) in
cash and cash equivalents 495,380 1,501,327 (498,246) 98,551 (299,070)
Cash and cash equivalents at
the beginning of the
year/period 97,173 600,425 2,102,448 2,102,448 1,504,048
Effects of foreign exchange
rate changes on cash and
cash equivalents 7,872 696 (100,154) (67,768) (9,714)
Cash and cash equivalents at
the end of the year/period 600,425 2,102,448 1,504,048 2,133,231 1,195,264
APPENDIX I ACCOUNTANT’S REPORT
– I-16 –


--- page 473 ---
II NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. GENERAL INFORMATION, HISTORY AND REORGANIZATION
1.1 General information
J&T Global Express Limited (the “Company”), was incorporated in the Cayman Islands on October 24, 2019
as an exempted company registered under the laws of the Cayman Islands. The address of the Company’s
registered office is P .O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman,
KY1-1205, Cayman Islands.
The Company acts as an investment holding company and its subsidiaries and consolidated affiliated entities,
as set out in Note 18 (collectively, the “Group”), are principally engaged in express delivery services
(collectively, the “Listing Business”) in the People’s Republic of China (the “PRC”, or “China”), Indonesia,
the Philippines, Malaysia, Thailand, Vietnam, and other countries.
Mr. Li Jie (or “Mr. Jet Li”) is the ultimate controlling shareholder of the Company as of the date of this report.
1.2 History and reorganization
On May 8, 2015, Mr. Jet Li and other individual investors established a holding company (the “BVI Holdco”)
in British Virgin Islands, with 320,000,000 ordinary shares. The total share capital and share premium was
Renminbi (“RMB”) 220,000,000 (approximately USD33,187,000). Since the establishment of the BVI Holdco,
the Group started operations in Indonesia in 2015, and entered the express delivery markets in Malaysia and
Vietnam in 2018, and then in the Philippines, Thailand and Cambodia in 2019. In 2020, the Group entered the
express delivery market in China and Singapore. In 2022, the Group further established express delivery
operations in Mexico, Egypt, Brazil, UAE, and Saudi Arabia (together with UAE called “Middle East”).
For China, the Group entered the market by acquiring local operating licenses and established its own
operations, and further expanded its operations along with business acquisitions of certain local entities. For
Indonesia, the Group established local operations with business acquisitions of certain local entities, and
further expanded its operations along with acquisitions of certain operating entities of its regional sponsors.
For Singapore, the Group established local operations with business acquisitions of certain local entities. For
Thailand, the Group established local subsidiaries to commence local operations, and further expanded its
operations along with business acquisitions of certain operating entities of its regional sponsors. For Vietnam
and the Philippines, the Group entered the market by acquiring local operating licenses and established its own
operations. For Malaysia, Cambodia, and other countries, the Group established local subsidiaries to
commence local operations.
On July 15, 2017, the BVI Holdco entered into a subscription agreement for the Series Pre-A1 Preferred Shares
financing with certain third-party investors. The total consideration was USD103,408,000.
On August 20, 2018, the BVI Holdco entered into a subscription agreement for the Series Pre A2 Preferred
Shares financing with certain third-party investors. The total consideration was USD80,037,000.
The Company was established on October 24, 2019, with an authorised share capital of USD50,000 divided
into 5,000,000,000 shares with par value of USD0.00001 each. On the incorporation date, the Company and
the BVI Holdco underwent a reorganization and entered into a share swap agreement, under which the
Company issued 448,933,332 shares to the shareholders of the BVI Holdco and in return the Company
acquired all the equity interest of the BVI Holdco (the “Reorganization”).
Since then, the Company issued certain series of preferred shares, further details of which are set out in Note
25 and Note 29.
The regulations in certain jurisdictions have certain restrictions on foreign ownership of companies that
provide express delivery services. In order to comply with relevant local regulations, the Company controls
relevant subsidiaries in the PRC and Indonesia through certain contractual arrangements.
APPENDIX I ACCOUNTANT’S REPORT
– I-17 –


--- page 474 ---
(a) Contractual agreements with the VIE in the PRC
In accordance with a series of contractual arrangements effective from January 1, 2020, entered into
among a wholly owned subsidiary of the Company (the “HK Holding”), the parent company (the “China
VIE”) of the express delivery service licence holding company in the PRC and its equity holders, the
HK Holding and the Company were able to:
 exercise equity holders’ voting rights of the China VIE;
 receive substantially all of the economic interest returns generated by the China VIE in
consideration for the business support, technical and consulting services provided by the HK
Holding;
 obtain an irrevocable and exclusive right to purchase all of the equity interests in the China VIE
from its respective equity holders at a minimum purchase price when it is permitted under laws
and regulations in the PRC, and the HK Holding may exercise such options at any time until it
has acquired all equity interests of the China VIE; and
 obtain a pledge over the entire equity interests of the China VIE from its respective equity holders
as collateral security for the due payment and timely performance by the China VIE and its equity
holders in accordance with the terms in the contractual arrangements.
The abovementioned arrangements were terminated on April 22, 2020 and in accordance with a series
of contractual arrangements effective since then, entered into among a wholly owned subsidiary of the
Company (the “China WFOE”, a wholly foreign-owned enterprise in China), the China VIE and its
equity holders, the China WFOE and the Company are able to:
 exercise equity holders’ voting rights of the China VIE;
 receive substantially all of the economic interest returns generated by the China VIE in
consideration for the business support, technical and consulting services provided by the China
WFOE;
 obtain an irrevocable and exclusive right to purchase all of the equity interests in the China VIE
from the respective equity holders at a minimum purchase price when it is permitted under laws
and regulations in the PRC and the China WFOE may exercise such options at any time until it
has acquired all equity interests of the China VIE; and
 obtain a pledge over the entire equity interests of the China VIE from its respective equity holders
as collateral security for the due payment and timely performance by the China VIE and its equity
holders in accordance with the terms in the contractual arrangements.
As a result of such contractual arrangements, the Company has the rights to exercise power over the
China VIE and its subsidiaries, the right to receive variable returns from its involvement in the China
VIE and its subsidiaries, and the ability to affect those returns through its power over the China VIE and
its subsidiaries, and is therefore considered to control the China VIE and its subsidiaries. Consequently,
the Company regards the China VIE and its subsidiaries as controlled entities and consolidated the
assets, liabilities, and results of operations of the China VIE and its subsidiaries in the consolidated
financial information of the Group.
(b) Contractual agreements with the VIE in Indonesia
In accordance with a series of contractual arrangements effective from August 15, 2016, entered into
among the HK Holding, the local holding companies of the relevant businesses in Indonesia
(collectively, the “Indonesia VIE”) and their equity holders, the HK Holding and the Company are able
to:
 exercise substantially all the powers and rights associated to the portion of contributed capital
held by equity holders of the Indonesia VIE;
APPENDIX I ACCOUNTANT’S REPORT
– I-18 –


--- page 475 ---
 receive substantially all of the economic interest returns generated by the Indonesia VIE in
consideration for the business support, technical and consulting services provided by the HK
Holding;
 obtain an irrevocable and exclusive right to purchase all or part of the equity interests in the
Indonesia VIE from its respective equity holders when it is permitted under laws and regulations
in Indonesia. The HK Holding may exercise such options at any time until it has acquired all
equity interests of the Indonesia VIE. The purchase price is set at HK Holding’s discretion,
subject to any restrictions imposed by Indonesian law; and
 obtain a pledge over the entire equity interests of the Indonesia VIE from its respective equity
holders as collateral security for the due payment and timely performance by the Indonesia VIE
and its equity holders in accordance with the terms in the contractual arrangements.
Starting from March 29, 2022, the abovementioned contractual arrangements were terminated, and as
per a new series of contractual arrangements entered into among an Indonesian subsidiary of the HK
Holding (the “Indonesia Holding”), the Indonesia VIE and their equity holders, with similar terms and
clauses, the Indonesia Holding was able to exercise similar power and to be exposed to similar returns
from the Indonesia VIE.
As a result of such arrangements, the Company has the rights to exercise power over the Indonesian VIE
and its subsidiaries, the rights to receive variable returns from its involvement in the Indonesian VIE
and its subsidiaries, and the ability to affect those returns through its power over the Indonesian VIE
and its subsidiaries, and is therefore considered to control the Indonesian VIE and its subsidiaries.
Consequently, the Company regards the Indonesian VIE and its subsidiaries as controlled entities and
consolidated the assets, liabilities and results of operations of the Indonesian VIE and its subsidiaries
in the consolidated financial information of the Group.
(c) Contractual agreements with the VIE in Vietnam (terminated since June 9, 2021)
In accordance with a series of contractual arrangements effective from January 1, 2018, entered into
among the HK Holding, a related party of the Group (Company H), and the main operating entity in
Vietnam (the “Vietnam VIE 1”) and its equity holders, the HK Holding and the Company were able to:
 exercise all the powers and rights associated to the portion of contributed capital held by equity
holders of the Vietnam VIE 1;
 receive substantially 62% of the economic interest returns generated by the Vietnam VIE 1, in
consideration for the technical services, marketing and management consulting and human
resources support provided by the HK Holding together with Company H (while Company H
receives 38%);
 obtain an irrevocable and exclusive right to purchase up to 62% of the equity interests in the
Vietnam VIE 1 from its respective equity holders when it is permitted under laws and regulations
in Vietnam. The HK Holding may exercise such options at any time until it has acquired all the
62% of equity interests of the Vietnam VIE 1. The purchase price is set at HK Holding’s
discretion, subject to any restrictions imposed by Vietnamese law and above the book value as per
Vietnam VIE 1’s accounting books (while Company H obtains similar right to purchase the
remaining 38% of the equity interests); and
 obtain a pledge over 62% of equity interests of the Vietnam VIE 1 from its respective equity
holders as collateral security for the due payment and timely performance by the Vietnam VIE 1
and its equity holders in accordance with the terms in the contractual arrangements (while
Company H obtains a pledge over the remaining 38% of the equity interests).
In December 2020, the Group underwent a reorganization, in which an intermediate holding company
of Vietnam VIE 1 (the “Vietnam VIE 2”, together with Vietnam VIE 1, the “Vietnam VIEs”) became the
shareholder of Vietnam VIE 1 through a local holding company. Effective from December 2, 2020, the
abovementioned contractual arrangements were terminated, and as per the new series of contractual
APPENDIX I ACCOUNTANT’S REPORT
– I-19 –


--- page 476 ---
arrangements entered into among the HK Holding, Company H and the Vietnam VIE 2 and its equity
holders, with similar terms and clauses, the HK Holding and the Company were able to exercise similar
power and to be exposed to similar returns from Vietnam VIEs.
On April 30, 2021, the Company completed a series of transactions for the purpose of acquiring
Company H’s power over and the returns from Vietnam VIEs, upon which relevant abovementioned
contractual arrangements were terminated and in accordance with a new series of contractual
arrangements entered into among the HK Holding, the Vietnam VIE 2 and its equity holders, the HK
Holding and the Company were able to:
 exercise substantially all the powers and rights associated to the portion of contributed capital
held by equity holders of the Vietnam VIE 2;
 receive substantially all of the economic interest returns generated by the Vietnam VIE 2, in
consideration for the technical services, marketing and management consulting and human
resources support provided by the HK Holding;
 obtain an irrevocable and exclusive right to purchase all of the equity interests in the Vietnam VIE
2 from its respective equity holders when it is permitted under laws and regulations in Vietnam.
The HK Holding may exercise such options at any time until it has acquired all the of equity
interests of the Vietnam VIE 2. The purchase price is set at the HK Holding’s discretion, subject
to any restrictions imposed by Vietnamese law and above the book value as per Vietnam VIE 2’s
accounting books; and
 obtain a pledge over all the equity interests of the Vietnam VIE 2 from its respective equity
holders as collateral security for the due payment and timely performance by the Vietnam VIE 2
and its equity holders in accordance with the terms in the contractual arrangements.
As a result of such contractual arrangements, the Company has the rights to exercise power over the
Vietnam VIE 2 and its subsidiaries, the rights to receive variable returns from its involvement in the
Vietnam VIE 2 and its subsidiaries, and the ability to affect those returns through its power over the
Vietnam VIE 2 and its subsidiaries, and is therefore considered to control the Vietnam VIE 2 and its
subsidiaries. Consequently, the Company regards the Vietnam VIE 2 and its subsidiaries as controlled
entities and consolidated the assets, liabilities, and results of operations of the Vietnam VIE 2 and its
subsidiaries in the consolidated financial information of the Group.
Starting from June 9, 2021, with a series of reorganizations, the HK Holding indirectly obtained all the
equity interests in the Vietnam VIEs, and the abovementioned contractual agreements were terminated.
Nevertheless, the contractual arrangements may not be as effective as direct legal ownership in
providing the Group with direct control over those aforementioned VIEs and its subsidiaries.
Uncertainties presented by relevant local legal systems could impede the Group’s beneficiary rights of
the results, assets, and liabilities of those aforementioned VIEs and its subsidiaries. The directors of the
Company, based on the advice of its legal counsel, consider that the contractual arrangements are in
compliance with relevant local laws and regulations, and are legally binding and enforceable.
1.3 Basis of presentation
Immediately prior to and after the Reorganization, all of the Group’s business is held by the BVI Holdco. The
Group’s Business is mainly conducted through a couple of operating entities in relevant countries, which are
all directly or indirectly controlled by the BVI Holdco. Pursuant to the Reorganization, the BVI Holdco and
all of the Group’s business are transferred to and held by the Company. The Company has not been involved
in any other business prior to the Reorganization and does not meet the definition of a business. The
Reorganization is merely a recapitalization of the Group’s business with no change in management of such
business and the ultimate owners of the Group’s business remain the same. Accordingly, the Group resulting
from the Reorganization is regarded as a continuation of the Group’s business under the BVI Holdco. and, for
the purpose of this report, the Historical Financial Information has been prepared and presented as a
continuation of the consolidated financial statements of the BVI Holdco and its subsidiaries, with the assets
and liabilities of the Group recognized and measured at the carrying amounts of the Group’s business under
the consolidated financial statements of the BVI Holdco for all periods presented.
APPENDIX I ACCOUNTANT’S REPORT
– I-20 –


--- page 477 ---
2. SUMMARY OF MATERIAL ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the Historical Financial Information are set out
below. These policies have been consistently applied during the Track Record Period, unless otherwise stated.
2.1 Basis of preparation
The Historical Financial Information of the Group has been prepared in accordance with International
Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”)
during the Track Record Period. The Historical Financial Information of the Group has been prepared under
the historical cost convention, except for financial assets and financial liabilities measured at fair value
through profit or loss.
The Group incurred net losses of USD664.2 million, USD6.2 billion, net profit of USD1.6 billion, net profit
of USD1.4 billion and net losses of USD666.8 million for the years ended December 31, 2020, 2021, and 2022
and the six months ended June 30, 2022 and 2023, respectively. The Group had net operating cash outflows
of USD117.5 million, USD900.4 million, USD470.8 million, USD320.7 million and net operating cash inflows
of USD49.9 million for the years ended December 31, 2020, 2021, and 2022 and the six months ended June 30,
2022 and 2023, respectively.
As at June 30, 2023, although the Group reported a net deficit of equity of USD5.5 billion, the Group’s cash
and cash equivalents and net current assets were USD1.2 billion and USD0.8 billion. In addition, the Group’s
financial liabilities as at June 30, 2023 included convertible preferred shares, with an amount of USD8.3
billion, that would not contractually become redeemable within the next 12 months.
Management has prepared a cash flow projection covering a period of not less than 12 months from June 30,
2023, based on which the directors of the Company believe that the Group will have sufficient working capital
to fund its operations and to meet its financial obligations as and when they fall due within 12 months from
June 30, 2023. Consequently, the Historical Financial Information has been prepared on a going concern basis.
The preparation of the Historical Financial Information in conformity with IFRSs requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the process of applying
the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the Historical Financial Information are disclosed in
Note 4.
All effective standards, amendments to standards and interpretations, which are mandatory for the financial
year beginning on January 1, 2023, including IFRS 9, IFRS 15 and IFRS 16, are consistently applied to the
Group for the Track Record Period.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for Track
Record Period and have not been early adopted by the Group. Those new standards, amendments of standards
and interpretations are as follows:
Effective for annual periods
beginning on or after
IFRS 10 (Amendment) and IAS
28 (Amendment)
Sale or contribution of assets
between an investor and its
associate or joint venture
To be determined
IFRS 7 (Amendment) and IAS 7
(Amendment)
Supplier Finance Arrangements January 1, 2024
IFRS 16 (Amendments) Lease Liability in a Sale and
Leaseback
January 1, 2024
IAS 1 (Amendments) Non-current Liabilities with
Covenants
January 1, 2024
IAS 1 (Amendment) Classification of liabilities as
current or non-current
January 1, 2024
APPENDIX I ACCOUNTANT’S REPORT
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--- page 478 ---
The directors of the Company anticipate that the application of the above new standards, amendments and
interpretations will have no material impact on the Historical Financial Information upon adoption, except for
Amendment to IAS 1 where the convertible preference shares of the Company and of the Company’s
subsidiaries, which are convertible by the holders at any time, will be reclassified to current liabilities upon
adoption of IAS 1.
2.2 Principles of consolidation and equity accounting
2.2.1 Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group
controls an entity where the Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power to direct the activities of the
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group (refer
to Note 2.3).
Inter-company transactions, balances, and unrealized gains on transactions between Group companies
are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an
impairment of the transferred asset. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the
consolidated income statement, statement of comprehensive income, statement of changes in equity and
balance sheet respectively.
There are entities controlled by the Company under certain contractual arrangements. The Company
does not have legal ownership in equity of these entities or their subsidiaries. There are also entities
controlled by the Company where the Company is holding less than 50% of their equity interests
respectively due to certain local restrictions on foreign ownership of companies that provide express
delivery services. Nevertheless, under certain contractual arrangements or shareholder’s agreements
entered into with the registered owners or together with other local owners of these entities, the
Company and its other legally owned subsidiaries control these entities by way by controlling their
major corporate governance and decision-making processes and directing the results of such processes,
governing their major operating, investment, and financing policies and etc. In addition, the Company
and its other legally owned subsidiaries are also exposed to variable returns in such companies through
certain service contracts, which constitute substantially all the net income of such companies, dividend
income as a result of its direct shareholding and as per relevant shareholder’s agreements, and etc.
Therefore, the Group has rights to exercise power over these entities, receives variable returns from its
involvement in these entities, and has the ability to affect those returns through its power over these
entities. As a result, they are presented as controlled entities of the Group.
2.2.2 Associates
Associates are all entities over which the Group has significant influence but not control or joint control.
This is generally the case where the Group holds between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting (see Note 2.2.3
below), after initially being recognized at cost.
2.2.3 Equity method
Under the equity method of accounting, the investments are initially recognized at cost and adjusted
thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit
or loss, and the Group’s share of movements in other comprehensive income of the investee in other
comprehensive income. Dividends received or receivable from associates and joint ventures are
recognized as a reduction in the carrying amount of the investment.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 479 ---
Where the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in
the entity, including any other unsecured long-term receivables, the Group does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the other entity.
Unrealized gains on transactions between the Group and its associates and joint ventures are eliminated
to the extent of the Group’s interest in these entities. Unrealized losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Accounting policies of
equity-accounted investees have been changed where necessary to ensure consistency with the policies
adopted by the Group.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the
policy described in Note 2.10.
2.2.4 Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as
transactions with equity owners of the Group. A change in ownership interest results in an adjustment
between the carrying amounts of the controlling and non-controlling interests to reflect their relative
interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling
interests and any consideration paid or received is recognized in a separate reserve within equity
attributable to owners of the Company.
When the Group ceases to consolidate or equity account for an investment because of a loss of control,
joint control or significant influence, any retained interest in the entity is remeasured to its fair value
with the change in carrying amount recognized in profit or loss. This fair value becomes the initial
carrying amount for the purposes of subsequently accounting for the retained interest as an associate,
joint venture, or financial asset. In addition, any amounts previously recognized in other comprehensive
income in respect of that entity are accounted for as if the Group had directly disposed of the related
assets or liabilities. This may mean that amounts previously recognized in other comprehensive income
are reclassified to profit or loss or transferred to another category of equity as specified/permitted by
applicable IFRSs.
If the ownership interest in a joint venture or an associate is reduced but joint control or significant
influence is retained, only a proportionate share of the amounts previously recognized in other
comprehensive income are reclassified to profit or loss where appropriate.
2.3 Business combination
The acquisition method of accounting is used to account for all business combinations, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises the:
 fair values of the assets transferred
 liabilities incurred to the former owners of the acquired business
 equity interests issued by the Group
 fair value of any asset or liability resulting from a contingent consideration arrangement, and
 fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are,
with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises
any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or
at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
APPENDIX I ACCOUNTANT’S REPORT
– I-23 –


--- page 480 ---
The excess of the:
 consideration transferred,
 amount of any non-controlling interest in the acquired entity, and
 acquisition-date fair value of any previous equity interest in the acquired entity
over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than
the fair value of the net identifiable assets of the business acquired, the difference is recognized directly in
profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental
borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier
under comparable terms and conditions. Contingent consideration is classified either as equity or a financial
liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in
fair value recognized in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains
or losses arising from such remeasurement are recognized in profit or loss.
2.4 Separate financial statements
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs
of investment. The results of subsidiaries are accounted for by the company on the basis of dividend received
and receivable.
Impairment testing of the investments in subsidiaries is required upon receiving a dividend from these
investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the
dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds
the carrying amount in the consolidated financial statements of the investee’s net assets including goodwill.
2.5 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker (“CODM”). The CODM, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Chief Executive Officer (the “CEO”) that
makes strategic decisions.
2.6 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which each entity operates respectively (“the
functional currency”). The Historical Financial Information is presented in United States Dollars
(“USD”), which is the Company’s functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are generally recognized in profit or loss. They are deferred in
equity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are
attributable to part of the net investment in a foreign operation.
APPENDIX I ACCOUNTANT’S REPORT
– I-24 –


--- page 481 ---
Foreign exchange gains and losses that relate to borrowings are presented in the consolidated income
statement, within finance costs. All other foreign exchange gains and losses are presented in the
consolidated income statement on a net basis within other gains/(losses).
Non-monetary items that are measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined. Translation differences on assets and
liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation
differences on non-monetary assets and liabilities such as equities held at fair value through profit or
loss are recognized in profit or loss as part of the fair value gain or loss and translation differences on
non-monetary assets such as equities classified as fair value through other comprehensive income are
recognized in other comprehensive income.
(c) Group companies
The results and financial position of foreign operations (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
 assets and liabilities for each balance sheet presented are translated at the closing rate at the date
of that balance sheet
 income and expenses for each income statement and statement of comprehensive income are
translated at average exchange rates (unless this is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions), and
 all resulting exchange differences are recognized in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at the closing rate.
(d) Disposal of foreign operation and partial disposal
On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign
operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, a
disposal involving loss of joint control over a joint venture that includes a foreign operation, or a
disposal involving loss of significant influence over an associate that includes a foreign operation), all
of the currency translation differences accumulated in equity in respect of that operation attributable to
the owners of the company are reclassified to profit or loss.
In the case of a partial disposal that does not result in the Group losing control over a subsidiary that
includes a foreign operation, the proportionate share of accumulated currency translation differences is
re-attributed to non-controlling interests and are not recognized in profit or loss. For all other partial
disposals (that is, reductions in the Group’s ownership interest in associates or joint ventures that do not
result in the Group losing significant influence or joint control), the proportionate share of the
accumulated exchange difference is reclassified to profit or loss.
2.7 Property, plant and equipment
All property, plant and equipment are stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from
equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant
and equipment.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate
asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the
reporting period in which they are incurred.
APPENDIX I ACCOUNTANT’S REPORT
– I-25 –


--- page 482 ---
Depreciation is calculated using the straight-line method to allocate their costs to their residual values over
their estimated useful lives as follows:
Buildings and warehouses 10-20 years
Logistic equipment 3-10 years
V ehicles 3-10 years
Office equipment 2-5 years
Freehold Land Infinite useful life
Leasehold improvements Estimated useful lives or remaining lease terms,
whichever is shorter
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount (Note 2.10).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included
in profit or loss.
2.8 Investment properties
Investment properties, principally freehold buildings, warehouses and land, are held for long-term rental yields
and are not occupied by the Group. Investment property is measured at historical cost less depreciation.
Historical cost includes related transaction costs and where applicable borrowing costs.
Depreciation is calculated using the straight-line method to allocate their costs to their residual values over
their estimated useful lives as shown in Note 2.7.
2.9 Intangible assets
(a) Goodwill
Goodwill is measured as described in Note 2.3. Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill is not amortised, but it is tested for impairment annually, or more frequently
if events or changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is
made to those cash-generating units or groups of cash-generating units that are expected to benefit from
the business combination in which the goodwill arose. The units or groups of units are identified at the
lowest level at which goodwill is monitored for internal management purposes, being the operating
segments (Note 5).
(b) Software
Computer softwares are initially recognized and measured at costs incurred to acquire and bring them
to use, amortised on a straight-line basis over their estimated useful lives, and recorded in amortization
within operating expenses in the consolidated income statement.
(c) Customer relationship
Customer relationships acquired in a business combination are recognised at fair value at the acquisition
date. Customer relationships have a finite useful life and are carried at cost less accumulated
amortisation. Amortisation is calculated using the straight-line method over the estimated life.
During the Track Record Period, the Group’s customer relationships were mainly related to several
business combinations, representing the customers acquired including network partners of Best Inc.’s
Express Business in China, and details of which are set out in Note 36, Note 37 and Note 38. Because
the annual churn rate of such customers was around 9% historically prior to relevant business
combinations, the same assumptions were applied for the Company (i.e., customers would keep exiting
the network at a rate of 9% each year), which means it will take around 10-12 years for such customers
to exit completely.
APPENDIX I ACCOUNTANT’S REPORT
– I-26 –


--- page 483 ---
(d) Trademark
Separately acquired trademarks are shown at historical cost. Trademarks acquired in a business
combination are recognised at fair value at the acquisition date. Certain trademarks have an infinite
useful life and are not amortised but tested for impairment annually, or more frequently if events or
changes in circumstances indicate that they might be impaired, and is carried at cost less accumulated
impairment losses. Certain trademarks are valid for 10-20 years.
(e) Licence and others
Separately acquired licences and other intangible assets are shown at historical cost. These intangible
assets have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is
calculated using the straight-line method to allocate the cost over their estimated useful lives. During
the Track Record Period, the Group’s licenses are generally valid for 5-7 years.
(f) Research and development expenditures
Research expenditure is recognized as an expense as incurred. Costs incurred on development projects
(relating to the design and testing of new or improved products) are capitalized as intangible assets when
recognition criteria are fulfilled. These criteria include:
 it is technically feasible to complete the software product so that it will be available for use;
 management intends to complete the software product and use or sell it;
 there is an ability to use or sell the software product;
 it can be demonstrated how the software product will generate probable future economic benefits;
 adequate technical, financial and other resources to complete the development and to use or sell
the software product are available; and
 the expenditure attributable to the software product during its development can be reliably
measured.
Other development expenditures that do not meet these criteria are recognized as an expense as incurred.
(g) Amortisation methods and periods
The Group amortises intangible assets with a limited useful life using the straight-line method over the
following periods:
Customer relationship 10-12 years
Software 2-5 years
Trademark 10-20 years
Licence 5-7 years
2.10 Impairment of non-financial assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be
impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value
less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash
inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill
that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting
period.
APPENDIX I ACCOUNTANT’S REPORT
– I-27 –


--- page 484 ---
2.11 Investments and other financial assets
2.11.1 Classification
The Group classifies its financial assets in the following measurement categories:
Those to be measured subsequently at fair value (either through OCI or through profit or loss), and those
to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For
investments in equity instruments that are not held for trading, this will depend on whether the Group
has made an irrevocable election at the time of initial recognition to account for the equity investment
at fair value through other comprehensive income (FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those
assets changes.
2.11.2 Recognition and derecognition
Regular way purchases and sales of financial assets are recognized on trade-date, the date on which the
Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive
cash flows from the financial assets have expired or have been transferred and the Group has transferred
substantially all the risks and rewards of ownership.
2.11.3 Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to
the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed
in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether
their cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the
asset and the cash flow characteristics of the asset. There are three measurement categories into which
the Group classifies its debt instruments:
 Amortised cost: Assets that are held for collection of contractual cash flows where those cash
flows represent solely payments of principal and interest are measured at amortised cost. Interest
income from these financial assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognized directly in profit or loss and
presented in other gains/(losses) together with foreign exchange gains and losses. Impairment
losses are presented as separate line item in the consolidated income statement.
 FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely payments of principal and interest, are
measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest income and foreign exchange gains and losses
which are recognized in profit or loss. When the financial asset is derecognized, the cumulative
gain or loss previously recognized in OCI is reclassified from equity to profit or loss and
recognized in other gains/(losses). Interest income from these financial assets is included in
finance income using the effective interest rate method. Foreign exchange gains and losses are
presented in other gains/(losses) and impairment expenses are presented as separate line item in
the consolidated income statement.
APPENDIX I ACCOUNTANT’S REPORT
– I-28 –


--- page 485 ---
 FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL.
A gain or loss on a debt investment that is subsequently measured at FVPL is recognized in profit
or loss and presented net within other gains/(losses) in the period in which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management
has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent
reclassification of fair value gains and losses to profit or loss following the derecognition of the
investment. Dividends from such investments continue to be recognized in profit or loss as other income
when the Group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognized in other gains/(losses) in the
consolidated income statement as applicable. Impairment losses (and reversal of impairment losses) on
equity investments measured at FVOCI are not reported separately from other changes in fair value.
2.11.4 Impairment
The Group assesses on a forward-looking basis the expected credit loss associated with its debt
instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on
whether there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires
expected lifetime losses to be recognized from initial recognition of the receivables, see Note 21 for
further details.
2.12 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average
cost basis and net realisable value is based on estimated selling prices less any estimated costs to be incurred
to completion and disposal.
As at December 31, 2020, 2021, and 2022 and June 30, 2023, inventories of the Group are generally
consumables and accessories, including packing supplies, apparels and etc.
2.13 Trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course
of business.
Trade receivables are recognized initially at the amount of consideration that is unconditional unless they
contain significant financing components, when they are recognized at fair value. The Group holds the trade
receivables with the objective of collecting the contractual cash flows and therefore measures them
subsequently at amortised cost using the effective interest method. See Note 21 for further information about
the Group’s accounting for trade receivables and Note 3.1 for a description of the Group’s impairment policies.
2.14 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on
hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
2.15 Share capital
Ordinary shares and non-redeemable participating preferred shares are classified as equity (Note 25).
Mandatorily redeemable preferred shares are classified as liabilities (Note 29).
Incremental costs directly attributable to the issuance of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
APPENDIX I ACCOUNTANT’S REPORT
– I-29 –


--- page 486 ---
2.16 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Trade and other payables are presented as current liabilities unless payment is not due
within 12 months after the reporting period. Trade payables also include bank acceptance notes with trade
nature and are due within 12 months.
Trade payables are recognized initially at fair value and subsequently measured at amortised cost using the
effective interest method.
2.17 Financial liabilities at fair value through profit or loss
Before and during the Track Record Period, the Group entered into a series of share purchase agreements with
certain investors and issued Series Pre-A1 Preferred Shares, Series Pre-A2 Preferred Shares, Series A Preferred
Shares, Series B Preferred Shares, Series B+ Preferred Shares, Series C1 Preferred Shares, Series C2 Preferred
Shares and JET Global Series A Preferred Shares.
The Group designated the convertible preferred shares, which the host contracts are financial liabilities, as
financial liabilities at fair value through profit or loss, which are initially recognized at fair value. Any directly
attributable transaction costs are recognized as finance costs in profit or loss.
The component of fair value changes relating to the Company’s own credit risk is recognized in other
comprehensive income/(loss). Amounts recorded in other comprehensive income/(loss) related to credit risk
are not subject to recycling in profit or loss, but are transferred to retained earnings when realized. Fair value
changes relating to market risk are recognized in profit or loss.
The convertible preferred shares are classified as current liabilities unless the Group has an unconditional right
to defer settlement of the liability for at least 12 months after the reporting period.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value at the end of each reporting period.
2.18 Financial liabilities – share redemption liabilities
A contract that contains an obligation for the Group to purchase its own equity instruments for cash or another
financial asset gives rise to a financial liability for the present value of the redemption amount.
The financial liability is recognised initially at the present value of the redemption amount, and is reclassified
from equity. Subsequently, the financial liability is measured at amortised cost. If the contract expires without
delivery, the carrying amount of the financial liability is reclassified to equity. The Group’s contractual
obligation to purchase its own equity instruments gives rise to a financial liability for the present value of the
redemption amount even if the obligation to purchase is conditional on the counterparty exercising a right to
redeem.
2.19 Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and
the redemption amount is recognized in profit or loss over the period of the borrowings using the effective
interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan
to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is
deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of
the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over
the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any noncash assets
transferred or liabilities assumed, is recognized in profit or loss as finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting period.
APPENDIX I ACCOUNTANT’S REPORT
– I-30 –


--- page 487 ---
2.20 Borrowing costs
Borrowing costs are expensed in the period in which they are incurred.
2.21 Current and deferred income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based
on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
(a) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted
at the end of the reporting period in the countries where the company and its subsidiaries and associates
operate and generate taxable income. Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is subject to interpretation and considers
whether it is probable that a taxation authority will accept an uncertain tax treatment. The Group
measures its tax balances either based on the most likely amount or the expected value, depending on
which method provides a better prediction of the resolution of the uncertainty.
(b) Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the Historical Financial
Information. However, deferred tax liabilities are not recognized if they arise from the initial recognition
of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset
or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantively enacted by the end of the reporting period and are
expected to apply when the related deferred income tax asset is realized, or the deferred income tax
liability is settled.
The deferred tax liability in relation to investment property that is measured at fair value is determined
assuming the property will be recovered entirely through sale.
Deferred tax assets are recognized only if it is probable that future taxable amounts will be available
to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognized for temporary differences between the carrying
amount and tax bases of investments in foreign operations where the company is able to control the
timing of the reversal of the temporary differences and it is probable that the differences will not reverse
in the foreseeable future.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current
tax assets and liabilities and where the deferred tax balances relate to the same taxation authority.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset
and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items
recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized
in other comprehensive income or directly in equity, respectively.
The Group considers the lease as a single transaction in which the assets and liabilities are integrally
linked. There is no net temporary difference at inception. Subsequently, when differences on settlement
of the liabilities and the amortisation of right-of-use assets arise, there will be a net temporary difference
on which deferred tax is recognized.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 488 ---
2.22 Employee benefits
(a) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave that are
expected to be settled wholly within 12 months after the end of the period in which the employees render
the related service are recognized in respect of employees’ services up to the end of the reporting period
and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are
presented as current employee benefit obligations in the balance sheet.
(b) Social security obligations
The Group’s subsidiaries have to make contribution to certain social security plans managed by relevant
local government authorities in accordance with the relevant rules and regulations. Contributions to
these plans are charged to the consolidated income statement as and when incurred. The Group has no
legal or constructive obligations to pay further contributions.
2.23 Share-based compensation
Equity-settled share-based compensation transactions
The Group operates share incentive plans, under which it receives services from employees as consideration
for equity instruments of the Company. The fair value of the equity instruments received in exchange for the
services is recognized as an expense on the consolidated income statement with a corresponding increase in
equity.
In terms of the equity instruments awarded to employees, the total amount to be expensed is determined by
reference to the fair value of equity instruments granted.
The total amount expensed is recognized over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied if applicable.
At the end of each reporting period, the Group revises its estimates of the number of equity instruments that
are expected to vest based on the non-marketing vesting and service conditions. It recognizes the impact of the
revision to original estimates, if any, in the consolidated income statement, with a corresponding adjustment
to equity.
In some circumstances, employees may provide services in advance of the grant date and therefore the grant
date fair value is estimated for the purposes of recognizing the expense during the period between service
commencement period and grant date.
2.24 Provisions
Provisions for legal claims, service warranties and make good obligations are recognized when the Group has
a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources
will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized
for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a whole. A provision is recognized even if the
likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at the end of the reporting period. The discount rate used to determine the present
value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability. The increase in the provision due to the passage of time is recognized as interest expense.
APPENDIX I ACCOUNTANT’S REPORT
– I-32 –


--- page 489 ---
2.25 Revenue recognition
The Group recognises revenue when (or as) a performance obligation is satisfied, i.e. when control of the
goods or services underlying the particular performance obligation is transferred to the customer.
Control is transferred over time and revenue is recognized over time by reference to the progress towards
complete satisfaction of the relevant performance obligation if one of the following criteria is met:
 The customer simultaneously receives and consumes the benefits provided by the Group’s performance
as the Group performs;
 The Group’s performance creates or enhances an asset that the customer controls as the Group performs;
or
 The Group’s performance does not create an asset with an alternative use to the Group and the Group
has an enforceable right to payment for performance completed to date.
Otherwise, revenue is recognized at a point in time when the customer obtains control of the distinct goods
or services.
A contract asset represents the Group’s right to consideration in exchange for goods or services that the Group
has transferred to a customer that is not yet unconditional. It is assessed for impairment in accordance with
IFRS 9. In contrast, a receivable represents the Group’s unconditional right to consideration, i.e. only the
passage of time is required before payment of that consideration is due.
A contract liability represents the Group’s obligation to transfer goods or services to a customer for which the
Group has received consideration (or an amount of consideration is due) from the customer.
A contract asset and a contract liability relating to a contract are accounted for and presented on a net basis.
(a) Express delivery services
(i) Services provided to pick-up outlets of network partners in China and other countries
The Group offers an integrated express delivery service to pick-up outlets of network partners in
China and other countries, such service includes parcel sorting, line-haul transportation,
dispatching and other relevant network management services. The Group generally involves other
outlets of network partners in dispatching. The Group is acting as principal in providing the entire
express delivery service as the Group controls the dispatching services from other outlets of
network partners to integrate into one complete express delivery service and is primarily
responsible for the fulfilment of the express delivery service.
The Group charges pick-up outlets fees based on the parcel’s size, weight, route to the end
recipient’s destination and other factors. The Group satisfies the performance obligation of
express delivery service and recognises revenue over time and uses an output method of progress
based on time-in-transit for express delivery service. The Group generally requires prepayment
of such service fees.
In addition, the Group also earns non-refundable fees for initial operating training and other
initial services to outlets of network partners, and such fees are generally recognized as revenue
when the services are completed.
(ii) Services provided to operating entities of regional sponsors in Indonesia, Thailand, and other
countries
The Group provides network services to operating entities of regional sponsors in Indonesia,
Thailand and other countries, which include providing system support and continuous training,
granting access to the Group’s logos and brand names, and general network arrangement and
oversight services. The Group is not responsible and not acting as principal for relevant express
delivery services regarding orders made by the operating entities of regional sponsors through the
network performed by other operating entities of regional sponsors. The Group charges fees from
APPENDIX I ACCOUNTANT’S REPORT
– I-33 –


--- page 490 ---
operating entities of regional sponsors based on parcel volumes. The network service is
considered as a series of network management and oversight services as they are substantially the
same and have same pattern of transfer to the customers. The revenue from the network service
is recognized on monthly basis according to monthly fees chargeable to the operating entities of
regional sponsors.
In some routes, the operating entities of regional sponsors will use the sorting centers operated
by the Group, and in such situation, the Group is responsible for the express delivery service
provided by its sorting centers, including parcel sorting, line-haul transportation and other
services contained in the service contracts, and charges for such service based on parcel’s size,
weight, route to the end recipient’s destination and other factors. Such express delivery service
is considered a separated performance obligation in addition to the network service. The Group
satisfies the performance obligation of such express delivery service and recognises revenue over
time and uses an output method of progress based on time-in-transit for the express delivery
service.
The Group issues billings on a monthly basis and grants certain credit periods to such operating
entities of regional sponsors.
As mentioned in Note 36 and Note 37, during year 2021 substantially all the operating entities
of regional sponsors in Thailand and Indonesia were acquired by the Group, and after such
acquisitions, the Group directly and substantially provides its integrated express delivery service
to its enterprise, individual or other customers.
(iii) Services provided to enterprise customers/individual customers
The Group also provides an integrated express delivery service directly to certain
enterprise/individual customers in China, Indonesia, Thailand and other countries, and directly to
enterprise/individual customers in the Philippines, Malaysia, Vietnam and other countries. The
Group involves other outlets of network partners or operating entities of regional sponsors in
pick-up, dispatching and other services. The Group is acting as principal in providing the entire
express delivery service as the Group controls relevant services from other outlets of network
partners or operating entities of regional sponsors to integrate into one complete express delivery
service and is primarily responsible for the fulfilment of the express delivery service.
The Group charges the customers based on parcel’s size, weight, route to the end recipient’s
destination and other factors. The Group generally issues billings on a regular basis and grants
certain credit periods to such customers. The Group satisfies the performance obligation of such
express delivery service and recognises revenue over time and uses an output method of progress
based on time-in-transit for the express delivery service.
(iv) Cash on delivery services
For cash on delivery services, the Group is generally engaged by its customers (normally on-line
shopping platforms or on-line merchants) to collect cash payment for the merchandise from
end-users, then disburse the cash payment to such customers, and charges certain proportion of
the cash payments as service fees as a value-added service on top of the express delivery services.
Generally all of such service contracts include only one performance obligation as normally the
abovementioned or other relevant promises contained in the service contracts are considered to
be not separately identifiable due to the fact that such promises are highly interrelated, and
generally the customer expects the Group to deliver services with integration of such promises.
For cash on delivery services, the Group generally satisfies a performance obligation and
recognises revenue at a point in time once such services are completed.
The Group provides customers with certain volume-based incentives in relation to express delivery services,
which represent variable considerations and are recorded as reductions to the related revenue. The Group
estimates the variable considerations to the extent that it is highly probable that a significant reversal in the
amount of cumulative revenue recognized will not occur. As the incentives are generally determined on a
monthly basis, the uncertainty in estimating the variable considerations to be recorded is very limited.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 491 ---
(b) Cross-border services
For its cross-border services provided to its customers, the Group is generally acting as principal in
providing cargo or parcel collection, transportation and warehousing, customs clearances, dispatching
and other relevant services to such customers as the Group is primarily responsible for and has control
over the services. A substantial part of such service contracts includes only one performance obligation
as normally the abovementioned or other relevant promises contained in the service contracts are
considered to be not separately identifiable due to the fact that such promises are highly interrelated,
and generally the customer expects the Group to deliver services with integration of such promises.
For such service, the Group generally satisfies a performance obligation and recognises revenue over
time as it transfers control of such service over time, since the customers receive the benefit of the
service as the goods are transported from one location to another. Revenue is recognized based on the
extent of progress towards completion of the performance obligation. The Group uses an output method
of progress based on time-in-transit as it best depicts the transfer of control to the customers.
(c) The Group’s revenue also includes sales of accessories, such as J&T-branded packing supplies and
apparels. Revenue from sales of accessories is recognized when control of the product is transferred to
the customer and in an amount the Group expects to earn in exchange for the product.
(d) Contract assets and liabilities
Contract assets mainly include unbilled receivables resulting from uncompleted services and contract
liabilities mainly include deferred revenue.
2.26 Leases
Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the
contract to the lease and non-lease components based on their relative stand-alone prices.
However, for leases of real estate for which the Group is a lessee, it has elected not to separate lease and
non-lease components and instead accounts for these as a single lease component.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.
The lease agreements do not impose any covenants other than the security interests in the leased assets that
are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
 fixed payments (including in-substance fixed payments), less any lease incentives receivable
 variable lease payment that are based on an index or a rate, initially measured using the index or rate
as at the commencement date
 amounts expected to be payable by the Group under residual value guarantees
 the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
 payments of penalties for terminating the lease, if the lease term reflects the Group exercising that
option.
Lease payments to be made under reasonably certain extension options are also included in the measurement
of the liability.
APPENDIX I ACCOUNTANT’S REPORT
– I-35 –


--- page 492 ---
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset
of similar value to the right-of-use asset in a similar economic environment with similar terms, security and
conditions.
To determine the incremental borrowing rate, the Group:
 where possible, uses recent third-party financing received by the individual lessee as a starting point,
adjusted to reflect changes in financing conditions since third-party financing was received
 uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held
by the Group, which does not have recent third-party financing, and
 makes adjustments specific to the lease, e.g. term, country, currency and security.
If a readily observable amortising loan rate is available to the individual lessee (through recent financing or
market data) which has a similar payment profile to the lease, then the Group entities use that rate as a starting
point to determine the incremental borrowing rate.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which
are not included in the lease liability until they take effect. When adjustments to lease payments based on an
index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the
liability for each period.
Right-of-use assets are measured at cost comprising the following:
 the amount of the initial measurement of lease liability
 any lease payments made at or before the commencement date less any lease incentives received
 any initial direct costs, and
 restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on
a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Payments associated with short-term leases of logistic equipment and vehicles and all leases of low-value
assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with
a lease term of 12 months or less without a purchase option. Low-value assets comprise IT equipment and
small items of office equipment.
Lease income from operating leases where the Group is a lessor is recognized in income on a straight-line basis
over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying
amount of the underlying asset and recognized as expense over the lease term on the same basis as lease
income. The respective leased assets are included in the balance sheet based on their nature. The Group did
not need to make any adjustments to the accounting for assets held as lessor as a result of adopting the new
leasing standard.
APPENDIX I ACCOUNTANT’S REPORT
– I-36 –


--- page 493 ---
2.27 Earnings per share
(a) Basic earnings per share
Basic earnings per share is calculated by dividing:
 the profit or loss attributable to owners of the company, excluding any costs of servicing equity
other than ordinary shares
 by the weighted average number of ordinary shares outstanding during the financial year, adjusted
for bonus elements in ordinary shares issued during the year and excluding treasury shares.
(b) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account:
 the after-income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares, and
 the weighted average number of additional ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary shares.
2.28 Dividend distribution
Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s Historical
Financial Information in the period in which the dividends are approved by the Company’s shareholders or
directors, where appropriate.
2.29 Government grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the
grant will be received, and the Group will comply with all attached conditions.
Government grants relating to costs are deferred and recognized in the profit or loss over the period necessary
to match them with the costs that they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in non-current
liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives
of the related assets. Note 6 provides further information on how the Group accounts for government grants.
2.30 Interest income
Interest income from financial assets at FVPL is included in the net fair value gains/(losses) on these assets.
Interest income on financial assets at amortised cost and financial assets at FVOCI calculated using the
effective interest method is recognized in profit or loss as part of other income.
Interest income is presented as finance income where it is earned from financial assets that are held for cash
management purposes. Any other interest income is included in other income.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial
asset except for financial assets that subsequently become credit impaired. For credit impaired financial assets
the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss
allowance).
APPENDIX I ACCOUNTANT’S REPORT
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3. FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The
Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group’s financial performance. Risk management is carried out by
the senior management of the Group.
(a) Market risk
(i) Foreign exchange risk
The Group’s subsidiaries primarily operate in the PRC, Indonesia, the Philippines, Malaysia,
Thailand, Vietnam and other countries. The transactions of those subsidiaries were generally
settled in local currencies. Therefore, foreign exchange risk primarily arises from recognized
assets and liabilities in the Group’s subsidiaries in the abovementioned countries when receiving
or to receive foreign currencies from, or paying or to pay foreign currencies to overseas business
partners.
For the Group’s subsidiaries whose functional currency is RMB, if RMB had
strengthened/weakened by 5% against USD with all other variables held constant, the loss before
income tax for the years ended December 31, 2020, 2021, and 2022 and the six months ended
June 30, 2023, would have been approximately USD13,322,000 lower/higher, USD351,000
lower/higher, USD29,000 lower/higher and USD1,206,000 higher/lower, respectively, as a result
of net foreign exchange gains/losses on translation of net monetary assets/liabilities denominated
in USD.
For the Group’s subsidiaries whose functional currency is IDR, if IDR had
strengthened/weakened by 5% against USD with all other variables held constant, the profit
before income tax for the years ended December 31, 2020, 2021 and 2022 and the six months
ended June 30, 2023 would have been approximately USD6,219,000 higher/lower, USD8,639,000
higher/lower, USD1,000 lower/higher and USD26,000 higher/lower respectively, as a result of
net foreign exchange gains/losses on translation of net monetary assets/liabilities denominated in
USD.
For the Group’s subsidiaries whose functional currency is THB, if THB had
strengthened/weakened by 5% against USD with all other variables held constant, the loss before
income tax for the years ended December 31, 2020, 2021 and 2022 and the six months ended
June 30, 2023 would have been approximately USD5,915,000 lower/higher, USD13,217,000
lower/higher, USD2,000 higher/lower and USD19,000 lower/higher respectively, as a result of
net foreign exchange gains/losses on translation of net monetary assets/liabilities denominated in
USD.
For the Group’s subsidiaries whose functional currency is VND, if VND had
strengthened/weakened by 5% against USD with all other variables held constant, the loss before
income tax for the years ended December 31, 2020 and 2021 and the six months ended June 30,
2023 would have been approximately USD6,231,000 lower/higher, USD8,894,000 lower/higher
and USD398,000 lower/higher respectively, as a result of net foreign exchange gains/losses on
translation of net monetary assets/liabilities denominated in USD. Relevant impact for year 2022
is minimal.
For the Group’s subsidiaries whose functional currency is MYR, if MYR had
strengthened/weakened by 5% against USD with all other variables held constant, the profit
before income tax for the years ended December 31, 2020 and 2021 would have been
approximately USD2,877,000 higher/lower and USD3,161,000 lower/higher respectively, as a
result of net foreign exchange gains/losses on translation of net monetary assets/liabilities
denominated in USD. Relevant impact for year 2022 and the six months ended June 30, 2023 is
minimal.
APPENDIX I ACCOUNTANT’S REPORT
– I-38 –


--- page 495 ---
For the Group’s subsidiaries whose functional currency is SGD, if SGD had
strengthened/weakened by 5% against USD with all other variables held constant, the loss before
income tax for the years ended December 31, 2020, 2021 and 2022 and the six months ended
June 30, 2023 would have been approximately USD540,000 lower/higher, USD700,000
lower/higher, USD5,000 higher/lower and USD69,000 lower/higher respectively, as a result of
net foreign exchange losses on translation of net monetary liabilities denominated in USD for
year 2020 and 2021, and net foreign exchange gains/losses on translation of net monetary
assets/liabilities denominated in USD for year 2022.
For the Group’s subsidiaries whose functional currency is PHP , if PHP had
strengthened/weakened by 5% against USD with all other variables held constant, the profit
before income tax for the years ended December 31, 2020, 2021, and 2022 and the six months
ended June 30, 2023 would have been approximately USD2,831,000 lower/higher, USD951,000
lower/higher, USD2,490,000 lower/higher, and USD3,842,000 lower/higher respectively, as a
result of net foreign exchange gains/losses on translation of net monetary assets/liabilities
denominated in USD.
(ii) Interest rate risk
The Group’s interest rate risk primarily arose from borrowings, loans to third parties, and cash
and cash equivalents. Those carried at floating rates expose the Group to cash flow interest rate
risk whereas those carried at fixed rates expose the Group to fair value interest rate risk.
The Group has limited cash flow interest rate risk as at December 31, 2020, 2021, and 2022 and
June 30, 2023, as substantially all the borrowings and loans to third parties are carried at fixed
interest rates.
The exposure of the Group’s borrowings to interest rate changes and the contractual re-pricing
dates of the borrowings at the end of the reporting period are as follows:
Year ended
December 31,
2020
%o f
total
loans
Year ended
December 31,
2021
%o f
total
loans
Year ended
December 31,
2022
%o f
total
loans
Six months
ended
June 30,
2023
%o f
total
loans
USD’000 USD’000 USD’000 USD’000
V ariable rate borrowings – – – – – – – –
Fixed rate borrowings – repricing or
maturity dates:
Less than one year 407,143 91% 59,965 67% 77,480 7% 151,563 13%
1-2 years 16,922 4% 23,039 26% 38,493 4% 10,555 1%
2-5 years 19,995 5% 6,023 7% 982,404 89% 997,448 86%
Over 5 years – – – – – – 2,868 0%
444,060 100% 89,027 100% 1,098,377 100% 1,162,434 100%
The Group regularly monitors its interest rate risk to ensure there is no undue exposure to
significant interest rate movements.
(b) Credit risk
Credit risk arises from cash and cash equivalents, trade receivables, restricted cash, financial assets
measured at fair value through profit or loss, other receivables and other assets.
(i) Risk management
The Group manages risk arising from cash and cash equivalents, restricted cash and bank wealth
management products by only conducting transacts with state-owned or reputable financial
institutions, which have no recent history of default.
APPENDIX I ACCOUNTANT’S REPORT
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The Group manages risk arising from trade receivables, contract assets and financial assets
included in other receivables and other assets by only conducting transactions only with
recognized and creditworthy third parties, or with other customers who passed the Group’s
creditability assessment. It is the Group’s policy that all customers who wish to trade on credit
terms or carry out other transactions need to be subject to certain creditability assessment.
The Group manages risk arising from investments included in financial assets measured at fair
value through profit or loss by regularly monitoring of the financial performance and balance
sheet positions of relevant significant investees, and conduct independent creditability
assessment.
(ii) Impairment of financial assets
The Group has the following types of financial assets that are subject to the expected credit loss
model:
 trade receivables and contract assets from the provision of express delivery services,
cross-border services, sales of accessories, rentals and others; and
 other receivables and other non-current assets
While restricted cash and cash and cash equivalents are also subject to the impairment
requirements of IFRS 9, the identified impairment loss was immaterial.
Trade receivables
The Group applies the IFRS 9 simplified approach to measure expected credit losses which uses
a lifetime expected loss allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables have been grouped based on aging and
shared credit characteristics, which typically vary across countries or regions.
The expected loss rates are based on the historical credit losses and adjusted to reflect current and
forward-looking information on macroeconomic factors affecting the ability of the customers to
settle the receivables. The Group has identified the Gross Domestic Product (“GDP”) and
Consumer Price Index (“CPI”) of the countries in which it provides its services to be the most
relevant factors, and accordingly adjusts the historical loss rates based on expected changes in
these factors.
On that basis, the loss allowance as at December 31, 2020, 2021, and 2022 and June 30, 2023 was
determined as follows for trade receivables:
China
As at December 31,
2020
Within
3 months
3-6
months
6-9
months
9-12
months
Above
12 months Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Expected loss rate 1.45% 22.00% 47.12% 92.86% N/A
Gross amount 19,651 1,518 556 14 – 21,739
Loss allowance 284 334 262 13 – 893
APPENDIX I ACCOUNTANT’S REPORT
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--- page 497 ---
As at December 31,
2021
Within
3 months
3-6
months
6-9
months
9-12
months
Above
12 months Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Expected loss rate
Reputable customers
(i) 1.39% N/A N/A N/A N/A
Other customers (i) 5.53% 25.11% 59.96% 83.48% 100.00%
Terminated
customers (credit
impaired) (ii) 100.00% 100.00% N/A N/A N/A
Gross amount
Reputable customers 10,02 2––– – 10,022
Other customers 105,843 7,324 5,058 2,185 2,595 123,005
Terminated
customers (credit
impaired) 15,021 8,404 – – – 23,425
Total gross amount 130,886 15,728 5,058 2,185 2,595 156,452
Loss allowance
Reputable customers 13 9––– – 1 3 9
Other customers 5,850 1,839 3,033 1,824 2,595 15,141
Terminated
customers (credit
impaired) 15,021 8,404 – – – 23,425
Total loss allowance 21,010 10,243 3,033 1,824 2,595 38,705
As at December 31,
2022
Within
3 months
3-6
months
6-9
months
9-12
months
Above
12 months Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Expected loss rate
Reputable customers
(i) N/A N/A 1.87% 86.05% N/A
Other customers (i) 2.07% 22.81% 61.26% 87.75% 100.00%
Terminated
customers (credit
impaired) (ii) N/A N/A N/A 100.00% 100.00%
Gross amount
Reputable customers – 20 482 86 – 588
Other customers 205,787 5,889 573 2,996 493 215,738
Terminated
customers (credit
impaired) – – – 1,533 29,135 30,668
Total gross amount 205,787 5,909 1,055 4,615 29,628 246,994
APPENDIX I ACCOUNTANT’S REPORT
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As at December 31,
2022
Within
3 months
3-6
months
6-9
months
9-12
months
Above
12 months Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Loss allowance
Reputable customers – 32 9 74 – 115
Other customers 4,257 1,343 351 2,629 493 9,073
Terminated
customers (credit
impaired) – – – 1,533 29,135 30,668
Total loss allowance 4,257 1,375 360 4,236 29,628 39,856
As at June 30,
2023
Within
3 months
3-6
months
6-9
months
9-12
months
Above
12 months Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Expected loss rate
Reputable customers
(i) N/A N/A N/A N/A N/A
Other customers (i) 2.76% 26.60% 94.60% 97.54% 100.00%
Terminated
customers (credit
impaired) (ii) N/A N/A N/A N/A 100.00%
Gross amount
Reputable customers –––– ––
Other customers 213,767 6,578 7,311 1,790 653 230,099
Terminated
customers (credit
impaired) –––– 17,793 17,793
Total gross amount 213,767 6,578 7,311 1,790 18,446 247,892
Loss allowance
Reputable customers –––– ––
Other customers 5,899 1,750 6,916 1,746 653 16,964
Terminated
customers (credit
impaired) –––– 17,793 17,793
Total loss allowance 5,899 1,750 6,916 1,746 18,446 34,757
(i) In China, the Group categorised the customers as per the size of their capitals, transaction
volumes, as well as historical settlement and etc.
(ii) After the acquisition of Best Inc.’s express business in China in December 2021 (Note 38),
as a result of the Group’s business integration plan and further commercial negotiations,
the Group ended business relationships with certain network partners from Best Inc.’s
express business in China, consequently, the Group assessed the credit loss for such
customers separately as the credit risk profile is different from other customers.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 499 ---
South-East Asia
As at December 31,
2020
Within
3 months
3-6
months
6-9
months
9-12
months
Above
12 months Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Expected loss rate 1.87% 24.78% 53.02% 93.41% 100.00%
Gross amount 156,241 8,665 149 91 198 165,344
Loss allowance 2,921 2,147 79 85 198 5,430
As at December 31,
2021
Within
3 months
3-6
months
6-9
months
9-12
months
Above
12 months Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Expected loss rate 1.50% 22.60% 55.33% 92.92% 100.00%
Gross amount 216,443 4,354 244 240 1,275 222,556
Loss allowance 3,236 984 135 223 1,275 5,853
As at December 31,
2022
Within
3 months
3-6
months
6-9
months
9-12
months
Above
12 months Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Expected loss rate 1.60% 27.91% 57.50% 85.82% 100.00%
Gross amount 235,995 2,798 647 388 1,231 241,059
Loss allowance 3,776 781 372 333 1,231 6,493
As at June 30,
2023
Within
3 months
3-6
months
6-9
months
9-12
months
Above
12 months Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Expected loss rate 0.95% 32.41% 72.39% 93.20% 100.00%
Gross amount 271,418 5,138 1,938 603 1,191 280,288
Loss allowance 2,572 1,665 1,403 562 1,191 7,393
Others
As at December 31,
2021
Within
3 months
3-6
months
6-9
months
9-12
months
Above
12 months Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Expected loss rate 2.96% – – – –
Gross amount 4 3 9––– – 4 3 9
Loss allowance 1 3––– – 1 3
APPENDIX I ACCOUNTANT’S REPORT
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As at December 31,
2022
Within
3 months
3-6
months
6-9
months
9-12
months
Above
12 months Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Expected loss rate 1.18% – – – –
Gross amount 73,11 3––– – 73,113
Loss allowance 8 6 3––– – 8 6 3
As at June 30,
2023
Within
3 months
3-6
months
6-9
months
9-12
months
Above
12 months Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Expected loss rate 0.95% 25.51% 69.57% N/A N/A
Gross amount 136,013 2,411 46 – – 138,470
Loss allowance 1,293 615 32 – – 1,940
The loss allowances for trade receivables as at December 31/June 30 reconcile to the opening loss
allowances as follows:
Trade receivables
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Opening loss allowance as at
January 1 2,695 6,323 44,571 47,212
Impairment losses recognized, net
of reversal 3,694 39,004 34,997 9,225
Bad debt write-offs – – (32,166) (12,094)
Exchange difference (66) (756) (190) (253)
Closing loss allowance as at
December 31/June 30 6,323 44,571 47,212 44,090
The Group writes off a trade receivable when there is information indicating that the debtor is in
severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has
been placed under liquidation or has entered into bankruptcy proceedings.
Impairment losses on trade receivables are presented as net impairment losses within operating
loss. Subsequent recoveries of amounts previously written off are credited against the same line
item.
Other receivables and other non-current assets
The Group determines the credit risk of its other receivables and other non-current assets basing
on factors including historical experience, internal/external credit rating, overdue status and
nature of relevant other receivables and other non-current assets, and also other forward-looking
information including macroeconomic factors.
Impairment on other receivables and other non-current assets is measured as either 12-month
expected credit losses or lifetime expected credit loss, depending on whether there has been a
significant increase in credit risk since initial recognition. If a significant increase in credit risk
of a receivable has occurred since initial recognition, then impairment is measured as lifetime
expected credit losses.
APPENDIX I ACCOUNTANT’S REPORT
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On that basis, the loss allowance as at December 31, 2020, 2021, and 2022 and June 30, 2023 was
determined as follows for other receivables and other non-current assets:
Risk rating as at
December 31, 2020
Expected
credit loss
rate
Gross
carrying
amount at
default
Gross
carrying
amount at
default
Gross
carrying
amount at
default
(stage 1) (stage 2) (stage 3)
Low risk 0.97% 714,654 N/A N/A
Moderate risk 5.46% 1,777 N/A N/A
High risk and credit
impaired N/A N/A N/A N/A
Risk rating as at
December 31, 2021
Expected
credit loss
rate
Gross
carrying
amount at
default
Gross
carrying
amount at
default
Gross
carrying
amount at
default
(stage 1) (stage 2) (stage 3)
Low risk 0.91% 537,137 N/A N/A
Moderate risk 10.89% 21,851 N/A N/A
High risk and credit
impaired 100.00% N/A N/A 1,925
Risk rating as at
December 31, 2022
Expected
credit loss
rate
Gross
carrying
amount at
default
Gross
carrying
amount at
default
Gross
carrying
amount at
default
(stage 1) (stage 2) (stage 3)
Low risk 1.21% 189,959 N/A N/A
Moderate risk N/A N/A N/A N/A
High risk and credit
impaired N/A N/A N/A N/A
Risk rating as at
June 30, 2023
Expected
credit loss
rate
Gross
carrying
amount at
default
Gross
carrying
amount at
default
Gross
carrying
amount at
default
(stage 1) (stage 2) (stage 3)
Low risk 1.2% 266,228 N/A N/A
Moderate risk N/A N/A N/A N/A
High risk and credit
impaired N/A N/A N/A N/A
As at December 31, 2020, minimal credit risk was identified for the receivable of Series A
Preferred Share consideration (Note 28). As at December 31, 2021, minimal credit risk was
identified for the receivable of Series C2 Preferred Share consideration.
Based on the management’s experience and expectation, the deposits and cash on delivery related
receivables were also exposed to minimal credit risk as at December 31, 2020, 2021, and 2022
and June 30, 2023.
The above receivables with minimal credit risk are classified as stage one.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 502 ---
The loss allowance for other receivables and other non-current assets at amortised cost as at
December 31/June 30 reconciles to the opening loss allowance as follows:
Loans to
related
parties and
third parties
Receivables
of Series C1
Preferred
Shares Others Total
USD’000 USD’000 USD’000 USD’000
Opening loss
allowance as at
January 1, 2020 1,054 – 198 1,252
Increase in the
allowance recognized
in profit or loss
during the year 5,511 – 283 5,794
Exchange difference (14) – (2) (16)
Closing loss allowance
as at December 31,
2020 6,551 – 479 7,030
Increase in the
allowance recognized
in profit or loss
during the year 1,394 380 542 2,316
Exchange difference (120) – (42) (162)
Closing loss
allowance as at
December 31, 2021 7,825 380 979 9,184
(Decrease)/Increase in
the allowance
recognized in profit
or loss during the
year (6,364) (369) 8,955 2,222
Write-offs – – (8,942) (8,942)
Exchange difference (68) (11) (86) (165)
Closing loss allowance
as at December 31,
2022 1,393 – 906 2,299
Increase in the
allowance recognized
in profit or loss
during the period 83 – 2,506 2,589
Write-offs – – (1,661) (1,661)
Exchange difference – – (19) (19)
Closing loss allowance
as at June 30, 2023 1,476 – 1,732 3,208
APPENDIX I ACCOUNTANT’S REPORT
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--- page 503 ---
Net impairment losses on financial assets recognized in profit or loss
During the Track Record Period, the following losses were recognized in profit or loss in relation
to impaired financial assets:
Year ended December 31,
Six months ended
June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Impairment losses
Movement in loss
allowance for
trade receivables 3,694 39,004 34,997 29,539 9,225
Movement in loss
allowance for
other receivables
and other non-
current assets 5,794 2,316 2,222 (4,506) 2,589
Impairment losses on
financial assets at
amortised cost 9,488 41,320 37,219 25,033 11,814
(iii) Financial assets at fair value through profit or loss
The entity is also exposed to credit risk in relation to debt investments that are measured at fair
value through profit or loss. The maximum exposure at the end of the reporting period is the
carrying amount of these investments.
(c) Liquidity risk
The Group aims to maintain sufficient cash and cash equivalents. Due to the dynamic nature of the
underlying business, the policy of the Group is to regularly monitor the Group’s liquidity risk and to
maintain adequate cash and cash equivalents or adjust financing arrangements to meet the Group’s
liquidity requirements.
The table below analyses the Group’s non-derivative financial liabilities into relevant maturity grouping
based on the remaining period at each balance sheet date to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows, except for financial liabilities at fair
value through profit or loss that are disclosed at fair value.
Non-derivatives
Less than
1 year
Between
1 and
2 years
Between
2 and
5 years
More than
5 years Total
USD’000 USD’000 USD’000 USD’000 USD’000
As at December 31, 2020
Borrowings 408,375 13,219 20,610 – 442,204
Trade payables 225,45 2––– 225,452
Accruals and other
payables (excluding
salary and welfare
payables, tax payables
and other non-financial
liabilities) 217,74 2––– 217,742
Advances from customers 137,22 4––– 137,224
Lease liabilities 65,008 69,137 46,904 7,335 188,384
Financial liabilities at fair
value through profit or
loss – – – 1,812,915 1,812,915
Total 1,053,801 82,356 67,514 1,820,250 3,023,921
APPENDIX I ACCOUNTANT’S REPORT
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--- page 504 ---
Non-derivatives
Less than
1 year
Between
1 and
2 years
Between
2 and
5 years
More than
5 years Total
USD’000 USD’000 USD’000 USD’000 USD’000
As at December 31, 2021
Borrowings 61,185 25,594 6,293 – 93,072
Trade payables 577,06 5––– 577,065
Accrued and other
payables (excluding
salary and welfare
payables, tax payables
and other non-financial
liabilities) 646,91 5––– 646,915
Advances from customers 291,36 2––– 291,362
Lease liabilities 211,955 151,047 203,869 44,735 611,606
Financial liabilities at fair
value through profit or
loss – – 10,424,409 – 10,424,409
Financial liabilities –
ordinary shares
redemption liabilities 133,74 9––– 133,749
Financial liabilities –
redemption liabilities of
shares of JNT KSA – – 60,000 – 60,000
Total 1,922,231 176,641 10,694,571 44,735 12,838,178
Non-derivatives
Less than
1 year
Between
1 and
2 years
Between
2 and
5 years
More than
5 years Total
USD’000 USD’000 USD’000 USD’000 USD’000
As at December 31, 2022
Borrowings 79,212 39,913 1,005,558 – 1,124,683
Trade payables 484,21 5––– 484,215
Accrued and other
payables (excluding
salary and welfare
payables and other tax
payables) 533,85 6––– 533,856
Advances from customers 209,92 5––– 209,925
Lease liabilities 154,448 140,122 157,292 51,405 503,267
Financial liabilities at fair
value through profit or
loss – – 7,765,067 – 7,765,067
Financial liabilities –
redemption liabilities of
shares of JNT KSA – – 60,000 – 60,000
Total 1,461,656 180,035 8,987,917 51,405 10,681,013
APPENDIX I ACCOUNTANT’S REPORT
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--- page 505 ---
Non-derivatives
Less than
1 year
Between
1 and
2 years
Between
2 and
5 years
More than
5 years Total
USD’000 USD’000 USD’000 USD’000 USD’000
As at June 30, 2023
Borrowings 154,245 10,656 1,023,017 2,889 1,190,807
Trade payables 471,66 6––– 471,666
Accrued and other
payables (excluding
salary and welfare
payables and other tax
payables) 598,83 9––– 598,839
Advances from customers 241,44 1––– 241,441
Lease liabilities 200,813 141,774 145,345 80,177 568,109
Financial liabilities at fair
value through profit or
loss 10,016 – 8,251,027 – 8,261,043
Financial liabilities –
redemption liabilities of
shares of JNT KSA – – 60,000 – 60,000
Total 1,677,020 152,430 9,479,389 83,066 11,391,905
In addition, as at December 31, 2021, derivative financial liabilities with an carrying amount of
USD62,897,000 represents the difference between the carrying amount (fair value) of relevant preferred
shares to be repurchased and the repurchase consideration (Note 26 (v)), with total contractual amount
of USD244,839,000, and such repurchase was completed in 2022.
Details of the description of financial liabilities at fair value through profit or loss are presented in
Note 29.
3.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to enhance shareholders’ value in the long-term.
The Group monitors capital (including share capital, share premium and convertible preferred shares on an
as-if-converted basis) by regularly reviewing the capital structure. As a part of this review, the Group considers
the cost of capital and the risks associated with the issued share capital. The Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or repurchase the Company’s
shares. In the opinion of the directors of the Company, the Group’s capital risk is relatively low, as a substantial
part of its total liabilities as at December 31, 2020, 2021, and 2022 and June 30, 2023 were financial liabilities
at fair value through profit or loss, substantially representing the Company and its subsidiaries’ preferred
shares, which will not contractually become redeemable within the next 12-month period after December 31,
2020, 2021, and 2022 and June 30, 2023.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 506 ---
The asset-liability ratios of the Group as at December 31, 2020, 2021, and 2022 and June 30, 2023 are as
follows:
As at December 31, As at June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Total assets 2,243,040 6,544,642 5,935,559 6,072,779
Total liabilities 3,113,539 13,181,066 10,919,807 11,602,369
Asset-liability ratio 138.8% 201.4% 184.0% 191.1%
Asset-liability ratio is calculated by dividing total liabilities by total assets and multiplying by 100%. The
increase/decrease of asset-liability ratio in 2021 and 2022 is mainly due to the increase/decrease of the
Company’s value, according to which the fair value change of financial liabilities at fair value through profit
or loss significantly increased/decrease. The increase of asset-liability ratio in the six months 2023 is mainly
due to the increase of borrowings and issuance of convertible preferred shares.
3.3 Fair value estimation
Fair value hierarchy
The table below analyses the Group’s financial instruments carried at fair value as at each balance sheet date,
by level of the inputs to valuation techniques used to measure fair value. Such inputs are categorised into three
levels within a fair value hierarchy as follows:
 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and.
 Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (level 3).
The following table presents the Group’s assets and liabilities that are measured at fair value on December 31,
2020:
Level 1 Level 2 Level 3 Total
USD’000 USD’000 USD’000 USD’000
Assets
Short-term investments measured at
fair value through profit or loss
(Note 24) – 71,324 – 71,324
Liabilities
Financial liabilities at fair value
through profit or loss (Note 29) – – 1,812,915 1,812,915
APPENDIX I ACCOUNTANT’S REPORT
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--- page 507 ---
The following table presents the Group’s assets and liabilities that are measured at fair value on December 31,
2021:
Level 1 Level 2 Level 3 Total
USD’000 USD’000 USD’000 USD’000
Assets
Short-term investments measured at
fair value through profit or loss
(Note 24) – 41,581 – 41,581
Liabilities
Financial liabilities at fair value
through profit or loss (Note 29) – – 10,487,306 10,487,306
The following table presents the Group’s assets and liabilities that are measured at fair value on December 31,
2022:
Level 1 Level 2 Level 3 Total
USD’000 USD’000 USD’000 USD’000
Assets
Non-current financial assets at fair
value through profit or loss (Note 24) – – 481,050 481,050
Short-term investments measured at fair
value through profit or loss (Note 24) – 16,440 – 16,440
– 16,440 481,050 497,490
Liabilities
Financial liabilities at fair value
through profit or loss (Note 29) – – 7,765,067 7,765,067
The following table presents the Group’s assets and liabilities that are measured at fair value on June 30, 2023:
Level 1 Level 2 Level 3 Total
USD’000 USD’000 USD’000 USD’000
Assets
Non-current financial assets at fair
value through profit or loss (Note 24) – – 532,319 532,319
Short-term investments measured at fair
value through profit or loss (Note 24) – 9,493 – 9,493
– 9,493 532,319 541,812
Liabilities
Financial liabilities at fair value
through profit or loss (Note 29) – – 8,261,043 8,261,043
APPENDIX I ACCOUNTANT’S REPORT
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--- page 508 ---
(a) Financial instruments in level 1
The fair value of financial instruments traded in active markets is based on quoted market prices at each
of the reporting dates. A market is regarded as active if quoted prices are readily and regularly available
from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices
represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market
price used for financial assets held by the Group is the current bid price. These instruments are included
in level 1.
(b) Financial instruments in level 2
The fair value of financial instruments that are not traded in an active market (for example,
over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques
maximise the use of observable market data where it is available and rely as little as possible on entity
specific estimates. If all significant inputs required to fair value of an instrument are observable, the
instrument is included in level 2.
For the years ended December 31, 2020, 2021, and 2022 and the six months ended June 30, 2022 and
2023, level 2 instruments of the Group’s assets mainly include wealth management products offered by
banks, classified as financial assets at fair value through profit or loss.
(c) Financial instruments in level 3
If one or more of the significant inputs are not based on observable market data, the instrument is
included in level 3.
Specific valuation techniques used to value financial instruments include:
 Discounted cash flow model and unobservable inputs mainly including assumptions of expected
future cash flows and discount rate; and
 A combination of observable and unobservable inputs, including risk-free rate, expected
volatility, discount rate for lack of marketability, market multiples, etc.
As at December 31, 2020 and 2021, level 3 instruments of the Group’s liabilities mainly included
convertible preferred shares (Note 29).
As at December 31, 2022 and June 30, 2023, level 3 instruments of the Group’s assets included the
Group’s investments in Windfall T&L SPC and the convertible bonds of Huisen Global Limited (Note
24), and liabilities mainly included convertible preferred shares (Note 29).
There were no transfers between level 1, 2 and 3 of fair value hierarchy classifications during the years
ended December 31, 2020, 2021, and 2022 and the six months ended June 30, 2022 and 2023.
The carrying amounts of the Group’s financial assets including cash and cash equivalents, restricted
cash, trade receivables, other receivables, other assets and other non-current assets, and the Group’s
financial liabilities, including borrowing, trade payables, lease liabilities, advances from customers,
financial liabilities – ordinary share redemption liabilities, financial liabilities – redemption liabilities
of shares of JNT KSA, accruals and other payables, approximate their fair values due to their short
maturities or that the contract interest rates (if applicable) are generally close to the market interest
rates.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of Historical Financial Information requires the use of accounting estimates which, by
definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the
Group’s accounting policies.
Estimates and judgements are continually evaluated. They are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to
be reasonable under the circumstances.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 509 ---
(a) Consolidation of affiliated entities
The Group conducts a substantial part of the business in countries including the PRC, Indonesia, Thailand, the
Philippines, and Vietnam, where there are certain regulatory restrictions on foreign ownerships in express
delivery and relevant businesses. The Group has entered into certain contractual arrangements with relevant
local entities and their respective registered shareholders, or certain agreements or constitutional documents
with non-controlling shareholders of relevant local entities where the Company is holding less than 50% of
their equity interests. The directors of the Company determine that the Group is able to control such entities
by assessing and concluding that the Group has the rights to exercise power over such entities, to receive
variable returns from its involvement in such entities, and has the ability to affect those returns through its
power over such entities. Consequently, the Company consolidates the assets, liabilities and results of
operations of such entities in the consolidated financial information of the Group.
Nevertheless, uncertainties presented by the local legal system could impede the Group’s beneficiary rights in
the results, assets and liabilities of the local entities. The directors of the Company, based on the advice of its
legal counsels, have exercised judgement and consider that the abovementioned contractual arrangements,
relevant agreements or constitutional documents are in compliance with relevant local laws and regulations,
and are legally binding and enforceable.
(b) Impairment of financial assets
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates.
The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation,
based on the Group’s past history, existing market conditions, as well as forward-looking estimates at the end
of each reporting period. Details of the key assumptions and inputs used are disclosed in the tables in Note 3.1.
(c) Fair value of ordinary shares, preferred shares, and financial assets at fair value through profit or loss
The ordinary shares and preferred shares issued by the Company and the Group’s financial assets at fair value
through profit or loss are not traded in an active market and the respective fair value is substantially determined
by using valuation techniques. During the Track Record Period, the Company appointed an external valuer to
provide assistance in the valuation of the fair value of relevant ordinary shares, preferred shares and financial
assets at fair value through profit or loss. The discounted cash flow method is normally adopted to determine
the underlying equity value of the Company or relevant business, and equity allocation model is adopted to
determine the fair value of the preferred shares of the Company. Key assumptions, such as discount rate, lack
of marketability discount and volatility are disclosed in Note 24, Note 29, Note 35, Note 36 and Note 37.
(d) Current and deferred income taxes
The Group is subject to income taxes in different jurisdictions. Significant judgement is required in
determining the worldwide provision for income taxes. There are many transactions and calculations for which
the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues
based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such differences will impact the current and deferred
income tax assets and liabilities in the period in which such determination is made.
For temporary differences which give rise to deferred tax assets, the Group assesses the likelihood that the
deferred income tax assets could be recovered. Deferred tax assets are recognized based on the Group’s
estimates and assumptions that they will be recovered from taxable income arising from continuing operations
in the foreseeable future.
(e) Impairment of goodwill and other non-financial assets
The Group tests annually, or more frequently if events or changes in circumstances indicate that they might
be impaired, whether goodwill has suffered any impairment. Other assets are tested for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable
amount is determined as higher of fair value less costs of disposal and value in use amount. These calculations
require use of estimates.
APPENDIX I ACCOUNTANT’S REPORT
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For the purposes of determining the value in use of cash-generating unit or group of cash-generating units,
expected cash flows generated by relevant assets are discounted to their present value, which requires
significant estimates related to growth rate, gross margin, discount rate and other factors in the cash flow
projection. Fair value less costs of disposal is calculated by benchmarking against the price quotation of a
comparable model in the second-hand market, adjusting the estimated disposal costs.
The revision to the major assumptions adopted may result in recognition of impairment against goodwill, and
recognition or reversal of impairment against other non-financial assets.
(f) Recognition of identifiable net assets acquired in business combinations and useful lives of customer
relationship
During the Track Record Period, the Group completed several business combinations, details of which are set
out in Note 36, Note 37 and Note 38. In accordance with IFRS 3, the identifiable net assets acquired are to
be measured at fair value at the acquisition date to determine the difference between the cost of business
combinations and the fair value of the net assets attributable to the Group acquired, which should be
recognized as goodwill on the consolidated balance sheets.
In the absence of an active market for the above acquisition transaction undertaken by the Group, the directors
of the Company made estimates from a variety of sources, in order to determine the fair value of identifiable
net assets acquired. For the fair value of the intangible assets of customer relationships and property, plant and
equipment, the directors of the Company made their estimates with reference to valuation results assessed by
an external valuer appointed by the Company. The determination of fair value of net assets acquired requires
estimates and judgements.
The Group determines the estimated useful lives and consequently the related amortisation charges for such
acquired customer relationship. These estimates are based on the relevant industry and historical experience
if applicable of the actual useful lives of customer relationship of similar nature and functions. Management
will increase the amortisation charges where useful lives are less than previously estimated lives. Actual
economic lives may differ from estimated useful lives. Periodic review could result in a change in amortisable
lives and therefore amortisation expenses in future periods.
5. REVENUE AND SEGMENT INFORMATION
(a) Description of segments and principal activities
The chief operating decision maker has been identified as the Chief Executive Officer (the “CEO”).
The CEO examines the Group’s performance from a geographic perspective and has identified three reportable
segments of its business generally basing on territories in which the Group operates.
The CEO assesses the performance of the abovementioned segments mainly based on segment revenue,
segment gross (loss)/profit, and segment adjusted EBITDA (a non-IFRS measure).
The abovementioned adjusted EBITDA (a non-IFRS measure) is defined as net profit or loss to exclude the
following items (the “Adjustments”):
 Income tax expense
 Finance income/costs – net
 Depreciation and amortisation
 Share-based compensation expenses – employee benefit expenses
 Share-based compensation expenses – related to equity transactions
 Fair value change of financial assets and liabilities at fair value through profit or loss
 Other gains, expenses or losses the Group and the CEO deem to be one-off
APPENDIX I ACCOUNTANT’S REPORT
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During the Track Record Period, certain expenses, gains and losses incurred at corporate and holding
companies’ level including the Company, the BVI Holdco and the HK Holding, and the fair value changes of:
a) financial assets of the Group and b) financial liabilities of the Group that would not be converted into equity
of the Company upon listing, were defined as un-allocated items.
The revenue from external customers is measured as segment revenue, which is the revenue derived from the
customers in each operating segment respectively.
(b) Segment information
The geographical segment information for the years ended December 31, 2020, 2021, and 2022 and the six
months ended June 30, 2022 and 2023 is as follows:
Year ended December 31, 2020
China
South-East
Asia Others Total
USD’000 USD’000 USD’000 USD’000
Segment revenue 478,847 1,046,504 10,074 1,535,425
Segment cost of revenue (1,055,581) (734,551) (6,781) (1,796,913)
Segment gross profit/(loss) (576,734) 311,953 3,293 (261,488)
Adjusted segment EBITDA
(a non-IFRS measure) (616,227) 266,561 1,652 (348,014)
Unallocated 26,851
Total adjusted EBITDA
(a non-IFRS measure) (321,163)
Year ended December 31, 2021
China
South-East
Asia Others Total
USD’000 USD’000 USD’000 USD’000
Segment revenue 2,181,368 2,377,544 292,888 4,851,800
Segment cost of revenue (3,400,061) (1,715,413) (281,070) (5,396,544)
Segment gross profit/(loss) (1,218,693) 662,131 11,818 (544,744)
Adjusted segment EBITDA
(a non-IFRS measure) (1,206,014) 427,436 (14,028) (792,606)
Unallocated (1,844)
Total adjusted EBITDA
(a non-IFRS measure) (794,450)
APPENDIX I ACCOUNTANT’S REPORT
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Year ended December 31, 2022
China
South-East
Asia Others Total
USD’000 USD’000 USD’000 USD’000
Segment revenue 4,096,177 2,381,726 789,525 7,267,428
Segment cost of revenue (4,760,937) (1,905,724) (871,005) (7,537,666)
Segment gross profit/(loss) (664,760) 476,002 (81,480) (270,238)
Adjusted segment EBITDA
(a non-IFRS measure) (722,658) 331,582 (168,789) (559,865)
Unallocated (334,225)
Total adjusted EBITDA
(a non-IFRS measure) (894,090)
Six months ended June 30, 2022
China
South-East
Asia Others Total
(Unaudited) USD’000 USD’000 USD’000 USD’000
Segment revenue 1,960,145 1,177,929 264,469 3,402,543
Segment cost of revenue (2,228,024) (954,892) (285,686) (3,468,602)
Segment gross profit/(loss) (267,879) 223,037 (21,217) (66,059)
Adjusted segment EBITDA
(a non-IFRS measure) (222,158) 156,737 (45,613) (111,034)
Unallocated (27,691)
Total adjusted EBITDA
(a non-IFRS measure) (138,725)
Six months ended June 30, 2023
China
South-East
Asia Others Total
USD’000 USD’000 USD’000 USD’000
Segment revenue 2,203,070 1,246,076 581,293 4,030,439
Segment cost of revenue (2,220,155) (1,025,958) (590,786) (3,836,899)
Segment gross profit/(loss) (17,085) 220,118 (9,493) 193,540
Adjusted segment EBITDA
(a non-IFRS measure) (44,967) 184,060 (66,431) 72,662
Unallocated (33,493)
Total adjusted EBITDA
(a non-IFRS measure) 39,169
APPENDIX I ACCOUNTANT’S REPORT
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Year ended December 31,
Six months ended
June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Adjusted EBITDA
(a non-IFRS measure)
China (616,227) (1,206,014) (722,658) (222,158) (44,967)
South-East Asia 266,561 427,436 331,582 156,737 184,060
Others 1,652 (14,028) (168,789) (45,613) (66,431)
Un-allocated 26,851 (1,844) (334,225) (27,691) (33,493)
Total adjusted EBITDA
(a non-IFRS measure) (321,163) (794,450) (894,090) (138,725) 39,169
Adjustments:
Depreciation and amortization (97,302) (220,489) (505,947) (246,512) (251,981)
Share-based compensation
expenses-related to
employee benefit expenses
(Note 8) (161,073) (382,594) (244,104) (244,104) (10,295)
Share-based compensation
expense related to regional
sponsors –––– (158,442)
Share-based compensation
expenses-related to equity
transactions (Note 9) (27,229) (236,418) (37,262) (16,490) (1,258,131)
Fair value change of financial
liabilities of the Company – (4,383,532) 3,352,590 2,061,022 1,029,661
Listing expenses – (12,048) (10,360) (9,173) (5,536)
Finance income 1,965 9,476 22,002 8,025 11,367
Finance costs (13,831) (99,077) (99,499) (44,647) (56,002)
Income tax expense (45,530) (73,126) (10,763) 2,876 (6,579)
(Loss)/Profit for the year/period (664,163) (6,192,258) 1,572,567 1,372,272 (666,769)
The total of non-current assets other than financial instruments and deferred tax assets, broken down by
location of the assets, are shown in the following table:
As at December 31, As at June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
China 281,236 1,941,342 1,544,461 1,584,418
South-East Asia 281,737 867,640 830,038 913,761
Others 1,932 52,176 145,548 172,952
564,905 2,861,158 2,520,047 2,671,131
APPENDIX I ACCOUNTANT’S REPORT
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During the Track Record Period, Revenues of the Group derived from single external customers which
accounts for over 10% of the Group’s revenue are shown in the following table:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 % USD’000 % USD’000 % USD’000 % USD’000 %
(Unaudited)
Customer A 542,963 35% 1,715,398 35% 1,231,324 17% 706,013 21% 446,218 11%
(c) Revenue during the Track Record Period
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Type of revenue:
Express delivery services 1,481,921 4,513,597 6,482,977 3,109,156 3,546,178
Cross-border services 10,074 291,896 707,773 252,644 448,536
Rental income 8,036 10,163 44,391 17,932 23,307
Sale of accessories 34,166 30,350 23,730 14,105 8,465
Others 1,228 5,794 8,557 8,706 3,953
1,535,425 4,851,800 7,267,428 3,402,543 4,030,439
Timing of revenue recognition:
Overtime 1,437,525 4,732,225 7,102,996 3,317,272 3,943,832
A point in time 89,864 109,412 120,041 67,339 63,300
Rental income 8,036 10,163 44,391 17,932 23,307
1,535,425 4,851,800 7,267,428 3,402,543 4,030,439
6. OTHER INCOME
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Subsidy income 11,466 71,415 87,035 42,497 10,791
Interest income on loans to
related parties 1,305 4,412 10,175 5,088 –
Interest income on loans to third
parties 4,285 6,715 939 495 1,437
17,056 82,542 98,149 48,080 12,228
The subsidy incomes were mainly related to incentives provided by governments in the PRC based on the
amounts of value added tax paid, and subsidies provided by local governments for economic recovery plans
in South East Asian countries. The Group has received all the subsidy incomes in full and there was no future
obligation related to these subsidy incomes.
APPENDIX I ACCOUNTANT’S REPORT
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7. OTHER GAINS/(LOSSES) – NET
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Provisions for legal claims – – (19,330) (17,164) –
Exchange gains/(losses) – net 29,362 19,887 (17,338) (25,073) (12,686)
Net gains/(losses) on disposal of
property, plant and equipment (37) (1,424) (1,873) 3,470 (21,306)
Others (1,851) 7,907 (1,705) 7,108 (9,431)
27,474 26,370 (40,246) (31,659) (43,423)
8. EMPLOYEE BENEFIT EXPENSES
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Salaries and bonuses 395,642 935,834 939,117 480,395 473,860
Pension cost – defined
contribution plans 12,092 37,259 39,132 22,328 23,689
Share-based compensation
expenses (Notes 26 (i) (ii),
(iii)) 161,073 382,594 244,104 244,104 10,295
Other compensation expenses (i) – 16,027 5,306 2,462 –
Medical and other benefits 22,193 64,138 62,670 23,954 32,198
591,000 1,435,852 1,290,329 773,243 540,042
(i) After the acquisition of Best Inc.’s express business in China (Note 38), as part of the Group’s
integration plan, the Group offered certain compensation packages to the staffs from Best Inc.’s express
business in China who had chosen to end the employment with the Group. As a result, relevant expenses
with amounts of USD16,027,000, USD5,306,000 and USD2,462,000 were recorded for the years ended
2021 and 2022 and the sixth months ended June 30, 2022 respectively for such purpose.
APPENDIX I ACCOUNTANT’S REPORT
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9. EXPENSES BY NATURE
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Employee benefit expenses
(Note 8) 591,000 1,435,852 1,290,329 773,243 540,042
Fulfilment costs 820,139 2,385,225 3,320,187 1,582,047 1,790,771
Other labour costs 96,685 310,959 402,694 190,314 213,284
Line-haul costs 368,172 1,341,433 2,221,664 995,370 1,137,526
Depreciation and amortization
(Note 34 (a)) 97,302 220,489 505,947 246,512 251,981
Materials 59,518 97,087 107,568 54,572 43,028
Share-based compensation
expenses – related to regional
sponsors (Notes 26 (iv), (v),
(vi), (vii)) – – – – 158,442
Share-based compensation
expenses – related to equity
transactions (Notes 26 (iv),
(v), (vi), (vii)) 27,229 236,418 37,262 16,490 1,258,131
Short-term leases 24,611 64,412 136,200 65,909 70,584
Auditors’ remuneration 249 1,465 2,252 1,126 1,244
Listing expenses – 12,048 10,360 9,173 5,536
Advertising and marketing
expenses 15,509 18,036 24,709 3,775 24,795
Impairment of long-term assets
(Note 15, Note 17) – 250,292 219,080 – –
Impairment of goodwill
(Note 17) – – 117,502 – –
Others 76,497 192,883 281,923 77,311 128,284
2,176,911 6,566,599 8,677,677 4,015,842 5,623,648
APPENDIX I ACCOUNTANT’S REPORT
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--- page 517 ---
10. FINANCE COSTS – NET
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Finance income
Interest income from bank
deposits 1,965 9,476 22,002 8,025 11,367
Finance costs
Interest expenses on convertible
preferred shares (Note 43) – (81,602) – – –
Interest expenses on lease
liabilities (Note 16) (6,007) (13,860) (37,318) (18,239) (19,015)
Interest expenses on borrowings – – – – –
Includes: Interest expense on
borrowings from financial
institutions (34) (195) (54,902) (24,248) (32,870)
Interest expense on
borrowings from related
parties (4,843) (642) (17) (8) –
Interest expense on
borrowings from third
parties (2,947) (2,778) (7,262) (2,152) (4,117)
Total finance costs (13,831) (99,077) (99,499) (44,647) (56,002)
Finance costs – net (11,866) (89,601) (77,497) (36,622) (44,635)
11. NET IMPAIRMENT LOSSES ON FINANCIAL ASSETS
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Impairment losses recognized,
net of reversal, on:
– trade receivables 3,694 39,004 34,997 29,539 9,225
– other receivables and other
non-current assets 5,794 2,316 2,222 (4,506) 2,589
9,488 41,320 37,219 25,033 11,814
APPENDIX I ACCOUNTANT’S REPORT
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12. INCOME TAX EXPENSE/(CREDIT)
The amount of income tax charged to the consolidated income statements represents:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Current tax on profits for the
year/period 46,422 66,042 56,183 38,400 23,239
Deferred income tax (Note 30) (892) 7,084 (45,420) (41,276) (16,660)
45,530 73,126 10,763 (2,876) 6,579
Taxes on profits assessable have been calculated at the rates of tax prevailing in the jurisdictions in which
relevant entities operate.
(i) Cayman Islands profits tax
The Company was incorporated in the Cayman Islands as an exempted company with limited liability under
the Companies Law (Law 3 of 1961, as consolidated and revised) of the Cayman Islands and is exempted from
payment of the Cayman Islands income tax.
(ii) British Virgin Islands (“BVI”) profits tax
The Company’s subsidiaries incorporated in the BVI are exempted from BVI income tax, as they are
incorporated under the International Business Companies Act of the BVI.
(iii) Hong Kong profits tax
The Company’s subsidiaries incorporated in Hong Kong are subject to Hong Kong profits tax at a rate of 8.25%
on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000 for
the Track Record Period.
(iv) PRC corporate income tax (“PRC CIT”)
The Group’s subsidiaries in the PRC are subject to PRC CIT which is calculated based on the applicable tax
rate of 25% on the assessable profits of the subsidiaries in accordance with PRC tax laws and regulations for
the Track Record Period, except for disclosed below.
The Group’s subsidiary, Shenzhen Y unlu Information Technology Co., Ltd. is qualified as a software enterprise
under the relevant laws and regulations in the PRC. Accordingly, it is exempted from PRC CIT for two years
since the first profit-making year, followed by a 50% reduction in the PRC CIT tax rate of 25% for the next
three years.
Besides, certain Group’s subsidiaries benefit from a preferential tax rate of 15% under the CIT Law if they are
located in applicable PRC regions, such as certain western regions and special economic zone, as specified in
the relevant catalogue of encouraged industries, subject to certain general restrictions described in the CIT Law
and the related regulations.
For the Track Record Period, several subsidiaries in the PRC were qualified as small and micro enterprises
under the PRC CIT regime, which enjoyed a 50%-87.5% reduction in certain statutory taxable income, with
a preferential income tax rate of 20%.
APPENDIX I ACCOUNTANT’S REPORT
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(v) Indonesia corporate income tax (“Indonesia CIT”)
The Group’s subsidiaries in Indonesia are subject to Indonesia CIT which is calculated based on the applicable
tax rate of 22% on the assessable profits of the subsidiaries in accordance with Indonesia tax laws and
regulations for the Track Record Period.
(vi) Malaysia corporate income tax (“Malaysia CIT”)
The Group’s subsidiaries in Malaysia are subject to Malaysia CIT which is calculated based on the applicable
tax rate of 24% on the assessable profits of the subsidiaries in accordance with Malaysia tax laws and
regulations for the Track Record Period.
(vii) Vietnam corporate income tax (“Vietnam CIT”)
The Group’s subsidiaries in Vietnam are subject to Vietnam CIT which is calculated based on the applicable
tax rate of 20% on the assessable profits of the subsidiaries in accordance with Vietnam tax laws and
regulations for the Track Record Period.
(viii) Thailand corporate income tax (“Thailand CIT”)
The Group’s subsidiaries in Thailand are subject to Thailand CIT which is calculated based on the applicable
tax rate of 20% on the assessable profits of the subsidiaries in accordance with Thailand tax laws and
regulations for the Track Record Period.
(ix) The Philippines corporate income tax (“the Philippines CIT”)
For the six months period ended June 30, 2020, the Group’s subsidiaries in the Philippines are subject to the
Philippines CIT which is calculated based on the applicable tax rate of 30% on the assessable profits of the
subsidiaries in accordance with the Philippines tax laws and regulations. The applicable CIT tax rate has been
decreased from 30% to 25% since July 1, 2020.
(x) Withholding income tax
As at December 31, 2020, the Group’s business was still in a loss position except for the business in Indonesia
and the Philippines. As at December 31, 2021, the Group’s major business is still in a loss position except for
the business in Indonesia, the Philippines and Malaysia. As at December 31, 2022, the Group’s major business
is still in a loss position except for the business in Indonesia and the Philippines. As at June 30, 2023, the
Group’s major business is still in a loss position except for the business in Indonesia and the Philippines.
According to the Indonesia CIT Law, a 20% withholding tax will be levied on the immediate holding
companies established outside Indonesia when their Indonesian subsidiaries declare dividends out of their
profits, and the rate could be lowered to 5% when certain conditions are met in accordance with Hong Kong
– Indonesia Double Tax Treaty.
During the years ended December 31, 2020, 2021, and 2022 and the six months ended June 30, 2022 and 2023,
no dividend withholding tax for Indonesia companies was provided as the directors have confirmed that the
Group does not expect those subsidiaries to distribute the retained earnings as at December 31, 2020, 2021,
and 2022 and June 30, 2023 in the foreseeable future. Unremitted earnings that deferred income tax liabilities
have not been recognized totalled USD73,237,000, USD148,332,000, USD213,917,000 and USD229,399,000
as at December 31, 2020, 2021, and 2022 and June 30, 2023, respectively.
According to the Philippine CIT Law, withholding tax will be levied on the immediate holding companies
established outside the Philippines when their Philippine subsidiaries declare dividends out of their profits.
The withholding tax rates are 15% or 30% for the year ended December 31, 2020, and 15% or 25% for the
years ended December 31, 2021 and 2022 and the six months ended June 30, 2022 and 2023.
APPENDIX I ACCOUNTANT’S REPORT
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During the years ended December 31, 2020, 2021, and 2022 and the six months ended June 30, 2022 and 2023,
no dividend withholding tax for the Philippine companies was provided as the directors have confirmed that
the Group does not expect those subsidiaries to distribute the retained earnings as at December 31, 2020, 2021,
and 2022 and June 30, 2023 in the foreseeable future. Unremitted earnings that deferred income tax liabilities
have not been recognized totalled USD40,986,000, USD84,471,000, USD113,742,000 and USD118,557,000 as
at December 31, 2020, 2021, and 2022 and June 30, 2023, respectively.
According to the Malaysia CIT Law, Malaysia has no withholding tax on dividends in addition to tax on the
profits out of which the dividends are declared.
The difference between the actual income tax expense charged to the consolidated income statements and the
amounts which would result from applying the enacted tax rates to (loss)/profit before income tax can be
reconciled as follows:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
(Loss)/profit before income tax (618,633) (6,119,132) 1,583,330 1,369,396 (660,190)
Income tax expenses calculated
at applicable tax rates (109,943) (296,547) (254,488) (83,217) (70,779)
Additional deduction of research
and development expense (1,966) (4,681) (403) (352) (1,130)
Costs, expenses and losses not
deductible for tax purposes 3,288 6,649 16,019 8,922 11,177
Previously unrecognized tax
losses and deductible
temporary differences utilised (5,041) (820) (63,153) (29,515) (20,408)
Previously unrecognized tax
losses and deductible
temporary differences
recognized as deferred tax
assets (3,949) – (27,404) (32,548) (23,806)
Deductible temporary
differences for which no
deferred tax asset was
recognized 901 63,602 3,907 1,547 4,461
Tax losses for which no deferred
tax asset was recognized 162,240 304,923 336,285 132,287 107,064
45,530 73,126 10,763 (2,876) 6,579
APPENDIX I ACCOUNTANT’S REPORT
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13. (LOSSES)/EARNINGS PER SHARE
(a) Basic
Basic (losses)/earnings per share is calculated by dividing the loss attributable to owners of the Company by
the weighted average number of ordinary shares and preferred shares outstanding during the financial year,
excluding relevant treasury shares if applicable.
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
(Unaudited)
Net (loss)/profit attributable to
owners of the Company
(USD’000) (564,836) (6,046,983) 1,656,168 1,413,479 (640,967)
Weighted average number of
shares (thousands):
Ordinary Shares outstanding 275,410 – – – –
Class A Ordinary Shares
outstanding 25,862 343,606 432,651 431,525 436,481
Class B Ordinary Shares
outstanding 18,859 170,754 171,811 169,402 179,335
Series Pre-A1 Preferred Shares
outstanding 70,383 – – – –
Series Pre-A2 Preferred Shares
outstanding 51,153 – – – –
Series A Preferred Shares
outstanding 154,135 – – – –
Total weighted average number
of shares outstanding 595,802 514,360 604,462 600,927 615,816
Basic (losses)/earnings per share
(USD cent) (94.8) (1,175.6) 274.0 235.2 (104.1)
As Series Pre-A1 Preferred Shares, Series Pre-A2 Preferred Shares and Series A Preferred Shares have the
same dividend entitlement as the Class A and Class B Ordinary Shares, these preferred shares are included in
total weighted average number of shares outstanding for the purpose of the calculation of basic loss per share,
before reclassifying from equity to financial liabilities at fair value through profit or loss on December 30,
2020 (Note 29).
(b) Diluted
The calculation of the diluted losses per share is based on the profit/(loss) attributable to equity holders of the
Company, adjusted to reflect the impact from any dilutive potential ordinary shares that would have been
outstanding, as appropriate. The weighted average number of ordinary shares used in calculating diluted losses
per share is the weighted average number of ordinary shares, as used in the basic (losses)/earnings per share
calculation, and the weighted average number of ordinary shares assumed to have been issued at no
consideration on the deemed exercise or conversion of all dilutive potential ordinary shares into ordinary
shares.
For the six months ended June 30, 2023 and the year ended December 31, 2022, the Group has four categories
of potential ordinary shares, namely convertible preferred shares of the Company, Series A Preferred Shares
of JET Global (Note 29), shares of JNT KSA (Note 26) and ordinary shares with vesting schedule granted to
network partners (Note 26).
APPENDIX I ACCOUNTANT’S REPORT
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For the six months ended June 30, 2022 and the year ended December 31, 2021, the Group has three categories
of potential ordinary shares, namely convertible preferred shares of the Company, Series A Preferred Shares
of JET Global (Note 29) and shares of JNT KSA (Note 26).
For the year ended December 31, 2020, the Group has one category of potential ordinary shares, namely
convertible preferred shares of the Company (Note 29).
Convertible preferred shares were dilutive for the year ended December 31, 2022 and the six months ended
June 30, 2023 and 2022, and were anti-dilutive for the years ended December 31, 2021 and 2020.
Series A Preferred Shares of JET Global and shares of JNT KSA were anti-dilutive for the years ended
December 31, 2022 and 2021 and the six months ended June 30, 2023 and 2022.
Ordinary shares with vesting schedule granted to network partners were anti-dilutive for the year ended
December 31, 2022 and the six months ended June 30, 2023.
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
(Unaudited)
Net (loss)/profit attributable to
owners of the Company
(USD’000) (564,836) (6,046,983) 1,656,168 1,413,479 (640,967)
Adjustment for fair value change
of the Company’s convertible
preferred shares through profit
or loss – – (3,352,590) (2,061,022) (1,029,661)
Net (loss)/profit attributable to
owners of the Company
(USD’000) (564,836) (6,046,983) (1,696,422) (647,543) (1,670,628)
Weighted average number of
shares (thousands):
Weighted average number of
shares outstanding 595,802 514,360 604,462 600,927 615,816
Adjustment for convertible
preferred shares of the
Company – – 840,331 837,114 892,428
Weighted average number of
shares for calculation of
diluted loss per share 595,802 514,360 1,444,793 1,438,041 1,508,244
Diluted losses per share (USD
cent) (94.8) (1,175.6) (117.4) (45.0) (110.8)
APPENDIX I ACCOUNTANT’S REPORT
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14. INVESTMENT PROPERTIES
The Group’s investment properties are initially recognized at cost and subsequently carried at cost less
accumulated depreciation and accumulated impairment losses.
As at December 31, As at June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Investment properties
Opening balance 53,125 53,065 718 507
Addition 1,678 987 – –
Transferred to property, plant
and equipment (Note 15) – (52,648) – (185)
Depreciation (1,228) (266) (154) (27)
Exchange differences (510) (420) (57) 19
Closing balance 53,065 718 507 314
Cost 55,034 966 881 437
Accumulated depreciation (1,969) (248) (374) (123)
Net book amount 53,065 718 507 314
In 2021, as a result of the acquisition of the operating entities of Indonesian regional sponsors, who were also
the lessees of the investment properties of the Group, an amount of USD52,648,000 of investment properties
were transferred to property, plant and equipment (Note 15).
Investment properties mainly represent buildings and warehouses held by the Group in Indonesia erected on
freehold land and include the cost of land, buildings and warehouses. The fair values as at December 31, 2020,
2021, and 2022 and June 30, 2023 were determined by management’s self-assessment using discounted cash
flow projection based on significant unobservable inputs.
The fair values of the investment properties were set out as follows:
As at December 31, As at June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Fair value 57,231 890 876 640
(i) Leasing arrangements
The investment properties are leased to tenants (substantially operating entities of regional sponsors) under
operating leases with rentals payable monthly, generally with fixed monthly payments and the lease term of
around one year. As at June 30, 2023, the remaining leasing arrangements have lease terms less than 6 years.
Although the Group is exposed to changes in the residual value at the end of the current leases, the Group
typically enters into new operating leases and therefore will not immediately realise any reduction in residual
value at the end of these leases. Expectations about the future residual values are reflected in the fair value
of the properties.
The minimum lease receivable on leases of investment properties is USD4,338,000, USD341,000,
USD284,000 and USD238,000 as at December 31, 2020, 2021, and 2022 and June 30, 2023, respectively.
No major or significant contractual obligation for future repairs and maintenance is committed.
Lease income amounting to approximately USD3,169,000, USD3,458,000, USD57,000, USD27,000 and
USD28,000 for the years ended December 31, 2020, 2021, and 2022 and the six months ended June 30, 2022
and 2023, respectively, were related to the lease of investment properties.
APPENDIX I ACCOUNTANT’S REPORT
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15. PROPERTY, PLANT AND EQUIPMENT
Buildings
and
warehouses
Logistic
equipment Vehicles
Leasehold
improvements
Office
equipment Land Others
Construction
in progress Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Cost
As at January 1, 2020 7,566 13,580 48,698 10,349 22,360 – 226 7,240 110,019
Acquisition of subsidiaries – – 188 11 25 – – – 224
Transfer upon completion 8,172 11,556 1,180 1,288 2,907 – 18 (25,121) –
Other additions 381 39,915 117,999 9,949 24,871 1,136 537 53,316 248,104
Other disposals – (646) (1,135) – (617) – (16) – (2,414)
Exchange differences (113) 1,260 3,959 449 817 32 12 971 7,387
As at December 31, 2020 16,006 65,665 170,889 22,046 50,363 1,168 777 36,406 363,320
Acquisition of subsidiaries
(Notes 36, 37 and 38) 2,285 407,442 19,898 53,910 13,300 1,905 244 97,245 596,229
Transfer from investment
properties 25,912 – – – – 28,690 – – 54,602
Transfer upon completion 205 86,077 10,883 5,578 2,263 – – (105,006) –
Other additions 1,609 78,458 174,326 15,636 29,271 – 468 238,353 538,121
Other disposals – (17,900) (7,749) (1,418) (8,697) – (317) – (36,081)
Exchange differences (484) (742) (2,432) (462) (1,112) (307) (150) 845 (4,844)
As at December 31, 2021 45,533 619,000 365,815 95,290 85,388 31,456 1,022 267,843 1,511,347
Acquisition of subsidiaries 59 1,367 1,791 – 544 – – – 3,761
Transfer upon completion 9,302 289,106 4,872 23,101 6,594 – – (332,975) –
Transfer to Intangible assets – – – –––– (235) (235)
Other additions 18,810 137,038 87,642 17,681 33,762 30,035 1,501 218,737 545,206
Other disposals (327) (107,535) (8,882) (34,418) (5,689) (1,051) (284) (8,434) (166,620)
Exchange differences (7,755) (95,746) (29,594) (11,801) (8,664) (1,496) 4 (13,647) (168,699)
As at December 31, 2022 65,622 843,230 421,644 89,853 111,935 58,944 2,243 131,289 1,724,760
APPENDIX I ACCOUNTANT’S REPORT
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Buildings
and
warehouses
Logistic
equipment Vehicles
Leasehold
improvements
Office
equipment Land Others
Construction
in progress Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Acquisition of subsidiaries – 953 – – 2,909 – – – 3,862
Transfer from investment
properties 474 – – –––– – 4 7 4
Transfer upon completion 510 61,959 17,505 13,767 998 – – (94,739) –
Other additions 384 51,443 20,382 6,373 14,439 32,490 23 102,511 228,045
Disposal of subsidiaries – (33) (9) – (3) – – – (45)
Other disposals – (129,719) (1,885) (24,121) (6,892) – (1,647) (14,967) (179,231)
Exchange differences 4,478 (32,735) (11,353) (4,171) 71 (619) 576 (1,172) (44,925)
As at June 30, 2023 71,468 795,098 446,284 81,701 123,457 90,815 1,195 122,922 1,732,940
Depreciation
As at January 1, 2020 (152) (1,531) (7,563) (4,127) (7,051) – (18) – (20,442)
Charge for the year (1,643) (3,974) (18,564) (4,864) (10,067) – (158) – (39,270)
Disposal of subsidiaries – – 2 –––– –2
Other disposals – 34 188 – 90 – 1 – 313
Exchange differences (59) (57) (460) (135) (177) – (3) – (891)
As at December 31, 2020 (1,854) (5,528) (26,397) (9,126) (17,205) – (178) – (60,288)
Transferred from investment
properties (1,954) – – –––– – (1,954)
Charge for the year (3,404) (22,496) (49,578) (13,576) (15,149) – (241) – (104,444)
Other disposals – 4,658 1,463 1,228 3,279 – 183 – 10,811
Exchange differences 55 422 1,118 259 459 – 71 – 2,384
As at December 31, 2021 (7,157) (22,944) (73,394) (21,215) (28,616) – (165) – (153,491)
Charge for the year (3,694) (92,333) (78,935) (28,338) (24,228) – (382) – (227,910)
Other disposals 87 5,740 3,779 8,943 3,005 – 19 – 21,573
Exchange differences 775 17,921 7,496 6,419 3,885 – (3) – 36,493
As at December 31, 2022 (9,989) (91,616) (141,054) (34,191) (45,954) – (531) – (323,335)
APPENDIX I ACCOUNTANT’S REPORT
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Buildings
and
warehouses
Logistic
equipment Vehicles
Leasehold
improvements
Office
equipment Land Others
Construction
in progress Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Transferred from investment
properties (289) – – –––– – (289)
Charge for the period (2,098) (33,685) (43,133) (10,889) (14,353) – (225) – (104,383)
Other disposals (9) 24,466 829 3,686 4,758 – 52 – 33,782
Exchange differences (521) 8,291 4,407 2,439 306 – 61 – 14,983
As at June 30, 2023 (12,906) (92,544) (178,951) (38,955) (55,243) – (643) – (379,242)
Impairment
As at January 1, 2020 and
December 31, 2020 – –– –––– ––
Charge for the year (766) (170,480) (251) (16,309) (3,100) – – (59,386) (250,292)
As at December 31, 2021 (766) (170,480) (251) (16,309) (3,100) – – (59,386) (250,292)
Charge for the year (587) (171,466) (192) (10,128) (2,375) – – (30,748) (215,496)
Transfer upon completion – (38,975) – –––– 38,975 –
Other disposals – 81,164 118 5,350 408 – – 5,577 92,617
Currency translation differences – 19,209 545 1,233 471 – – 3,172 24,630
As at December 31, 2022 (1,353) (280,548) 220 (19,854) (4,596) – – (42,410) (348,541)
Other disposals – 69,485 – 11,287 318 – – 6,444 87,534
Currency translation differences – 7,492 1,256 216 240 – – 334 9,538
As at June 30, 2023 (1,353) (203,571) 1,476 (8,351) (4,038) – – (35,632) (251,469)
Net book amount
As at December 31, 2020 14,152 60,137 144,492 12,920 33,158 1,168 599 36,406 303,032
As at December 31, 2021 37,610 425,576 292,170 57,766 53,672 31,456 857 208,457 1,107,564
As at December 31, 2022 54,280 471,066 280,810 35,808 61,385 58,944 1,712 88,879 1,052,884
As at June 30, 2023 57,209 498,983 268,809 34,395 64,176 90,815 552 87,290 1,102,229
APPENDIX I ACCOUNTANT’S REPORT
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The provision for impairment during the years ended December 31, 2021 and 2022 and the six months ended
June 30, 2022 and 2023 represented the impairment loss of the property, plant and equipment that are expected
to be redundant.
Subsequent to the acquisition of Best Inc.’s express business in China in December 2021 (Note 38), the Group
planned to integrate and consolidate the express delivery network facilities acquired with its own. The Group
identified certain redundant sorting centers which would be closed within one or two years when the current
lease agreements ended, and assessed the recoverable amounts of the relevant assets based on the higher of
value in use with reference to discounted cash flow projections and fair value less costs of disposal.
Accordingly, impairment provisions amounting to USD250,292,000 were made against the relevant assets of
property, plant and equipment during the year ended December 31, 2021.
In 2022, subsequent to integration of the express delivery network acquired from Best Inc. with its own, the
Group further planned to optimize its China domestic express delivery network to achieve higher efficiency
and quality. As a result, the Group further identified certain redundant sorting centers, and assessed the
recoverable amounts of the relevant assets based on the higher of value in use with reference to discounted cash
flow projections and fair value less costs of disposal. Accordingly, impairment provisions amounting to
USD167,080,000 were made against the relevant assets of property, plant and equipment during the year ended
December 31, 2022.
The recoverable amount of the abovementioned long-term assets is determined based on value-in-use
calculations. These calculations use pre-tax cash flow projections based on certain assumptions made by
management. The key assumptions used for value-in-use calculations are as follows:
As at
December 31,
2021
Pre-tax discount rate 18.24%
Recoverable amount (USD’000) 324,707
As at
December 31,
2022
Pre-tax discount rate 17.25%
Recoverable amount (USD’000) 461,115
Depreciation expenses have been charged to the consolidated income statements as follows:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Cost of revenue 30,055 87,234 208,104 100,612 93,232
Selling, general and
administrative expenses 8,657 16,881 19,511 10,957 11,015
Research and development
expenses 558 329 295 244 136
39,270 104,444 227,910 111,813 104,383
As at December 31, 2020, 2021, and 2022 and June 30, 2023, property, plant and equipment with carrying
amount of USD17,180,000, USD69,684,000, USD71,592,000 and USD102,215,000 were pledged as securities
for the Group’s borrowings from financial institutions (Note 28), respectively.
APPENDIX I ACCOUNTANT’S REPORT
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16. LEASES
(i) Amounts recognized in the consolidated balance sheets
The consolidated balance sheets show the following amounts relating to leases:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Right-of-use assets
Buildings and warehouses 182,789 578,085 460,258 495,218
V ehicles 3,117 10,099 11,320 14,375
Land 682 3,138 2,471 60,432
Equipment and others 174 12,890 7,158 4,662
186,762 604,212 481,207 574,687
Lease liabilities
Current lease liabilities 63,639 207,490 151,195 196,583
Non-current lease liabilities 111,378 391,232 341,471 359,559
175,017 598,722 492,666 556,142
Additions to the right-of-use assets during the financial years ended December 31, 2020, 2021, and 2022 and
the six months ended June 30, 2022 and 2023 were USD169,150,000, USD530,693,000, USD269,678,000,
USD152,288,000 and USD261,556,000 respectively.
(ii) Amounts recognized in the consolidated income statements
The consolidated income statements show the following amounts relating to leases:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Depreciation charge of
right-of-use assets
Buildings and warehouses 55,266 104,224 245,899 122,054 126,631
V ehicles 499 6,138 5,694 3,078 4,333
Land 226 701 437 232 686
Equipment and others 9 2,815 5,146 2,651 2,314
56,000 113,878 257,176 128,015 133,964
Interest expense (Note 10) 6,007 13,860 37,318 18,239 19,015
Expense relating to short-
term leases
(included in cost of
revenue, selling, general
and administrative
expenses, research, and
development expenses) 21,146 59,730 124,377 61,102 57,578
APPENDIX I ACCOUNTANT’S REPORT
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The total cash outflows for leases payments for the years ended December 31, 2020, 2021, and 2022 and the
six months ended June 30, 2022 and 2023 were USD87,206,000, USD195,541,000, USD417,516,000,
USD194,475,000 and USD259,990,000, respectively. For the years ended December 31, 2020, 2021, and 2022
and the six months ended June 30, 2022 and 2023, among the cash outflow for lease payments, cash outflow
for the principal elements of lease payments were USD61,405,000, USD101,703,000, USD262,668,000,
USD127,290,000 and USD168,427,000, respectively, which is presented in cash flows from financing
activities. The lease payments related to short-term leases were USD19,794,000, USD79,978,000,
USD117,530,000, USD48,946,000 and USD62,548,000 for the years ended December 31, 2020, 2021, and
2022 and the six months ended June 30, 2022 and 2023, which are presented in cash flows from operating
activities.
(iii) The group’s leasing activities and how these are accounted for
The Group leases various offices, warehouses, vehicles, land and equipment. Lease contracts are typically
made for fixed periods of 6 months to 6 years but may have extension options as described in (v) below.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.
Under certain circumstances, certain amount of deposits is required to be paid to the lessors. Generally leased
assets may not be used as security for borrowing purposes.
(iv) Variable lease payments
The Group’s property leases generally do not contain material variable payment terms that are linked to sales
generated.
(v) Extension and termination options
The majority of extension and termination options held are exercisable by mutual agreement of the Group and
the respective lessors.
(vi) Residual value guarantees
The Group generally does not provide residual value guarantees in relation to equipment leases.
17. INTANGIBLE ASSETS
Software Goodwill
Customer
relationship Trademark
License
and others Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Cost
As at January 1, 2020 2,134 1,444 310 – – 3,888
Additions 1,303 220 – 786 1,481 3,790
Exchange differences 5 4––– 5 1 1 0 5
As at December 31, 2020 3,491 1,664 310 786 1,532 7,783
Acquisition of subsidiaries 956 946,365 173,531 – 332 1,121,184
Additions 5,608 – – 427 – 6,035
Exchange differences 9 (2,200) – – 35 (2,156)
As at December 31, 2021 10,064 945,829 173,841 1,213 1,899 1,132,846
Acquisition of
subsidiaries (b) 151 51,82 9––– 51,980
Other additions 7,531 – – 154 – 7,685
Other disposals (54) –––– (54)
Exchange differences (861) (76,718) (6,564) – (180) (84,323)
APPENDIX I ACCOUNTANT’S REPORT
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Software Goodwill
Customer
relationship Trademark
License
and others Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
As at December 31, 2022 16,831 920,940 167,277 1,367 1,719 1,108,134
Acquisition of
subsidiaries (c) 4,219 33,62 9––– 37,848
Other additions 1,13 8–––8 1,146
Other disposals (2,595) –––– (2,595)
Exchange differences 3,089 (9,305) (2,917) – (71) (9,204)
As at June 30, 2023 22,682 945,264 164,360 1,367 1,656 1,135,329
Amortization
As at January 1, 2020 (936) – (16) – – (952)
Additions (477) – (31) (59) (237) (804)
Exchange differences (3) – – – (10) (13)
As at December 31, 2020 (1,416) – (47) (59) (247) (1,769)
Additions (842) – (730) (96) (233) (1,901)
Exchange differences 2 8––– (10) 18
As at December 31, 2021 (2,230) – (777) (155) (490) (3,652)
Additions (2,898) – (17,528) (180) (101) (20,707)
Other disposals 3 2–––– 3 2
Exchange differences 415 – 356 – 77 848
As at December 31, 2022 (4,681) – (17,949) (335) (514) (23,479)
Additions (5,069) – (8,112) – (426) (13,607)
Other disposals 7 9–––– 7 9
Exchange differences (45) – 363 – 38 356
As at June 30, 2023 (9,716) – (25,698) (335) (902) (36,651)
Impairment
As at January 1, 2020,
December 31, 2020 and
December 31, 2021 ––––––
Additions – (117,502) (3,584) – – (121,086)
Other disposals ––––––
Exchange differences ––––––
As at December 31, 2022 – (117,502) (3,584) – – (121,086)
Additions ––––––
Other disposals ––––––
Exchange differences – 4,248 130 – – 4,378
As at June 30, 2023 – (113,254) (3,454) – – (116,708)
APPENDIX I ACCOUNTANT’S REPORT
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Software Goodwill
Customer
relationship Trademark
License
and others Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Carrying values
As at December 31, 2020 2,075 1,664 263 727 1,285 6,014
As at December 31, 2021 7,834 945,829 173,064 1,058 1,409 1,129,194
As at December 31, 2022 12,150 803,438 145,744 1,032 1,205 963,569
As at June 30, 2023 12,966 832,010 135,208 1,032 754 981,970
The abovementioned software was all externally acquired rather than internally developed.
(a) During the Track Record Period, no development costs were capitalised as intangible assets.
Amortization expenses have been charged to the consolidated income statements as follows:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Cost of revenue 607 315 8,139 2,167 4,721
Selling, general and
administrative expenses 197 1,586 12,568 4,436 8,886
804 1,901 20,707 6,603 13,607
(b) Acquisition of the operating entity of Brazilian regional sponsors
In October 2022, the Group acquired the operating entity of Brazilian regional sponsors (the “Brazilian
Acquiree”). As the consideration of this transaction, the Group swapped certain equity interests of its major
operating entity in Brazil to the corresponding Brazilian regional sponsors.
With the assistance from an external valuer appointed by the Group, the Group applied the discounted cash
flow method to determine the underlying equity value of the Brazilian Acquiree. The fair value of relevant net
identifiable assets acquired was around negative USD9,127,000.
The fair value of the swapped-out equity interests of the operating entity exceeded the fair value of relevant
net identifiable assets acquired by USD51,829,000, which was recognised as goodwill.
(c) Acquisition of Shenzhen Fengwang Information Technology Company Limited (“Fengwang
Information”)
In June 2023, the Group acquired Fengwang Information, a subsidiary of S.F. Holding Co., Ltd., with a total
cash payment of approximately USD63,789,000.
With the assistance from an external valuer appointed by the Group, the Group applied the discounted cash
flow method to determine the underlying equity value of Fengwang Information. Accordingly, relevant
goodwill with an amount of USD 33,629,000 was recognised.
APPENDIX I ACCOUNTANT’S REPORT
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(d) Impairment test for goodwill
A cash-generating unit (CGU) is the smallest group of assets that independently generates cash flow and whose
cash flow is largely independent of the cash flows generated by other assets. Goodwill is allocated to the
Group’s CGUs or groups of CGUs identified according to the territories in which the Group operates:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
China 220 630,676 459,428 476,237
Indonesia 1,194 216,407 199,012 208,387
Thailand – 96,293 90,937 88,526
Brazil – – 51,829 56,413
Others 250 2,453 2,232 2,447
1,664 945,829 803,438 832,010
The movement of carrying amount of goodwill for each respective CGUs is set out below:
China Indonesia Thailand Brazil
USD’000 USD’000 USD’000 USD’000
As at December 31, 2019 – 1,194 – –
Acquisition of subsidiaries 22 0–––
Impairment of goodwill ––––
Exchange differences ––––
As at December 31, 2020 220 1,194 – –
Acquisition of subsidiaries
(Note 36, 37, 38) 630,458 215,487 98,320 –
Impairment of goodwill ––––
Exchange differences (2) (274) (2,027) –
As at December 31, 2021 630,676 216,407 96,293 –
Acquisition of subsidiaries – – – 51,829
Impairment of goodwill (117,502) – – –
Exchange differences (53,746) (17,395) (5,356) –
As at December 31, 2022 459,428 199,012 90,937 51,829
Acquisition of subsidiaries 33,629 – – –
Impairment of goodwill ––––
Exchange differences (16,820) 9,375 (2,411) 4,584
As at June 30, 2023 476,237 208,387 88,526 56,413
APPENDIX I ACCOUNTANT’S REPORT
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The recoverable amount of a CGU or a group of CGUs is determined based on value-in-use calculations. These
calculations use pre-tax cash flow projections based on certain assumptions made by management covering a
ten-year period (the “Period”). The management consider the length of the forecast period is appropriate
because it generally takes longer for the Group to reach a stable growth state, especially taking into account
the fact that the E-commerce express industry in the abovementioned regions is an emerging industry with fast
growth in the coming years and the Group is still in the initial stage of rapid growth. The key assumptions used
for value-in-use calculations for the Track Record Period (if applicable) are as follows:
2020
China Indonesia
Annual growth rate within the Period 2.5%-195.5% 3.0%-42.6%
Growth rate to extrapolate cash flows beyond the Period 2.5% 3.0%
Gross margin -9.7%-13.4% 25.8%-28.8%
Pre-tax discount rate 19.84% 23.66%
Excess of recoverable amount over carrying value (USD’000) 273,880 643,169
2021
China Indonesia Thailand
Annual growth rate within the Period 5.4%-105.0% 5.5%-29.2% 10.7%-64.2%
Growth rate to extrapolate cash flows
beyond the Period 2.5% 3.0% 2.0%
Gross margin 0.0%-13.4% 24.8%-28.9% (12.0%)-33.0%
Pre-tax discount rate 18.14% 19.87% 20.24%
Excess of recoverable amount over
carrying value (USD’000) 5,297,516 2,294,940 508,299
2022
China Indonesia Thailand Brazil
Annual growth rate within
the Period 2.4%-33.3% 5.3%-28.0% 10.2%-40.6% 27.6%-302.9%
Growth rate to extrapolate cash
flows beyond the Period 2.2% 3.0% 2.0% 3.0%
Gross margin 3.2%-8.2% 23.1%-28.5% 12.7%-30.3% -4.4%-20.5%
Pre-tax discount rate 17.48% 19.17% 21.45% 24.85%
Excess of recoverable amount
over carrying value
(USD’000) – 1,987,918 580,469 129
Six months ended June 30, 2023
China Indonesia Thailand Brazil
Annual growth rate within
the Period 2.4-40.5% 5.0%-28.0% 10.2%-39.6% 10.5%-328.1%
Growth rate to extrapolate cash
flows beyond the Period 2.2% 2.5% 2.0% 3.0%
Gross margin 2.0%-8.5% 24.0%-28.3% 12.7%-30.1% -3.1%-19.8%
Pre-tax discount rate 17.58% 19.31% 20.49% 26.48%
Excess of recoverable amount
over carrying value
(USD’000) 20,504 2,244,912 599,514 40,052
Management determined budgeted gross margin and growth rates based on past performance and its
expectations of market development. The growth rates to extrapolate cash flows beyond the Period are
consistent with forecasts included in relevant industry reports. The discount rates used are pre-tax after
reflecting specific risks of the relevant CGUs and groups of CGUs.
APPENDIX I ACCOUNTANT’S REPORT
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The recoverable amount of the following CGUs would equal its carrying amount if the key assumptions were
to change relatively as follows:
As of December 31, 2020
China Indonesia
Decrease in annual growth rate within the period (8%) (196%)
Decrease in growth rate to extrapolate cash flows
beyond the period N/A (ii) N/A(ii)
Decrease in gross margin (13%) (73%)
Increase in pre-tax discount rate 26% 2721%
As at December 31, 2021
China Indonesia Thailand
Decrease in annual growth rate within the period (37%) (152%) (59%)
Decrease in growth rate to extrapolate cash flows
beyond the period N/A (ii) N/A(ii) N/A(ii)
Decrease in gross margin (51%) (61%) (46%)
Increase in pre-tax discount rate 128% 221% 64%
As at December 31, 2022
China Indonesia Thailand Brazil (i)
Decrease in annual growth rate
within the period N/A (155%) (88%) N/A
Decrease in growth rate to
extrapolate cash flows beyond
the period N/A
(ii) N/A(ii) N/A(ii) N/A(ii)
Decrease in gross margin N/A (54%) (48%) N/A
Increase in pre-tax discount rate N/A 279% 68% N/A
As of June 30, 2023
China Indonesia Thailand Brazil
Decrease in annual growth rate
within the period (0.6%) (166%) (96%) (3%)
Decrease in growth rate to
extrapolate cash flows beyond the
period
(ii) (12.2%) N/A (ii) N/A(ii) (301%)
Decrease in gross margin (0.5%) (55%) (50%) (5%)
Increase in pre-tax discount rate 0.9% 298% 104% 9%
(i) For the groups of CGUs in Brazil, management has assessed the risk of impairment of goodwill and
concluded that no impairment charge would be required. However, as the Brazil related acquisition was
closed in late 2022 and the relevant key assumptions used in the valuation as at the acquisition date
approximated those used as at December 31, 2022, any adverse changes in key assumptions would lead
to impairment.
(ii) As per relevant assessment, the headroom would not decrease to zero even if growth rate in extrapolate
cash flows beyond the Period dropped to minus 10%.
As at December 31, 2021, it is unlikely that any reasonable possible changes in key assumptions would lead
to impairment for the goodwill in China, Indonesia and Thailand.
APPENDIX I ACCOUNTANT’S REPORT
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As at December 31, 2022, it is unlikely that any reasonable possible changes in key assumptions would lead
to impairment for the goodwill in Indonesia and Thailand. For the groups of CGUs in China, according to
management’s impairment test performed with the assistance of an independent valuer, the carrying amount
exceeded relevant recoverable amount. As a result, impairment charges of goodwill amounting to
approximately USD117,502,000 were recognised.
As at June 30, 2023, it is unlikely that any reasonable possible changes in key assumptions would lead to
impairment for the goodwill of the Group.
18. MAJOR SUBSIDIARIES AND CONTROLLED ENTITIES
The Company’s investments in subsidiaries are as follows:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Investment in Onwing Global
Limited (i) 217,958 882,972 882,972 1,042,750
Investment in J&T International
Logistics Limited (ii) – 124,506 124,506 124,506
217,958 1,007,478 1,007,478 1,167,256
(i) Through 2021 to 2023, the Company issued certain ordinary shares as considerations of certain
transactions (Note 26, Note 35, Note 36, Note 37), which were accounted for as its investment in
Onwing Global Limited, a subsidiary directly held by the Company.
(ii) In 2021, as part of the reorganization of the cross-border service business, the Company established J&T
International Logistics Limited, injected cash of USD124,506,000 and restructured the Group’s
subsidiaries in cross-border business under it.
APPENDIX I ACCOUNTANT’S REPORT
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As at December 31, 2020, 2021, and 2022 and June 30, 2023, and as at the date of this report, the Company had the following major subsidiaries (including c ontrolled structured
entities):
Name of entity Type of legal entity
Country/Place and
date of incorporation
Paid-in capital
Percentage of Attributable equity
interest to the Company
Principal activities
and place of
operation
As at December 31, As at June 30, As at December 31,
As at
June 30,
As at
the date
of this
report2020 2021 2022 2023 2020 2021 2022 2023
Indirectly held:
Jitu International
Logistics Co., Ltd.
(Note 26 (iii))
(Note 2)
Limited Liability
Company
The PRC,
January 10, 2018
CNY14,000,000 CNY200,020,000 CNY200,020,000 CNY200,020,000 99.3% 89.3% 76.94% 76.94% 76.94% Cross-border services
Thuan Phong Express
Company Limited
Limited Liability
Company
Vietnam,
January 13, 2016
VND2,500,000,000 VND112,500,000,000 VND112,500,000,000 VND112,500,000,000 62% 100% 100% 100% 100% Express delivery
services
PH Global Jet Express
Inc. doing business
under the name and
style of J&T
Express
(PH GJE)
(Note 3)
Limited Liability
Company
The Philippines
September 14, 2018
PHP2,500,000 PHP2,500,000 PHP2,500,000 PHP39,375,000 40% 40% 40% 99% 99% Express delivery
services
J&T Express
(Malaysia)
Sdn. Bhd.
Limited Liability
Company
Malaysia,
January 10, 2018
MYR 3,878,075 MYR 3,878,075 MYR 3,878,075 MYR 3,878,075 70.2% 100% 100% 100% 100% Express delivery
services
Global Jet Express
(Thailand) Co., Ltd.
Limited Liability
Company
Thailand,
August 17, 2018
THB200,000,000 THB123,507,750 THB123,507,750 THB123,507,750 Note 1 Express delivery
services
Controlled entities:
J&T Express China
Co., Ltd.
(Note 2)
Limited Liability
Company
The PRC,
September 29, 2007
CNY10,000,000 CNY10,000,000 CNY10,000,000 CNY10,000,000 100% 100% 100% 100% 100% Courier and
warehousing
services
J&T Express (Jinhua)
Supply Chain
Co., Ltd.
(Note 2)
Limited Liability
Company
The PRC,
October 28, 2019
CNY10,000,000 CNY10,000,000 CNY10,000,000 CNY10,000,000 100% 100% 100% 100% 100% Courier and
warehousing
services
J&T Express (Hebei)
Acme Supply Chain
Management
Co., Ltd.
(Note 2)
Limited Liability
Company
The PRC,
November 13, 2019
CNY10,000,000 CNY10,000,000 CNY10,000,000 CNY10,000,000 51% 85% 85% 85% 85% Courier and
warehousing
services
J&T Express
(Shandong) Supply
Chain Co.,
Ltd.
(Note 2)
Limited Liability
Company
The PRC,
October 31, 2019
CNY5,100,000 CNY10,000,000 CNY10,000,000 CNY10,000,000 51% 85% 85% 85% 85% Courier and
warehousing
services
APPENDIX I ACCOUNTANT’S REPORT
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Name of entity Type of legal entity
Country/Place and
date of incorporation
Paid-in capital
Percentage of Attributable equity
interest to the Company
Principal activities
and place of
operation
As at December 31, As at June 30, As at December 31,
As at
June 30,
As at
the date
of this
report2020 2021 2022 2023 2020 2021 2022 2023
J&T Express (Henan)
Acme Supply Chain
Co., Ltd.
(Note 2)
Limited Liability
Company
The PRC,
November 1, 2019
CNY10,000,000 CNY10,000,000 CNY10,000,000 CNY10,000,000 51% 85% 85% 85% 85% Courier and
warehousing
services
J&T Express (Jieyang)
Supply Chain
Management
Co., Ltd.
(Note 2)
Limited Liability
Company
The PRC,
November 5, 2019
CNY5,600,000 CNY6,600,000 CNY6,600,000 CNY6,600,000 51% 85% 85% 85% 85% Courier and
warehousing
services
J&T Express
(Guangzhou) Supply
Chain Co.,
Ltd.
(Note 2)
Limited Liability
Company
The PRC,
October 18, 2019
CNY10,000,000 CNY10,000,000 CNY10,000,000 CNY10,000,000 100% 100% 100% 100% 100% Courier and
warehousing
services
J&T Express (Fujian)
Supply Chain
Management
Co., Ltd.
(Note 2)
Limited Liability
Company
The PRC,
November 7, 2019
CNY10,000,000 CNY10,000,000 CNY10,000,000 CNY10,000,000 51% 85% 85% 85% 85% Courier and
warehousing
services
Pt. Global Jet Express Limited Liability
Company
Indonesia,
December 20, 2006
IDR3,000,000,000 IDR3,000,000,000 IDR3,000,000,000 IDR3,000,000,000 100% 100% 100% 100% 100% Express delivery
services
Notes:
(1) As at December 31, 2020, the Company indirectly owns 48% shareholding of Global Jet Express (Thailand) Co., Ltd., while according to relevant inve stment agreements,
the Company indirectly enjoys around 98% of the dividend interests of Global Jet Express (Thailand) Co., Ltd. As at December 31, 2021 and 2022, the Comp any indirectly
owns around 74% shareholding of Global Jet Express (Thailand) Co., Ltd, and according to relevant investment agreements, the Company indirectly enj oys substantially
100% of the dividend interests of Global Jet Express (Thailand) Co., Ltd..
(2) The English names of the companies referred above represent the best effort made by the management of the Company to directly translate the Chinese names as they
have not registered any official English names.
(3) Although the Company indirectly owns only 40% equity interests in PH GJE, through certain agreements and arrangements, PH GJE’s major business ac tivities are carried
out under the Company’s discretion, the Company has rights to exercise power over PH GJE, receives variable returns from its involvement in PH GJE, has the ability
to affect those returns through its power over PH GJE. As a result, the Company is considered, from an accounting perspective, to have control over PH GJ E.
APPENDIX I ACCOUNTANT’S REPORT
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The statutory auditors of the Group’s major subsidiaries were as follows:
Name of statutory auditor
2020 2021 2022
Indirectly held:
Jitu International Logistics
Co., Ltd.
Shenzhen Huashuo Certified
Public Accountants (General
Partnership)
(Note 1)
Shenzhen Huashuo Certified
Public Accountants (General
Partnership)
(Note 1)
Shenzhen Huashuo Certified
Public Accountants (General
Partnership)
(Note 1)
Thuan Phong Express
Company Limited
A&C Baker Tilly A&C Baker Tilly RSM Vietnam Auditing &
Consulting
PH Global Jet Express Inc.
doing business under the
name and style of J&T
Express
Isla Lipana & Co. Isla Lipana & Co. Isla Lipana & Co.
(PwC Philippines)
J&T Express (Malaysia)
Sdn.Bhd.
SJ & CO PLT PricewaterhouseCoopers PLT YH TAN & ASSOCIA TES
PLT
Global Jet Express
(Thailand) Co., Ltd.
Kaemakorn V achiravarakarn Dharmniti Auditing Co., Ltd Dharmniti Auditing Co., Ltd
Controlled entities:
J&T Express China
Co., Ltd.
Zhongzhun Certified Public
Accountants (Special
General Partnership)
Shanghai Branch
(Note 1)
Beijing Chengyu Certified
Public Accountants (Special
General Partnership)
Shanghai Branch
(Note 1)
Shanghai Shenya Certified
Public Accountants Co., Ltd
J&T Express (Jinhua) Supply
Chain Co., Ltd.
Jinhua Daofeng Certified
Public Accountants
(General Partnership)
(Note 1)
Jinhua Daofeng Certified
Public Accountants (General
Partnership)
(Note 1)
Zhejiang Nanfang Certified
Public Accountants Co., Ltd.
J&T Express (Hebei) Acme
Supply Chain Management
Co., Ltd.
Zhongshen Zhonghuan
Certified Public Accountants
(Special General
Partnership)
Hebei Branch
(Note 1)
HeBei ShangCheng Public
Accounting Firm (Note 1)
HeBei ShangCheng Public
Accounting Firm (Note 1)
J&T Express (Shandong)
Supply Chain Co., Ltd.
Shandong Xinhua Co., Ltd.
Jinan Branch (Note 1)
Jinan Suyuan Certified Public
Accountants (Note 1)
Shandong Suyuan Certified
Public Accountants (General
Partnership)
J&T Express (Henan) Acme
Supply Chain Co., Ltd.
Grant Thornton Certified
Public Accountants (Special
General Partnership)
Henan Branch
(Note 1)
Grant Thornton Certified
Public Accountants (Special
General Partnership) Henan
Branch
(Note 1)
Grant Thornton Certified
Public Accountants (Special
General Partnership) Henan
Branch
(Note 1)
J&T Express (Jieyang)
Supply Chain Management
Co., Ltd.
Guangdong Huaqian
Accounting Firm
(Note 1)
Guangdong Huaqian
Accounting Firm (Note 1)
Guangzhou Hengxin
Accountant Firm Co., Ltd.
J&T Express (Guangzhou)
Supply Chain Co., Ltd.
Guangzhou Avalue Certified
Public Accountants
Co., Ltd.
(Note 1)
Guangzhou Jinling Certified
Public Accountings (Note 1)
Guangzhou Hengxin
Accountant Firm Co., Ltd.
J&T Express (Fujian) Supply
Chain Management
Co., Ltd.
Xiamen Huacheng Certified
Public Accountants
Co., Ltd.
(Note 1)
Xiamen Yingjian Certified
Public Accountants
Co., Ltd
(Note 1)
Quanzhou Y onghexing
Certified Public Accountants
Co., Ltd.
Pt. Global Jet Express ShineWing Indonesia ShineWing Indonesia ShineWing Indonesia
Note:
(1) The English names of the statutory auditors represent the best effort by the management of the Company
in translating their Chinese names as they do not have official English names.
APPENDIX I ACCOUNTANT’S REPORT
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19. FINANCIAL INSTRUMENTS BY CATEGORY
Group
As at December 31,
As at
June 30,
Note 2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Financial Assets
Financial assets at
amortised cost
Trade receivables 21 180,760 334,876 513,954 622,560
Other receivables and
other assets (excluding
prepayments) 22 651,021 394,518 144,088 192,426
Other non-current assets
(excluding prepayments) 20 58,380 157,212 43,570 72,073
Restricted cash 23 928 125,970 79,725 96,301
Cash and cash equivalents 23 600,425 2,102,448 1,504,048 1,195,264
Financial assets at fair value
through profit or loss 24 71,324 41,581 497,490 541,812
1,562,838 3,156,605 2,782,875 2,720,436
As at December 31,
As at
June 30,
Note 2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Financial Liabilities
Financial Liabilities at
amortised cost
Trade payables 31 225,452 577,065 484,215 471,666
Accruals and other payables
(excluding salary and
welfare payables, tax
payables and other
non-financial liabilities) 32 217,742 646,915 533,856 598,839
Advances from customers 33 137,224 291,362 209,925 241,441
Borrowings 28 444,060 89,027 1,098,377 1,162,434
Lease liabilities 16 175,017 598,722 492,666 556,142
Financial liabilities –
ordinary share
redemption liabilities 29 – 133,749 – –
Financial liabilities –
redemption liabilities of
shares of JNT KSA 29 – 25,458 30,583 33,495
Financial liabilities at fair
value through profit or loss 29 1,812,915 10,487,306 7,765,067 8,261,043
3,012,410 12,849,604 10,614,689 11,325,060
APPENDIX I ACCOUNTANT’S REPORT
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Company
As at December 31,
As at
June 30,
Note 2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Financial Assets
Financial assets at
amortised cost
Loans to subsidiaries 20 688,400 4,438,706 4,379,799 4,467,925
Other receivables and other
assets (excluding
prepayments) 22 466,110 226,460 307 307
Cash and cash equivalents 23 105,475 222,341 3,347 66,111
Financial assets at fair value
through profit or loss 24 50,007 – 481,050 532,319
1,309,992 4,887,507 4,864,503 5,066,662
As at December 31,
As at
June 30,
Note 2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Financial Liabilities
Financial liabilities at
amortised cost
Accrued expenses and other
payables 32 – 161,901 6,127 2,420
Financial liabilities – ordinary
share redemption liabilities 29 – 133,749 – –
Financial liabilities at fair
value through profit or loss 29 1,812,915 10,201,544 7,212,933 7,681,637
1,812,915 10,497,194 7,219,060 7,684,057
20. OTHER NON-CURRENT ASSETS
Group
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Loans to related parties –
non-current portion 167 146,299 – –
Loans to third parties –
non-current portion 58,829 2,127 37,428 68,806
Prepayments for constructions 15,713 13,918 19,778 7,677
Deposits – 11,370 7,363 4,743
Others – – 39 –
Less: allowance for credit losses (616) (2,584) (1,260) (1,476)
74,093 171,130 63,348 79,750
APPENDIX I ACCOUNTANT’S REPORT
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Terms for loans to related parties and third parties were negotiated on a case-by-case basis. During the Track
Record Period, generally the Group entered into loan agreements with related parties and third parties with
terms ranging from 8 months to 5 years, with annual interest rates from 0.4% to 7%. At the end of each
reporting period, such loans due over 12 months were included in other non-current assets.
Company
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Loans to subsidiaries 688,400 4,438,706 4,379,799 4,467,925
During the Track Record Period, loans to subsidiaries were not interest bearing, and the Company classified
such loans as non-current assets as generally management did not expect to recover the loans within twelve
months as at December 31, 2021 and 2022 and June 30, 2023.
21. TRADE RECEIV ABLES
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Trade receivables 187,083 379,447 561,166 666,650
Less: provision for impairment (6,323) (44,571) (47,212) (44,090)
180,760 334,876 513,954 622,560
The majority of the balances of trade receivables are generally due from customers of cross-border services
and enterprise or other direct customers of express delivery services in China, Indonesia, Thailand, the
Philippines, Malaysia and other countries, and customers of other services, to whom the Group generally
grants a credit period of 30 to 120 days.
For outlets of network partners in China, service fees are typically required to be prepaid.
The aging analysis of trade receivables based on invoice date is as follows:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Within 1 month 124,814 297,578 366,405 464,976
1-4 months 56,255 58,437 156,515 167,461
4-6 months 5,006 11,835 768 2,888
6-9 months 705 5,302 1,702 9,295
9-12 months 105 2,425 4,917 2,393
Above 12 months 198 3,870 30,859 19,637
Less: provision for impairment (6,323) (44,571) (47,212) (44,090)
Total 180,760 334,876 513,954 622,560
APPENDIX I ACCOUNTANT’S REPORT
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The Group applies the simplified approach under IFRS 9, which requires lifetime expected losses to be
recognized from initial recognition of the assets. The provision matrix is determined based on historical
observed default rates over the expected life of the trade receivables with similar credit risk characteristics and
forward-looking estimates. At the end of each reporting period, the historical observed default rates are
updated and changes in the forward-looking estimates are analysed. Information about the impairment of trade
receivables and the Group’s exposure to credit risk is described in Note 3.1.
The carrying amounts of the Group’s trade receivables approximated their fair values as at the balance sheet
dates.
22. PREPAYMENTS, OTHER RECEIV ABLES, AND OTHER ASSETS
Group
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Loans to related parties 70,453 47,364 – –
Loans to third parties 248,553 16,155 1,674 3,225
Receivable of Series A Preferred
Share consideration (Note 29) 236,862 – – –
Receivable of Series C1 Preferred
Share consideration (Note 25 (15)) – 30,000 – –
Receivable of Series C2 Preferred
Share consideration (Note 26 (v)) – 159,922 – –
Prepaid V A T and other taxes 71,911 422,339 482,667 512,000
Deposits 37,356 81,379 77,151 98,487
Prepaid expenses 22,431 65,333 76,255 97,389
Others 64,211 66,298 66,302 92,446
Less: allowance for credit losses (6,414) (6,600) (1,039) (1,732)
745,363 882,190 703,010 801,815
Company
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Loans to related parties – 36,600 – –
Loans to third parties 233,500 – – –
Receivable of Series A Preferred
Share consideration (Note 29) 236,862 – – –
Receivable of Series C1 Preferred
Share consideration (Note 25 (15)) – 30,000 – –
Receivable of Series C2 Preferred
Share consideration (Note 26 (v)) – 159,922 – –
Other receivables from subsidiaries ––––
Others – 361 307 307
Less: allowance for credit losses (4,252) (423) – –
466,110 226,460 307 307
APPENDIX I ACCOUNTANT’S REPORT
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As at December 31, 2020, 2021, and 2022 and June 30, 2023, loans to related parties and third parties due
within 1 year were included in current assets, and those due over 1 year would be included in non-current
assets (Note 20).
Terms for loans to related parties and third parties were negotiated on a case-by-case basis and during the Track
Record Period, the Group and the Company entered into loan agreements with related parties and third parties
with terms ranging from 8 months to 2 years, with annual interest rates from 0.4% to 7% per annum and
unsecured. The loans to related parties and third parties were substantially settled in 2022.
The receivable of Series C1 Preferred Share consideration settled in 2022.
In respect of the receivable of Series C2 Preferred Share consideration, as mentioned in Note 26 (v), in
December 2021, 24,440,890 Series C2 Preferred Shares with total amount of consideration of USD382,877,000
were issued, of which USD159,922,000 was pending to be received as at December 31, 2021. Accordingly, the
payable with the same amount related to the repurchase of the ordinary shares and preferred shares was also
pending to be paid according to the relevant agreements (Note 32). Considering such, minimal credit risk was
identified for the receivable of Series C2 Preferred Share consideration. The outstanding receivables and
payables were settled in 2022.
23. RESTRICTED CASH AND CASH AND CASH EQUIV ALENTS
Group
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Restricted cash
Cash at banks 928 125,970 79,725 96,301
Cash and cash equivalents
Cash on hand and at banks 600,425 2,102,448 1,504,048 1,195,264
Total 601,353 2,228,418 1,583,773 1,291,565
Company
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Cash on hand and at banks 105,475 222,341 3,347 66,111
As at December 31, 2020, 2021, and 2022 and June 30, 2023, restricted cash with a total amount of
USD621,000, USD633,000, USD218,000 and USD773,000, respectively were pledged as collaterals for the
Group’s borrowings (Note 28).
As at December 31, 2020, 2021, and 2022 and June 30, 2023, restricted cash with a total amount of
USD307,000, USD46,179,000, USD41,497,000 and USD42,826,000, respectively, were placed as securities of
the Group’s certain guarantees and commitments.
As at December 31, 2020, 2021, and 2022 and June 30, 2023, restricted cash with a total amount of nil,
USD79,158,000, USD nil and USD15,277,000, respectively, were pledged as collateral for the Group’s bank
acceptance notes.
As at December 31, 2022, and June 30, 2023 restricted cash with a total amount of USD38,010,000 and
USD37,425,000 was placed under restriction, due to a number of on-going legal claims, for which management
has made relevant provisions (Note 32).
APPENDIX I ACCOUNTANT’S REPORT
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24. FINANCIAL ASSETS AT FAIR V ALUE THROUGH PROFIT OR LOSS
Group
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Current
Bank wealth management
products (i) 71,324 41,581 16,440 9,493
Non-current
Investments in the convertible
bonds of Huisen Global
Limited (ii) – – 428,678 483,711
Investments in Windfall T&L
SPC (iii) – – 52,372 48,608
– – 481,050 532,319
71,324 41,581 497,490 541,812
(i) Bank wealth management products purchased by the Group were issued by major and reputable
commercial banks without guaranteed returns. The Group manages and evaluates the performance of
investments on a fair value basis in accordance with the Group’s risk management and investment
strategy. The fair values of part of the bank wealth management products are based on cash flow
discounted using the expected return based on observable market inputs and are within level 2 of the
fair value hierarchy.
(ii) The Group invested around USD457,000,000 in 2022 and further invested around USD58,000,000 in
May 2023 in the convertible bonds issued by Huisen Global Limited, a related party, engaged in the
industry of freight less-than truckload delivery business, which was accounted for as financial assets at
fair value through profit or loss.The bond matures in seven years after its issuance and may be extended
at the holder’s discretion, the interest of which is 1.5% per annum. At the discretion of the holder, the
entire principal amount may be converted into preferred shares to be issued by the Huisen Global
Limited in the event of any of its future equity financing transaction, with the conversion price as 80%
of the price at its latest equity financing immediately prior to it.
The movements of investments in the convertible bonds of Huisen Global Limited are set out below:
Six months ended
June 30, 2023
USD’000
Carrying amount at the beginning of the period 428,678
Purchase the convertible bonds of Huisen Global Limited 58,000
Changes in fair value – profit or loss (2,967)
Carrying amount at the end of the period 483,711
APPENDIX I ACCOUNTANT’S REPORT
– I-88 –


--- page 545 ---
Six months ended
June 30, 2022
USD’000
(Unaudited)
Carrying amount at the beginning of the period –
Purchase the convertible bonds of Huisen Global Limited 357,000
Changes in fair value – profit or loss (7,140)
Carrying amount at the end of the period 349,860
Year ended
December 31,
2022
USD’000
Carrying amount at the beginning of the year –
Purchase the convertible bonds of Huisen Global Limited 457,000
Changes in fair value – profit or loss (28,322)
Carrying amount at the end of the year 428,678
With the assistance from an external valuer appointed by the Group, the Group applied the discounted
cash flow method to determine the underlying equity value of Huisen Global Limited, and adopted
equity allocation model (if applicable) to determine the fair value of the abovementioned convertible
bonds.
In determining the fair value of the abovementioned convertible bonds, one or more of the significant
inputs are not based on observable market data, and therefore the Group included the abovementioned
investments in level 3 financial instruments. Key assumptions are set out as below:
As at
December 31,
As at
June 30, Relationship of
unobservable inputs
to fair value2022 2023
USD’000 USD’000
Discount rate 17.0% 17.0% The higher the discount rate,
the lower the fair value
Discount of lack of
marketability
(“DLOM”)
26.0% 26.0% The higher the DLOM, the
lower the fair value
Expected volatility 47.6% 48.8% The higher the expected
volatility, the lower the
fair value
Discount rate was estimated by weighted average cost of capital as at the valuation date. The DLOM
was estimated based on the option-pricing method. Under the option pricing method, the cost of put
option, which can hedge the price change before the privately held share can be sold, was considered
as a basis to determine the lack of marketability discount. Expected volatility was estimated based on
annualized standard deviation of daily stock price return of comparable companies for the period before
respective valuation date and with similar span as time to expiration. In addition to the assumptions
adopted above, the Huisen Global Limited’s projections of future performance were also factored into
the determination of the underlying equity value of Huisen Global Limited on the valuation date.
APPENDIX I ACCOUNTANT’S REPORT
– I-89 –


--- page 546 ---
The estimated carrying amount of relevant convertible bonds as at December 31, 2022 and June 30, 2023
would have been USD10,288,000 lower/USD12,875,000 higher and USD11,249,000
lower/USD14,101,000 higher, respectively, should the discount rate used in discounted cash flow
analysis be higher/lower by 100 basis points from management’s estimates.
(iii) Through January to March 2022, the Group invested around USD60,000,000 in a private equity fund
focusing on investing in industries such as logistics and its upstream and downstream industry chains,
under significant influence of Mr. Jet Li. The contractual term of investment is between 3-5 years, which
may be further extended with the consent of the majority of investors.
The movements of investments in Windfall T&L SPC are set out below:
Six months ended
June 30, 2023
USD’000
Carrying amount at the beginning of the period 52,372
Investment in Windfall T&L SPC –
Changes in fair value – profit or loss (3,764)
Carrying amount at the end of the period 48,608
Six months ended
June 30, 2022
USD’000
(Unaudited)
Carrying amount at the beginning of the period –
Investment in Windfall T&L SPC 60,020
Changes in fair value – profit or loss 3,300
Carrying amount at the end of the period 63,320
2022
USD’000
Carrying amount at the beginning of the year –
Investment in Windfall T&L SPC 60,020
Changes in fair value – profit or loss (7,648)
Carrying amount at the end of the year 52,372
As the abovementioned fund and personnel are specialized in making investments in the
abovementioned private sectors, the Group does not seek control or significant influence over it. As per
relevant agreements and contracts, the Group does not take any board seats and is not involved in
relevant decision-making process of the abovementioned investees. As a result, the Group does not have
control or significant influence over the fund, and accounts for such investment as financial assets at fair
value through profit or loss.
APPENDIX I ACCOUNTANT’S REPORT
– I-90 –


--- page 547 ---
25. SHARE CAPITAL
Authorised
Ordinary shares Preferred shares
Number
of
ordinary
shares
Nominal
value of
ordinary
shares
Number
of Class A
Ordinary
Shares
Nominal
value of
Class A
Ordinary
Shares
Number
of Class B
Ordinary
Shares
Nominal
value of
Class B
Ordinary
Shares
Number
of Series
Pre-A1
Preferred
Shares
Nominal
value of
Series
Pre-A1
Preferred
Shares
Number
of Series
Pre-A2
Preferred
Shares
Nominal
value of
Series
Pre-A2
Preferred
Shares
Number
of Series
A
Preferred
Shares
Nominal
value of
Series A
Preferred
Shares
Number
of Series
B
Preferred
Shares
Nominal
value of
Series B
Preferred
Shares
Number
of Series
B+
Preferred
Shares
Nominal
value of
Series B+
Preferred
Shares
Number
of Series
C1
Preferred
Shares
Nominal
value of
Series C1
Preferred
Shares
Number
of Series
C2
Preferred
Shares
Nominal
value of
Series C2
Preferred
Shares
Number
of Series
D
Preferred
Shares
Nominal
value of
Series D
Preferred
Shares
Total
number
of shares
(’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’ 000 (’000) USD’000 (’000)
As at January 1, 2020 4,871,066 4 9–––– 74,667 1 54,267 1–––––––––––– 5,000,000
Reclassification and
redesignation upon
issuance of the
Series A Preferred
Shares (1) (276,334) (3) –––––––– 276,334 3–––––––––––
Reclassification and
redesignation upon
repurchase of the
Series A Preferred
Shares (2) 6,413 ––––––––– (6,413) ––––––––––––
Reclassification and
redesignation of
Class A and B
Ordinary Shares (3) (4,601,145) (46) 4,466,745 45 134,400 1–––––––––––––––– –
Reclassification and
redesignation upon
issuance of the
Series B Preferred
Shares (4) – – (22,462) ––––––––– 22,462 ––––––––– –
Reclassification and
redesignation of
Class A and B
Ordinary Shares (4) – – (50,550) (1) 50,550 1–––––––––––––––––
As at December 31,
2020 – – 4,393,733 44 184,950 2 74,667 1 54,267 1 269,921 3 22,462 ––––––––– 5,000,000
Reclassification and
re-designation upon
issuance of the
Series B+ Preferred
Shares (5) – – (255,864) (3) –––––––––– 255,864 3–––––––
Reclassification and
re-designation upon
issuance of the
Series C1 Preferred
Shares (6) – – (212,765) (2) –––––––––––– 212,765 2–––––
Reclassification and
re-designation upon
issuance of the
Series C2 Preferred
Shares (6) – – (72,250) (1) –––––––––––––– 72,250 1–––
As at December 31,
2021 and 2022 – – 3,852,854 38 184,950 2 74,667 1 54,267 1 269,921 3 22,462 – 255,864 3 212,765 2 72,250 1 – – 5,000,000
APPENDIX I ACCOUNTANT’S REPORT
– I-91 –


--- page 548 ---
Ordinary shares Preferred shares
Number
of
ordinary
shares
Nominal
value of
ordinary
shares
Number
of Class A
Ordinary
Shares
Nominal
value of
Class A
Ordinary
Shares
Number
of Class B
Ordinary
Shares
Nominal
value of
Class B
Ordinary
Shares
Number
of Series
Pre-A1
Preferred
Shares
Nominal
value of
Series
Pre-A1
Preferred
Shares
Number
of Series
Pre-A2
Preferred
Shares
Nominal
value of
Series
Pre-A2
Preferred
Shares
Number
of Series
A
Preferred
Shares
Nominal
value of
Series A
Preferred
Shares
Number
of Series
B
Preferred
Shares
Nominal
value of
Series B
Preferred
Shares
Number
of Series
B+
Preferred
Shares
Nominal
value of
Series B+
Preferred
Shares
Number
of Series
C1
Preferred
Shares
Nominal
value of
Series C1
Preferred
Shares
Number
of Series
C2
Preferred
Shares
Nominal
value of
Series C2
Preferred
Shares
Number
of Series
D
Preferred
Shares
Nominal
value of
Series D
Preferred
Shares
Total
number
of shares
(’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’ 000 (’000) USD’000 (’000)
Reclassification and
re-designation upon
issuance of the
Class B Ordinary
Shares (7) – – (10,917) – 10,917 ––––––––––––––––––
Reclassification and
re-designation upon
issuance of the
Series C1 Preference
Shares (7) – – (53,408) (1) –––––––––––– 53,408 1–––––
Reclassification and
re-designation upon
issuance of the
Series C2 Preference
Shares (7) – – (43,082) ––––––––––––––– 43,082 ––––
Reclassification and
re-designation upon
issuance of the
Series D Preference
Shares (7) – – (26,144) ––––––––––––––––– 26,144 – –
As at June 30, 2023 – – 3,719,303 37 195,867 2 74,667 1 54,267 1 269,921 3 22,462 – 255,864 3 266,173 3 115,332 1 26,144 – 5,000,000
(1) In May 2020, the Company redesignated and reclassified 276,334,498 ordinary shares from its authorized ordinary shares into Series A Preferred S hares.
(2) In September 2020, the Company repurchased and cancelled 6,413,333 Series A Preferred Shares at substantially nil consideration, redesignated and reclassified such
Series A Preferred Shares into ordinary shares.
(3) In November 2020, the Company redesignated and reclassified 4,466,745,503 ordinary shares from its authorized ordinary shares into Class A Ordi nary Shares, and
134,400,000 ordinary shares from its authorized ordinary shares into Class B Ordinary Shares.
(4) In December 2020, the Company redesignated and reclassified 22,462,293 Class A Ordinary Shares from its authorized ordinary shares into Series B Preferred Shares,
and 50,550,000 Class A Ordinary Shares from its authorized ordinary shares into Class B Ordinary Shares.
(5) In February 2021, the Company redesignated and reclassified 255,864,131 Class A Ordinary Shares from its authorized ordinary shares into Series B+ Preferred Shares.
(6) In October 2021, the Company redesignated and reclassified 212,765,236 Class A Ordinary Shares from its authorized ordinary shares into Series C 1 Preferred Shares,
and 72,250,382 Class A Ordinary Shares from its authorized ordinary shares into Series C2 Ordinary Shares.
(7) In May 2023, the Company redesignated and reclassified 10,916,682 Class A Ordinary Shares from its authorized ordinary shares into Class B Ordina ry Shares, 53,408,460
Class A Ordinary Shares from its authorized ordinary shares into Series C1 Preferred Shares, 43,082,204 Class A Ordinary Shares from its authorized o rdinary shares
into Series C2 Preferred Shares and 26,143,791 Class A Ordinary Shares from its authorized ordinary shares into Series D Preferred Shares.
APPENDIX I ACCOUNTANT’S REPORT
– I-92 –


--- page 549 ---
Issued
The Company was incorporated in the Cayman Islands as an exempted company registered under the laws of the Cayman Islands on October 24, 2019. Upon inco rporation of
the Company, one share was issued at par value of USD0.00001.
Number of
ordinary
shares
Nominal
value of
ordinary
shares
Number of
Class A
Ordinary
Shares
Nominal
value of
Class A
Ordinary
Shares
Number of
Class B
Ordinary
Shares
Nominal
value of
Class B
Ordinary
Shares
Number of
Series
Pre-A1
Preferred
Shares
Nominal
value of
Series
Pre-A1
Preferred
Shares
Number of
Series
Pre-A2
Preferred
Shares
Nominal
value of
Series
Pre-A2
Preferred
Shares
Number of
Series A
Preferred
Shares
Nominal
value of
Series A
Preferred
Shares
Number of
Series B
Preferred
Shares
Nominal
value of
Series B
Preferred
Shares
(’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000
As at January 1, 2020 320,000 3 – – – – 74,667 1 54,267 – – – – –
Issuance of Series A
Preferred Shares (1) – – – – – – – – – – 269,921 3 – –
Reclassification and
redesignation of Class A
and B Ordinary Shares (2) (320,000) (3) 185,600 2 134,400 1 – – – – – – – –
Issuance of Series B
Preferred Shares (3) – – – – – – – – – – – – 22,462 –
Transfer of Series Pre-A1,
Pre-A2 and Series A
Preferred Shares from
equity to liability (4) –– –– –– –– –– –– ––
As at December 31, 2020 – – 185,600 2 134,400 1 74,667 1 54,267 – 269,921 3 22,462 –
On incorporation of the Company on October 24, 2019, the Company underwent the Reorganization as described in Note 1.2. The movements in share capital of the Company
subsequent to its incorporation are as follows:
(1) In May 2020, the Company entered into a share purchase agreement with the Series A Preferred Shares investors pursuant to which, the Company issued 276,334,498
shares of Series A Preferred Shares and in September 2020 repurchased and cancelled 6,413,333 Series A Preferred Shares. The total consideration for the issuance of
Series A Preferred Shares amounted to USD1,186,633,000, of which USD977,193,000 was received during the year and the outstanding consideration rec eivable of
USD236,862,000 was recognized on the balance sheet as at December 31, 2020 (Note 22). The receivables were fully settled in 2021.
(2) In November 2020, the Company redesignated and reclassified 185,600,000 ordinary shares into Class A Ordinary Shares, and 134,400,000 ordinary shares into Class
B Ordinary Shares.
(3) In December 2020, the Company entered into a share purchase agreement with the Series B Preferred Shares investor, pursuant to which, the Company i ssued 22,462,293
shares of Series B Preferred Shares with the total consideration of USD100,000,000, recognized as financial liabilities at fair value through profi t or loss (Note 29).
APPENDIX I ACCOUNTANT’S REPORT
– I-93 –


--- page 550 ---
(4) In December 2020, along with the issuance of Series B Preferred Shares, the Company promulgated the Third Amended and Restated Memorandum of Assoc iation (Note
29), according to which certain shareholders are able to discretionarily trigger the drag-along sale, and in which all assets and funds of the Company legally available
for distribution to all the shareholders shall be distributed. Consequently, Series Pre-A1 Preferred Shares, Series Pre-A2 Preferred Shares and Se ries A Preferred Shares
were reclassified as financial liabilities measured at fair value through profit or loss on December 30, 2020 (Note 29).
Number of
Class A
Ordinary
Shares
Nominal
value of
Class A
Ordinary
Shares
Number of
Class B
Ordinary
Shares
Nominal
value of
Class B
Ordinary
Shares
Number
of Series
Pre-A1
Preferred
Shares
Nominal
value of
Series
Pre-A1
Preferred
Shares
Number
of Series
Pre-A2
Preferred
Shares
Nominal
value of
Series
Pre-A2
Preferred
Shares
Number of
Series A
Preferred
Shares
Nominal
value of
Series A
Preferred
Shares
Number of
Series B
Preferred
Shares
Nominal
value of
Series B
Preferred
Shares
Number of
Series B+
Preferred
Shares
Nominal
value of
Series B+
Preferred
Shares
Number of
Series C1
Preferred
Shares
Nominal
value of
Series C1
Preferred
Shares
Number of
Series C2
Preferred
Shares
Nominal
value of
Series C2
Preferred
Shares
(’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000
As at January 1, 2021 185,600 2 134,400 1 74,667 1 54,267 – 269,921 3 22,462 ––––– – –
Issuance of Series B+ Preferred
Shares (5) –– –––––– –– –– 255,864 3 – – – –
Share-based compensation for
employees (6,11) 77,335 1 28,80 81–––– –– – ––––– – –
Repurchase of Class B Ordinary
Shares (7) – – (3,143) ––––– –– – ––––– – –
Issuance of Class A Ordinary Shares
to acquire Cambodia NCI (8) 2 5 9– –––––– –– – ––––– – –
Issuance of Class A Ordinary Shares
to acquire Malaysia NCI (8) 25,669 – –––––– –– – ––––– – –
Issuance of Class A Ordinary Shares
to acquire Vietnam NCI (8) 18,778 – –––––– –– – ––––– – –
Issuance of Class A Ordinary Shares
to acquire China NCI (8) 32,509 – –––––– –– – ––––– – –
Share-based compensation to
regional sponsors (9) 32,821 – –––––– –– – ––––– – –
Issuance of Class A Ordinary Shares
to acquire operating entities of
Thai regional sponsor (10) 11,210 – –––––– –– – ––––– – –
Dividends (12) –– –––––– –– – ––––– – –
Repurchase of Class A Ordinary
Shares from one shareholder (13) ( 1 1 1 ) – –––––– –– – ––––– – –
Issuance of Class A Ordinary Shares
to acquire operating entities of
Indonesian regional sponsors (14) 55,274 1 –––––– –– – ––––– – –
Issuance of Series C1 Preferred
Shares (15) –– –––––– –– –– – – 134,051 1 – –
Issuance of Series C2 Preferred
Shares (16) –– –––––– –– – ––––– 2 4 , 4 4 1 –
Repurchase of ordinary shares and
preferred shares (17) (4,898) – (3,736) – (1,743) – (1,267) – (6,300) – (524) – (5,972) – – – – –
Repurchase of ordinary shares and
preferred shares – commitment
(17) –– –––––– –– – ––––– – –
As at December 31, 2021 434,446 4 156,329 2 72,924 1 53,000 – 263,621 3 21,938 – 249,892 3 134,051 1 24,441 –
APPENDIX I ACCOUNTANT’S REPORT
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--- page 551 ---
(5) In February 2021, the Company entered into a share purchase agreement with the Series B+ Preferred Shares investors, pursuant to which, the Compan y issued
255,864,131 shares of Series B+ Preferred Shares with the total consideration of USD1,822,382,000, recognized as financial liabilities at fair val ue through profit or loss.
(Note 29).
(6) On December 30, 2020 and February 26, 2021, pursuant to the Company’s share-based payment 2020 Plan (Note 26(i)), the Company granted 48,017,110 a nd 5,054,433
Class A Ordinary Shares, respectively, to an entity beneficially owned by Mr. Jet Li (“Company T”), at par value. The 53,071,543 shares were registere d on March 1,
2021, of which 28,807,744 shares were redesignated as Class B Ordinary Shares on the same date. On January 8, 2021, March 31, 2021 and August 31, 2021, th e Company
further granted 51,051,691, 1,009,964 and 1,009,888 Class A Ordinary Shares respectively, to the Company’s employees at par value, and the 53,071,5 43 shares were
registered during June 2021 and September 2021. The fair value of the shares granted were recognised as share-based compensation for employee benefi t expenses for
the relevant years (Note 26 (i)).
(7) In February 2021, the Company repurchased 3,142,500 Class B Ordinary Shares from Company T, with total consideration of USD22,382,000 (Note 26 (i v)).
(8) In April 2021, with the consideration of 32,508,856, 25,669,206, 18,778,451, and 259,202 Class A Ordinary Shares, the Company completed the acqu isitions of certain
non-controlling interests of the Chinese subsidiaries, Malaysian subsidiary, Vietnam subsidiary and Cambodia subsidiary, respectively. Detail s of the acquisitions are set
out in Note 35. These Class A Ordinary Shares were registered later in 2021.
(9) In April 2021, the Company granted 32,820,938 Class A Ordinary Shares to certain employees of the Group. These Class A Ordinary Shares were registe red later in 2021
(Note 26 (ii)).
(10) As per relevant agreements, the Group issued 11,210,471 Class A Ordinary Shares of the Company to acquire certain equity interests and to obtain c ontrol of 13 operating
entities of Thai regional sponsors. These transactions were completed on June 30, 2021 (Note 36).
(11) In June 2021, Company T transferred 24,263,799 Class A Ordinary Shares of the Company to other parties to fulfil its prior commitments.
(12) In August 2021, the Company declared a cash dividend of 12.0 cents per fully paid ordinary share and preferred share, totalling USD72,244,000 out of the Company’s
share premium account. The dividend was fully paid in November 2021 (Note 43).
(13) In August 2021, the Company repurchased 111,111 Class A Ordinary Shares from one Class A Ordinary Shareholder, with total consideration of USD1, 566,000 (Note
26 (iv)).
(14) As per relevant agreements, the Group obtained control of 25 operating entities of certain Indonesian regional sponsors and issued 55,273,897 C lass A Ordinary Shares
to relevant Indonesian regional sponsors. These transactions were completed on August 31, 2021 (Note 37).
(15) Through October to December 2021, the Company entered into share purchase agreements with the Series C1 Preferred Shares investors and pursuant to which, the
Company issued 134,050,964 shares of Series C1 Preferred Shares with the total consideration of USD1,890,125,000, recognized as financial liabili ties at fair value
through profit or loss. (Note 29). As at December 31, 2021, the outstanding consideration receivable was USD30,000,000 (Note 22).
(16) In December 2021, the Company entered into share purchase agreements with the Series C2 Preferred Shares investors and pursuant to which, the Com pany issued
24,440,890 shares of Series C2 Preferred Shares with the total consideration of USD382,877,000, recognized as financial liabilities at fair value t hrough profit or loss.
(Note 26 (v), Note 29). As at December 31, 2021, the outstanding consideration receivable was USD159,922,000 (Note 22).
APPENDIX I ACCOUNTANT’S REPORT
– I-95 –


--- page 552 ---
(17) In December 2021, accompanying with issuance of Series C2 Preferred Shares, the Company entered into agreements with certain existing sharehol ders to repurchase
48,607,928 shares, among which 24,440,890 shares had been repurchased and deregistered as at December 31, 2021. As to the remaining 24,167,038 share st ob e
repurchased, of which 4,843,603 Class A Ordinary Shares and 3,694,268 Class B Ordinary Shares are recognized as treasury shares with certain redempt ion liabilities
recognized, and rest were related to repurchase of preferred shares with certain derivative financial liabilities recognized. The ordinary shares to be repurchased were
included in the calculation of earnings per share for the year ended December 31, 2021 since such shares remained exposed to certain risks and rewards i n relation to
the equity interests. The repurchase and de-registration of remaining shares were completed in 2022 (Notes 26 (v) and 29).
Number of
Class A
Ordinary
Shares
Nominal
value of
Class A
Ordinary
Shares
Number of
Class B
Ordinary
Shares
Nominal
value of
Class B
Ordinary
Shares
Number
of Series
Pre-A1
Preferred
Shares
Nominal
value of
Series
Pre-A1
Preferred
Shares
Number
of Series
Pre-A2
Preferred
Shares
Nominal
value of
Series
Pre-A2
Preferred
Shares
Number of
Series A
Preferred
Shares
Nominal
value of
Series A
Preferred
Shares
Number of
Series B
Preferred
Shares
Nominal
value of
Series B
Preferred
Shares
Number of
Series B+
Preferred
Shares
Nominal
value of
Series B+
Preferred
Shares
Number of
Series C1
Preferred
Shares
Nominal
value of
Series C1
Preferred
Shares
Number of
Series C2
Preferred
Shares
Nominal
value of
Series C2
Preferred
Shares
Number of
Series D
Preferred
Shares
Nominal
value of
Series D
Preferred
Shares
(’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’000 (’000) USD’ 000
As at January 1, 2022 434,446 4 156,329 2 72,924 1 53,000 – 263,621 3 21,938 – 249,892 3 134,051 1 24,441 – – –
Issuance of Series C1
Preferred Shares (18) –– –––––– –– –– – – 1 3 , 3 7 7 – –– ––
Issuance of Series C2
Preferred Shares (19,21) –– –––––– –– – ––––– 3 1 , 0 8 7 –– –
Repurchase of ordinary
shares and preferred
shares (20,21) (6,230) – (4,752) – (2,217) – (1,611) – (8,014) – (667) – (7,596) – – – – – – –
Share-based compensation
for employees (22,23) 1,474 – 22,288 ––––– –– – ––––– – –– –
Issuance of Class A
Ordinary Shares to
network partners in
China (24) 3 8 , 0 0 0– –––––– –– – ––––– – –– –
Repurchase of Class A
Ordinary Shares from
one shareholder (25) (1,450) – –––––– –– – ––––– – –– –
As at December 31, 2022 466,240 4 173,865 2 70,707 1 51,389 – 255,607 3 21,271 – 242,296 3 147,428 1 55,528 – – –
As at January 1, 2023 466,240 4 173,865 2 70,707 1 51,389 – 255,607 3 21,271 – 242,296 3 147,428 1 55,528 – – –
Repurchase of ordinary
shares and preferred
shares (26) (3,351) – (2,556) – (1,192) – (867) – (4,311) – (359) – (4,086) – – – – – – –
Issuance of Series D
Preferred Shares (27) –– –––––– –– – ––––– – – 2 6 , 1 4 4 –
Share-based compensation
for employees (28,29) 261 – 24,558 ––––– –– – ––––– – –– –
Issuance of Series C1
Preferred Shares (30) –– –––––– –– –– – – 1 1 8 , 7 4 6 2 –– ––
Issuance of Series C2
Preferred Shares (26,30) –– –––––– –– – ––––– 5 9 , 8 0 4 1– –
As at June 30, 2023 463,150 4 195,867 2 69,515 1 50,522 – 251,296 3 20,912 – 238,210 3 266,174 3 115,332 1 26,144 –
APPENDIX I ACCOUNTANT’S REPORT
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(18) Through January to March 2022, the Company entered into share purchase agreements with the Series C1 Preferred Shares investors and pursuant to w hich, the Company
issued 13,377,060 shares of Series C1 Preferred Shares with the total consideration of USD189,024,000, recognized as financial liabilities at fair value through profit
or loss. (Note 29).
(19) Through January to March 2022, pursuant to the agreements, the Company issued 24,167,038 shares of Series C2 Preferred Shares to certain third-p arty investors.
(20) Through January to March 2022, accompanying with issuance of Series C2 Preferred Shares, pursuant to relevant the agreements, the Company repur chased the
24,167,038 shares, including 4,843,603 Class A Ordinary Shares, 3,694,268 Class B Ordinary Shares, 1,723,288 Series Pre-A1 Preferred Shares, 1,25 2,460 Series Pre-A2
Preferred Shares, 6,229,713 Series A Preferred Shares, 518,425 Series B Preferred Shares and 5,905,281 Series B+ Preferred Shares (Notes 26 (v) and 2 9).
(21) In August 2022, the Company further entered into agreements with certain personals and third-party investors to repurchase 1,386,996 Class A Or dinary Shares, 1,057,875
Class B Ordinary Shares, 493,474 Series Pre-A1 Preferred Shares, 358,650 Series Pre-A2 Preferred Shares, 1,783,917 Series A Preferred Shares, 148, 454 Series B
Preferred Shares and 1,691,013 Series B+ Preferred Shares, and issued 6,920,379 Series C2 Preferred Shares as the consideration (Note 26 (v)).
(22) In April 2022, the Company granted 1,474,280 Class A Ordinary Shares to employees of the Group at par value, and the shares granted were fully veste d on the grant
date (Note 26 (i)).
(23) Through October 2021 to March 2022, the Company granted 22,287,975 Class A Ordinary Shares to Mr. Jet Li at par value and the shares granted were ful ly vested on
relevant grant dates. The shares were registered in March 2022 and redesignated as Class B Ordinary Shares on the same date (Note 26 (i)).
(24) In September 2022, the Company issued 38,000,000 Class A Ordinary Shares for the purpose to carry out its 2022 Incentive Plan, of which 29,502,660 Class A Ordinary
Shares are treasury shares (Note 26(viii)). As at June 30, 2023, 6,398,100 Class A Ordinary Shares remains as treasure shares.
(25) In September 2022, the Company repurchased 1,449,568 Class A Ordinary Shares at fair market value from certain Class A Ordinary Shareholders, wi th total consideration
of USD15,294,000, of which USD11,601,000 had been paid in the year ended December 31, 2022 (Note 26(iv)).
(26) In May 2023, the Company further entered into agreements with certain personals and third-party investors to repurchase 3,351,470 Class A Ordin ary Shares, 2,556,199
Class B Ordinary Shares, 1,192,408 Series Pre-A1 Preferred Shares, 866,626 Series Pre-A2 Preferred Shares, 4,310,571 Series A Preferred Shares, 35 8,716 Series B
Preferred Shares and 4,086,085 Series B+ Preferred Shares, and issued 16,722,075 Series C2 Preferred Shares as the consideration (Note 26 (v)).
(27) In May 2023, the Company entered into share purchase agreements with the Series D Preferred Shares investor and pursuant to which, the Company iss ued 26,143,791
shares of Series D Preferred Shares with the total consideration of USD200,000,000, recognized as financial liabilities at fair value through profi t or loss. (Note 29).
(28) In May 2023, the Company granted 261,438 Class A Ordinary Shares to employees of the Group at par value, and the shares granted were fully vested on t he grant date
(Note 26 (i)).
(29) In May 2023, the Company granted 24,557,934 Class B Ordinary Shares to Mr. Jet Li at par value and the shares granted were to vest within the four year period
commencing on the date of initial public filing of the Company (Note 26 (i)).
(30) In May 2023, the Company entered into agreements with the existing Series C1 and C2 Preferred Share holders to further issue 118,745,672 Series C1 Preferred Shares
and 43,082,204 Series C2 Preferred Shares respectively at par value (Note 26 (vi)).
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26. SHARE-BASED COMPENSATION
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Share-based compensation
– related to employee
benefit expenses
(Note 8) :
Employee benefit expenses
– shares granted to
employees under “J&T
Global Express Limited
2020 Share Incentive
Plan” (“2020 Plan”) (i) 161,073 213,314 239,521 239,521 10,295
Employee benefit expenses
– shares granted to
regional sponsors
considered as staff (ii) – 141,34 4–––
Equity interests transferred
to management team of
the cross-border
business (iii) – 27,936 4,583 4,583 –
161,073 382,594 244,104 244,104 10,295
Share-based compensation
– related to equity
transactions (Note 9) :
Repurchase of Class A and
Class B Ordinary
Shares (iv) – 10,652 4,292 – –
Ordinary shares and
preferred shares
repurchased
accompanying Series C2
Preferred Shares
issuance (v) – 105,910 16,480 – 22,960
Ordinary shares and
preferred shares to be
repurchased
accompanying Series C2
Preferred Shares
issuance (v) – 106,56 6–––
Issuance of preferred
shares (vi) 27,229 9,310 16,490 16,490 1,235,171
Issuance of JNT KSA
shares (vii) – 3,98 0–––
27,229 236,418 37,262 16,490 1,258,131
Issuance of ordinary shares
to network partners and
regional sponsors under
“J&T Global Express
Limited Equity Incentive
Plan” (“2022 Incentive
Plan”) (viii)
– deducting revenue – – 65,193 – 1,336
– recognising in
administrative
expenses –––– 158,442
188,302 619,012 346,559 260,594 1,428,204
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(i) Shares granted to employees under 2020 Plan
In December 2020, the board of directors of the Company approved the establishment of 2020 Plan with the
purpose of attracting, motivating, retaining, and rewarding certain members of management and employees.
The awards that may be awarded or granted under 2020 plan include options, RSUs, restricted shares, dividend
equivalents, deferred shares, share payments, share appreciation rights and other awards. Pursuant to the
Second Amended and Restated Shareholder Agreement signed on December 30, 2020, the maximum number
of shares that may be issued under 2020 Plan shall be 101,088,653 Class A Ordinary Shares, which was further
expanded in February 2021 accompanying the closing of Series B+ financing, and during October 2021 to
March 2022 accompanying the closing of Series C1 financing, and in May 2023 accompanying the closing of
Series D financing, and certain extraordinary general meetings of the shareholders of the Company.
On December 30, 2020 and February 26, 2021, the Company granted 48,017,110 and 5,054,433 Class A
Ordinary Shares, respectively, to Mr. Jet Li at par value, and the shares granted were fully vested on the grant
dates. The 53,071,543 shares were registered on March 1, 2021, of which 28,807,744 shares were redesignated
as Class B Ordinary Shares on the same date (Note 25).
Through October to December 2021, the Company granted 1,340,510 Class A Ordinary Shares to Mr. Jet Li
at par value. Through January to March 2022, the Company further granted 20,947,465 Class A Ordinary
Shares to Mr. Jet Li at par value. These shares granted were fully vested on relevant grant dates, then registered
in March 2022 and redesignated as Class B Ordinary Shares on the same date (Note 25).
On January 8, 2021, March 31, 2021, August 31, 2021, April 8, 2022 and May 17, 2023, the Company granted
51,051,691, 1,009,964, 1,009,888, 1,474,280 and 261,438, respectively, totalling 54,807,261 Class A Ordinary
Shares to employees of the Group at par value, and the shares granted were fully vested on the grant date. The
shares were registered in June 2021, September 2021, April 2022 and May 2023 respectively (Note 25).
On May 17, 2023, the Company granted 24,557,934 Class B Ordinary Shares to Mr. Jet Li at par value.
Pursuant to relevant award agreements, the vesting schedule is as follows, on the condition that Mr. Jet Li will
remain in service as the chairman of the board of the Company, or as the chief executive officer or such other
position equivalent (“ Executive Position ”) within the four year period commencing on the date of initial
public filing of the Company (“ Listing Date ”) (Note 25).
Vesting date
Percentage of
shares vested
the 1st anniversary of the Listing Date 25%
the 2nd anniversary of the Listing Date 25%
the 3rd anniversary of the Listing Date 25%
the 4th anniversary of the Listing Date 25%
Upon the termination of service as Executive Position, Mr. Jet Li shall return the unvested portion of ordinary
shares to the Company at par value.
The fair values of the Company’s ordinary shares granted under 2020 Plan are as follows:
Number of
ordinary shares
Weighted average
fair value per
share in USD
Granted during year 2020 48,017,110 3.35
Granted during year 2021 59,466,486 3.59
Granted during year 2022 22,421,745 10.68
Granted during the six months ended June 30, 2022
(Unaudited) 22,421,745 10.68
Granted during the six months ended June 30, 2023 24,819,372 6.94
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The Company appointed an external valuer to provide assistance in the valuation of the fair value of its
ordinary shares at the grant dates. The discounted cash flow method was adopted to determine the underlying
equity fair value of the Group and the equity allocation model was applied to determine the fair value of the
underlying ordinary shares of the Company. Key assumptions, such as discount rate and projections of future
performance, are required to be determined by the Company with best estimate.
The total expenses recognized in the consolidated income statements with a corresponding increase in
share-based compensation reserve for the abovementioned share-based awards granted were USD161,073,000,
USD213,314,000, USD239,521,000, USD239,521,000 and USD10,295,000 for the years ended December 31,
2020, 2021, and 2022 and the six months ended June 30, 2022 and 2023, respectively. Except for the
abovementioned 24,557,934 Class B Ordinary Shares granted to Mr. Jet Li, all shares were vested upon the
grant date without any outstanding unvested shares as at December 31, 2020, 2021, and 2022 and June 30,
2023.
(ii) Shares granted to regional sponsors considered as staff
On April 30, 2021, in addition to the abovementioned 2020 Plan, the Company granted 32,820,938 Class A
Ordinary Shares to certain regional sponsors, who are considered as staff of the Group. The shares granted
vested immediately upon the grant date, with a fair value amount of USD141,344,000 and fully charged to
employee benefit expenses – share-based compensation expenses during the year ended December 31, 2021.
The abovementioned Class A Ordinary Shares were registered later in 2021 (Note 25).
(iii) Equity interests transferred to management team of the cross-border business
On September 30, 2021, through a reorganization of the cross-border service business, the relevant
management team of cross-border business of the Group was awarded a portion of equity interests of the
cross-border business of the Group at nil consideration and fully vested on the grant date. The carrying amount
of the relevant equity interests of the cross-border business of the Group was approximately USD12,556,000.
The fair value of such equity interests awarded was estimated to be approximately USD27,936,000, which was
recognized as share-based compensation expenses. An increase of USD15,380,000 in share-based
compensation reserve was recognized, representing the difference between the fair value and carrying amount
of the relevant equity interests of the cross-border business of the Group.
In January 2022, the relevant management team of cross-border business of the Group invested approximately
USD6,274,000 and obtained a portion of equity interests of the cross-border business of the Group, the fair
value of which amounted to USD10,857,000. The difference between such consideration and the fair value of
such equity interests amounted to USD4,583,000, which was recognized as share-based compensation
expenses and an increase of USD6,025,000 in other reserve was recognized, representing the difference
between the fair value and carrying amount of the abovementioned equity interests.
(iv) Repurchase of Class A and Class B Ordinary Shares
On February 26, 2021, the Company repurchased 3,142,500 Class B Ordinary Shares from an entity
beneficially owned by Mr. Jet Li (“Company T”), with total consideration of USD22,382,000 (Note 25). The
difference between such consideration and the fair value of the repurchased shares amounted to USD9,651,000,
which was recognized as share-based compensation expenses during the year ended December 31, 2021.
On August 31, 2021, the Company repurchased 111,111 Class A Ordinary Shares from one shareholder of the
Company, with total consideration of USD1,566,000 (Note 25). The difference between such consideration and
the fair value of the repurchased shares amounted to USD1,001,000, which was recognized as share-based
compensation expenses during the year ended December 31, 2021.
On September 30, 2022, the Company repurchased 1,449,568 Class A Ordinary Shares from certain
shareholders of the Company, with total consideration of USD15,294,000 (Note 25). The difference between
such consideration and the fair value of the repurchased shares amounted to USD4,292,000, which was
recognized as share-based compensation expenses during the year ended December 31, 2022.
APPENDIX I ACCOUNTANT’S REPORT
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(v) Repurchase of ordinary shares and preferred shares in relation to Series C2 Preferred Shares issuance
On December 31, 2021, the Company entered into agreements with a number of third-party investors to issue
Series C2 Preferred Shares, with the total consideration of USD761,465,000 for 48,607,928 Series C2
Preferred Shares of the Company. Simultaneously, the Company entered into agreements with its certain
existing shareholders to repurchase 48,607,928 ordinary and preferred shares of the Company (see the table
below), at the same amount with the consideration as the abovementioned Series C2 Preferred Shares.
On December 31, 2021, 24,440,890 Series C2 Preferred Shares with consideration of USD382,877,000 were
issued (Note 25), and the same number of ordinary and preferred shares were repurchased by the Company at
the same consideration (Note 25) and de-registered. As at December 31, 2021, USD222,955,000 of the
abovementioned consideration was settled along with the consideration for the repurchase of relevant ordinary
shares and preferred shares. The remaining consideration of USD159,922,000 was recorded as receivable of
Series C2 Preferred Share consideration (Note 22) and consideration payable for repurchase of ordinary shares
and preferred shares (Note 32) on the Group’s consolidated balance sheet as at December 31, 2021, which were
settled on a net basis in 2022.
The remaining 24,167,038 Series C2 Preferred Shares were issued in January and March 2022.
On December 31, 2021, the number of ordinary and preferred shares repurchased and to be repurchased and
their respective fair values are set out below:
Fair value as at
the repurchase
date
Number of
shares
Repurchase
consideration
Share-based
compensation
expenses
USD’000 USD’000 USD’000
Repurchased
Class A Ordinary Shares 52,046 4,898,491 76,737 24,691
Class B Ordinary Shares 39,696 3,736,129 58,528 18,832
Series Pre-A1 Preferred Shares 18,900 1,742,815 27,302 8,402
Series Pre-A2 Preferred Shares 13,738 1,266,653 19,843 6,105
Series A Preferred Shares 71,311 6,300,306 98,697 27,386
Series B Preferred Shares 6,125 524,299 8,213 2,088
Series B+ Preferred Shares 75,151 5,972,197 93,557 18,406
276,967 24,440,890 382,877 105,910
To be repurchased
Class A Ordinary Shares 51,103 4,843,603 75,877 24,774
Class B Ordinary Shares 38,977 3,694,268 57,872 18,895
Series Pre-A1 Preferred Shares 18,560 1,723,288 26,997 8,437
Series Pre-A2 Preferred Shares 13,490 1,252,460 19,620 6,130
Series A Preferred Shares 70,033 6,229,713 97,592 27,559
Series B Preferred Shares 6,016 518,425 8,121 2,105
Series B+ Preferred Shares 73,843 5,905,281 92,509 18,666
272,022 24,167,038 378,588 106,566
548,989 48,607,928 761,465 212,476
Shares repurchased in 2021
For the ordinary and preferred shares that had been repurchased as at December 31, 2021, share-based
compensation expenses of USD105,910,000 was recognized during the year ended December 31, 2021, and
such amount represented the difference between (i) the repurchase consideration of USD382,877,000 and (ii)
the fair values of the relevant ordinary and preferred shares at the repurchase date of December 31, 2021.
APPENDIX I ACCOUNTANT’S REPORT
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Shares repurchased in 2022
For the abovementioned 4,843,603 Class A ordinary shares and 3,694,268 Class B ordinary shares, totalling
8,537,871 ordinary shares, share-based compensation expenses of USD43,669,000 was recognised for the year
ended December 31, 2021. The amount represented the difference between (i) the repurchase consideration of
USD133,749,000 which was recognized as financial liabilities – ordinary share redemption liabilities (Note
29) and (ii) the fair values of such ordinary shares as at December 31, 2021. These ordinary shares were
reclassified as treasury shares as at December 31, 2021 and repurchased in January and March 2022. The
ordinary shares reclassified as treasury shares were included in the calculation of earnings per share for the
year ended December 31, 2021 since such shares remained exposed to certain risks and rewards in relation to
the equity interests.
For the abovementioned 15,629,167 preferred shares, share-based compensation expenses of USD62,897,000
for the year ended December 31, 2021, and derivative financial liabilities at fair value through profit or loss
for the same amount as at December 31, 2021 (Note 29), were recognized in the Group’s consolidated financial
statements. The amount represented the difference between (i) the repurchase consideration of
USD244,839,000 and (ii) the carrying amount of financial liabilities at fair value through profit or loss in
relation to the relevant preferred shares. These preferred shares were repurchased in January and March 2022.
The abovementioned 24,167,038 Series C2 Preferred Shares were issued concurrently in January and March
2022.
In August 2022, the Company further entered into agreements with certain personals and third-party investors
to repurchase 1,386,996 Class A Ordinary Shares, 1,057,875 Class B Ordinary Shares, 493,474 Series Pre-A1
Preferred Shares, 358,650 Series Pre-A2 Preferred Shares, 1,783,917 Series A Preferred Shares, 148,454 Series
B Preferred Shares and 1,691,013 Series B+ Preferred Shares, and issued 6,920,379 Series C2 Preferred Shares
as the consideration. The difference between such consideration and the fair value of the repurchased shares
amounted to USD16,480,000, which was recognized as share-based compensation expenses during the year
ended December 31, 2022.
Fair value as at
the repurchase
date
Number of
shares
Repurchase
consideration
Share-based
compensation
expenses
USD’000 USD’000 USD’000
Class A Ordinary Shares 10,528 1,386,996 14,365 3,837
Class B Ordinary Shares 8,029 1,057,875 10,957 2,928
Series Pre-A1 Preferred Shares 3,836 493,474 5,111 1,275
Series Pre-A2 Preferred Shares 2,788 358,650 3,715 927
Series A Preferred Shares 14,251 1,783,917 18,476 4,225
Series B Preferred Shares 1,207 148,454 1,538 331
Series B+ Preferred Shares 14,557 1,691,013 17,514 2,957
55,196 6,920,379 71,676 16,480
Shares repurchased in 2023
In May 2023, the Company further entered into agreements with certain personals and third-party investors to
repurchase 3,351,470 Class A Ordinary Shares, 2,556,199 Class B Ordinary Shares, 1,192,408 Series Pre-A1
Preferred Shares, 866,626 Series Pre-A2 Preferred Shares, 4,310,571 Series A Preferred Shares, 358,716 Series
B Preferred Shares and 4,086,085 Series B+ Preferred Shares, and issued 16,722,075 Series C2 Preferred
Shares as the consideration. The difference between such consideration and the fair value of the repurchased
shares amounted to USD22,960,000, which was recognized as share-based compensation expenses during the
six months ended June 30, 2023.
APPENDIX I ACCOUNTANT’S REPORT
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Fair value as at
the repurchase
date
Number of
shares
Repurchase
consideration
Share-based
compensation
expenses
USD’000 USD’000 USD’000
Class A Ordinary Shares 25,843 3,351,470 31,166 5,323
Class B Ordinary Shares 19,712 2,556,199 23,771 4,059
Series Pre-A1 Preferred Shares 9,359 1,192,408 11,089 1,730
Series Pre-A2 Preferred Shares 6,802 866,626 8,059 1257
Series A Preferred Shares 34,309 4,310,571 40,086 5,777
Series B Preferred Shares 2,882 358,716 3,336 454
Series B+ Preferred Shares 33,638 4,086,085 37,998 4,360
132,545 16,722,075 155,505 22,960
(vi) Issuance of preferred shares
In December 2020, after entering into an agreement with a third-party investor, the Company raised Series B
financing with the total amount of USD100,000,000 by issuance of 22,462,293 Series B Preferred Shares. The
fair value of all the Series B Preferred Shares was approximately USD127,229,000, and the difference of
USD27,229,000 between the fair value and the total consideration received was considered as a compensation
for the unidentifiable service from such investor, and recognized as share-based compensation expenses.
Through October to December 2021, the Company entered into agreements with a number of third-party
investors to raise Series C1 financing, with the total amount of USD1,890,125,000 by issuance of 134,050,964
Series C1 Preferred Shares. The fair value of all the Series C1 Preferred Shares was approximately
USD1,899,435,000, and the difference between such fair value and the total consideration received with the
amount of USD9,310,000 was considered as a compensation for the unidentifiable service from such investors,
and recognized as share-based compensation expenses.
Through January to March 2022, the Company entered into agreements with a number of third-party investors
to further raise Series C1 financing, with the total amount of USD189,024,000 by issuance of 13,377,060
Series C1 Preferred Shares. The fair value of all the Series C1 Preferred Shares was approximately
USD205,514,000, and the difference between such fair value and the total consideration received with the
amount of USD16,490,000 was considered as a compensation for the unidentifiable service from such
investors, and recognized as share-based compensation expenses.
In May 2023, accompanying Series D financing, the Company entered into agreements with the existing Series
C1 and C2 Preferred Share holders to further issue 118,745,672 Series C1 Preferred Shares and 43,082,204
Series C2 Preferred Shares respectively at par value, representing both the exercise of relevant anti-dilution
arrangements included in the Company’s shareholder agreement and an additional compensation to such
shareholders, accordingly share-based compensation expenses with an amount of USD1,235,171,000 were
recognized, representing the fair value of the additional shares issued as compensation.
(vii) Issuance of JNT KSA shares
JNT Express KSA LLC (“JNT KSA”) is a non-wholly owned subsidiary of the Group operating in Saudi
Arabia, established in 2021. The shares of JNT KSA held by a third-party investor were entitled to an exit right
as below and were recognized as financial liabilities – redemption liabilities of shares of JNT KSA.
Exit right
After the fifth anniversary of the closing date and so long as JNT KSA maintains its business operation, the
abovementioned investor shall have an exit right for the purpose of disposing of all (but not less than all) of
its shares.
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The exit price will be subject to certain agreements between the Group and the third-party investor. Upon
receiving the exit right exercise notice, the Company shall issue to the abovementioned investor a number of
shares of the Company substantially equal to the result of (i) the exit price divided by (ii) the applicable share
price of the Company. If the Company is not publicly listed as at the exit date, the satisfactory information
evidencing the Company’s share price shall be provided to the exiting shareholder.
The fair value of the abovementioned shares of JNT KSA held by the third-party investor along with the exit
right entitled was USD23,980,000, being the present value of the expected redemption amount, which
exceeded the injected capital from the investor of USD20,000,000, the difference of USD3,980,000 was
considered as a compensation for the unidentifiable service from such investor, and recognized as share-based
compensation expenses for the year ended December 31, 2021.
The Company accounted such shares and exit right as a redemption liability at the amount of USD23,980,000
at initial recognition. As at June 30, 2023, the carrying amount of such redemption liability was
USD33,495,000 (As at December 31, 2022: USD30,583,000; As at December 31, 2021: USD25,458,000).
In April 2023, JNT KSA further entered into agreements with the abovementioned third-party shareholder to
issue a number of its shares with similar exit right, with total consideration of USD15,000,000. The fair value
of such shares to be issued approximates the abovementioned consideration, and as at June 30, 2023, such
consideration had been received and was accounted for as financial liabilities at fair value through profit or
loss, as the shares were still not issued.
(viii) Issuance of ordinary shares to network partners and regional sponsors under 2022 Incentive Plan
In 2022, the board of directors of the Company approved the establishment of the 2022 Incentive Plan for the
purpose of enhancing the bonding between the interests of the Group and relevant regional sponsors and
network partners.
Pursuant to the 2022 Incentive Plan, the maximum number of shares that may be issued shall be 38,000,000
Class A Ordinary Shares.
Shares granted to network partners
Ordinary shares granted to network partners with vesting schedule
On September 28, 2022, the Company granted certain network partners 6,330,100 ordinary shares under the
abovementioned plan with the total consideration of USD44,579,000. Pursuant to relevant award agreements,
the vesting schedule is as follows, on the condition that the network partners will remain in service.
Vesting date
Percentage of
shares vested
September 28, 2023 30%
September 28, 2024 30%
September 28, 2025 40%
Upon the termination of service, the unvested portion of ordinary shares shall be returned to the Company, and
the Company shall also refund the relevant purchase price.
Pursuant to the relevant agreements, the unvested portion of the ordinary shares are not entitled to any voting
power or dividends.
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A summary of activities of the shares granted under such plan is presented as follows:
Year ended
December 31, 2022
Six months ended
June 30, 2023
Number of
ordinary
shares
Weighted
average
grant-date
fair value
Number of
ordinary
shares
Weighted
average
grant-date
fair value
USD per
share
USD per
share
At beginning of the period – – 6,330,100 7.59
Granted 6,330,100 7.59 – –
V ested ––––
Forfeited or cancelled – – (22,000) 7.59
At end of the period 6,330,100 7.59 6,308,100 7.59
In addition to the abovementioned shares granted with considerations and vesting schedule listed above, the
2022 Incentive Plan also include certain number of ordinary shares to be granted with various vesting
arrangements and with nil consideration.
Ordinary shares granted to network partners with “fast-track” vesting schedule
On September 28, 2022, the Company granted certain network partners 90,000 ordinary shares at nil
consideration, the fair value of which was USD683,000. Pursuant to the relevant award agreements, these
ordinary shares will fully vest on September 28, 2023 on the condition that the network partners will remain
in service.
Upon the termination of service, the unvested portion of ordinary shares shall be returned to the Company.
Pursuant to the relevant agreements, the unvested portion of the ordinary shares are not entitled to any voting
power or dividends.
Ordinary shares granted to network partners with no vesting schedule
On September 28, 2022, the Company granted certain network partners 8,497,340 ordinary shares at nil
consideration, the fair value of which was USD64,498,000. Pursuant to the relevant award agreements, these
shares granted immediately vest upon the grant date.
As the shares granted to network partners in 2022 under the 2022 Incentive Plan were not linked to distinct
goods or services, such shares granted were considered as payments to customers. Revenue with a total amount
of approximately USD65,193,000 and USD1,336,000 was reduced for the year ended December 31, 2022 and
the six months ended June 30, 2023 respectively, representing the difference between the total consideration
received and the fair value of the abovementioned vested shares at the grant date, with a corresponding
increase in share-based compensation reserve.
Shares granted to regional sponsors
Ordinary shares granted to regional sponsors with no vesting schedule
On June 27, 2023, the Company granted certain regional sponsors 23,104,560 ordinary shares at nil
consideration. Pursuant to the relevant award agreements, these shares granted immediately vest upon the grant
date, with a fair value amount of USD158,442,000 and fully charged to share-based compensation expenses
during the six months ended June 30, 2023.
The Company appointed an external valuer to provide assistance in the valuation of the fair value of its
ordinary shares at the grant dates. The discounted cash flow method was adopted to determine the underlying
equity fair value of the Group and the equity allocation model was applied to determine the fair value of the
underlying ordinary shares of the Company. Key assumptions, such as discount rate and projections of future
performance, are required to be determined by the Company with best estimate.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 562 ---
27. SHARE PREMIUM AND OTHER RESERVES
(a) Share premium
Group
Total
USD’000
As at January 1, 2020 216,628
Issuance of Series A Preferred Shares (Note 25) 1,186,630
Reclassification of Series Pre-A1 Preferred Shares, Series Pre-A2 Preferred Shares
and Series A Preferred Shares (Note 29) (1,370,074)
As at December 31, 2020 33,184
As at January 1, 2021 33,184
Issuance of Class A Ordinary Shares pursuant to transactions with non-controlling
interests (Notes 25 and 35) 332,528
Business acquisition of Thai and Indonesian operating entities of regional sponsors
and others (Notes 25, 36 and 37) 332,485
Dividend (Note 43) (72,244)
Repurchase of ordinary shares (Notes 25, 26 and 29) (9,329)
Repurchase of ordinary shares – commitment (Notes 25, 26 and 29) (8,890)
As at December 31, 2021 607,734
As at January 1, 2022 607,734
Repurchase of ordinary shares (Notes 25, 26 and 29) (3,905)
As at December 31, 2022 603,829
As at January 1, 2023 603,829
Repurchase of ordinary shares (Notes 25, 26 and 29) (5,573)
As at June 30, 2023 598,256
(Unaudited)
As at January 1, 2022 607,734
Repurchase of ordinary shares (Notes 25, 26 and 29) –
As at June 30, 2022 607,734
APPENDIX I ACCOUNTANT’S REPORT
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--- page 563 ---
Company
Total
USD’000
As at January 1, 2020 217,954
Issuance of Series A Preferred Shares (Note 25) 1,186,630
Reclassification of Series Pre-A1 Preferred Shares, Series Pre-A2 Preferred Shares
and Series A Preferred Shares (Note 29) (1,370,074)
As at December 31, 2020 34,510
As at January 1, 2021 34,510
Issuance of Class A Ordinary Shares pursuant to transactions with non-controlling
interests (Notes 25 and 35) 332,528
Business acquisition of Thai and Indonesian operating entities of regional sponsors
and others (Notes 25, 36 and 37) 332,485
Dividend (Note 43) (72,244)
Repurchase of ordinary shares (Notes 25, 26 and 29) (9,329)
Repurchase of ordinary shares – commitment (Notes 25, 26 and 29) (8,890)
As at December 31, 2021 609,060
As at January 1, 2022 609,060
Repurchase of ordinary shares (Notes 25, 26 and 29) (3,905)
As at December 31, 2022 605,155
As at January 1, 2023 605,155
Repurchase of ordinary shares (Notes 25, 26 and 29) (5,573)
As at June 30, 2023 599,582
(Unaudited)
As at January 1, 2022 609,060
Repurchase of ordinary shares (Notes 25, 26 and 29) –
As at June 30, 2022 609,060
APPENDIX I ACCOUNTANT’S REPORT
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--- page 564 ---
(b) Other reserves
Group
Share-based
compensation
reserve
Translation
reserve Others Total
USD’000 USD’000 USD’000 USD’000
As at January 1, 2020 – (622) – (622)
Reclassification of Series Pre-A1
Preferred Shares, Series Pre-A2
Preferred Shares and Series A
Preferred Shares (Note 29) – – (315,612) (315,612)
Employee benefit expenses –
Share-based compensation
(Note 26) 161,073 – – 161,073
Transaction with non-controlling
interests – – 1,633 1,633
Currency translation differences – (12,806) – (12,806)
Other – – (134) (134)
As at December 31, 2020 161,073 (13,428) (314,113) (166,468)
As at January 1, 2021 161,073 (13,428) (314,113) (166,468)
Other comprehensive loss – resulted
from change of credit risk of
financial liabilities measured at
fair value – – (24,874) (24,874)
Issuance of convertible preferred
shares (Notes 25 and 29) – – (4) (4)
Share-based compensation (Note 26) 370,037 – – 370,037
Transaction with non-controlling
interests (Note 35) – – (514,661) (514,661)
Disposal of subsidiaries – – (604) (604)
Repurchase of ordinary shares and
convertible preferred shares
(Notes 25 and 26) – – (95,710) (95,710)
Repurchase of ordinary shares –
commitment (Notes 25 and 26) – – (81,190) (81,190)
Currency translation differences – (12,973) – (12,973)
Others – – 625 625
At December 31, 2021 531,110 (26,401) (1,030,531) (525,822)
APPENDIX I ACCOUNTANT’S REPORT
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--- page 565 ---
Share-based
compensation
reserve
Translation
reserve Others Total
USD’000 USD’000 USD’000 USD’000
As at January 1, 2022 531,110 (26,401) (1,030,531) (525,822)
Other comprehensive loss – resulted
from change of credit risk of
financial liabilities measured at
fair value – – 9,875 9,875
Share-based compensation (Note 26) 239,521 – – 239,521
Transaction with non-controlling
interests (Note 35) – – 6,025 6,025
Issuance of ordinary shares pursuant
to the 2022 Incentive Plan – – 71,886 71,886
Repurchase of ordinary shares and
convertible preferred shares
(Notes 25 and 26) – – (25,654) (25,654)
Issuance of ordinary shares of the
Company’s subsidiary pursuant to
the acquisition of the operating
entity of Brazilian regional
sponsors (Note 17) – – 36,323 36,323
Currency translation differences – (247,043) – (247,043)
Others – – 781 781
At December 31, 2022 770,631 (273,444) (931,295) (434,108)
Share-based
compensation
reserve
Translation
reserve Others Total
USD’000 USD’000 USD’000 USD’000
As at January 1, 2023 770,631 (273,444) (931,295) (434,108)
Other comprehensive loss – resulted
from change of credit risk of
financial liabilities measured at
fair value – – 5,233 5,233
Share-based compensation (Note 26) 10,295 – – 10,295
Transaction with non-controlling
interests (Note 35) – – 58,852 58,852
Issuance of ordinary shares pursuant
to the 2022 Incentive Plan – – 172,598 172,598
Repurchase of ordinary shares and
convertible preferred shares
(Notes 25 and 26) – – (39,981) (39,981)
Issuance of convertible preferred
shares (Note 26) – – (3) (3)
Currency translation differences – (16,873) – (16,873)
Others – – 189 189
At June 30, 2023 780,926 (290,317) (734,407) (243,798)
APPENDIX I ACCOUNTANT’S REPORT
– I-109 –


--- page 566 ---
Share-based
compensation
reserve
Translation
reserve Others Total
USD’000 USD’000 USD’000 USD’000
(Unaudited)
As at January 1, 2022 531,110 (26,401) (1,030,531) (525,822)
Other comprehensive loss – resulted
from change of credit risk of
financial liabilities measured at
fair value – – 9,182 9,182
Share-based compensation (Note 26) 239,521 – – 239,521
Transaction with non-controlling
interests (Note 35) – – 6,025 6,025
Currency translation differences – (154,420) – (154,420)
Others – – 54 54
At June 30, 2022 770,631 (180,821) (1,015,270) (425,460)
In February, August and December 2021, January, March, August and September 2022 (Note 26 (iv)), the
Company repurchased certain number of ordinary shares and preferred shares. For those repurchased ordinary
shares, the differences between the carrying values (historical cost) and the fair values of such repurchased
shares as at repurchase date were substantially recorded in other reserves, while the differences between the
fair values of such repurchased shares as at repurchase date and the relevant repurchase considerations of such
shares were substantially recorded as share-based compensation expenses. For those repurchased preferred
shares which were already carried at fair value and recognised as financial liabilities at fair value through
profit or loss, the difference between the carrying values (fair values) as at repurchase date and relevant
repurchase considerations of such shares were substantially recorded as share-based compensation expenses.
Company
Share-based
compensation
reserve Others Total
USD’000 USD’000 USD’000
As at January 1, 2020 – – –
Reclassification of Series Pre-A1 Preferred
Shares, Series Pre-A2 Preferred Shares and
Series A Preferred Shares (Note 29) – (315,612) (315,612)
Employee benefit expenses – Share-based
compensation (Note 26) 161,073 – 161,073
As at December 31, 2020 161,073 (315,612) (154,539)
APPENDIX I ACCOUNTANT’S REPORT
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--- page 567 ---
Share-based
compensation
reserve Others Total
USD’000 USD’000 USD’000
As at January 1, 2021 161,073 (315,612) (154,539)
Share-based compensation (Note 26) 354,657 – 354,657
Repurchase of ordinary shares and preferred
shares (Notes 25 and 26) – (95,710) (95,710)
Issuance of convertible preferred
shares (Notes 25 and 29) – (4) (4)
Other comprehensive loss – resulted from change
of credit risk of financial liabilities measured
at fair value – (24,780) (24,780)
Repurchase of ordinary shares – commitment
(Notes 25 and 26) – (81,190) (81,190)
As at December 31, 2021 515,730 (517,296) (1,566)
As at January 1, 2022 515,730 (517,296) (1,566)
Share-based compensation (Note 26) 239,521 – 239,521
Repurchase of ordinary shares and preferred
shares (Notes 25 and 26) – (25,654) (25,654)
Issuance of ordinary shares pursuant to the 2022
Incentive Plan (Note 26) – 71,886 71,886
Other comprehensive loss – resulted from change
of credit risk of financial liabilities measured
at fair value – 10,321 10,321
As at December 31, 2022 755,251 (460,743) 294,508
As at January 1, 2023 755,251 (460,743) 294,508
Share-based compensation (Note 26) 10,295 – 10,295
Repurchase of ordinary shares and preferred
shares (Notes 25 and 26) – (3) (3)
Issuance of ordinary shares pursuant to the 2022
Incentive Plan (Note 26) – 172,598 172,598
Other comprehensive loss – resulted from change
of credit risk of financial liabilities measured
at fair value – (39,981) (39,981)
As at June 30, 2023 765,546 (328,129) 437,417
Company
(Unaudited)
As at January 1, 2022 515,730 (517,296) (1,566)
Share-based compensation (Note 26) 239,521 – 239,521
Other comprehensive loss – resulted from change
of credit risk of financial liabilities measured
at fair value – (5,664) (5,664)
As at June 30, 2022 755,251 (522,960) 232,291
APPENDIX I ACCOUNTANT’S REPORT
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--- page 568 ---
28. BORROWINGS
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Non-current
Borrowings from financial
institutions (i) 6,001 21,714 1,020,897 1,010,871
Borrowings from related parties
(Note 39) 20,516 7,075 – –
Borrowings from third parties 10,400 273 – –
36,917 29,062 1,020,897 1,010,871
Current
Borrowings from financial
institutions (i) 4,807 41,025 74,480 143,963
Borrowings from related parties
(Note 39) 147,104 7,395 – –
Borrowings from third parties (ii) 255,232 11,545 3,000 7,600
407,143 59,965 77,480 151,563
Total borrowings 444,060 89,027 1,098,377 1,162,434
(i) As at December 31, 2020, 2021 and 2022 and June 30, 2023, borrowings from financial institutions of
USD10,808,000, USD30,581,000, USD1,095,377,000 and USD1,028,952,000 respectively, were
substantially secured by the pledges of bank deposits (Note 23), and property, plant and equipment
(Note 15), supported by guarantees from certain regional sponsors, as well as debentures over the items
including but not limited to the shares the Company holds in certain subsidiaries, certain receivables,
bank accounts, material intellectual property and other assets of the Group. The Group was in
compliance with the relevant borrowing covenants during the Track Record Period.
In addition, as at December 31, 2021, borrowings from financial institutions with an amount of
USD32,158,000 were assumed from the acquisition of Best Inc.’s express business in China (Note 38),
and were secured by the pledge of property, plant and equipment with carrying amount of
USD14,702,000 (Note 15) and supported by guarantees from by Best Inc.. Such borrowings were settled
in year 2022.
(ii) As at December 31, 2020, the outstanding Series A Preferred Share consideration from one of the Series
A Preferred Share investors was around USD236,862,000. Considering such investor provided a series
of outstanding borrowings to the Group’s subsidiaries in the PRC through its affiliates, generally with
a repayment term of 12 months and interest free, minimal credit risk was identified for the receivable
of Series A Preferred Share consideration (Note 22). The abovementioned outstanding Series A Preferred
Share consideration were received, and the corresponding outstanding borrowings were repaid in 2021.
(iii) As at December 31, 2020, 2021, and 2022 and June 30, 2023, the borrowings were generally due within
1 month to 5 years, and the borrowings from related parties and third parties were not secured. The
weighted average interest rates per annum as at December 31, 2020, 2021, and 2022 and June 30, 2023
were 2.94%, 3.32%, 6.29% and 6.69% respectively.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 569 ---
(iv) At December 31, 2020, 2021, and 2022 and June 30, 2023, the Group’s borrowings were repayable as
follows:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Within 1 year 407,143 59,965 77,480 151,563
Between 1 and 2 years 16,922 23,039 38,493 10,555
Between 2 and 5 years 19,995 6,023 982,404 997,448
Over 5 years – – – 2,868
444,060 89,027 1,098,377 1,162,434
The fair values of the borrowings were not materially different from their carrying amounts since the
interest payable on those borrowings is either close to current market rates or the borrowings are of a
short-term nature.
As at December 31, 2020, 2021, and 2022 and June 30, 2023, the Group has the following undrawn bank
facilities:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Undrawn bank facilities in
China – – 99,149 41,518
29. FINANCIAL LIABILITIES
(a) Financial liabilities at fair value through profit or loss
Group
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Convertible preferred shares of the
Company
– Series Pre-A1 Preferred Shares 271,150 785,363 537,970 485,536
– Series Pre-A2 Preferred Shares 197,129 570,846 391,012 352,892
– Series A Preferred Shares 1,217,407 2,963,550 1,998,989 1,782,713
– Series B Preferred Shares 127,229 254,591 169,395 149,881
– Series B+ Preferred Shares – 3,124,776 2,045,614 1,754,224
– Series C1 Preferred Shares – 2,056,644 1,503,377 2,055,034
– Series C2 Preferred Shares – 382,877 566,576 901,357
– Series D Preferred Shares – – – 200,000
APPENDIX I ACCOUNTANT’S REPORT
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--- page 570 ---
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Liabilities of the Company’s
subsidiaries
– Series A Preferred Shares of JET
Global Express Limited (“JET
Global”) – 285,762 552,134 554,390
– Redeemable Shares of JNT KSA
to be issued (Note 26 (vii)) – – – 15,000
– Convertible loans of JNT KSA – – – 10,016
Derivatives
– Commitment to repurchase
preferred shares – 62,897 – –
1,812,915 10,487,306 7,765,067 8,261,043
Company
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Convertible preferred shares of the
Company
– Series Pre-A1 Preferred Shares 271,150 785,363 537,970 485,536
– Series Pre-A2 Preferred Shares 197,129 570,846 391,012 352,892
– Series A Preferred Shares 1,217,407 2,963,550 1,998,989 1,782,713
– Series B Preferred Shares 127,229 254,591 169,395 149,881
– Series B+ Preferred Shares – 3,124,776 2,045,614 1,754,224
– Series C1 Preferred Shares – 2,056,644 1,503,377 2,055,034
– Series C2 Preferred Shares – 382,877 566,576 901,357
– Series D Preferred Shares – – – 200,000
Derivatives
– Commitment to repurchase
preferred shares – 62,897 – –
1,812,915 10,201,544 7,212,933 7,681,637
Convertible preferred shares of the Company
(i) Series B Preferred Shares
In December 2020, after entering into an agreement with a third-party investor, the Company raised
Series B financing with total consideration of USD100,000,000 by issuance of 22,462,293 Series B
Preferred Shares. The fair value of all the Series B Preferred Shares issued was around
USD127,229,000. The difference of USD27,229,000 between such fair value and the total consideration
received was recognized as share-based compensation expenses (Note 26 (vi)).
APPENDIX I ACCOUNTANT’S REPORT
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(ii) Series Pre-A1 Preferred Shares, Series Pre-A2 Preferred Shares and Series A Preferred Shares
Series Pre-A1 Preferred Shares, Series Pre-A2 Preferred Shares and Series A Preferred Shares were
initially recognized as equity. On December 30, 2020, along with the issuance of Series B Preferred
Shares, the Company promulgated an updated memorandum of association. According to the
memorandum of association, certain shareholders are able to discretionarily trigger the drag-along sale,
and in which all assets and funds of the Company legally available for distribution to the shareholders
shall be distributed. Consequently, Series Pre-A1 Preferred Shares, Series Pre-A2 Preferred Shares and
Series A Preferred Shares were reclassified as financial liabilities measured at fair value through profit
or loss (Note 25).
Series Pre-A1 Preferred Shares, Series Pre-A2 Preferred Shares and Series A Preferred Shares were
reclassified from equity as financial liabilities measured at fair value through profit or loss on December
30, 2020.
As at December 30, 2020, the effect of such reclassification is as follows:
USD’000
Carrying amount of Series Pre-A1 Preferred Shares 103,408
Carrying amount of Series Pre-A2 Preferred Shares 80,037
Carrying amount of Series A Preferred Shares 1,186,633
1,370,078
Less:
Nominal value of Series Pre-A1 Preferred Shares, Series Pre-A2 Preferred
Shares and Series A Preferred Shares remained in equity (4)
Fair value of Series Pre-A1 Preferred Shares (271,150)
Fair value of Series Pre-A2 Preferred Shares (197,129)
Fair value of Series A Preferred Shares (1,217,407)
Movement of other reserves (315,612)
(iii) Series B+ Preferred Shares
In February 2021, the Company entered into agreements with a number of third-party investors to raise
Series B+ financing, with total consideration of USD1,822,382,000 by issuance of 255,864,131 Series
B+ Preferred Shares. The fair value of Series B+ Preferred Shares at issuance was the same as the
consideration.
(iv) Series C1 and C2 Preferred Shares
Through October to December 2021, the Company entered into agreements with a number of third-party
investors to raise Series C1 financing, with total consideration of USD1,890,125,000 by issuance of
134,050,964 Series C1 Preferred Shares. The fair value of Series C1 Preferred Shares at issuance was
USD1,899,435,000. The difference of USD9,310,000 between the fair value and the total consideration
received was recognized as share-based compensation expenses (Note 26 (vi)).
Through January to March 2022, the Company entered into agreements with a number of third-party
investors to raise Series C1 financing, with total consideration of USD189,024,000 by issuance of
13,377,060 Series C1 Preferred Shares. The fair value of Series C1 Preferred Shares at issuance was
USD205,514,000. The difference of USD16,490,000 between the fair value and the total consideration
received was recognized as share-based compensation expenses (Note 26 (vi)).
On December 31, 2021, the Company entered into agreements with a number of third-party investors
to issue Series C2 Preference Shares, with total consideration of USD761,465,000 by issuance of
48,607,928 Series C2 Preferred Shares. As at December 31, 2021, 24,440,890 Series C2 Preferred
APPENDIX I ACCOUNTANT’S REPORT
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--- page 572 ---
Shares were issued at consideration of USD382,877,000 which was also the fair value of the shares at
issuance and as at December 31, 2021. The remaining 24,167,038 Series C2 Preferred Shares was issued
in January and March 2022 (Note 26 (v)).
In August 2022, the Company further entered into agreements with certain personals and third-party
investors to repurchase 1,386,996 Class A Ordinary Shares, 1,057,875 Class B Ordinary Shares, 493,474
Series Pre-A1 Preferred Shares, 358,650 Series Pre-A2 Preferred Shares, 1,783,917 Series A Preferred
Shares, 148,454 Series B Preferred Shares and 1,691,013 Series B+ Preferred Shares, and issued
6,920,379 Series C2 Preferred Shares as the consideration. The difference between such consideration
and the fair value of the repurchased shares amounted to USD16,480,000, which was recognized as
share-based compensation expenses during the year ended December 31, 2022. (Note 26 (v)).
In May 2023, the Company further entered into agreements with certain personals and third-party
investors to repurchase 3,351,470 Class A Ordinary Shares, 2,556,199 Class B Ordinary Shares,
1,192,408 Series Pre-A1 Preferred Shares, 866,626 Series Pre-A2 Preferred Shares, 4,310,571 Series A
Preferred Shares, 358,716 Series B Preferred Shares and 4,086,085 Series B+ Preferred Shares, and
issued 16,722,075 Series C2 Preferred Shares as the consideration. The difference between such
consideration and the fair value of the repurchased shares amounted to USD22,960,000, which was
recognized as share-based compensation expenses during the six months ended June 30, 2023. (Note 26
(v)).
(v) Series D Preferred Shares
In May 2023, the Company entered into agreements with a third-party investor to raise Series D
financing, with total consideration of USD200,000,000 by issuance of 26,143,791 Series D Preferred
Shares. The fair value of Series D Preferred Shares at issuance was the same as the consideration.
The Group designated Series B Preferred Shares, Series B+ Preferred Shares, Series C1 Preferred
Shares, Series C2 Preferred Shares and Series D Preferred Shares as financial liabilities at fair value
through profit or loss at initial recognition upon issuance of shares.
(vi) Rights, preferences and privileges of the Group’ s convertible preferred shares
The rights, preferences and privileges of the above convertible preferred shares are as follows:
Dividend rights
The directors of the Company may, upon approval by the majority of preferred shareholders, declare
dividends and distributions on shares in issue and authorise payment of funds under such dividends or
distributions out of the funds of the Company lawfully available therefor. All such payments shall be
distributed pro rata among all holders of the ordinary shares and preferred shares (on an as converted
basis).
Conversion rights
Each preferred share may, at the option of the holder thereof, be converted at any time after the date of
issuance of such preferred shares into Class A Ordinary Shares, or shall automatically be converted into
Class A Ordinary Shares upon the closing of an IPO of the Company.
The conversion ratio for the preferred shares to the Class A Ordinary Shares is 1:1 if no adjustments to
conversion price have occurred. As at June 30, 2023, each convertible preferred share is convertible into
one Class A Ordinary Share.
V oting rights
The holder of each Class A Ordinary Share issued and outstanding shall have one vote for each Class
A Ordinary Share held by such holder, the holder of each Class B Ordinary Share issued and outstanding
shall have twenty votes for each Class B Ordinary Share held by such holder, and the holder of each
preferred share shall be entitled to the number of votes equal to the whole number of Class A Ordinary
Shares into which such preferred share could be converted.
APPENDIX I ACCOUNTANT’S REPORT
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Notwithstanding the above, in the event that the voting power of the collective total amount of issued
and outstanding Class B Ordinary Shares ever falls lower than 70% of the entire voting power of the
total issued and outstanding shares of the Company, the number of votes allotted to each issued and
outstanding Class B Ordinary Share shall be automatically adjusted to the nearest whole number of votes
that would result in the issued and outstanding Class B Ordinary Shares holding at least 70% of the
entire voting power of the total issued and outstanding shares of the Company.
Liquidation preferences
Each holder of preferred shares and ordinary shares shall be entitled to receive for each series of
preferred shares and ordinary shares he or it holds on the preferential basis, prior and in preference to
any distribution of any of the assets or surplus funds of the Company to the holders of other series of
preferred shares and ordinary shares or any other class or series of shares by reason of their ownership
of such shares, the amount equal to one hundred percent (100%) of the respective applicable issue price,
plus (a) all interest that would accrue on the applicable issue price during the period from the relevant
issue date to the date of receipt by the holder thereof of the full liquidation amount at a rate of 6% per
annum, plus (b) declared but unpaid dividends for holders of ordinary shares and preferred shares,
respectively.
If the assets and funds available for distribution shall be insufficient to permit the payment to such
holders of the full preferred preference amount, the liquidation preference amount will be paid to the
holders of preferred shares and ordinary shares in the following order: first to holders of Series D
Preferred Shares, second to holders of Series C1 Preferred Shares, third to holders of Series C2
Preferred Shares, forth to holders of Series B+ Preferred Shares, fifth to holders of Series B Preferred
Shares, sixth to holders of Series A Preferred Shares, and lastly to the holders of Series Pre-A1 Preferred
Share, the holders of Series Pre-A2 Preferred Share and the holders of ordinary share (collectively, the
“Early Holders”). After distributing or paying in full the liquidation preference amount to all of the
holders of preferred shares and ordinary shares, the remaining assets of the Company available for
distribution to members, if any, shall be distributed to the holders of the preferred shares and ordinary
shares on a pro rata basis, based on the number of ordinary shares then held by each holder on an
as-converted basis.
Redemption rights
The Series B Preferred Shares, Series B+ Preferred Shares, Series C1 Preferred Shares, Series C2
Preferred Shares and Series D Preferred Shares are entitled the redemption right. These convertible
preferred shares issued by the Company are redeemable at a price equal to the applicable purchase price
plus all accrued interest and declared but unpaid dividends, payable in cash, at any time after the earliest
of (i) March 1, 2026, (ii) the occurrence of a material breach, or fraud or wilful misconduct by the Group
or founder parities in its performance of the transaction documents, which remains uncured for ninety
(90) days upon written notification from any holder of Series B Preferred Shares, Series B+ Preferred
Shares, Series C1 Preferred Shares, Series C2 Preferred Shares or Series D Preferred Shares, (iii) the
occurrence of a material adverse effect, or (iv) the request by any holder of Series B Preferred Shares,
Series B+ Preferred Shares, Series C1 Preferred Shares, Series C2 Preferred Shares or Series D
Preferred Shares exercising its redemption rights under (i), (ii) or (iii) to redeem all or a portion of the
equity securities held by it.
The redemption price payable on each of the abovementioned convertible preferred shares is the
applicable purchase price for each share, plus (a) all interest that would accrue on applicable purchase
price during the period from the relevant issue date to the date of receipt by the holder thereof of the
full redemption amount at a rate of 8% per annum, plus (b) all declared but unpaid dividends on the
abovementioned convertible preferred shares through the date of receipt by the holder of the full
redemption amount thereof.
The aforementioned redemption right is not given to the holders of Series A Preferred Share, the holders
of Series Pre-A1 Preferred Share, the holders of Series Pre-A2 Preferred Share and the holders of
ordinary share.
APPENDIX I ACCOUNTANT’S REPORT
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Financial liabilities of the Company’s subsidiaries
Series A Preferred Shares of JET Global
JET Global is the holding company of the Group’s business in Mexico, Egypt, Brazil and Middle East.
In July 2021, JET Global entered into agreements with third-party investors to raise Series A financing, with
total consideration of USD283,620,000 by issuance of 283,620,000 JET Global Series A Preferred Shares.
These financing proceeds were divided into four parts with certain investment allocation ratio, and allocated
among the businesses of the four regions, namely Mexico, Egypt, Brazil, and Middle East (“Allocated
Investment”). Major operations in such regions substantially started in 2022.
The rights, preferences, and privileges of the JET Global Series A Preferred Shares are as follows:
Dividend rights
The directors of JET Global may from time to time declare dividends (including interim dividends) and
distributions on JET Global’s shares. No dividend will be declared and paid on JET Global’s ordinary shares
unless and until a dividend is declared and paid on JET Global Series A Preferred Shares.
V oting rights
The holder of each share issued and outstanding, including JET Global’s ordinary share and JET Global Series
A Preferred Share, shall have one vote for each share held by such holder.
Liquidation preference
In the liquidation, dissolution or winding up of substantially all regional entities of a given region, prior and
in preference to any distribution of any of the available funds and assets to any other holders of shares, each
JET Global Series A Preferred Share holder shall be entitled to receive for each issued and outstanding JET
Global Series A Preferred Share, the amount equal to one hundred percent (100%) of the Allocated Investment,
plus (a) all interest that would accrue on the Allocated Investment during the period from the relevant issue
date to the date of receipt by the holder thereof of the full liquidation amount at a rate of 6% per annum, plus
(b) declared but unpaid dividends for such portion of preferred shares, respectively.
If the available funds and assets of liquidated regions are insufficient for the full payment to all JET Global
Series A Preferred Shareholders, then these available funds and assets shall be distributed among the JET
Global Series A Preferred Shareholders in proportion. After distributing or paying in full the liquidation
preference amount to JET Global Series A Preferred Shareholders, the remaining available funds, and assets,
if any, shall be distributed shall be distributed among the holders of the JET Global’s ordinary shares and
preferred shares on a pro rata basis, based on the number of ordinary shares then held by each holder on an
as-converted basis.
Conversion rights
Each preferred share may, at the option of the holder thereof, be converted at any time after the date of issuance
of such preferred shares into ordinary shares of JET Global, or shall automatically be converted into ordinary
shares of JET Global upon the closing of an IPO of JET Global.
The conversion ratio for the preferred shares to the ordinary shares is 1:1 if no adjustments to conversion price
have occurred. As at June 30, 2023, each convertible preferred share is convertible into one ordinary share of
JET Global.
Exit right
During two thirty-day periods following receipt of the annual regional financial statements of all
abovementioned regions after the fifth and sixth anniversary of the closing date, each JET Global Series A
Preferred Shareholders will have an exit right for the purpose of disposing of all (but not less than all) of their
JET Global Series A Preferred Shares.
The exit price will be subject to certain agreements between the group and the third-party investors.
APPENDIX I ACCOUNTANT’S REPORT
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Upon receiving the exit right exercise notice, the Company shall issue to the exiting JET Global Series A
Preferred Shareholders a number of shares of the Company substantially equal to the result of (i) the sum of
all regional exit prices for each unliquidated region, divided by (ii) the applicable share price of the Company.
If the Company is not publicly listed as at the exit date, the satisfactory information evidencing the Company’s
share price shall be provided to the exiting shareholder.
Convertible loans of JNT KSA
In April 2023, JNT KSA entered into agreements with its third-party shareholder to obtain a convertible loan
with the amount of USD 10,000,000, which approximated relevant fair value as at transaction date and was
accounted for as financial liabilities at fair value through profit or loss.
The convertible loan matures in 12 months after its issuance, the interest of which is 8% per annum, and the
term may be adjusted under certain circumstance. Typically, the entire principal amount may be converted into
the shares of JNT KSA upon the maturity date, with the conversion price as 80% of the fair market price per
share of JNT KSA as determined per relevant agreements.
Derivatives – repurchase of certain preferred shares
On December 31, 2021, accompanying with issuance of Series C2 Preferred Shares, the Company entered into
agreements with certain existing shareholders to repurchase totally 48,607,928 of the Company’s ordinary and
preferred shares (Note 26 (v)). As at December 31, 2021, there are still 1,723,288 Series Pre-A1 Preferred
Shares, 1,252,460 Series Pre-A2 Preferred Shares, 6,229,713 Series A Preferred Shares, 518,425 Series B
Preferred Shares and 5,905,281 Series B+ Preferred Shares outstanding to be repurchased. The expected excess
of the repurchase price over the fair value of these convertible preferred shares was recognized as financial
liabilities at fair value through profit or loss.
Accompanying the repurchase of the abovementioned convertible preferred shares in January and March 2022,
the relevant derivatives were derecognized concurrently. The fair value of relevant repurchased shares as at
transaction date approximated the fair value as at December 31, 2021.
The movements of financial liabilities at fair value through profit or loss are set out below:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Carrying amount at the beginning of
the year/period – 1,812,915 10,487,306 7,765,067
Reclassification of Series Pre-A1
Preferred Shares from equity
(Note 25 (4)) 271,150 – – –
Reclassification of Series Pre-A2
Preferred Shares from equity
(Note 25 (4)) 197,129 – – –
Reclassification of Series A
Preferred Shares from equity
(Note 25 (4)) 1,217,407 – – –
Issuance of Series B Preferred
Shares 127,229 – – –
Issuance of Series B+ Preferred
Shares – 1,822,381 – –
Issuance of Series C1 Preferred
Shares – 1,899,435 205,514 898,649
Issuance of Series C2 Preferred
Shares – 382,877 442,944 492,027
Issuance of Series D Preferred
Shares – – – 200,000
APPENDIX I ACCOUNTANT’S REPORT
– I-119 –


--- page 576 ---
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Repurchase of Series Pre-A1
Preferred Shares (Note 26 (v)) – (18,900) (21,685) (9,359)
Repurchase of Series Pre-A2
Preferred Shares (Note 26 (v)) – (13,738) (15,754) (6,802)
Repurchase of Series A Preferred
Shares (Note 26 (v)) – (71,311) (81,522) (34,309)
Repurchase of Series B Preferred
Shares (Note 26 (v)) – (6,125) (6,981) (2,882)
Repurchase of Series B+ Preferred
Shares (Note 26 (v)) – (75,151) (85,330) (33,638)
Issuance of Series A Preferred
Shares of JET Global – 283,620 – –
Redeemable shares of JNT KSA to
be issued – – – 15,000
Issuance of convertible loans of
JNT KSA – – – 10,000
Derivative – commitment to
repurchase
preferred shares (Note 26 (v)) – 62,897 (62,897) –
Changes in fair value – profit or
loss – 4,383,532 (3,086,653) (1,027,477)
Changes in fair value – other
comprehensive loss – 24,874 (9,875) (5,233)
Carrying amount at the end of the
year/period 1,812,915 10,487,306 7,765,067 8,261,043
Determination of fair value
With the assistance from an external valuer appointed by the Group, the Group applied the discounted cash
flow method to determine the underlying equity value of the Company and adopted option-pricing method and
equity allocation model to determine the fair value of the convertible preferred shares. Key assumptions are
set out as below:
As at December 31,
As at
June 30, Relationship of
unobservable inputs
to fair value2020 2021 2022 2023
Discount rate 17% 15% 14% 14% The higher the
discount rate, the
lower the fair value
Discount of lack of
marketability
(“DLOM”)
9%-17% 9%-13% 9%-13% 9%-12% The higher the
DLOM, the lower
the fair value
Expected volatility 41.29% 42.63% 49.61% 49.93% The higher the
expected volatility,
the lower the fair
value
APPENDIX I ACCOUNTANT’S REPORT
– I-120 –


--- page 577 ---
Discount rate was estimated by weighted average cost of capital as at each valuation date. The DLOM was
estimated based on the option-pricing method. Under the option pricing method, the cost of put option, which
can hedge the price change before the privately held share can be sold, was considered as a basis to determine
the lack of marketability discount. Expected volatility was estimated based on annualised standard deviation
of daily stock price return of comparable companies for the period before respective valuation date and with
similar span as time to expiration. In addition to the assumptions adopted above, the Company’s projections
of future performance were also factored into the determination of the fair value of the preferred shares on each
valuation date.
The estimated carrying amount of relevant preferred shares as at June 30, 2023 would have been USD
829,875,000 lower/USD980,284,000 higher, respectively, should the discount rate used in discounted cash
flow analysis be higher/lower by 100 basis points from management’s estimates. (2022: USD788,022,000
lower/USD903,958,000 higher; 2021: USD882,235,000 lower/USD1,075,386,000 higher; 2020:
USD115,717,000 lower/USD132,117,000 higher).
(b) Financial liabilities – ordinary share redemption liabilities
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Financial liabilities – ordinary share
redemption liabilities – 133,749 – –
Financial liabilities – redemption
liabilities of shares of JNT KSA
(Note 26 (vii)) – 25,458 30,583 33,495
On December 31, 2021, accompanying with issuance of Series C2 Preferred Shares, the Company entered into
agreements with certain existing shareholders to repurchase totally 48,607,928 their shares. As at December
31, 2021, there were 4,843,603 Class A Ordinary Shares and 3,694,268 Class B Ordinary Shares to be
repurchased, and the repurchase consideration was recognized as financial liabilities – ordinary share
redemption liabilities. Details are set out in Note 26 (v).
30. DEFERRED INCOME TAX
(i) Deferred income tax assets
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
The balance comprises temporary
differences attributable to:
Deductible tax losses 4,006 23,080 58,788 74,881
Lease liabilities 45,688 140,636 129,047 138,366
Provision and other temporary
difference 876 4,104 6,643 8,822
Total deferred tax assets 50,570 167,820 194,478 222,069
Net-off with deferred tax liabilities (45,569) (157,972) (151,371) (170,493)
Net deferred tax assets 5,001 9,848 43,107 51,576
APPENDIX I ACCOUNTANT’S REPORT
– I-121 –


--- page 578 ---
Deferred income taxes are calculated in full on temporary differences under the liability method using the tax
rates at which are expected to be applied at the time of reversal of the temporary differences. The analysis of
deferred income tax assets is as follows:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Deferred income tax assets
– to be recovered after 12 months 25,442 45,467 39,617 78,496
– to be recovered within 12
months 25,128 122,353 154,861 143,573
50,570 167,820 194,478 222,069
The gross movements in deferred income tax assets before offsetting during the Track Record Period are as
follows:
Deductible
tax losses
Lease
liabilities
Provision
and other
temporary
difference Total
USD’000 USD’000 USD’000 USD’000
As at January 1, 2020 – 15,777 879 16,656
Credit/(debit) to consolidated
income statement 3,948 29,778 (125) 33,601
Exchange differences 58 133 122 313
As at December 31, 2020 and
January 1, 2021 4,006 45,688 876 50,570
Acquisition of
subsidiaries (Notes 36, 37, 38) 23,080 – – 23,080
Credit/(debit) to consolidated
income statement (4,075) 94,248 3,102 93,275
Exchange differences 69 700 126 895
As at December 31, 2021 and
January 1, 2022 23,080 140,636 4,104 167,820
Credit/(debit) to consolidated
income statement 37,378 (8,479) 1,580 30,479
Exchange differences (1,670) (3,110) 959 (3,821)
As at December 31, 2022 58,788 129,047 6,643 194,478
Credit to consolidated income
statement 18,378 6,976 2,333 27,687
Exchange differences (2,285) 2,343 (154) (96)
As at June 30, 2023 74,881 138,366 8,822 222,069
APPENDIX I ACCOUNTANT’S REPORT
– I-122 –


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Deferred income tax assets are recognized to the extent that the realisation of the related tax benefit through
the future taxable profits is probable. Deferred income tax assets have not been recognized in respect of the
following items:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Tax losses 733,619 2,336,651 3,130,790 3,660,958
Deductible temporary differences 4,985 257,223 357,289 265,433
738,604 2,593,874 3,488,079 3,926,391
As at December 31, 2020 and December 31, 2021, the unrecognized tax losses primarily arise from the
Company’s subsidiaries in the PRC and other South-East Asia countries. As at December 31, 2022 and June
30, 2023, the unrecognized tax losses primarily arise from the Company’s subsidiaries in the PRC and other
South-East Asia countries.
The expiry dates of the unrecognized tax losses are as follows:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
2021 2 5–––
2022 15 72 – –
2023 18,611 18,611 18,611 –
2024 84,400 84,407 84,407 83,567
2025 620,089 760,014 444,786 381,885
2026 – 1,452,090 949,673 979,317
2027 4,450 396 1,552,579 1,591,385
2028 – – – 450,900
2031 – 3,358 3,358 3,358
2032 – – 5,895 5,895
2033 – – – 31,965
no expiry date 6,029 17,703 71,481 132,686
733,619 2,336,651 3,130,790 3,660,958
APPENDIX I ACCOUNTANT’S REPORT
– I-123 –


--- page 580 ---
(ii) Deferred income tax liabilities
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
The balance comprises temporary
differences attributable to:
Right-of-use assets 45,569 143,189 130,805 142,639
Depreciation and other temporary
difference 3,051 47,867 42,973 43,382
Total deferred tax liabilities 48,620 191,056 173,778 186,021
Net-off of deferred tax assets (45,569) (157,972) (151,371) (170,493)
Net deferred tax liabilities 3,051 33,084 22,407 15,528
Deferred income taxes are calculated in full on temporary differences under the liability method using the tax
rates at which are expected to be applied at the time of reversal of the temporary differences. The analysis of
deferred income tax liabilities is as follows:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Deferred income tax liabilities
– to be settled after 12 months 23,557 66,482 57,947 65,754
– to be settled within 12 months 25,063 124,574 115,831 120,267
48,620 191,056 173,778 186,021
The gross movements in deferred income tax liabilities before offsetting during the Track Record Period are
as follows:
Right-of-use
assets
Depreciation
and other
temporary
difference Total
USD’000 USD’000 USD’000
As at January 1, 2020 15,768 – 15,768
Debit to consolidated income statement 29,642 3,067 32,709
Exchange differences 159 (16) 143
As at December 31, 2020 and January 1, 2021 45,569 3,051 48,620
APPENDIX I ACCOUNTANT’S REPORT
– I-124 –


--- page 581 ---
Right-of-use
assets
Depreciation
and other
temporary
difference Total
USD’000 USD’000 USD’000
Acquisition of a subsidiary (Note 36, Note 37,
Note 38) – 40,631 40,631
Debit to consolidated income statement 96,867 3,492 100,359
Exchange differences 753 693 1,446
As at December 31, 2021 and January 1, 2022 143,189 47,867 191,056
Credit to consolidated income statement (9,574) (5,367) (14,941)
Exchange differences (2,810) 473 (2,337)
As at December 31, 2022 130,805 42,973 173,778
Credit to consolidated income statement 12,734 (1,707) 11,027
Exchange differences (900) 2,116 1,216
As at June 30, 2023 142,639 43,382 186,021
31. TRADE PAYABLES
The following is an aging analysis of the Group’s trade payables presented based on the invoice issuance date:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Within 3 months 212,619 505,960 434,660 404,373
3 to 6 months 9,028 19,200 26,512 44,560
6 to 9 months 1,253 28,286 14,360 13,074
9 to 12 months 1,891 22,903 5,103 3,782
Above 12 months 661 716 3,580 5,877
225,452 577,065 484,215 471,666
The carrying amounts of trade payables approximated their fair values as at the balance sheet dates.
APPENDIX I ACCOUNTANT’S REPORT
– I-125 –


--- page 582 ---
32. ACCRUALS AND OTHER PAYABLES
Group
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Cash on delivery related payables 137,017 95,047 156,666 167,553
Salary and welfare payables 62,336 219,607 163,637 169,079
Deposits 25,928 192,734 175,229 192,797
Tax payables (excluding Corporate
Income Tax) 24,284 48,830 40,999 37,237
Payables for purchase of long-term
assets 5,644 110,710 88,587 67,022
Consideration payable for
repurchase of ordinary shares and
preferred shares (Note 26 (v)) – 159,922 – –
Consideration received pursuant to
2022 Incentive Plan (Note
26(viii)) – – 37,886 23,991
Others 49,153 88,502 113,374 171,467
304,362 915,352 776,378 829,146
Company
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Consideration of repurchase of
ordinary shares and preferred
shares (Note 26 (v)) – 159,922 – –
Others – 1,979 6,127 2,420
– 161,901 6,127 2,420
APPENDIX I ACCOUNTANT’S REPORT
– I-126 –


--- page 583 ---
33. ADV ANCES FROM CUSTOMERS
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Advances from customers for
express delivery services 137,224 291,362 209,925 241,441
Advances from customers for express delivery services were mainly the advance payments from customers
which can be refunded as per request by customers.
As at December 31, 2020, 2021, and 2022 and June 30, 2023, the outstanding express delivery service orders
would generally be completed within ten days, while other types of orders generally within one month.
All contracts are for periods of one year or less. As permitted under IFRS 15, the transaction price allocated
to these unsatisfied contracts is not disclosed.
34. CASH FLOW INFORMATION
(a) Cash generated (used in)/generated from operations
The reconciliation from (loss)/profit for the year/period to cash (used in)/generated from operations is as
follows:
Year ended December 31,
Six months
ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
(Loss)/profit for the year/period (664,163) (6,192,258) 1,572,567 1,372,272 (666,769)
Adjustments for:
Income tax expense 45,530 73,126 10,763 (2,876) 6,579
Depreciation of property, plant and
equipment 39,270 104,444 227,910 111,813 104,383
Depreciation of right-of-use assets 56,000 113,878 257,176 128,015 133,964
Depreciation of investment
properties 1,228 266 154 81 27
Amortization of intangible assets 804 1,901 20,707 6,603 13,607
Impairment losses on financial
assets 9,488 41,320 37,219 25,033 11,814
(Reversal)/accrual of inventory
provisions (4) 3 103 33 2
Impairment losses on long-term
assets – 250,292 219,080 – –
Impairment losses on goodwill – – 117,502 – –
Finance income (1,965) (9,476) (22,002) (8,025) (11,367)
Finance costs 13,831 99,077 99,499 44,647 56,002
Other income (17,056) (82,542) (98,149) (48,080) (12,228)
Other (losses)/gains – net (258) (560) (1,263) 267 2,958
Share-based compensation 188,302 619,012 346,559 260,594 1,428,204
Net loss on disposal of property,
plant and equipment 37 1,424 1,873 (3,470) 21,306
Fair value change of financial
assets and liabilities at fair value
through profit or loss – 4,383,532 (3,050,694) (2,028,151) (1,020,747)
Share of results of associates 323 (1,208) 302 222 84
Foreign exchange (gains)/losses –
net (29,362) (19,887) 17,338 25,073 12,686
APPENDIX I ACCOUNTANT’S REPORT
– I-127 –


--- page 584 ---
Year ended December 31,
Six months
ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Movements in working capital
(Increase)/decrease in inventories (9,867) (8,622) 127 5,273 6,088
Increase in trade receivables (128,078) (4,322) (191,126) (18,875) (95,108)
(Increase)/decrease in prepayments,
other receivables, and other
assets (203,926) (105,520) (42,182) (37,233) 86,113
Increase/(decrease) in trade
payables 189,454 (305,366) (84,661) (183,190) (11,403)
Increase/(decrease) in accruals and
other payables 324,141 128,302 118,202 (18,162) (29,296)
Increase/(decrease) in advances
from customers 68,792 62,774 (73,643) (31,757) 29,030
(Placement)/return of restricted
cash – (49,950) 45,830 79,163 (16,021)
Cash (used in)/generated from
operations (117,479) (900,360) (470,809) (320,730) 49,908
(b) Net debt reconciliation
Net debt
As at December 31, As at June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Cash and cash equivalents 600,425 2,102,448 1,504,048 2,133,231 1,195,264
Restricted cash 928 125,970 79,725 46,721 96,301
Financial assets at fair value
through profit or loss 71,324 41,581 497,490 545,173 541,812
Borrowings (444,060) (89,027) (1,098,377) (1,040,707) (1,162,434)
Lease liabilities (175,017) (598,722) (492,666) (505,210) (556,142)
Financial liabilities at fair
value through profit or
loss (1,812,915) (10,487,306) (7,765,067) (8,785,417) (8,261,043)
Financial liabilities –
redemption liabilities of
shares of JNT KSA – (25,458) (30,583) (26,635) (33,495)
Financial liabilities –
ordinary share redemption
liabilities – (133,749) – – –
Net debt (1,759,315) (9,064,263) (7,305,430) (7,632,844) (8,179,737)
Cash and financial assets at
fair value through profit
or loss 672,677 2,269,999 2,081,263 2,725,125 1,833,377
Gross debt – fixed interest
rates (2,431,992) (11,334,262) (9,386,693) (10,357,969) (10,013,114)
Net debt (1,759,315) (9,064,263) (7,305,430) (7,632,844) (8,179,737)
APPENDIX I ACCOUNTANT’S REPORT
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This section sets out the movements in net debt for each of the years presented.
Liabilities from financing activities Other assets
Borrowings
Lease
liabilities
Financial
liabilities at
FVTPL
Financial
liabilities –
redemption
liabilities of
shares of
JNT KSA
Financial
liabilities at
FVTPL –
ordinary
share
redemption
liabilities
Cash and
cash
equivalents
Restricted
cash
Financial
assets at
FVTPL Total
As at January 1, 2020 (163,881) (61,063) – – – 97,173 586 6,752 (120,433)
Cash flows (260,090) 67,412 (100,000) – – 495,380 342 63,909 266,953
New leases entered – (169,150) – – –––– (169,150)
Interest expenses (7,824) (6,007) – – –––– (13,831)
Share-based compensation expense – – (27,229) – –––– (27,229)
Transfer from equity (Note 25, 29) – – (1,685,686) – –––– (1,685,686)
Foreign exchange adjustments (12,265) (6,209) – – – 7,872 – 663 (9,939)
As at December 31, 2020 and January 1,
2021 (444,060) (175,017) (1,812,915) – – 600,425 928 71,324 (1,759,315)
Cash flows 403,056 115,563 (3,966,126) (20,000) – 1,501,327 49,962 (30,954) (1,947,172)
New leases entered – (207,356) – – –––– (207,356)
Interest expenses (3,615) (13,860) – (1,478) –––– (18,953)
Repurchase of preferred shares (Note 29) – – 185,225 – –––– 185,225
Share-based compensation expense – – (9,310) (3,980) (43,669) – – – (56,959)
Outstanding proceeds of Series C2
Preferred Shares – – (159,922) – –––– (159,922)
Non-cash payment for Series C2 Preferred
Shares – – (222,955) – –––– (222,955)
Outstanding proceeds of Series C1
Preferred Shares – – (30,000) – –––– (30,000)
Derivative – commitment to repurchase
preferred shares – – (62,897) – –––– (62,897)
Fair V alue Change – – (4,383,532) – –––– (4,383,532)
Fair V alue Change – other comprehensive
loss – – (24,874) – –––– (24,874)
APPENDIX I ACCOUNTANT’S REPORT
– I-129 –


--- page 586 ---
Liabilities from financing activities Other assets
Borrowings
Lease
liabilities
Financial
liabilities at
FVTPL
Financial
liabilities –
redemption
liabilities of
shares of
JNT KSA
Financial
liabilities at
FVTPL –
ordinary
share
redemption
liabilities
Cash and
cash
equivalents
Restricted
cash
Financial
assets at
FVTPL Total
Recognition of ordinary share redemption
liabilities –––– (90,080) – – – (90,080)
Acquisition of subsidiaries (41,067) (336,714) – – – – 75,080 488 (302,213)
Foreign exchange adjustments (3,341) 18,66 2––– 6 9 6 – 7 2 3 16,740
As at December 31, 2021 and January 1,
2022 (89,027) (598,722) (10,487,306) (25,458) (133,749) 2,102,448 125,970 41,581 (9,064,263)
Cash flows (954,715) 299,986 (219,024) – – (498,246) (46,245) 490,979 (927,265)
New leases entered – (261,593) – – –––– (261,593)
Interest expenses (57,056) (37,318) – (5,125) –––– (99,499)
Lease modification – 108,46 1 – – –––– 108,461
Settlement of receivable of Series C2
Preferred Share consideration – – 30,000 – –––– 30,000
Repurchase of preferred shares (Note 29) – – 211,272 – –––– 2 1 1,272
Share-based compensation expense – – (16,490) – –––– (16,490)
Non-cash payment for Series C2 Preferred
Shares – – (442,944) – –––– (442,944)
Fulfilment of commitment to repurchase
preferred shares – – 62,897 – –––– 62,897
Fair V alue Change – – 3,086,648 – –––– 3,086,648
Fair V alue Change – other comprehensive
loss – – 9,880 – – – – (35,970) (26,090)
Repurchase of ordinary shares (Note 29) –––– 133,74 9––– 133,749
Acquisition of subsidiaries – (8,981) – – –––– (8,981)
Foreign exchange adjustments 2,421 5,50 1––– (100,154) – 900 (91,332)
As at December 31, 2022 (1,098,377) (492,666) (7,765,067) (30,583) – 1,504,048 79,725 497,490 (7,305,430)
APPENDIX I ACCOUNTANT’S REPORT
– I-130 –


--- page 587 ---
Liabilities from financing activities Other assets
Borrowings
Lease
liabilities
Financial
liabilities at
FVTPL
Financial
liabilities –
redemption
liabilities of
shares of
JNT KSA
Financial
liabilities at
FVTPL –
ordinary
share
redemption
liabilities
Cash and
cash
equivalents
Restricted
cash
Financial
assets at
FVTPL Total
As at January 1, 2023 (1,098,377) (492,666) (7,765,067) (30,583) – 1,504,048 79,725 497,490 (7,305,430)
Cash flows (33,586) 187,442 (225,000) – – (277,372) 16,576 51,046 (280,894)
New leases entered – (260,692) – – –––– (260,692)
Interest expenses (35,075) (19,015) – (2,912) –––– (57,002)
Lease modification – 47,15 6 – – –––– 47,156
Repurchase of preferred shares (Note 29) – – 86,990 – –––– 86,990
Share-based compensation expense – – (1,235,171) – –––– (1,235,171)
Non-cash payment for Series C2 Preferred
Shares – – (155,505) – –––– (155,505)
Fair V alue Change – – 1,027,477 – – – – (6,731) 1,020,746
Fair V alue Change – other comprehensive
loss – – 5,233 – –––– 5,233
Acquisition of subsidiaries – (667) – – – (21,698) – – (22,365)
Foreign exchange adjustments 4,604 (17,700) – – – (9,714) – 7 (22,803)
As at June 30, 2023 (1,162,434) (556,142) (8,261,043) (33,495) – 1,195,264 96,301 541,812 (8,179,737)
(Unaudited)
As at January 1, 2022 (89,027) (598,722) (10,487,306) (25,458) (133,749) 2,102,448 125,970 41,581 (9,064,263)
Cash flows (929,249) 145,529 (219,024) – – 98,551 (79,249) 510,225 (473,217)
New leases entered – (152,288) – – –––– (152,288)
Interest expenses (23,231) (18,239) – (1,177) –––– (42,647)
Lease modification – 112,39 7 – – –––– 1 12,397
Settlement of receivable of Series C2
Preferred Share consideration – – 30,000 – –––– 30,000
Repurchase of preferred shares (Note 29) – – 174,633 – –––– 174,633
Share-based compensation expense – – (16,490) – –––– (16,490)
Non-cash payment for Series C2 Preferred
Shares – – (371,268) – –––– (371,268)
APPENDIX I ACCOUNTANT’S REPORT
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--- page 588 ---
Liabilities from financing activities Other assets
Borrowings
Lease
liabilities
Financial
liabilities at
FVTPL
Financial
liabilities –
redemption
liabilities of
shares of
JNT KSA
Financial
liabilities at
FVTPL –
ordinary
share
redemption
liabilities
Cash and
cash
equivalents
Restricted
cash
Financial
assets at
FVTPL Total
Fulfilment of commitment to repurchase
preferred shares – – 62,897 – –––– 62,897
Fair V alue Change – – 2,031,959 – –––– 2,031,959
Fair V alue Change – other comprehensive
loss – – 9,182 – – – – (3,820) 5,362
Repurchase of ordinary shares (Note 29) –––– 133,74 9––– 133,749
Foreign exchange adjustments 800 6,11 3––– (67,768) – (2,813) (63,668)
As at June 30, 2022 (1,040,707) (505,210) (8,785,417) (26,635) – 2,133,231 46,721 545,173 (7,632,844)
APPENDIX I ACCOUNTANT’S REPORT
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--- page 589 ---
35. TRANSACTIONS WITH NON-CONTROLLING INTERESTS
The material transactions with non-controlling interests during the Track Record Period are as follows:
(a) Acquisition of non-controlling interests of Chinese subsidiaries
On April 30, 2021, the Group acquired additional 34% of the 49% non-controlling equity interests of 36 the
PRC subsidiaries with aggregated cash consideration of USD837,000, and the issuance of 32,508,856 Class A
Ordinary Shares of the Company with fair value of USD4.3065 per share.
Immediately prior to the purchase, the carrying amount of the 49% non-controlling interests in these the PRC
subsidiaries in aggregate was negative USD223,081,000. The Group recognized an increase in non-controlling
interests by USD154,791,000 and a decrease in equity attributable to owners of the Company by
USD295,627,000.
(b) Acquisition of non-controlling interests of the Malaysian subsidiary
On April 30, 2021, the Group acquired an additional 29.8% of the equity interests of the Group’s main
operating entity in Malaysia with the issuance of 25,669,206 Class A Ordinary Shares of the Company with
fair value of USD4.3065 per share.
Immediately prior to the purchase, the carrying amount of the 29.8% non-controlling interests in the Malaysian
subsidiary was USD5,444,000. The Group recognized a decrease in non-controlling interests by USD5,444,000
and a decrease in equity attributable to owners of the Company by USD105,101,000.
(c) Acquisition of non-controlling interests of the Vietnamese subsidiary
On April 30, 2021, through updating certain contractual arrangements, the Group indirectly obtained an
additional 38.0% of the equity interests of the Group’s main operating entity in Vietnam, with the issuance of
18,778,451 Class A Ordinary Shares of the Company with fair value of USD4.3065 per share.
Immediately prior to the purchase, the carrying amount of the 38.0% non-controlling interest in the Vietnamese
subsidiary was negative USD27,772,000. The Group recognized an increase in non-controlling interests by
USD27,772,000 and a decrease in equity attributable to owners of the Company by USD108,642,000.
(d) Acquisition of non-controlling interests of the Cambodia subsidiary
On April 30, 2021, the Group acquired an additional 28.0% of the equity interests of the Group’s main
operating entity in Cambodia with the issuance of 259,202 Class A Ordinary Shares of the Company with fair
value of USD4.3065 per share.
Immediately prior to the purchase, the carrying amount of the 28.0% non-controlling interest in the Cambodia
subsidiary was negative USD810,000. The Group recognized an increase in non-controlling interests by
USD810,000 and a decrease in equity attributable to owners of the Company by USD1,925,000.
The Class A Ordinary Shares issued in the abovementioned transactions were all registered in 2021.
(e) Acquisition of non-controlling interests of the Philippines subsidiary
Till April 10, 2023, the Group acquired an additional 59.0% of the equity interests of the Group’s main
operating entity in the Philippines by making additional capital injection of approximately USD10,864,000
into such entity. After the transaction, the Group holds 99% of the equity interests of the above mentioned
entity in the Philippines.
Immediately prior to the transaction, the carrying amount of the 59.0% non-controlling interest in the
Philippines subsidiary was around USD62,485,000. The Group recognized a decrease in non-controlling
interests by USD62,378,000 and an increase in equity attributable to owners of the Company by
USD62,378,000.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 590 ---
The effect of the transactions with non-controlling interests on the equity attributable to the owners of the
Company during the Track Record Period are summarised follows:
2020 Total
USD’000
Carrying amount of non-controlling interests debited/(credited) 914
Consideration received from non-controlling interests in cash – net 719
Total consideration 719
Excess of consideration received recognized in the transactions with non-controlling
interests reserve within equity 1,633
2021
Acquisition
of NCI of
the PRC
subsidiaries
Acquisition
of NCI of
Malaysia
subsidiary
Acquisition
of NCI of
Vietnam
subsidiary
Acquisition
of NCI of
Cambodia
subsidiary
Other
immaterial
transactions Total
USD’000 USD’000 USD’000 USD’000 USD’000 USD’000
Carrying amount of
non-controlling
interests
debited/(credited) (154,791) 5,444 (27,772) (810) 5,198 (172,731)
Consideration paid to
non-controlling
interests in cash (837) – – – (8,564) (9,401)
Consideration paid to
non-controlling
interests in ordinary
shares (139,999) (110,545) (80,870) (1,115) – (332,529)
Total consideration (140,836) (110,545) (80,870) (1,115) (8,564) (341,930)
Excess of
consideration paid
recognized in the
transactions with
non-controlling
interests reserve
within equity (295,627) (105,101) (108,642) (1,925) (3,366) (514,661)
With the assistance from an external valuer appointed by the Group, the Group applied the discounted cash
flow method to determine the underlying equity value of the Company and adopted option-pricing method and
equity allocation model to determine the fair value of the issued ordinary shares. Key assumptions are set out
as below:
Discount rate 17%
DLOM 15%
Expected volatility 41.83%
APPENDIX I ACCOUNTANT’S REPORT
– I-134 –


--- page 591 ---
2022
Equity interests
transferred to
management team
of the cross-
border business
(Note 26 (iii))
USD’000
Carrying amount of non-controlling interests credited (4,832)
Consideration received from non-controlling interests in cash 6,274
Share-based compensation expenses 4,583
Increase in other reserve 6,025
Six months ended June 30, 2022 (Unaudited)
Equity interests
transferred to
management team
of the cross-
border business
(Note 26 (iii))
USD’000
Carrying amount of non-controlling interests credited (4,832)
Consideration received from non-controlling interests in cash 6,274
Share-based compensation expenses 4,583
Increase in other reserve 6,025
Six months ended June 30, 2023
Acquisition of
NCI of the
Philippines
subsidiary
Other
immaterial
transactions Total
USD’000 USD’000 USD’000
Carrying amount of non-controlling interests
debited/(credited) 62,378 (3,526) 58,852
(Increase)/decrease in other reserve (62,378) 3,526 (58,852)
APPENDIX I ACCOUNTANT’S REPORT
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--- page 592 ---
36. BUSINESS COMBINATION OF OPERATING ENTITIES OF THAILAND REGIONAL SPONSORS
(a) Summary of acquisition
According to relevant agreements entered in 2021, the Company issued 11,210,471 Class A Ordinary Shares
for the Group to acquire 70% of the equity interests of 12 operating entities and 86.5% of one operating entity
of Thai regional sponsors (the “Thai Acquirees”) and to obtain control of each Thai Acquiree. The transactions
were completed on June 30, 2021.
Details of the companies acquired, and the purchase consideration are as follows:
Name of the acquirees
Transaction
Date
Ordinary
shares issued
Fair value of
ordinary
shares issued
USD’000
Thai Acquiree 1 June 30, 2021 907,206 4,135
Thai Acquiree 2 June 30, 2021 907,206 4,135
Thai Acquiree 3 June 30, 2021 907,206 4,135
Thai Acquiree 4 June 30, 2021 907,206 4,135
Thai Acquiree 5 June 30, 2021 907,206 4,135
Thai Acquiree 6 June 30, 2021 907,204 4,135
Thai Acquiree 7 June 30, 2021 907,207 4,135
Thai Acquiree 8 June 30, 2021 907,206 4,135
Thai Acquiree 9 June 30, 2021 907,206 4,135
Thai Acquiree 10 June 30, 2021 907,206 4,135
Thai Acquiree 11 June 30, 2021 907,204 4,135
Thai Acquiree 12 June 30, 2021 907,206 4,135
Thai Acquiree 13 June 30, 2021 324,002 1,471
Subtotal 11,210,471 51,091
Settlement of pre-existing net payables
to the Group 86,578
Total consideration 137,669
The pre-existing net payables of the acquirees to the Group is USD86,578,000 as at June 30, 2021. No gain
or loss is recognised on the settlement, because the net payables were effectively settled at the recorded
amount.
The fair value of the ordinary shares of the Company issued as part of the consideration paid for the Thai
Acquirees was USD4.5574 per share.
With the assistance from an external valuer appointed by the Group, the Group applied the discounted cash
flow method to determine the underlying equity value of the Company and adopted option-pricing method and
equity allocation model to determine the fair value of the issued ordinary shares of the Company. Key
assumptions are set out as below:
Discount rate 17%
DLOM 14%
Expected volatility 41.78%
APPENDIX I ACCOUNTANT’S REPORT
– I-136 –


--- page 593 ---
The assets and liabilities recognized as a result of the acquisition, excluding the pre-existing net payables of
the acquirees to the Group are as follows:
Fair value
USD’000
Cash and cash equivalents 5,930
Inventories 1,202
Trade receivables 10,851
Prepayments, other receivables, and other assets 4,309
Right-of-use assets 5,407
Property, plant and equipment 2,406
Intangible assets: customer relationship 2,192
Intangible assets: others 55
Other non-current assets 3,999
Trade Payables and other payables (3,293)
Lease liabilities (5,407)
Current income tax liabilities (1,074)
Borrowings (4,946)
Net identifiable assets acquired 21,631
Add: non-controlling deficits 17,718
Add: goodwill 98,320
Net assets acquired 137,669
The goodwill is attributable to the workforce and the expected future high profitability of the acquired
business. It will not be deductible for tax purposes.
(i) Acquired receivables
The fair value of acquired trade receivables is USD10,851,000. The gross contractual amount for trade
receivables due is USD12,075,000, with a loss allowance of USD1,224,000 recognised on acquisition.
(ii) Accounting policy of non-controlling interests
The Group recognises non-controlling interests in an acquired entity either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. This
decision is made on an acquisition-by-acquisition basis. For the non-controlling interests in the Thai
Acquirees, the Group elected to recognise the non-controlling interests at its proportionate share of the
acquired net identifiable assets.
(iii) Revenue and profit contribution
The acquired business contributed revenue of USD4,795,000, gross loss of USD26,357,000, loss before
tax of USD46,017,000 and net loss of USD46,017,000 to the Group for the period from June 30, 2021
to December 31, 2021.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 594 ---
If the acquisition had occurred on January 1, 2021, consolidated pro-forma revenue, gross loss, loss
before tax and net loss for the year ended December 31, 2021 would have been USD4,901,284,000,
USD547,870,000, USD6,129,906,000, and USD6,203,033,000 respectively. These amounts have been
calculated using the subsidiaries’ results and adjusting them for:
 differences in the accounting policies between the Group and the subsidiaries, and
 the additional depreciation and amortisation that would have been charged assuming the fair
value adjustments to property, plant and equipment and intangible assets had applied from
January 1, 2021, together with the consequential tax effects.
(b) Purchase consideration – cash inflow
USD’000
Outflow of cash to acquire subsidiary, net of cash acquired
Cash consideration –
Add: Balances acquired – cash 5,930
Net inflow of cash – investing activities 5,930
37. BUSINESS COMBINATION OF OPERATING ENTITIES OF INDONESIAN REGIONAL SPONSORS
(a) Summary of acquisition
According to relevant agreements entered in 2021, the Group had contractual agreements with an operating
entity and its relevant shareholders (terminated in 2022, as the Group obtained relevant equity interests), and
made capital injection totalling USD19,342,000 to 24 operating entities of certain Indonesian regional
sponsors (the “Indonesian Acquirees”), and the Company issued 55,273,897 Class A Ordinary Shares to such
Indonesian regional sponsors for the Group to acquire 70% of the equity interests and to obtain control of each
Indonesian Acquiree. The transactions were completed on August 31, 2021.
Details of the companies acquired, and the purchase considerations are as follows:
Name of the
Indonesian Acquirees
Acquisition
date
Number of
ordinary shares
issued
Fair value of
ordinary
shares issued
Cash
consideration
Total
consideration
USD’000 USD’000 USD’000
Indonesian Acquiree 1 August 31, 2021 797,261 4,059 81 4,140
Indonesian Acquiree 2 August 31, 2021 1,080,007 5,498 161 5,659
Indonesian Acquiree 3 August 31, 2021 540,004 2,749 81 2,830
Indonesian Acquiree 4 August 31, 2021 1,231,424 6,269 40 6,309
Indonesian Acquiree 5 August 31, 2021 1,080,007 5,498 40 5,538
Indonesian Acquiree 6 August 31, 2021 826,638 4,208 161 4,369
Indonesian Acquiree 7 August 31, 2021 1,016,935 5,177 20 5,197
Indonesian Acquiree 8 August 31, 2021 1,753,283 8,926 211 9,137
Indonesian Acquiree 9 August 31, 2021 543,460 2,767 48 2,815
Indonesian Acquiree 10 August 31, 2021 1,071,799 5,456 403 5,859
Indonesian Acquiree 11 August 31, 2021 1,768,403 9,003 484 9,487
Indonesian Acquiree 12 August 31, 2021 2,216,174 11,282 484 11,766
Indonesian Acquiree 13 August 31, 2021 1,972,093 10,040 48 10,088
Indonesian Acquiree 14 August 31, 2021 864,006 4,399 1,693 6,092
Indonesian Acquiree 15 August 31, 2021 6,223,865 31,685 3,224 34,909
Indonesian Acquiree 16 August 31, 2021 3,366,598 17,139 1,612 18,751
Indonesian Acquiree 17 August 31, 2021 4,464,965 22,731 2,466 25,197
APPENDIX I ACCOUNTANT’S REPORT
– I-138 –


--- page 595 ---
Name of the
Indonesian Acquirees
Acquisition
date
Number of
ordinary shares
issued
Fair value of
ordinary
shares issued
Cash
consideration
Total
consideration
USD’000 USD’000 USD’000
Indonesian Acquiree 18 August 31, 2021 7,916,451 40,302 1,755 42,057
Indonesian Acquiree 19 August 31, 2021 2,160,014 10,996 1,628 12,624
Indonesian Acquiree 20 August 31, 2021 2,160,014 10,996 484 11,480
Indonesian Acquiree 21 August 31, 2021 709,997 3,615 8 3,623
Indonesian Acquiree 22 August 31, 2021 862,278 4,390 20 4,410
Indonesian Acquiree 23 August 31, 2021 2,052,661 10,450 1,612 12,062
Indonesian Acquiree 24 August 31, 2021 2,193,279 11,166 967 12,133
Indonesian Acquiree 25 August 31, 2021 6,402,281 32,594 1,611 34,205
Subtotal 55,273,897 281,395 19,342 300,737
Settlement of pre-
existing net payables 11,363
Total purchase
consideration 312,100
The pre-existing net payables of the acquirees to the Group is USD11,363,000 as at August 31, 2021. No gain
or loss is recognised on the settlement, because the net payables were effectively settled at the recorded
amount.
The fair value of the ordinary shares of the Company issued as part of the consideration paid for the Indonesian
Acquirees was USD5.0909 per share.
With the assistance from an external valuer appointed by the Group, the Group applied the discounted cash
flow method to determine the underlying equity value of the Company and adopted option-pricing method and
equity allocation model to determine the fair value of the issued ordinary shares. Key assumptions are set out
as below:
Discount rate 16%
DLOM 14%
Expected volatility 41.13%
The assets and liabilities recognized as a result of the acquisition, excluding the pre-existing net payables of
the acquirees to the Group are as follows:
Fair value
USD’000
Cash and cash equivalents 109,193
Inventories 2,752
Trade Receivables 36,492
Prepayments, other receivables, and other assets 42,639
Right-of-use assets 19,959
Investment properties 468
Property, plant and equipment 33,975
Intangible assets: customer relationship 80,370
Intangible assets: others 134
Other non-current assets 171
Trade Payables (22,771)
APPENDIX I ACCOUNTANT’S REPORT
– I-139 –


--- page 596 ---
Fair value
USD’000
Advances from customers (227)
Accrued expenses and other payables (119,026)
Current income tax liabilities (18,729)
Borrowings (3,851)
Lease liabilities (2,592)
Employee benefit obligations (349)
Long-term payables (867)
Deferred tax liability (17,477)
Net identifiable assets acquired 140,264
Less: non-controlling interests (43,651)
Add: goodwill 215,487
Net assets acquired 312,100
The goodwill is attributable to the workforce and the high profitability of the acquired business. It will not be
deductible for tax purposes.
(i) Acquired receivables
The fair value of acquired trade receivables is USD36,492,000. The gross contractual amount for trade
receivables due is USD36,966,000, with a loss allowance of USD474,000 recognised on acquisition.
(ii) Accounting policy for non-controlling interests
The Group recognises non-controlling interests in an acquired entity either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. This
decision is made on an acquisition-by-acquisition basis. For the non-controlling interests in the
Indonesian Acquirees, the Group elected to recognise the non-controlling interests at its proportionate
share of the acquired net identifiable assets.
(iii) Revenue and profit contribution
The acquired business contributed revenue of USD12,167,000, gross profit of USD81,821,000, profit
before tax of USD69,352,000 and net profit of USD52,104,000 to the Group for the period from August
31, 2021 to December 31, 2021.
If the acquisition had occurred on January 1, 2021, consolidated pro-forma revenue, gross loss, loss
before tax and net loss for the year ended December 31, 2021 would have been USD4,957,201,000,
USD427,372,000, USD6,035,388,000 and USD6,109,451,000 respectively. These amounts have been
calculated using the subsidiaries’ results and adjusting them for:
 differences in the accounting policies between the Group and the subsidiaries, and
 the additional depreciation and amortisation that would have been charged assuming the fair
value adjustments to property, plant and equipment and intangible assets had applied from
January 1, 2021, together with the consequential tax effects.
APPENDIX I ACCOUNTANT’S REPORT
– I-140 –


--- page 597 ---
(b) Purchase consideration – cash inflow
USD’000
Outflow of cash to acquire subsidiary, net of cash acquired
Cash consideration (19,343)
Add: Balances acquired – cash 109,193
Net inflow of cash – investing activities 89,850
38. BUSINESS COMBINATION OF BEST INC.’S EXPRESS BUSINESS IN CHINA
(a) Summary of acquisition
On December 8, 2021, as to further enhance the Group’s scale and network in China, the Group acquired Best
Inc.’s express business in China with cash consideration of USD715,511,000, through obtaining 100% of the
equity interests of the main operating entity of such business and other relevant assets.
Details of the purchase consideration, the net assets acquired, and goodwill are as follows:
The assets and liabilities recognized as a result of the acquisition are as follows:
Fair value
USD’000
Cash and cash equivalents 11,042
Restricted cash 75,080
Financial assets at fair value through profit or loss 147
Inventories 1,088
Trade receivables 109,285
Prepayments, other receivables, and other assets 197,836
Right-of-use assets 297,971
Property, plant and equipment 558,389
Intangible assets: customer relationships 88,258
Other intangible assets 549
Other non-current assets 9,975
Trade payables and other payables (806,019)
Advances from customers (95,700)
Borrowings (34,134)
Lease liabilities (328,714)
Net identifiable liabilities acquired 85,053
Less: non-controlling interests –
Add: goodwill 630,458
Net assets acquired 715,511
The goodwill is attributable to the workforce and the expected future high profitability of the acquired
business. It will not be deductible for tax purposes.
APPENDIX I ACCOUNTANT’S REPORT
– I-141 –


--- page 598 ---
(i) Acquired receivables
The fair value of acquired trade receivables is USD109,285,000. The gross contractual amount for trade
receivables due is USD147,480,000, with a loss allowance of USD38,195,000 recognised on acquisition.
(ii) Revenue and profit contribution
The acquired business contributed revenue of USD196,958,000, gross loss of USD10,583,000, loss
before tax of USD39,348,000 and net loss of USD39,348,000 to the Group for the period from
December 8, 2021 to December 31, 2021.
If the acquisition had occurred on January 1, 2021, consolidated pro-forma revenue, gross loss, loss
before tax and net loss for the year ended December 31, 2021 would have been USD7,331,286,000,
USD732,207,000, USD6,422,307,000, and USD6,495,434,000 respectively.
In addition, if the abovementioned acquisitions of operating entities of Thailand regional sponsors (Note
36), operating entities of Indonesian regional sponsors (Note 37) and Best Inc.’s express business in
China (Note 38) had occurred on January 1, 2021, consolidated pro-forma revenue, gross loss, loss
before tax and net loss for the year ended December 31, 2021 would have been USD7,486,172,000,
USD617,961,000, USD6,375,067,000, and USD6,449,131,000 respectively.
These amounts have been calculated using the subsidiaries’ results and adjusting them for:
 differences in the accounting policies between the Group and the subsidiaries, and
 the additional depreciation and amortisation that would have been charged assuming the fair
value adjustments to property, plant and equipment and intangible assets had applied from
January 1, 2021, together with the consequential tax effects.
(b) Purchase consideration – cash outflow
USD’000
Outflow of cash to acquire subsidiary, net of cash acquired
Cash consideration 715,511
Less: Balances acquired
Cash (11,042)
Net outflow of cash – investing activities 704,469
39. RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party
or exercise significant influence over the other party in making financial and operational decisions. Parties are
also considered to be related if they are subject to common control.
Members of key management and their close family members of the Group are also considered as related
parties.
The following significant transactions were carried out between the Group and its related parties during the
periods presented. In the opinion of the directors of the Company, the related party transactions were carried
out in the normal course of business and at terms negotiated between the Group and the respective related
parties.
APPENDIX I ACCOUNTANT’S REPORT
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(a) Names and relationships with related parties
The following companies are significant related parties of the Group that had transactions and/or balances with
the Group during the Track Record Period.
Name of related party Relationship with the Group
Galaxy Brilliant Inc. Controlled by Mr. Jet Li
Constant Talent Limited Controlled by Mr. Jet Li
Jet Commerce Group Controlled by Mr. Jet Li
Jie Business Sdn Bhd Controlled by Mr. Jet Li
Windfall T&L SPC Under significant influence of Mr. Jet Li
J&T Courier Service Sdn Bhd Under significant influence of Mr. Jet Li
Honour Victory Holdings Limited Under significant influence of Mr. Jet Li
Jumbo Link Holdings Limited Under significant influence of Mr. Jet Li
Shanghai Huisen Zhilian Express Co., Ltd Under significant influence of Mr. Jet Li
Huisen Global Limited Under significant influence of Mr. Jet Li
BNT Express Co., Ltd Controlled by a member of key management personnel
(before acquisition) (Note 36)
Guangdong OPPO Mobile
Telecommunications Corp.,Ltd.
Controlled by a member of key management personnel
(before the end of appointment of the member
of key management personnel)
PT. Semut Merah Squad Controlled by a member of key management personnel
(before acquisition) (Note 37)
Suzhou BBK Investment Development
Co., Ltd.
Controlled by a member of key management personnel
(b) Transactions with related parties
Save as disclosed in Note 24 of this report, related party transactions of the Group are listed as follows:
(i) Borrowings received from related parties
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Guangdong OPPO Mobile
Telecommunications
Corp., Ltd. 118,50 9––––
Honour Victory Holdings
Limited 6,099 3,23 6–––
Others – 4,75 6–––
124,608 7,99 2–––
APPENDIX I ACCOUNTANT’S REPORT
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(ii) Repayment of borrowings from related parties
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Guangdong OPPO Mobile
Telecommunications
Corp., Ltd. – 124,02 5–––
Honour Victory Holdings
Limited – 23,422 5,651 5,651 –
Jumbo Link Holdings
Limited – 9,775 4,659 4,659 –
Suzhou BBK Investment
Development
Co., Ltd. 7,40 7––––
Others 1,057 2,444 3,843 3,843 –
8,464 159,666 14,153 14,153 –
(iii) Loans to related parties
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Shanghai Huisen Zhilian
Express Co., Ltd 52,292 80,43 0–––
Huisen Global Limited – 24,200 320,000 320,000 –
Galaxy Brilliant Inc. – 21,60 0–––
Jet Commerce Group 45 0––––
Others 4,857 1,92 8–––
57,599 128,158 320,000 320,000 –
(iv) Collection of loans to related parties
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Huisen Global Limited – – 344,200 344,200 –
Shanghai Huisen Zhilian
Express Co., Ltd – – 135,424 138,044 –
Galaxy Brilliant Inc. – 6,200 15,400 15,400 –
Others 1,004 411 8,777 7,883 –
1,004 6,611 503,801 505,527 –
APPENDIX I ACCOUNTANT’S REPORT
– I-144 –


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(v) Interest expenses on borrowings from related parties
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Guangdong OPPO Mobile
Telecommunications
Corp., Ltd. 4,218 17 8–––
Others 625 464 17 8 –
4,843 642 17 8 –
(vi) Interest income on loans to related parties
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Shanghai Huisen Zhilian
Express Co., Ltd 1,198 4,009 8,552 3,754 –
Others 107 403 1,623 1,334 –
1,305 4,412 10,175 5,088 –
(vii) Rendering of services
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Jie Business Sdn Bhd 967 2,630 2,450 1,310 886
Jet Commerce Group – – 1,655 201 14
PT. Semut Merah Squad 19,361 3,466 N/A N/A N/A
BNT Express Co., Ltd 3,655 2,325 N/A N/A N/A
Others 2,585 5,031 2,820 1,269 719
26,568 13,452 6,925 2,780 1,619
APPENDIX I ACCOUNTANT’S REPORT
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(viii) Receiving of services
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
J&T Courier Service Sdn
Bhd – – 4,790 384 238
PT. Semut Merah Squad 12,379 57,899 N/A N/A N/A
BNT Express Co., Ltd 10,344 3,723 N/A N/A N/A
Others 2,127 2,402 188 52 404
24,850 64,024 4,978 436 642
(ix) Other transactions
During 2021, a series of transactions were completed by the Group (Note 35, Note 36, Note 37), and
part of the transaction consideration was paid to a member of key management personnel, who is also
a regional sponsor, as follows:
USD’000
Acquisition of Minority interests in Subsidiaries in China and South-East Asia 16,222
Business acquisition of entities of the regional sponsor 19,255
35,477
Through January to March 2022, the Group invested around USD60,000,000 in Windfall T&L SPC, a
private equity fund focusing on investing in industries such as logistics and its upstream and
downstream industry chains, under significant influence of Mr. Jet Li. The contractual term of
investment is between 3-5 years. As the Group does not have significant influence over such fund, the
Group accounted such investment as financial assets at fair value through profit or loss. (Note 24)
(c) Balances with related parties
(i) Borrowings
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
– Non-trade
Honour Victory Holdings
Limited 24,654 5,694 – –
Jumbo Link Holdings
Limited 9,947 4,933 – –
Constant Talent Limited 3,755 3,843 – –
Guangdong OPPO Mobile
Telecommunications
Corp., Ltd. 126,777 N/A N/A N/A
Others 2,48 7–––
167,620 14,470 – –
APPENDIX I ACCOUNTANT’S REPORT
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(ii) Loan receivables
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
– Non-trade
Shanghai Huisen Zhilian
Express Co., Ltd 57,166 145,688 – –
Jet Commerce Group 8,033 7,967 – –
Huisen Global Limited – 24,200 – –
Galaxy Brilliant Inc. – 15,400 – –
BNT Express Co., Ltd 3,854 N/A N/A N/A
Others 1,567 408 – –
Subtotal 70,620 193,663 – –
Less: allowance for
credit losses (1,116) (2,974) – –
69,504 190,689 – –
(iii) Bond receivables
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
– Non-trade
Huisen Global Limited
(Note 24) – – 428,678 483,711
(iv) Receivables from related parties
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Trade receivables
PT. Semut Merah Squad 2,326 N/A N/A N/A
BNT Express Co., Ltd 2,046 N/A N/A N/A
Others 217 897 589 449
Subtotal 4,589 897 589 449
Less: allowance for credit
losses (161) (41) (20) (16)
4,428 856 569 433
APPENDIX I ACCOUNTANT’S REPORT
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--- page 604 ---
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Other receivables
–Non-trade
BNT Express Co., Ltd 4,024 N/A N/A N/A
Shanghai Huisen Zhilian
Express Co., Ltd 1,53 3–––
Others 663 316 319 146
Subtotal 6,220 316 319 146
Less: allowance for credit
losses (75) (4) (5) (3)
6,145 312 314 143
(v) Payables to related parties
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Trade payables
BNT Express Co., Ltd 1,32 4–––
Others 520 21 115 56
1,844 21 115 56
Other payables
– Non-trade
Honour Victory Holdings
Limited – – 6,605 –
J&T Courier Service Sdn
Bhd – 2,340 2,461 –
Others 612 500 7 2
612 2,840 9,073 2
Except for the abovementioned bond receivables, the remaining outstanding non-trade balances with
related parties were subsequently settled by the date of this report.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 605 ---
(d) Key management compensation
Key management includes directors (executive and non-executive) and the senior management of the Group.
The compensation paid or payable to key management for employee services is shown below:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Salaries, bonuses and fees 2,721 20,031 11,040 5,440 4,997
Pension cost – defined contribution
plans 8 51 45 22 20
Share-based compensation 161,073 114,085 223,773 223,773 8,502
163,802 134,167 234,858 229,235 13,519
(e) Terms and conditions
Terms for loans to related parties were negotiated on a case-by-case basis. During the Track Record Period,
generally the Group entered into loan agreements with related parties with terms substantially ranging from
8 months to 3 years, with annual interest rates ranging from 0.4% to 7%.
The loans from the related parties generally mature between 1 to 3 years are repayable in a lump sum at
maturity. The annual interest rate on these loans is generally fixed at a rate below 5%.
Services were rendered to or received from the related parties during the Track Record Period based on normal
commercial terms, conditions and market rates that would be available to third parties and further negotiations.
40. COMMITMENT
(a) Capital commitments
Capital expenditure contracted for as at December 31, 2020, 2021 and 2022 and June 30, 2023 but not yet
incurred is as follows:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Buildings – – – 31,325
Right-of-use asset – Land in the
PRC – 22,052 11,659 11,238
V ehicles – – – 2,524
– 22,052 11,659 45,087
APPENDIX I ACCOUNTANT’S REPORT
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(b) Short-term lease commitments
The Group leases certain warehouses and vehicles under non-cancellable short-term lease agreements. The
lease terms are generally within one year.
The Group’s future aggregate minimum lease payments under such non-cancellable short-term leases are as
follows:
As at December 31,
As at
June 30,
2020 2021 2022 2023
USD’000 USD’000 USD’000 USD’000
Within one year 9,675 22,575 41,733 20,285
41. BENEFITS AND INTERESTS OF DIRECTORS
(a) Directors’ emoluments
The remuneration paid or payable to the directors of the Company (including emoluments for services as
employee/directors of the group entities prior to becoming the directors of the Company) during the years
ended December 31, 2020, 2021, and 2022 and the six months ended June 30, 2022 and 2023 was as follows.
Year ended December 31, 2020
Name Fees
Salaries and
bonuses
Pension cost
– defined
contribution
plans
Share-based
compensation Total
USD’000 USD’000 USD’000 USD’000 USD’000
Executive Director:
Mr. Jet Jie Li (i) – 1,642 5 161,073 162,720
Non-executive Directors:
Ms. Alice Y u-fen Cheng (ii) 7 0––– 7 0
Mr. Y uan Zhang (ii) –––––
Ms. Qinghua Liao (ii) –––––
Other directors (iv) – 1 1 3–– 1 1 3
70 1,755 5 161,073 162,903
APPENDIX I ACCOUNTANT’S REPORT
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--- page 607 ---
Name
Year ended December 31, 2021
Fees
Salaries and
bonuses
Pension cost
– defined
contribution
plans
Share-based
compensation Total
USD’000 USD’000 USD’000 USD’000 USD’000
Executive Director:
Mr. Jet Jie Li (i) – 11,932 23 80,223 92,178
Non-executive Directors:
Ms. Alice Y u-fen Cheng (ii) 1 2 0––– 1 2 0
Mr. Y uan Zhang (ii) –––––
Ms. Qinghua Liao (ii) –––––
Other directors (iv) – 762 12 3,988 4,762
120 12,694 35 84,211 97,060
Name
Year ended December 31, 2022
Fees
Salaries and
bonuses
Pension cost
– defined
contribution
plans
Share-based
compensation Total
USD’000 USD’000 USD’000 USD’000 USD’000
Executive Director:
Mr. Jet Jie Li (i) – 4,349 11 223,773 228,133
Non-executive Directors:
Ms. Alice Y u-fen Cheng (ii) –––––
Mr. Y uan Zhang (ii) –––––
Ms. Qinghua Liao (ii) –––––
Other directors (iv) – 656 10 – 666
– 5,005 21 223,773 228,799
APPENDIX I ACCOUNTANT’S REPORT
– I-151 –


--- page 608 ---
Six months ended June 30, 2022 (Unaudited)
Name Fees
Salaries and
bonuses
Pension cost
– defined
contribution
plans
Share-based
compensation Total
USD’000 USD’000 USD’000 USD’000 USD’000
Executive Director:
Mr. Jet Jie Li (i) – 2,034 5 223,773 225,812
Non-executive Directors:
Ms. Alice Y u-fen Cheng (ii) –––––
Mr. Y uan Zhang (ii) –––––
Ms. Qinghua Liao (ii) –––––
Other directors (iv) – 317 5 – 322
– 2,351 10 223,773 226,134
Six months ended June 30, 2023
Name Fees
Salaries and
bonuses
Pension cost
– defined
contribution
plans
Share-based
compensation Total
USD’000 USD’000 USD’000 USD’000 USD’000
Executive Director:
Mr. Jet Jie Li (i) – 1,894 5 8,502 10,401
Non-executive Directors:
Ms. Alice Y u-fen Cheng (ii) –––––
Mr. Y uan Zhang (ii) –––––
Ms. Qinghua Liao (ii) –––––
Other directors (iv) – 250 4 – 254
– 2,144 9 8,502 10,655
Notes:
(i) Mr. Jet Jie Li was appointed as executive director, Chief Executive Officer of the Company and
chairman of the Board of the Company on May 15, 2020.
(ii) Ms. Alice Y u-fen Cheng and Mr. Y uan Zhang were appointed as non-executive directors of the Company
on May 15, 2020. Ms. Qinghua Liao was appointed as non-executive director of the Company on March
3, 2022.
(iii) The appointment of Mr. Erh Fei Liu, Mr. Peng Shen and Mr. Charles Zhaoxuan Y ang as our independent
non-executive Directors will take effect on the Listing Date. During the years ended December 31, 2020,
2021, and 2022 and the six months ended June 30, 2022 and 2023, the independent non-executive
directors have not yet been appointed and did not receive any directors’ remuneration in the capacity of
independent non-executive directors of the Company.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 609 ---
(iv) Ms. Y ang Lulu, Mr. Zhu He, Mr. Qiu Y anjie, Mr. Chen Mingyong, Mr. Li Leheng and Mr. Chen Zhiyi
were appointed as directors on October 24, 2019, May 15, 2020, May 15, 2020, May 15, 2020, May 15,
2020 and February 26, 2021 and resigned on May 15, 2020, March 22, 2021, March 22, 2021, September
1, 2021, September 1, 2021 and March 3, 2022, respectively.
(b) Directors’ retirement and termination benefits
No retirement benefits were paid to or receivable by any directors in respect of their other services in
connection with the management of the affairs of the Company or its subsidiaries’ undertaking during the Track
Record Period.
No payment was made to the directors as compensation for early termination of appointment during the Track
Record Period.
(c) Consideration provided to third parties for making available directors’ services
No consideration was provided to third parties for making available directors’ services at the end of each
reporting period or at any time during the Track Record Period.
(d) Information about loans, quasi-loans, and other dealings in favour of directors, their controlled bodies,
and connected entities
Save as disclosed in the Note 39, there were no loans, quasi-loans, and other dealings in favour of directors,
their controlled bodies corporate and connected entities at the end of each reporting period or at any time
during the Track Record Period.
(e) Directors’ material interests in transactions, arrangements, or contracts
Save as disclosed in the Note 39, no significant transactions, arrangements, and contracts in relation to the
Group’s business to which the Company was a party and in which a director of the Company had a material
interest, whether directly or indirectly, subsisted at the end of each reporting period or at any time during the
Track Record Period.
42. FIVE HIGHEST PAID EMPLOYEES
The five highest paid employees include one director whose remuneration is set out in Note 41 for each of the
years ended December 31, 2020, 2021, and 2022 and the six months ended June 30, 2022 and 2023. All of these
individuals including that director have not received any emoluments from the Group as an inducement to join
or upon joining the Group or as compensation for the loss of office during the Track Record Period. None of
the directors, the CEO and employees waived or agreed to waive any emoluments during the Track Record
Period. The emoluments payable to the remaining four individuals, who are neither a director nor chief
executive of the Company, during the Track Record Period, are as follows:
Year ended December 31, Six months ended June 30,
2020 2021 2022 2022 2023
USD’000 USD’000 USD’000 USD’000 USD’000
(Unaudited)
Salaries, bonuses and fees 11,817 14,127 7,958 4,199 4,167
Pension cost – defined contribution
plans 32 38 43 23 16
Welfare, medical and other benefits – 28 32 26 12
Share-based compensation – 42,919 15,748 15,748 –
11,849 57,112 23,781 19,996 4,195
APPENDIX I ACCOUNTANT’S REPORT
– I-153 –


--- page 610 ---
The number of the highest paid employees who are not the directors of the Company whose remuneration fell
within the following bands is as follows:
Year ended December 31,
Six months ended
June 30,
2020 2021 2022 2022 2023
(Unaudited)
Emolument bands (in HK dollar)
HK$6,500,001 to HK$7,000,000 ––––1
HK$7,500,001 to HK$8,000,000 ––––2
HK$9,000,001 to HK$9,500,000 –––1–
HK$10,000,001 to HK$10,500,000 ––––1
HK$10,500,001 to HK$11,000,000 –––1–
HK$17,000,001 to HK$17,500,000 ––1––
HK$18,500,001 to HK$19,000,000 1––––
HK$20,000,001 to HK$20,500,000 1––––
HK$21,500,001 to HK$22,000,000 ––1––
HK$22,500,001 to HK$23,000,000 1––––
HK$30,500,001 to HK$31,000,000 1––––
HK$59,500,001 to HK$60,000,000 –1–––
HK$63,500,001 to HK$64,000,000 –1–––
HK$65,000,001 to HK$65,500,000 –––1–
HK$67,000,001 to HK$67,500,000 –––1–
HK$69,500,001 to HK$70,000,000 ––1––
HK$76,000,001 to HK$76,500,000 ––1––
HK$129,000,001 to HK$129,500,000 –1–––
HK$191,000,001 to HK$191,500,000 –1–––
44444
43. DIVIDENDS
No dividend has been paid or declared by the Company since its incorporation until July 2021.
In August 2021, the Company declared a cash dividend of USD12.0 cents per share, which was accounted for
as a distribution of the share premium account of the Company with the amount of USD72,244,000 to holders
of ordinary shares of the Company as at August 31, 2021, and interest expenses of USD81,602,000 (Note 10)
payable to holders of preferred shares of the Company as at August 31, 2021. Such dividend was fully settled
by cash in November 2021. No dividend has been paid or declared by the Company since then till June 30,
2023 and up to the date of this report.
44. CONTINGENT LIABILITIES
There are no significant contingent liabilities as at December 31, 2020, 2021, and 2022 and June 30, 2023.
45. SUBSEQUENT EVENTS
There are no significant subsequent events subsequent to June 30, 2023.
III SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company or any of the companies now comprising
the Group in respect of any period subsequent to June 30, 2023 and up to the date of this report.
APPENDIX I ACCOUNTANT’S REPORT
– I-154 –


--- page 611 ---
The following information does not form part of the Accountant’ s Report from
PricewaterhouseCoopers, Certified Public Accountants, the reporting accountant of the
Company, as set forth in Appendix I to this prospectus, and is included herein for information
only. The unaudited pro forma financial information should be read in conjunction with
“Financial Information” and the Accountant’ s Report set forth in Appendix I to this
prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma statement of adjusted consolidated net tangible assets
of the Group prepared in accordance with Rule 4.29 of the Listing Rules is for illustrative
purposes only, and is set out below to illustrate the effect of the Global Offering on the
net tangible assets of the Group attributable to the owners of the Company as at June 30,
2023 as if the Global Offering had taken place on June 30, 2023.
This unaudited pro forma statement of adjusted consolidated net tangible assets has been
prepared for illustrative purposes only and because of its hypothetical nature, it may not
give a true picture of the consolidated net tangible assets of the Group as at June 30, 2023
or at any future dates following the Global Offering.
Audited
Consolidated Net
Tangible Liabilities
of the Group
attributable to the
owners of the
Company as at
June 30, 2023
Estimated Net
Proceeds from the
Global Offering
Estimated Impact
Related to the
Conversion of the
Preferred Shares of
the Company from
Liabilities to
Equity upon the
Completion of the
Global Offering
Unaudited Pro
Forma Adjusted
Consolidated Net
Tangible Assets
Attributable to the
Owners of the
Company as at
June 30, 2023
Unaudited Pro Forma
Adjusted Consolidated
Net Tangible Assets
per Share
USD’000 USD’000 USD’000 USD’000 USD HK$
(Note 1) (Note 2) (Note 3) (Note 4) (Note 5)
Based on an Offer Price of
HK$12.00 per Offer Share (6,262,681) 478,353 7,681,637 1,897,310 0.22 1.72
Notes:
(1) The audited consolidated net tangible liabilities of the Group attributable to the owners of the Company as at
June 30, 2023 is extracted from the Accountant’s Report set out in Appendix I to this prospectus, which is
based on the audited consolidated net liabilities of the Group attributable to the owners of the Company as at
June 30, 2023 of approximately USD5,303,260,000 after adjusting the Group’s intangible assets attributable
to the owners of the Company of approximately USD959,421,000 as at June 30, 2023.
(2) The estimated net proceeds from the Global Offering are based on 326,550,400 Offer Shares and the Offer
Price of HK$12.00 per Offer Share, after deduction of the underwriting fees and other related expenses
(excluding listing expenses of approximately USD27,944,000 which have been accounted for in the
consolidated income statements for the years ended December 31, 2021 and 2022 and the six months ended
June 30, 2023).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 612 ---
(3) Upon the completion of the Global Offering, all the convertible preferred shares of the Company will be
automatically converted into Shares. These convertible preferred shares of the Company will be re-designated
from liabilities to equity. Accordingly, for the purpose of the unaudited pro forma financial information, the
unaudited pro forma adjusted consolidated net tangible assets attributable to the owners of the Company will
be increased by approximately USD7,681,637,000 being carrying amount of the convertible preferred shares
of the Company as at June 30, 2023.
(4) The unaudited pro forma adjusted consolidated net tangible assets per Share is arrived at after the adjustments
referred to in the preceding paragraphs and on the basis that 8,780,175,735 Shares (representing 659,017,524
Ordinary Shares and 1,038,105,643 Pre-IPO Preferred Shares as at June 30, 2023 (or 3,295,087,620 ordinary
Shares and 5,190,528,215 Pre-IPO Preferred Shares, respectively, following the Reclassification,
Redesignation and Share Subdivision) and 326,550,400 Offer Shares to be issued upon the completion of the
Global Offering and excluding 6,398,100 ordinary Shares (representing 31,990,500 ordinary Shares following
the Reclassification, Redesignation and Share Subdivision) being issued but unvested Shares upon the
completion of the Global Offering) were in issue, assuming that the Global Offering, the Reclassification,
Redesignation and Share Subdivision and the conversion of the convertible preferred shares of the Company
in paragraph (3) had been completed on June 30, 2023 but does not take into account any Class B Shares which
may be allotted and issued by the Company pursuant to the exercise of the Over-allotment Option or any Class
B Shares which may be allotted and issued or repurchased by the Company pursuant to the general mandates
granted to the Directors as described in “Share Capital”.
(5) For the purpose of the unaudited pro forma statement of adjusted consolidated net tangible assets, the
translation of United States dollar amounts into Hong Kong dollars was at rate of USD1.00 to HK$7.8326. No
representation is made that United States dollar amounts have been, could have been or may be converted to
Hong Kong dollars, or vice versa, at that date.
(6) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to reflect
any trading results or other transactions of the Group entered into subsequent to June 30, 2023.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 613 ---
B. REPORT FROM THE REPORTING ACCOUNTANT ON THE UNAUDITED PRO
FORMA FINANCIAL INFORMATION
The following is the text of a report received from PricewaterhouseCoopers, Certified Public
Accountants, Hong Kong, for the purpose of incorporation in this prospectus.
INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
To the Directors of J&T Global Express Limited
We have completed our assurance engagement to report on the compilation of unaudited pro
forma financial information of J&T Global Express Limited (the “Company”) and its
subsidiaries (collectively the “Group”) by the directors of the Company (the “Directors”) for
illustrative purposes only. The unaudited pro forma financial information consists of the
unaudited pro forma statement of adjusted consolidated net tangible assets of the Group as at
June 30, 2023, and related notes (the “Unaudited Pro Forma Financial Information”) as set out
on pages II-1 to II-2 of the Company’s prospectus dated October 16, 2023, in connection with
the proposed global offering of the shares of the Company (the “Global Offering”) (the
“Prospectus”). The applicable criteria on the basis of which the Directors have compiled the
Unaudited Pro Forma Financial Information are described on pages II-1 to II-2 of the
Prospectus.
The Unaudited Pro Forma Financial Information has been compiled by the Directors to
illustrate the impact of the proposed Global Offering on the Group’s financial position as at
June 30, 2023 as if the proposed Global Offering had taken place at June 30, 2023. As part of
this process, information about the Group’s financial position has been extracted by the
Directors from the Group’s financial information for the six months ended June 30, 2023, on
which an accountant’s report has been published.
Directors’ Responsibility for the Unaudited Pro Forma Financial Information
The Directors are responsible for compiling the Unaudited Pro Forma Financial Information in
accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting
Guideline 7 Preparation of Pro Forma Financial Information for Inclusion in Investment
Circulars (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants
(“HKICPA”).
Our Independence and Quality Control
We have complied with the independence and other ethical requirements of the Code of Ethics
for Professional Accountants issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behaviour.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
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--- page 614 ---
Our firm applies Hong Kong Standard on Quality Control (HKSQC) 1, Quality Control for
Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and
Related Services Engagements issued by the HKICPA and accordingly maintains a
comprehensive system of quality control including documented policies and procedures
regarding compliance with ethical requirements, professional standards and applicable legal
and regulatory requirements.
Reporting Accountant’s Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing
Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We
do not accept any responsibility for any reports previously given by us on any financial
information used in the compilation of the Unaudited Pro Forma Financial Information beyond
that owed to those to whom those reports were addressed by us at the dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420, Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus , issued by the HKICPA. This standard requires
that the reporting accountant plans and performs procedures to obtain reasonable assurance
about whether the Directors have compiled the Unaudited Pro Forma Financial Information in
accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the
HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any reports
or opinions on any historical financial information used in compiling the Unaudited Pro Forma
Financial Information, nor have we, in the course of this engagement, performed an audit or
review of the financial information used in compiling the Unaudited Pro Forma Financial
Information.
The purpose of unaudited pro forma financial information included in a prospectus is solely to
illustrate the impact of a significant event or transaction on unadjusted financial information
of the entity as if the event had occurred or the transaction had been undertaken at an earlier
date selected for purposes of the illustration. Accordingly, we do not provide any assurance that
the actual outcome of the proposed Global Offering at June 30, 2023 would have been as
presented.
A reasonable assurance engagement to report on whether the unaudited pro forma financial
information has been properly compiled on the basis of the applicable criteria involves
performing procedures to assess whether the applicable criteria used by the directors in the
compilation of the unaudited pro forma financial information provide a reasonable basis for
presenting the significant effects directly attributable to the event or transaction, and to obtain
sufficient appropriate evidence about whether:
 The related pro forma adjustments give appropriate effect to those criteria; and
 The unaudited pro forma financial information reflects the proper application of those
adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountant’s judgment, having regard to the
reporting accountant’s understanding of the nature of the company, the event or transaction in
respect of which the unaudited pro forma financial information has been compiled, and other
relevant engagement circumstances.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 615 ---
The engagement also involves evaluating the overall presentation of the unaudited pro forma
financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Our work has not been carried out in accordance with auditing standards or other standards and
practices generally accepted in the United States of America or auditing standards of the Public
Company Accounting Oversight Board (United States) or standards and practices of any
professional body in any other overseas jurisdiction and accordingly should not be relied upon
as if it had been carried out in accordance with those standards and practices.
Opinion
In our opinion:
(a) the Unaudited Pro Forma Financial Information has been properly compiled by the
Directors on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial
Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, October 16, 2023
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
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LAWS AND REGULATIONS IN RELATION TO OUR BUSINESS IN INDONESIA
REGULATORY OVERVIEW
Our business operations in Indonesia are subject to various laws and regulations. Please find
below an overview of the key laws and regulations relating our business.
GENERAL INVESTMENT REQUIREMENTS
A foreign investor which intends to establish a business in Indonesia must comply with certain
regulations related to the investment sector. In general, investment activities in Indonesia are
regulated by Law No. 25 of 2007 on Investments which then was amended by the Job Creation
Law (as amended, the “ Indonesian Investment Law ”). Currently, investment activities in
Indonesia are coordinated and supervised by the Ministry of Investment/Indonesian Investment
Coordinating Board ( Badan Koordinasi Penanaman Modal )–“ BKPM ” as the authorized
agency in the investment field. The followings are the requirements related to conducting
investment activities that must be complied by a business actor:
Indonesia Standard Industrial Classification ( Klasifikasi Baku Lapangan Usaha di
Indonesia – “KBLI”)
In performing and monitoring the business sectors in Indonesia, the Indonesian Government
has issued the Indonesia Standard Industrial Classification – or KBLI, which serves as a
classification for the existing and regulated business lines. Currently, the applicable KBLI is
as stipulated and regulated under Statistics Indonesia ( Badan Pusat Statistik –“ BPS”)
Regulation No. 2 of 2020 (“ KBLI 2020 ”), which revoked the prior applicable KBLI that was
regulated under Head of BPS Regulation No. 19 of 2017.
KBLI is also used to determine such company’s minimum investment value, required licensing,
and also foreign shareholder restrictions. Article 12 (1) of the Indonesian Investment Law
states that all business sectors shall be opened to investment activities, except for business
sectors that are declared to be closed to investment or activities that can only be carried out by
the Indonesian central government.
After the implementation of the Indonesian Investment Law, the President of the Republic of
Indonesia has issued the President Regulation No. 77 of 2007 dated July 3, 2007 which was last
amended by the President Regulation No. 10 of 2021 regarding Investment Business Fields,
which was partially amended by the Presidential Regulation No. 49 of 2021 on May 25, 2021
(“PR 49/2021 ”). Furthermore, Article 2 of PR 49/2021 (1a) states that the aforementioned open
business sectors refer to the business sectors that are commercial in nature.
Capital Requirement and Certain Shares Ownership
Indonesian laws also regulate the capital requirement for companies in accordance with their
sizes, i.e., micro, small, medium, or large-scale businesses.
As a further note, Article 12 of Guidelines and Procedures for Risk-Based Business Licensing
Services and Investment Facilities (“ BKPM Regulation No. 4/2021 ”) stipulates that (every)
business that is classified as a Foreign Direct Investment ( Penanaman Modal Asing ) Company
shall be categorized as a large-scale business, which therefore must comply with the minimum
investment value and capital requirement which shall be more than Indonesian Rupiah (“ IDR”)
10 billion for each line of business according to the KBLI codes (5 digits) and per project
APPENDIX III REGULATORY OVERVIEW
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--- page 617 ---
location, unless specified otherwise by the laws and regulations. Every new Foreign Direct
Investment made subsequent to the enactment of BKPM Regulation No. 4/2021 are also
required to have a minimum issued and paid-up capital of at least IDR 10 billion.
In relation to the general investment requirements in Indonesia, Article 33 (1) of the Indonesian
Investment Law stipulates that both domestic and foreign investors investing in the form of a
limited liability company are prohibited from entering into an agreement and/or making a
statement asserting that the ownership of shares in a limited liability is for and on behalf of
another person. According to Article 33 (2) of the Indonesian Investment Law, violation of the
abovementioned regulation will result in such agreement being declared as null and void.
Repatriation
The Indonesian Investment Law also regulates matters regarding repatriation, in which an
investor may transfer the assets they own to any party the investors desire in accordance with
the laws and regulations. Pursuant to Article 8 (3) of the Indonesian Investment Law, the
investors shall be granted the right to perform transfer and repatriation in foreign currencies for
a number of reasons as defined within the relevant regulations.
In relation to the above, Article 8 (5) of the Indonesian Investment Law further states that the
existence of this repatriation right does not reduce the Indonesian Government’s authority to
(a) enforce the provisions of the laws and regulations which requires the reporting of such fund
transfers; (b) impose tax on investments in accordance with the provisions of the laws and
regulations; (c) enforce the laws protecting the rights of creditors; and (d) enforce the law in
order to avoid losses to the state.
GENERAL COMPANY LICENSING REQUIREMENTS
General Company Licensing
The Government Regulation No. 5 of 2021 on the Implementation of Risk-Based Business
Licensing (“ GR No. 5/2021 ”) stipulates that businesses are required to fulfill certain general
requirements for business licensing and/or risk-based business licensing in order to conduct its
business in the territory of Indonesia. Under Article 176 of the GR No. 5/2021, businesses shall
obtain a business identification number (“ NIB”) as a business identity and legality of the
business, which remains valid as long as the company still conducts its business activities.
Furthermore, Article 12-14 of the GR No. 5/2021 regulates the business licensing obligations
i.e. NIB, standard certificate, and business license depending on the level of risk of the relevant
business activity. Pursuant to Article 212 (2) of GR No. 5/2021, a NIB can be revoked and
terminated under certain circumstances.
Environmental Licenses
Article 40 (1) of Law No. 32 of 2009 on Environmental Protection and Management as
partially amended by the Job Creation Law (as amended, “ Indonesian Environmental Law ”),
stipulates that an environmental license is required to obtain a business license.
In general, the environmental license under the law of Indonesia is divided into three
categories: (i) Environmental Impact Assessment ( analisis mengenai dampak lingkungan –
“AMDAL ”); (ii) Environmental Management Efforts and Environmental Monitoring Efforts
(Upaya Pengelolaan Lingkungan – Upaya Pemantauan Lingkungan –“ UKL-UPL ”); or (iii)
the Statement of Capability for Environmental Management and Monitoring ( Surat Pernyataan
Kesanggupan Pengelolaan dan Pemantauan Lingkungan Hidup –“ SPPL ”), depending on the
environmental risk of each activity and/or business.
APPENDIX III REGULATORY OVERVIEW
– III-2 –


--- page 618 ---
Based on Article 22 of Indonesian Environmental Law, should an activity and/or business be
deemed as having significant impact on the environment, the relevant activity and/or business
is mandated to obtain AMDAL. In addition, pursuant to Article 34 of Indonesian
Environmental Law, every activity and/or business that does not have a significant impact on
the environment and is not included in the mandatory AMDAL criteria must have UKL-UPL.
Moreover, the activity and/or business that does not have a significant impact on the
environment and is not included in the mandatory UKL-UPL criteria must have an SPPL.
Based on the Minister of the Environment Regulation No. 4 of 2021 on List of Businesses
and/or Activities that Must Have Environmental Impact Assessment, Environmental
Management Efforts and Environmental Monitoring Efforts, or the Statement of Capability for
Environmental Management and Monitoring (“ MOER No. 4/2021 ”), there are certain
obligations to obtain environmental license in conducting construction activity, depending on
the relevant built-up area.
Pursuant to Article 82A and Article 82C of Indonesian Environmental Law, if business actors
conduct business activities without obtaining the valid licenses, administrative sanctions could
be imposed in stages.
Business Licensing
Postal Service Regulation
In general, postal service activities in Indonesia could be classified into two categories: (i)
Courier Activities; and (ii) Universal Postal Services, which are further elaborated below:
Courier Activities
In order to conduct business activities under KBLI 53201 (Courier Activities), a Postal
Operator shall obtain a postal operator license issued by the Ministry of Communication and
Information Technology (“ MOCI ”).
Based on Article 5 of the Indonesian Postal Law, Article 3 of Government Regulation No. 46
of 2021 on Postal, Telecommunication and Broadcasting (“ GR No. 46/2021 ”) and Article 6 of
MOCI Regulation No. 4 of 2021 on Postal Operation (“ MOCIR No. 4/2021 ”), the services of
Postal Operators include the following: (a) delivering written communications and/or
electronic mail; (b) delivering packages; (c) logistic services; (d) facilitating financial
transactions; and/or (e) provision of services as postal agent.
After obtaining the postal operator license, under the MOCIR No. 4/2021, a Postal Operator
has to fulfil certain obligations including: (a) submitting an annual Postal Operation Report to
MOCI; (b) payment of the Universal Postal Services ( Layanan Pos Universal ,“ LPU”)
Implementation Contribution fees on an annual basis; and (c) submission of the LPU
Implementation Contribution Payment supporting documentation.
Pursuant to Article 124 (1) and (3) of MOCIR No. 4/2021, failure to comply or fulfil the
aforementioned obligations shall result in the company being subject to administrative
sanctions. The imposition of administrative sanctions can be carried out in stages or
independently for each type of administrative sanction.
APPENDIX III REGULATORY OVERVIEW
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--- page 619 ---
Universal Postal Services
Based on Article 1.3 of MOCIR No. 4/2021, LPU includes certain types of postal services that
are guaranteed by the government to reach the entire territory of the Republic of Indonesia
which allow people to send and/or receive mail. In addition, under Article 57 of MOCIR No.
4/2021, the operator of LPU is assigned by MOCI and determined by Ministerial Decree.
The business activity of Universal Postal Activities is classified under KBLI 53100 (Postal
Activities, or previously known as the Universal Postal Activities). In order to carry out
business under KBLI 53100 (Postal Activities), the postal company would have to fulfil certain
additional criteria including: (a) be appointed by MOCI; (b) has experience in conducting
postal activities for a minimum of 25 (twenty-five) years; (c) owns and/or controls the postal
network throughout the territory of Indonesia; and (d) has the capability and resources to
deliver postal items worldwide.
Joint V enture Between Foreign Postal Operator and Indonesia Postal Operator
Article 113 of MOCIR No. 4/2021 states that Foreign Postal Operators would be allowed to
conduct postal activities within the territory of the Republic of Indonesia subject to the
following conditions: (a) the Foreign Postal Operator must enter into a joint venture with an
Indonesian Postal Operator; and (b) the operational area will be limited to only the provincial
capital.
Such Foreign Postal Operators can only conduct postal activities in Indonesia by establishing
a new joint venture entity (“ new JV ”) with an Indonesian Postal Operator. The new JV must
be incorporated in Indonesia and the Foreign Postal Operator is allowed to subscribe for a
certain percentage of shares during the establishment of the new JV .
Pursuant to the elucidation of Article 11 (1) (b) of Indonesian Postal Law, the Foreign Postal
Operator refers to foreign business entities that provide postal services outside of Indonesia.
According to our consultation with MOCI, the Foreign Postal Operator and any of its affiliates
are different separate entities. As such, the operation of its affiliates will not be taken into
consideration as the operations of the relevant Foreign Postal Operator (separate entities). In
conclusion, if a parent company does not conduct the business of courier activities but the
affiliates do, such parent company cannot be considered as a Postal Operator (and vice versa).
A Foreign Non-Postal Operator Cannot Subscribe for Shares in an Indonesian Postal Company
Based on Article 11 of the Indonesian Postal Law, an Indonesian Postal Operator could
cooperate with a Foreign Non-Postal Operator. However, such cooperation between Indonesian
Postal Operators and Foreign Non-Postal Operators expressly prohibits the Foreign Non-Postal
Operator (or any holding entities it may control) from directly owning shares of the Indonesian
Postal Operator. This position has been further confirmed by MOCI following a formal
consultation.
Trade Activities Regulations
In Indonesia, trade activities are generally governed under the Law No. 7 of 2014 on Trade as
partially amended by the Job Creation Law (as amended, “ Trade Law ”). Based on Article 24
Trade Law, a business that conducts trade activities shall obtain the relevant business licensing
i.e., Trade Business License ( Surat Izin Usaha Perdagangan –“ SIUP ”).
APPENDIX III REGULATORY OVERVIEW
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--- page 620 ---
Pursuant to Article 24 of the Trade Law, every business owner who carries out trading business
activities but does not fulfill/obtain a business license is subject to administrative sanctions.
In addition, pursuant to Article 106 of Trade Law, business owners who carry out trading
business activities without a business license for trade activities might face imprisonment of
up to 4 (four) years and/or a maximum fine of IDR 10,000,000,000.
MANDATORY INVESTMENT REPORT (LAPORAN KEGIATAN PENANAMAN
MODAL – “LKPM”)
In relation to investment activities that are being conducted in Indonesia, BKPM has issued a
set of regulations, which stipulate the need for companies to submit LKPM to the BKPM
periodically. The obligation of submitting LKPM varies, depending on the size and
capitalization of the company.
Pursuant to Article 47 of BKPM Regulation No. 5/2021, failure to comply or fulfil the
aforementioned obligations shall result in the company being subject to administrative
sanctions which will be imposed in stages.
EMPLOYMENT LICENSES, WORK SAFETY AND HEALTH REQUIREMENTS AND
EMPLOYEE SOCIAL AND HEALTH INSURANCE
Employment Licenses
Law No. 13 of 2003 as partially amended by the Job Creation Law (as amended, the
“Employment Law ”) governs employment related issues. Based on Article 42 of the
Employment Law in conjunction with Article 6 of Government Regulation No. 34 of 2021
regarding the Recruitment of Foreign Workers (“ GR No. 34/2021 ”), the employment of foreign
workers necessitates a Foreign Workers Recruitment Plan ( Rencana Penggunaan Tenaga Kerja
Asing –“ RPTKA ”) validated by the Ministry of Manpower. After obtaining the RPTKA,
pursuant to Article 27 of GR No. 34/2021, the employer is required to obtain stay permits for
their foreign workers residing in Indonesia, namely Limited Stay Permit ( Izin Tinggal Terbatas
–“ ITAS”), which is further regulated by the Minister of Law and Human Rights Regulations
No. 16 of 2018 on Visa and Stay Permit for Foreign Workers (“ MOLHR Regulation No.
16/2018 ”). The GR No. 34/2021 further stipulates additional requirements whereby failure to
comply shall result in the company being subject to administrative sanctions.
In addition, Law No. 7 of 1981 on the Mandatory Manpower Report in a Company (the
“Manpower Report Law ”) states that every company in Indonesia must submit an annual
report regarding its manpower (known as Wajib Lapor Ketenagakerjaan di Perusahaan –
“WLKP ”) to the relevant authority. The consequences for not complying with the obligation
to report WLKP pursuant to Article 10 of the Manpower Report Law include: (a) fine up to the
maximum amount of IDR 1,000,000 or (b) detention for up to 3 (three) months if the employer
has failed to comply with its obligations for the second time or more.
Pursuant to Article 108 of Employment Law, a company that employs at least 10 (ten)
employees must have company regulations regulating: (a) the rights and obligations of the
employees and employers; (b) working terms and conditions; (c) company procedure; and (d)
the validity period of the company regulations.
Pursuant to Article 111 of Employment Law, company regulations will remain to be effective
for the period of 2 (two) years. The company regulations will be effective after it has been
ratified by the Ministry of Manpower.
APPENDIX III REGULATORY OVERVIEW
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--- page 621 ---
Work Safety and Health Requirements
Indonesian laws and regulations protect every employee’s right to safe working conditions,
which is governed by the Law No. 1 of 1970 on Occupational Health and Safety
(“Occupational Health and Safety Law ”). The provisions set out in the Occupational Health
and Safety Law cover all working places conducted in the territory of the Republic of Indonesia
and stipulate the employers which would be required to implement Occupational Health and
Safety Management Systems. Any violation of Article 87 of the Employment Law would result
in administrative sanctions to be imposed in stages governed under Article 190 of Employment
Law.
Employee Social and Health Insurance
Pursuant to Article 14 and 15 of Law No. 24 of 2011 on Agency of Employee Social Security
(Badan Penyelenggaraan Jaminan Sosial –“ BPJS ”) as partially amended by the Job Creation
Law (as amended, “ BPJS Law ”), Indonesian employers are obliged to register themselves and
their workers for BPJS. Pursuant to Article 14 of the BPJS Law, domestic and foreign
employees who work for a minimum of 6 (six) months in Indonesian territory are obliged to
obtain BPJS, which is registered by employers.
Pursuant to Article 6 of BPJS Regulation No. 6 of 2018 on Health Insurance Program
Participation Administration as partially amended by BPJS Regulation No. 6 of 2019 on
Amendment BPJS Regulation No. 6 of 2018 on Health Insurance Program Participation
Administration (“ BPJS Regulation No. 6/2018 ”), everyone is obliged to participate and
contribute to the health insurance program.
According to Article 19 of BPJS Law, the employer is also obliged to contribute to the BPJS
of its employees on a monthly basis. The contribution shall be collected from both the
employer and the employee. Based on Article 17 of BPJS Law in conjunction with Article 5
(2) of the Government Regulation No. 86 of 2013 on the procedures for imposing
administrative sanctions to employers other than state administrators and any persons, other
than employers, employees, and assistance recipients in the administration of social security,
the non-compliance of this obligation will be subject to administrative sanctions.
The sanctions will be given in stages in the forms of: (a) written warning; (b) fine payment;
and/or (c) rejection to obtain public services. However, if the employer has been given a
sanction in form of point (c) above, then the employer will be denied from applying any
licenses related to its employee or its business. Therefore, it is crucial for the employer to
register the BPJS.
Following the issuance of Government Regulation in Lieu of the Law No. 2 of 2022 on Job
Creation, the Government has now issued Government Regulation No. 37 of 2021 on the
Implementation of Loss of Job Security Program (“ GR No. 37/2021 ”) which sets out further
provisions on the organization of the unemployment insurance program ( jaminan kehilangan
pekerjaan –“ JKP”), a program held by the Indonesian central government and BPJS
employment that guarantees workers that have been laid off to obtain certain benefits.
Based on Article 2 of GR No. 37/2021, employers are required to register their workers as
members of the JKP program if they are eligible.
APPENDIX III REGULATORY OVERVIEW
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--- page 622 ---
Further, based on Article 37 of GR No. 37/2021, an employer’s (with the exception of
micro-scale employers) failure to register their workers under the JKP program will result in
them having to provide the following benefits to workers if they are terminated: (a) cash
payments, in accordance with the provisions elaborated upon in the above table; and (b) work
training.
TRANSACTION REQUIREMENTS
Mandatory Use of Rupiah Currency
Bank of Indonesia (“ BI”), as the authorized authority which supervises the monetary and the
banking system of Indonesia, issued Bank Indonesia Regulation No. 17/3/PBI/2015 on
Mandatory Use of Rupiah in the Territory of the Republic of Indonesia (“ BI Regulation No.
17/2015 ”) and Circular Letter of Bank Indonesia No. 17/11/DKSP of 2015 on Mandatory Use
of Rupiah in the Territory of the Republic of Indonesia (“BI Circular Letter No. 17/2015”), in
order to achieve and maintain the stability of Rupiah as the official currency of Indonesia.
Under Article 2 and 3 of BI Regulation No. 17/2015, BI provides the obligation for all parties
(regardless of the nationality) to use Rupiah as the lawful currency of Indonesia in any
transactions (both cash and non-cash) conducted within the territory of the Republic of
Indonesia. The mandatory use of Rupiah is applicable to any transaction that is: (1) intended
for payment purposes; (2) intended to fulfill obligations that must be performed by money; and
(3) intended for other financial services transactions, such as the deposit of money into a bank
account – whether it is conducted by Indonesian or non-Indonesian parties. Article 4 and 5 of
BI Regulation No. 17/2015 further set out certain exemptions to the mandatory use of Rupiah.
Should a violation of BI No. 17/2015 be incurred, sanctions in the form of a maximum of a
one-year imprisonment or fine of up to IDR 200,000,000 (two hundred million Indonesian
Rupiah) could be imposed. Moreover, Articles 18 and 20 of BI No. 17/2015 also stipulate an
administrative sanction should any party refuse to use Rupiah in any non-cash transactions.
PERSONAL DATA PROTECTION
Data security, cybersecurity and privacy in Indonesia are generally regulated under Law of
Indonesia No. 27 of 2022 on Personal Data Protection (“ PDP Law ”), which came into force
on October 17, 2022. According to PDP Law, there are two forms of subjects deemed to be
involved in personal data processing, namely, individuals or entities who process personal data
(“Personal Data Processor ”), and individuals or entities who control and determine the
objective of personal data processing are personal data controllers (“ Personal Data
Controller ”). Under Article 18 of the PDP Law, two or more Personal Data Controllers may
jointly carry out personal data processing, provided that there are: (i) an agreement between the
Personal Data Controllers which contain the role, responsibility, and relation between the
Personal Data Controllers; (ii) a jointly determined interrelated goals and methods of
processing the personal data; and (iii) a jointly appointed contact person.
Pursuant to the PDP Law, in processing the personal data, Personal Data Controller and/or
Personal Data Processors have the obligations to, among others:
(a) obtain the consent from owners of personal data;
(b) only carry out the processing of personal data on a limited and specific matter, lawful, and
transparent in accordance with its purposes;
APPENDIX III REGULATORY OVERVIEW
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--- page 623 ---
(c) ensure the accuracy, completeness, and consistency of personal data in accordance with
the laws and regulations through verification;
(d) record all activities on the processing of personal data and provide access for its owner
at the owner’s request;
(e) restrict/deny access of personal data alteration if such alteration: (i) endangers the
security, physical health, or mental health of the personal data owner and/or other
persons; (ii) results in the disclosure of personal data of other people; and/or (iii) is
against the interest of national defense and security;
(f) carry out risk assessment of personal data protection for high-risk data processing (e.g.
high impact on the owner, large scale processing, new processing technology); and
(g) protect and ensure the security and confidentiality of the original and processed personal
data, including supervision and control of the parties involved in the personal data
processing, prevention and control against unlawful processing.
Additionally, based on Article 53 of the PDP Law, there are conditions where the Personal Data
Processor and Personal Data Controller must appoint a Data Protection Officer, among others
if it is a large-scaled Personal Data processing which requires regular and systematic
monitoring or involving specific Personal Data. The PDP Law also stipulates the general
provisions on removal and destruction of personal data as well failure of the personal data
protection.
The Personal Data Controller, Personal Data Processor and other parties related to the
processing of personal data must comply to the provisions of the PDP Law at the latest within
2 years as of the promulgation of the PDP Law, i.e. no later by October 17, 2024. After the
lapse of such date, any non-compliances with the PDP Law shall result in the imposition of (a)
administrative sanctions, which may be imposed in stages in the forms of written notification,
temporary suspension on the personal data processing activities, removal and/or destruction of
personal data, and/or administrative fines; or (b) criminal sanctions, which for corporation is
in the form of fines up to IDR60 billion as well as other supplemental criminal sanctions which
may be imposed.
The PDP Law also provided that further provisions on certain technical matters will be further
regulated in the implementing regulation (government regulation) of the PDP Law, which could
cover among others: (i) filing on the objection of automatic personal data processing; (ii)
violation on personal data processing as well as its compensation procedures; (iii) rights of a
personal data owner to use and circulate personal data; (iv) implementation of personal data
processing; (v) notification procedures on the storing, transfer, deletion, or destruction of
personal data; (vi) personal data protection officer; (vii) transfer of personal data; and (viii)
administrative sanctions. However, until the Latest Practicable Date, the Indonesian
Government has not issued any further government regulations to serve as the implementing
regulations to the PDP Law.
LAWS AND REGULATIONS IN RELATION TO OUR BUSINESS IN THE PHILIPPINES
REGULATORY OVERVIEW
Our business operations in Philippines are subject to various laws and regulations. Please find
below an overview of the key laws and regulations relating to our business.
APPENDIX III REGULATORY OVERVIEW
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REGULATION OF PUBLIC UTILITIES, LAND OWNERSHIP, AND OTHER RELATED
MATTERS
Foreign Ownership Restriction
The Philippine Constitution restricts the operation of a public utility to citizens of the
Philippines or to corporations or associations organized under the laws of the Philippines at
least 60% of whose capital is owned by such citizens. It also mandates that all the executive
and managing officers of such public utility be citizens of the Philippines. Private express
and/or messenger delivery service, as well as domestic airfreight forwarding, were previously
considered to be public utilities.
The Philippine Constitution likewise restricts the ownership of land to Philippine nationals and
to corporations at least 60% the capital of which is owned by citizens of the Philippines.
Republic Act No. 7042 (as amended, the (“ Foreign Investments Act ”), defines a Philippine
national as, among others, a citizen of the Philippines or a corporation organized under the laws
of the Philippines of which at least sixty percent (60%) of the capital stock outstanding and
entitled to vote is owned and held by citizens of the Philippines. Under Memorandum Circular
No. 8, series of 2013 issued by the Philippine Securities and Exchange Commission (the
“PSEC ”), the minimum Filipino percentage of ownership applies to both (a) the total number
of outstanding shares of stock entitled to vote in the election of directors, and (b) the total
number of outstanding shares of stock, whether or not entitled to vote in the election of
directors.
Commonwealth Act No. 108, known as the Anti-Dummy Law (“ ADL”), imposes criminal
liability upon, among others, (a) any entity exercising a right or franchise that is reserved for
Philippine citizens or entities without complying with the required ownership by Philippine
citizens, (b) any person who allows his name or citizenship to be used for the purpose of
evading such ownership requirement, or (c) who falsely simulates the existence of the required
minimum percentage of Philippine ownership. The ADL also penalizes persons, corporations
or partnerships that allow foreigners to intervene in the management, control or administration
of such entity and any person who knowingly aids, assists or abets in the planning,
consummation or perpetration of such acts by imprisonment and/or fine. It also limits the
participation of foreign shareholders in the governing body of corporations covered thereunder
to the foreign shareholders’ proportionate share in the corporation’s capital, and mandates that
the corporation’s officers and employees be Filipino citizens, except for alien technical
personnel specifically authorized by the Secretary of the Philippine Department of Justice
(“DOJ Secretary ”).
Commonwealth Act No. 146, as amended (the “ Public Service Act ”), lists common carriers
and freight service in the definition of the term “public service.” On March 21, 2022, the
President has signed into law Republic Act No. 11659 or an Act Amending Commonwealth Act
No. 146, otherwise known as the Public Service Act, (“ PSA Amendment ”), which shall take
effect 15 days after its publication in the Official Gazette or in a newspaper of general
circulation. It was published in the online version of the Official Gazette on March 23, 2022
and in a newspaper of general circulation on March 25, 2022. Thus, it became effective on
April 7, 2022. The implementing rules to the PSA Amendment was published on March 20,
2023 and took effect on April 4, 2023.
The PSA Amendment provides for an exclusive enumeration of what constitutes a public utility
and states that “[n]o other person shall be deemed a public utility unless otherwise
subsequently declared by law.”
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--- page 625 ---
Under the PSA Amendment, private express and/or messenger delivery service, as well as
domestic airfreight forwarding, are no longer considered public utilities and are therefore no
longer subject to minimum 60% Filipino ownership.
REGULATIONS ON FREIGHT FORWARDING
Freight Forwarding by Air (Domestic and International)
Republic Act No. 776 or the Civil Aeronautics Act of the Philippines (“ Civil Aeronautics
Act”) provides for the regulatory framework for freight forwarding by air. It defines an air
freight forwarder as an indirect air carrier which, in the ordinary and usual course of its
undertaking, assembles and consolidates or provides for assembling and consolidating such
property or performs or provides for the performance of break-bulk and distributing operations
with respect to consolidated shipments, and is responsible for the transportation of property
from the point of receipt to point of destination and utilizes for the whole or any part of such
transportation the services of a direct air carrier.
Pursuant to the provisions of the Civil Aeronautics Act, an entity may only be allowed to
operate an as airfreight forwarder if it possesses a Certificate of Authority to engage in the
business of an International and/or Domestic Freight Forwarder issued by the Civil Aeronautics
Board (“ CAB”). Permits for domestic freight forwarding may only be granted to citizens of the
Philippines. For this purpose, “citizen of the Philippines” means (a) an individual who is a
citizen of the Philippines; or (b) a partnership of which each member is such an individual; or
(c) a corporation or association created or organized under the laws of the Philippines, of which
the directing head and two-thirds (2/3) or more of the Board of Directors and other managing
officers are citizens of the Philippines, and in which 60% of the voting interest is owned or
controlled by persons who are citizens of the Philippines. The PSA Amendment has repealed
this nationality restriction. No permit may be transferred without the prior approval of the
CAB. Operating without an authorization by CAB is subject to administrative and criminal
penalties.
Pursuant to its authority under the Civil Aeronautics Act, the CAB issued Economic Regulation
N o .4( “ ER-4 ”) or the Economic Regulation on Air Freight Forwarder and Off-line Carriers.
Among other things, ER-4 requires securing (i) a letter of authority issued by the CAB before
operating as an air freight forwarder and (ii) CAB approval before adopting a commercial or
business name. Further, no air freight forwarder shall engage in the performance of transfer,
collection or delivery services unless it files with the CAB a satisfactory certificate of
insurance evidencing a properly endorsed insurance policy or surety bond, conditioned to pay
any final judgment recovered against it on account of, among other things, loss of or damage
to property, resulting from the negligent operation, maintenance or use of motor vehicle
operation by or under its direction and control.
Freight Forwarding by Sea (Domestic and International)
Executive Order No. 514 (“ EO 514 ”) provides for the regulatory framework for freight
forwarding by sea and grants to the Philippine Shippers’ Bureau (the “ PSB”), now, the Fair
Trade Enforcement Bureau of the Department of Trade and Industry (“ FTEB ”) the power to,
among others, register and accredit non-vessel operating common carriers, freight forwarders,
cargo consolidators and break-bulk agents in accordance with existing agreements and charge
reasonable fees therefor.
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--- page 626 ---
Pursuant to the foregoing authority, the PSB issued the Revised Rules on Freight Forwarding
(the “ PSB Rules ”), which the FTEB has adopted. The PSB Rules, defines an international
freight forwarder as a local entity that acts as a cargo intermediary and facilitates transport of
goods on behalf of its client without assuming the role of a carrier. An international freight
forwarder can also perform other forwarding services, such as booking cargo space, negotiating
freight rates, preparing documents, advancing freight payments, providing packing/crating,
trucking and warehousing, engaging as an agent/representative of a foreign Non-V essel
Operating Common Carrier/cargo consolidator named in a master bill of lading as consignee
of a consolidated shipment, and other related undertakings.
A domestic freight forwarder, on the other hand, is defined under the PSB Rules as an entity
that facilitates and provides the transport of cargo and distribution of goods within the
Philippines on behalf of its client.
The PSB Rules require international and/or domestic freight forwarders to secure a Certificate
of Accreditation from the FTEB in order to conduct sea freight forwarding activities. The
Certificate of Accreditation has a life span of two years unless sooner cancelled or revoked
under the PSB Rules. The Certificate of Accreditation cannot be transferred, alienated, or
inherited, in any manner.
A company must obtain the necessary certificate depending on its business. Moreover, every
branch of an international and domestic freight forwarder must first be accredited before such
branch can legally engage in the freight forwarding business. Violations of the PSB Rules may
result in the imposition of fines and other administrative penalties.
Foreign Ownership Restriction in Freight Forwarding
Domestic freight forwarding was previously considered a “public utility” which is subject to
a minimum of 60% Filipino ownership requirement. However, the PSA Amendment has taken
out this activity from the definition of a “public utility” that is restricted to Filipinos and to
corporations at least 60% of the capital of which is owned by Filipino citizens.
There was a divergence of opinion with regard to whether international freight forwarding may
be foreign-owned. On the one hand, the PSEC, citing issuances of the Philippine Department
of Justice (“ DOJ”), has opined that corporations engaged exclusively in international freight
forwarding are considered beyond the purview of the nationality requirement for the operation
of public utilities and therefore, may be owned up to 100% by foreigners. On the other hand,
a division of the Court of Appeals had ruled in Merit Freight International, Inc. v. Federal
Express Pacific, Inc. , C.A.-G.R. SP No. 119658 and Ace Logistics Inc., v. Federal Express
Pacific, Inc. , C.A.-G.R. SP . No. 121661, (consolidated) (January 23, 2013), which involved a
complaint against the grant of provision and regular permit to Federal Express to operate as an
international freight forwarder, that foreign corporations are disqualified from operating as
international airfreight forwarders in the Philippines, being violative of the nationality
restrictions under the Philippine Constitution. In this case, the Court of Appeals mentioned the
DOJ opinion which ruled that international airfreight forwarders are not covered by the
nationality requirement, but nevertheless held that, while the DOJ opinion is persuasive, the
court is not bound by the resolution of the DOJ Secretary. The case is pending appeal with the
Supreme Court. In the meantime, however, the PSEC has issued opinions reiterating its view
that international freight forwarding may be foreign-owned.
This issue is now rendered moot with the passage of the PSA Amendment as mentioned above.
Thus, international freight forwarding activity is no longer considered nationalized – i.e.,
subject to the 40% foreign ownership restriction.
APPENDIX III REGULATORY OVERVIEW
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--- page 627 ---
REGULATIONS ON PRIV ATE EXPRESS AND/OR MESSENGER DELIVERY
SERVICE (“PEMEDES”)
Authority to Operate PEMEDES
Presidential Decree No. 240 issued on July 9, 1973 states that no express and/or messenger
delivery service firm shall operate in the Philippines without possessing an “Authority to
Operate and/or Messenger Delivery Service” to be issued by the Postmaster General (now the
Department of Information and Communications Technology or the “ DICT ”).
Under Republic Act No. 7354 or the Postal Service Act of 1992, the Department of
Transportation and Communications (“ DOTC ”) (whose functions relating to the operation and
maintenance of a national postal system including delivery services are transferred to the
DICT) was given the exclusive power and authority to regulate the postal delivery services
industry or those engaged in domestic postal commerce, including the registration and
prequalification of any natural or juridical person, other than freight forwarders, who engage
in the business of letter and parcel messengerial services, door-to-door delivery, or the
transporting of the property of others that are similar to mail or parcel.
“Mail” or “mail matters” refer to all matters authorized by the government to be delivered
through the postal service and shall include letters, parcels, printed materials, and money
orders. “Parcel” means a rectangular box, the dimension and weight of which is as specified
by the Philippine Postal Corporation or the Government containing goods or some form of
transportable property intended for delivery to an addressee prominently displayed on at least
one of its sides.
Under DOTC Department Circular No. 2001-01 (“ DC 2001-01 ”), which the DICT has adopted
as stated in DICT Department Order No. 001, Series of 2017, an “Express and/or Messengerial
Delivery Service Firm” is defined as those that own, operate, manage or control in the
Philippines, for hire or compensation, with general or limited clientele, whether permanent,
occasional or accidental, and for general business purposes, any service for the personal
delivery to other persons, of written messages and any mail matter, except telegram.
The DICT has proposed revised rules in procedures for applications for issuance/grant/renewal
of authority to operate PEMEDES, including the processing, hearing, and adjudicating
applications thereof and the investigation of complaints in connection with the operation of
such services.
DC 2001-01 provides that only citizens of the Philippines or entities at least 60% of whose
capital stock is owned by citizens of the Philippines may apply to operate a PEMEDES. The
DICT has not yet amended this notwithstanding the passage and effectivity of the PSA
Amendment.
A holder of a PEMEDES license must comply with certain terms and conditions, including that:
 any change in the composition of the stockholders/stockholdings, directors and
officers must be submitted to the DICT for prior approval and/or notations;
 the grantee shall neither lease, transfer, sell or assign the authority and the rights and
privileges appurtenant thereto to any person, firm, company, corporation or other
legal entity nor merge with any other person, company or corporation organized for
the same purpose, without the approval of the DICT;
APPENDIX III REGULATORY OVERVIEW
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--- page 628 ---
 the grantee shall not allow other persons or entities to operate under its authority to
operate PEMEDES under a contract of agency, on commission basis or other
arrangements; and
 the grantee shall not open or operate a branch in authorized places without notifying
the DICT within 10 days prior to actual operations; and
 Any violation of the conditions will be subject to corresponding penalties or ground
for revocation or cancellation of such authority.
The DICT has recently issued Department Circular No. 001, Series of 2022 dated April 8, 2022
(“DC 2022-001 ”) which rationalizes the registration, accreditation and monitoring of
PEMEDES operators. Under DC 2022-001, the ICT Infrastructure and Services and Enabling
Division (“ IISED ”) (formerly the Postal Regulation Division) is created to expedite the
application process for new entrants for the PEMEDES industry. The IISED is under the
control and supervision of the DICT Office of the Undersecretary for Digital Philippines
(“OUDP ”) and will handle the processing and evaluation for registration of, among others,
PEMEDES operators and their subsequent monitoring and regulation. Under the DC 2022-001,
the OUDP and IISED are tasked to ensure that all relevant processes are simplified through
process reengineering and through the use of appropriate digital technologies. They are also
authorized to impose and collect reasonable fees to cover the costs of administration and
regulation over the PEMEDES operators, among others.
Messenger’s Work License
Every operator of PEMEDES must also secure from the DICT a Messenger’s Work License for
every person it employs as a messenger. The Messenger’s Work License will be valid for two
years and may be renewed for the same period after the messenger concerned is ascertained to
have no derogatory record. However, notwithstanding the requirement under the PEMEDES
Rules obtain Messenger’s Work Licenses, the DICT is not able to process applications for
messenger’s work licenses. Consequently, the DICT issued Department Circular No. 002 dated
February 21, 2020, which requires PEMEDES operators to submit (i) a complete list of
employees functioning as messengers/couriers, and (ii) their respective Messenger’s Work
License Number, if any.
REGULATIONS ON DATA PRIV ACY
Republic Act No. 10173 (Data Privacy Act of 2012) (the “ DPA”), its implementing rules and
regulations, and the issuances of the National Privacy Commission (“ Philippine NPC ”) govern
the processing of all types of personal information “Personal Information” is defined as any
information whether recorded in a material form or not, from which the identity of an
individual is apparent or can be reasonably and directly ascertained by the entity holding the
information, or when put together with other information would directly and certainly identify
an individual. The DPA applies to any natural and juridical person involved in personal
information processing including those personal information controllers and processors who,
although not found or established in the Philippines, use equipment that are located in the
Philippines, or those who maintain an office, branch or agency in the Philippines, subject to
certain exceptions.
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--- page 629 ---
The DPA expressly requires that before an entity can collate, process, and then use or share
personal data, the personal information controller or processor must have a lawful criterion or
basis for processing, such as consent (which is defined as any freely given, specific, informed
indication of will, whereby the data subject agrees to the collection and processing of his or
her personal data). Such entity must also register with the Philippine NPC and appoint a data
protection officer.
The DPA and its implementing rules require personal information controllers and processors to
have a data protection officer or compliance officer who shall be accountable for ensuring
compliance with applicable laws and regulations for the protection of data privacy and security.
Personal information controllers (“ PICs ”) and personal information processors (“ PIPs ”) must
also (i) conduct a privacy impact assessment as part of the organizational security measures
pursuant to Philippine NPC Advisory No. 2017-03, and (ii) register its data processing system
with the Philippine NPC if any of the following thresholds are met: (a) it employs at least 250
employees; (b) the processing it conducts is likely to pose a risk to the rights and freedoms of
the data subjects; (c) it processes the sensitive personal information of at least 1,000
individuals; or (d) the processing involves automated decision making or profiling, pursuant to
Philippine NPC Circular No. 2022-04. PICs and PIPs who do not fall under mandatory
registration and do not undertake voluntary registration are required to submit a sworn
declaration to the Philippine NPC stating, among other things, why they are not required to
register.
PICs and PIPs are also required to constitute a data breach response team and proper
documentation under Philippine NPC Circular No. 2016-03.
Data sharing arrangements (which involves the transfer of disclosure of personal information
from one personal information to another personal information controller) and data outsourcing
arrangements (which involve the transfer or disclosure of personal information from a personal
information controller to a personal information processor) are also regulated under the DPA
and its implementing rules and regulations.
Non-compliance with the DPA is subject to administrative and criminal penalties. On August
8, 2022, the Philippine NPC issued Philippine NPC Circular No. 2022-01 or the Guidelines on
Administrative Fines. Philippine NPC Circular No. 2022-01 provides for the imposition of
administrative fines for data privacy infractions committed by PICs and PIPs. Depending on
whether the violation is grave or major, the Philippine NPC will impose administrative fines
ranging from 0.5% to 3% and 0.25% to 2%, respectively, of the annual gross income of the PIC
or PIP that committed the infraction. As for other violations, the PIC or PIP shall be subject
to an administrative fine of not less than Philippine Peso (“ PHP”) 50,000 but not exceeding
PHP200,000 for either of the following: (1) failure to register the true identity or contact details
of the PIC, the data processing system, or information on automated decision making; or (2)
failure to provide updated information as to the identity or contact details of the PIC, the data
processing system, or information on automated decision making. The failure to comply with
any Order, Resolution, or Decision of the Philippine NPC, or of any of its duly authorized
officers, will result to an administrative fine not exceeding PHP50,000 on top of the fine
imposed for the original infraction. Philippine NPC Circular No. 2022-01 also enumerates the
circumstances that will be taken into consideration in computing the fine. PICs or PIPs that
refuse to pay the administrative fine may be subject to a Cease and Desist Order, other
processes or reliefs as the Philippine NPC may be authorized to initiate pursuant to the DPA,
and appropriate contempt proceedings under the Rules of Court. Philippine NPC Circular No.
2022-01 applies prospectively. Complaints already filed to the Philippine NPC are not affected
by the said issuance.
APPENDIX III REGULATORY OVERVIEW
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--- page 630 ---
REGULATIONS ON COMPETITION LAW
Republic Act No. 10667 (Philippine Competition Act) (“ PCA”) is the primary competition
policy of the Philippines. It came into effect on August 8, 2015 and was enacted to provide free
and fair competition in trade, industry and all commercial economic activities. The PCA
prohibits practices that restrict market competition through anti-competitive agreements and
abuse of a dominant position and requires parties to notify and obtain clearance for certain
mergers and acquisitions. The PCA prescribes administrative and criminal penalties for
violations of its provisions.
The PCA also requires compulsory notification for mergers and acquisitions which meet certain
thresholds. Starting March 1, 2023, the thresholds are PHP7 billion for the Size of Party Test
and PHP2.9 billion for the Size of Transaction Test. These thresholds are subject to annual
adjustment based on the Gross Domestic Product of the Philippines.
REGULATIONS ON EMPLOYMENT
General Labor Standards
The Labor Code of the Philippines, as amended (“ Philippine Labor Code ”) and various labor
laws govern the employer’s relationship with its employees and provide the minimum benefits
the employer is required to provide to its employees. These laws include minimum wage
requirements, mandatory leave benefits, mandatory health benefits, overtime compensation,
retirement pay, separation pay, and other wage and benefit requirements. The non-payment of
statutory benefits or the payment of benefits that are less than those required by law may
expose an employer to (i) monetary claims subject to a three-year prescriptive period; (ii)
issuance of compliance order or writ of execution during labor inspection audits of the
Department of Labor and Employment (“ DOLE ”); and (iii) potential criminal liability in case
of non-compliance with the compliance order. Further, if the employer is unconditionally and
consistently providing benefits that are greater than what the law provides, it cannot
unilaterally reduce, diminish, discontinue or withdraw such benefits without violating the
principle of non-diminution of benefits.
Labor Unions
The Philippine Labor Code and Department Order No. 40, series of 2003, as amended, issued
by the DOLE set out the guidelines for the formation of labor unions. In unionized
establishments, the collective bargaining agreement (“ CBA”) entered into by the management
with the labor union governs the terms and conditions of employment of the union members.
Labor unions in the Philippines that have been certified as sole and exclusive bargaining agents
may request the management to enter into a CBA and negotiate the terms of their employment,
including salaries and benefits, which may be higher than the minimum required by law. While
a CBA is effective for five years, the union may renegotiate the economic terms (or those
provisions affecting the salaries and benefits of the employees) not later than three years from
the execution of the agreements, which may further result in periodic increase of costs for the
employer.
Under the Philippine Labor Code, the management has the duty to enter into collective
bargaining negotiations with a union in good faith. The management should be cautious not to
perform any of the following unfair labor practices: (a) require as a condition of employment
that a person or an employee shall not join a labor organization or shall withdraw from one to
which he belongs; (b) contract out services or functions being performed by union members
when such will interfere with, restrain, or coerce employees in the exercise of their right to
APPENDIX III REGULATORY OVERVIEW
– III-15 –


--- page 631 ---
self-organization; (c) discriminate as regards to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership in any labor
organization; and (d) dismiss, discharge, prejudice or discriminate against an employee for
having given or being about to give testimony under the Philippine Labor Code. Unfair labor
practices violate the constitutional right of workers and employees to self-organization, and are
inimical to the legitimate interests of both labor and management. The commission of unfair
labor practices exposes the employer to civil and criminal liabilities.
Prohibition on Engagement of Foreign Nationals in Partly Nationalized Business
Section 2-A of the ADL prohibits the participation of non-Philippine nationals in the
management, operation, administration or control of a company in wholly or partly
nationalized business, whether as an officer, employee or laborer therein with or without
remuneration, except where: (i) the Secretary of Justice specifically authorizes the employment
of alien technical personnel; and (ii) the foreign nationals are elected as members of the board
of directors or governing body of corporations or associations in proportion to their allowable
participation in the capital of such entities. In DOJ Opinion No. 239 dated November 12, 1976,
the term “technical personnel” would generally include any person who has special
extraordinary or practical knowledge, specially of a mechanical or scientific occupation.
Violations of the ADL may be punished by a penalty of imprisonment for not less than five but
not more than 15 years and by a fine of not less than the value of the right, franchise or
privilege enjoyed or acquired in violation of the ADL, but in no case less than PHP5,000
(approximately US$100). If the violator is a corporation, the penalties would be imposed on the
President, manager, and directors of the company in question and any person who knowingly
aids, assists, or abets in the planning, consummation, or perpetration of the violation.
Occupational Safety and Health Standards
Rule 1020 of the Occupational Safety and Health Standards (“ OSHS ”) requires every employer
to register its business with the relevant Regional Office of the DOLE on a per location basis
within 30 days before the start of operations. In addition, the OSHS and DOLE Department
Order No. 198, series of 2018 require employers to engage health personnel and safety officers
and provide health facilities depending on the number of employees per location and the
company’s risk classification. The willful failure or refusal of an employer to comply with the
OSHS requirements shall make it liable for administrative fines. The failure or refusal to
comply with OSHS shall be deemed willful when done voluntarily, deliberately and
intentionally. The penalty shall be computed on a per day basis until full compliance reckoned
from the date of the notice of violation or service of the compliance order to the employer.
Registration with Social Welfare Agencies
Under the Social Security Act of 2018, social security coverage is compulsory for all
employees under 60 years of age. An employer is obligated to deduct and withhold from each
employee’s monthly salary, wage, compensation or earnings, the employee’s contribution, and
the employer, for its part, makes a counterpart contribution for the employee, and remits both
amounts to the Social Security System (“ SSS”). This enables the employees to claim their
pension, death benefits, permanent disability benefits, funeral benefits, sickness benefits and
maternity-leave benefits. The failure to register employees or deduct contributions from the
employees’ compensation and remit the same to the SSS is punishable by a fine of not less than
PHP5,000 but not more than PHP20,000 (approximately US$100 to US$400) and
imprisonment for not less than six years and one day but not more than 12 years, or both, at
the discretion of the court.
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--- page 632 ---
The Universal Health Care Act requires every employer to report its employees to the
Philippine Health Insurance Corporation (“ PhilHealth ”), and deduct and withhold the
contributions from the employee’s salary, wage or earnings, make a counterpart contribution
for the employee, and remit both amounts to PhilHealth. An employer who fails or refuses to
register its employees or timely and accurately deduct contributions from the employee’s
compensation shall be punished with a fine of PHP50,000 for (approximately US$1,000) every
violation per affected employee, or imprisonment of not less than six months but not more than
one year, or both.
The Home Development Fund Law created the Home Development Mutual Fund (“ HDMF ”),
a national savings program as well as a fund to provide for affordable shelter financing to
Filipino workers. Coverage under the HDMF is compulsory for all SSS members and their
employers. Under the law, an employer must deduct and withhold 2% of the employee’s
monthly compensation, up to a maximum of PHP5,000 (approximately US$100), and likewise
make a counterpart contribution of 2% of the employee’s monthly compensation, and remit the
contributions to the HDMF. The non-compliance with the obligations under the HDMF Law is
punishable by a fine of not less than, but not more than, twice the amount involved or
imprisonment of not more than six years or both fine and imprisonment. When the offender is
a corporation, the penalty will be imposed upon the members of the governing board and the
President or General Manager, without prejudice to the prosecution of related offenses under
the Revised Penal Code and other laws, revocation and denial of operating rights and privileges
in the Philippines, and deportation when the offender is a foreigner.
Independent Contractor
Job contracting or outsourcing of work is allowed in the Philippines, but it is heavily regulated
by the Labor Code of the Philippines, as amended, and DOLE Department Order No. 174,
series of 2017 (“ DOLE DO 174-17 ”). There is legitimate or permissible contracting where the
contractor (i) is engaged in a distinct and independent business and undertakes to perform the
job or work on its own responsibility, according to its own manner and method; (ii) has
substantial capital to carry out the job farmed out by the principal on his account, manner and
method, and investment in the form of tools, equipment and supervision; (iii) is free from the
control and/or direction of the principal in all matters connected with the performance of the
work except as to the result thereof; and (iv) enters into a service agreement that ensures
compliance with all the rights and benefits of all the employees of the contractor under the
labor laws. On the other hand, DOLE DO 174-17 prohibits labor-only contracting, which is an
arrangement where the contractor merely supplies workers to an employer and any of the
following arrangements exists: (i) the contractor does not have substantial capital or
investments to perform the job, and the employees recruited and placed by the contractor are
performing activities which are directly related to the main business operation of the principal;
or (ii) the contractor does not exercise the right to control over the performance of the work
of the employee. In case of a finding of labor-only contracting, the contractor shall be
considered merely as an agent of the principal who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by the principal.
DOLE DO 174-17 also requires all entities acting as job contractors to register with the DOLE
Regional Office where they principally operate. Failure on the part of the contractor to register
with the DOLE gives rise to the presumption that it is engaged in the prohibited labor-only
contracting.
APPENDIX III REGULATORY OVERVIEW
– III-17 –


--- page 633 ---
TAXATION
Tax on Dividends
Cash and property dividends received from a domestic corporation by individual shareholders
who are either citizens or residents of the Philippines are subject to income tax at a final
withholding tax rate of 10%, which shall be withheld by the Philippine company. Subject to the
applicable preferential tax rates under income tax treaties executed between the Philippines and
the country of residence or domicile of such non-resident alien individuals, cash and property
dividends received by (a) non-resident alien individuals engaged in trade or business in the
Philippines are subject to income tax at a 20% final withholding tax rate on the gross amount
thereof, and (b) non-resident alien individuals not engaged in trade or business in the
Philippines are subject to income tax at a final withholding tax rate of 25% of the gross amount.
Cash and property dividends received from a domestic corporation by another domestic
corporation or by resident foreign corporations are not subject to income tax, while those
received by non-resident foreign corporations are generally subject to income tax at a final
withholding tax rate 25%. The 25% income tax rate for dividends paid to a non-resident foreign
corporation may be reduced to a lower rate of 15% if tax sparing applies, which is when the
country of domicile of the non-resident foreign corporation allows a 10% ( i.e. , the difference
between the regular income tax rate and 15% tax on dividends) credit equivalent for taxes
deemed to have been paid in the Philippines. A non-resident foreign corporation availing of the
tax sparing rate is required under Revenue Memorandum Order (“ RMO”) No. 46-20
(Guidelines and Procedures for the Availment of the Reduced Rate of 15% on Intercompany
Dividends Paid by a Domestic Corporation to a Non-resident Foreign Corporation Pursuant to
section 28 (B) (5) (b) of the National Internal Revenue Code of 1997, as Amended, dated
December 23, 2020) to file an application with the BIR for a confirmatory ruling on its
entitlement to the tax sparing rate.
The abovementioned tax rates are without prejudice to applicable preferential tax rates under
income tax treaties in force between the Philippines and the country of domicile of the
non-resident shareholder. Most tax treaties to which the Philippines is a party provide for a
reduced tax rate of 10% or 15% in cases where the dividend arises in the Philippines and is paid
to a resident of the other contracting state. Most income tax treaties also provide that reduced
withholding tax rates shall not apply if the recipient of the dividend, who is a resident of the
other contracting state, carries on business in the Philippines through a permanent
establishment and the holding of the relevant dividend-earning interest is effectively connected
with such permanent establishment. Under RMO 14-2021 (Streamlining the Procedures and
Documents for the Availment of Treaty Benefits dated March 31, 2021), as clarified by
Revenue Memorandum Circular No. 077-21, there are two ways to avail of the preferential tax
rates under tax treaties, i.e., through request for confirmation (“ RFC”) or through a tax treaty
relief application (“ TTRA ”). Accordingly, an RFC is filed by the withholding tax agent (or its
duly authorized representative) when the preferential rate under the tax treaty is applied, while
a TTRA is filed by the non-resident income recipient (or its duly authorized representative)
when the regular income tax rate is applied. If the RFC or TTRA is approved, the Bureau of
Internal Revenue will issue a Certificate of Entitlement to Treaty Benefit (“ COE”). RMO
20-2022 has clarified that taxpayers who were issued with COEs containing tenor allowing the
ruling to be applied to subsequent or future payments (i.e., for recurring transactions such as
the payment of dividends) are no longer required to file an RFC or TTRA every time an income
of similar nature is paid to the same nonresident, as long as the requisites mentioned in the
COE are met.
APPENDIX III REGULATORY OVERVIEW
– III-18 –


--- page 634 ---
Transfer taxes (e.g., documentary stamp tax, local transfer tax) may also be payable in addition
to income tax if the dividends declared are property dividends, depending on the type of
property distributed as dividends. Stock dividends distributed pro rata to any holder of shares
of stock outside of local stock exchange are generally not subject to Philippine income tax.
However, the subsequent sale, exchange or disposition of shares in a domestic corporation that
is not listed in the local exchange previously received as stock dividends by the shareholder is
subject to capital gains tax and documentary stamp tax.
Corporate Income Tax
Generally, the Philippine Tax Code, as amended by the Corporate Recovery and Tax Incentives
for Enterprises Act, imposes on a domestic corporation a tax of (i) 30% until June 30, 2020 and
(ii) 25% starting July 1, 2020, on its taxable income from all sources within and outside the
Philippines. If the corporation’s net taxable income does not exceed PHP5,000,000
(approximately US$100,000) and its total assets do not exceed PHP100,000,000
(approximately US$2,000,000) (excluding land on which the corporation’s office, plant and
equipment are situated) during the taxable year for which the tax is imposed, the income tax
rate will be further reduced to 20%. A minimum corporate income tax at the rate of 1% until
June 30, 2023 and 2% thereafter of the gross income of the corporation as of the end of the
taxable year, beginning on the fourth taxable year immediately following the year in which the
corporation commenced its business operations, may be imposed in lieu of the ordinary income
tax if the minimum corporate income tax is greater than the computed ordinary income tax for
the taxable year. Certain passive incomes are subject to final tax rates different from the 25%
rate imposed on ordinary income tax.
Aside from the corporate income tax, entities doing business in the Philippines are generally
liable to pay other taxes, such as value-added tax, documentary stamp tax and local taxes.
LAWS AND REGULATIONS IN RELATION TO OUR BUSINESS IN CHINA
REGULATORY OVERVIEW
Our business operations in China are subject to various laws and regulations. Please find below
an overview of the key laws and regulations relating to our business.
REGULATIONS RELATING TO FOREIGN INVESTMENT
Investment activities in the PRC by foreign investors are principally governed by the
Encouraging Catalog and the Negative List, which were promulgated and are amended from
time to time by the MOFCOM and the NDRC. The Encouraging Catalog and the Negative List
lay out the basic framework for foreign investment in the PRC, classifying businesses into
three categories with regard to foreign investment: “encouraged”, “restricted” and
“prohibited”. Industries not listed in the Encouraging Catalog and the Negative List are
generally deemed as falling into a fourth category “permitted”. The NDRC and the MOFCOM
promulgated the Catalog of Industries for Encouraging Foreign Investment (2022 V ersion)
(ོᎸ̮ਠҳ༟ପุͦ፽(2022و)) (the “ 2022 Encouraging Catalog ”), on October 26,
2022, which became effective on January 1, 2023, and the Special Management Measures
(Negative List) for the Access of Foreign Investment (2021 V ersion) (ɝतй၍
݄(૶ఊ)(2021و)) (the “ 2021 Negative List ”), on December 27, 2021, to replace
the previous encouraging catalog and negative list thereunder.
APPENDIX III REGULATORY OVERVIEW
– III-19 –


--- page 635 ---
We are mainly engaged in express delivery services, which could not exclude the possibility
of involving domestic express delivery services of letter in practices. According to the 2021
Negative List, foreign investments in domestic express delivery services of letter are
prohibited. Therefore, we provide domestic express delivery services of letter through our
Consolidated Affiliated Entities in China.
On March 15, 2019, the National People’s Congress (the “ PRC NPC ”) promulgated the PRC
Foreign Investment Law () (the “ FIL”), which came into
effect on January 1, 2020 and replaced the trio of laws regulating foreign investment in the
PRC, namely, the PRC Equity Joint V enture Law (),
the PRC Wholly Foreign-owned Enterprise Law () and the
PRC Cooperative Joint V enture Law (). Its
implementation rules promulgated by the State Council in December 2019 also came into effect
on January 1, 2020. The FIL, by means of legislation, establishes the basic framework for the
access, promotion, protection and administration of foreign investment in view of investment
protection and fair competition.
According to the FIL, foreign investment shall enjoy pre-entry national treatment, except for
those foreign invested entities that operate in industries deemed to be either “restricted” or
“prohibited” in the “negative list.” The FIL provides that foreign invested enterprises operating
in foreign “restricted” or “prohibited” industries will require entry clearance and other
approvals. The FIL does not comment on the concept of “de facto control” or contractual
arrangements with variable interest entities. However, it has a catch-all provision under
definition of “foreign investment” to include investments made by foreign investors in China
through means stipulated by laws or administrative regulations or other methods prescribed by
the State Council. Therefore, it still leaves leeway for future laws, administrative regulations
or provisions to provide for contractual arrangements as a form of foreign investment. In
addition, pursuant to the Measures for Reporting of Information on Foreign Investment ( ̮
), which came into effect on January 1, 2020, a foreign investment
information reporting system shall be established and foreign investors or foreign invested
enterprises shall submit the investment information to competent departments for commerce
through the enterprise registration system and the enterprise credit information publicity
system.
Furthermore, the PRC FIL provides that foreign invested enterprises established according to
the previous laws regulating foreign investment may maintain their structure and corporate
governance within five years after the implementation of the PRC FIL, which means that
foreign invested enterprises may be required to adjust the structure and corporate governance
in accordance with the current PRC Company Law () and other
laws and regulations governing the corporate governance.
On December 26, 2019, the State Council promulgated the Implementation Rules to the PRC
Foreign Investment Law (ૢԷ), which became effective
on January 1, 2020. The implementation rules further clarified that the state encourages and
promotes foreign investment, protects the lawful rights and interests of foreign investors,
regulates foreign investment administration, continues to optimize foreign investment
environment, and advances a higher-level opening.
According to the Measures for the Security Review of Foreign Investment ( ̮ਠҳ༟τΌᄲ
) which was promulgated by the NDRC and the MOFCOM on December 19, 2020 and
became effective on January 18, 2021, any foreign investment that has or possibly has an
impact on state security shall be subject to security review in accordance with the provisions
hereof. A foreign investor or a party concerned in China shall take the initiative to make a
APPENDIX III REGULATORY OVERVIEW
– III-20 –


--- page 636 ---
declaration to the working mechanism office prior to making the investment in any important
infrastructure, important transportation services and other important fields that concern state
security while obtaining the actual control over the enterprises invested in.
REGULATIONS RELATING TO EXPRESS DELIVERY SERVICES
The PRC Postal Law (), which was promulgated on December 2,
1986 and was most recently amended on April 24, 2015, sets out the fundamental rules on the
establishment and operation of an express delivery company. Pursuant to the PRC Postal Law,
an enterprise that operates and provides express delivery services must operate its express
delivery business by obtaining a Courier Service Operation Permit. In order to apply for a
Courier Service Operation Permit, a company must meet all the requirements as a corporate
legal person and satisfy certain prerequisites with respect to its service capacity and
management system, and its registered capital must be no less than RMB500,000 to operate
within a province, autonomous region, or municipality directly under the central government,
no less than RMB1,000,000 in the case of cross-provincial operation, and no less than
RMB2,000,000 to operate international express delivery services.
Filing with the postal administrative department is required where an express delivery
company sets up branches. The requirements for the establishment of a branch of express
delivery company are specified in the Administrative Measures for Courier Service Market
() (the “ Courier Market Measures ”), which was announced by the
Ministry of Transport in 2013. The Courier Market Measures stipulates that where any express
delivery company establishes its branches or business departments, it must register with the
local counterpart of the SAMR where such branches or business departments are located by
submitting its Courier Service Operation Permit and a list of its branches and, such branches
or business departments must, within 20 days after they obtain their relevant business licenses,
file with the local postal administrative department. The PRC Postal Law stipulates that if an
express delivery company fails to complete such required registration and/or filing with the
relevant governmental authority, it may be ordered to rectify and to pay general fines of no
more than RMB10,000. If the non-compliance situations are severe, a fine ranging from
RMB10,000 to RMB50,000 can be imposed, and the offender may face suspension of its
business operation before completing the rectification. State Postal Bureau and the Ministry of
Transport publicly solicited opinions on Administrative Measures for Courier Service Market
(Revised Draft For Comments) (ج(ࣩ)(ᅄӋจԈᇃ)) in January
2022, which provides that an express delivery company must complete the registration with the
local counterpart of SAMR within 20 days for its branches after it filed with the local postal
administrative department for such branches, otherwise the filing with local postal
administrative department will be revoked, while stipulating other operation requirements with
respect to services standards, operation safety, and personal information protection, among
others.
Pursuant to (i) the PRC Postal Law, (ii) the Courier Market Measures, (iii) the Administrative
Measures on Courier Service Operation Permits(), which was
promulgated on September 1, 2009 and was most recently amended on November 28, 2019, and
(iv) the Interim Regulations on Express Delivery( Ҟ჈ᅲБૢԷ), which was promulgated
on March 2, 2018 and was mostly recently amended on March 2, 2019, any entity engaged in
express delivery services must obtain a Courier Service Operation Permit from the State Post
Bureau or its local counterpart and is subject to their supervision and regulation. If an entity
operates express delivery services without obtaining a Courier Service Operation Permit in
accordance with the above measures and regulations, it may be compelled to make corrections,
subject to the confiscation of its earnings generated from its unlicensed operating express
delivery services, imposed a fine ranging from RMB50,000 to RMB100,000 or where the
APPENDIX III REGULATORY OVERVIEW
– III-21 –


--- page 637 ---
circumstances are severe, ranging from RMB100,000 to RMB200,000, and/or ordered to
suspend its business operation for rectification or even cancelation of its Courier Service
Operation Permit. If a permit-holder who ceases its business operation for over six months
within the effective period of the Courier Service Operation Permit, it will be ordered by the
postal administration departments to return the Courier Service Operation Permit, and if it
refuses or fails to do so on time, the postal administration departments shall publicly announce
the annulment of the Courier Service Operation Permit.
Enterprises engaged in express delivery services other than China Post and their wholly owned
and/or controlled enterprises that provide postal services (“ Postal Enterprise ”) may not
engage in post and mail delivery business which are exclusively operated by Postal Enterprise,
and may not deliver any official documents of state-owned organizations. The express delivery
business must operate within the permitted scope and under the valid terms of the Courier
Service Operation Permit. The Courier Service Operation Permit is valid for 5 years upon its
issuance and comes with an annual reporting obligation. The Circular on Implementing the
Administrative Measures for the Courier Market and Strengthening the Administration of
Courier Service Operations (݄<ج>ਗ၍ଣ
), which was issued by the State Post Bureau in 2013, further clarifies that the postal
administrative department must examine whether an entity operates express delivery service
within the permitted business scope and geographic scope of its Courier Service Operation
Permit, and the geographic examination must be carried out down to the level of cities that may
be divided into districts. Pursuant to the Courier Market Measures, failure to conduct express
delivery services within the permitted operation scopes would subject the express delivery
company to a correction order by the postal administrative department and a fine ranging from
RMB5,000 to RMB30,000. Moreover, in accordance with the Administrative Measures on
Courier Service Operation Permits, an enterprise engaged in express delivery services must
submit an annual report on its Courier Service Operation Permit with the postal administrative
authority which issued its Courier Service Operation Permit prior to April 30, each year. Where
an express delivery service company fails to submit its annual report to the relevant postal
administrative authority in a timely manner, it may be ordered by the postal administrative
authorities to make correction, and may be subject to a fine of up to RMB10,000. Where an
express delivery service company conceals any facts or commits fraud in its annual report, such
express delivery service company may be ordered by the postal administrative authorities to
make correction and imposed a fine ranging from RMB10,000 to RMB30,000.
Pursuant to the Risk Assessment and Reporting for Major Operation and Management Issues
of Courier Enterprise Headquarters (Trial) (ᎈ൙Пձజ
ܓ(༊Б)), which was issued by the State Post Bureau on October 20, 2020, the
headquarters of a courier enterprise must submit a report within 3 days after making a major
decision on business that may cause an impact on the nationwide postal industry, including but
not limited to nationwide price adjustment, capital reduction, dissolution and bankruptcy, to the
State Post Bureau. Where it fails to submit the report to the postal administration authorities
in a timely manner, such courier enterprise may be ordered to make correction, and it may be
subject to a fine ranging from RMB50,000 to RMB100,000 and ordered to suspend business
operation until cancelation of its Courier Service Operation Permit.
In accordance with the Decision of the State Council on Issues concerning Canceling and
Adjusting a Batch of Administrative Examination and Approval Items (՟ऊձሜ
) in February 2015, a company operating express delivery
services must apply for and obtain the Courier Service Operation Permit prior to the
application of its business license.
APPENDIX III REGULATORY OVERVIEW
– III-22 –


--- page 638 ---
In accordance with the Courier Market Measures, if any express delivery service is carried out
through franchise, both the franchisees and franchisors must obtain the Courier Service
Operation Permit and any franchisee must run its franchise business within franchisors’
licensed scopes; and the franchisees and franchisors must enter into written agreements
providing the rights and obligations of both parties and the liabilities of both parties in case of
any violation of the legal rights and interests of the users of express delivery services. Any
franchisee or franchisor failing to obtain the Courier Service Operation Permit or any
franchisee failing to run its franchise business within franchisors’ licensed scopes would be
subject to a correction order by the relevant postal administrative authority and a fine ranging
from RMB5,000 to RMB30,000.
Companies engaged in express delivery service must establish and implement a system for the
examination of parcels or articles received for delivery. Pursuant to the PRC Postal Law and
Measures for the Supervision and Administration of Postal Security in the Postal Industry
( ) issued by the Ministry of Transport on January 2, 2020,
which became effective on February 15, 2020, express delivery companies must examine the
postal articles so as to inspect whether the postal articles are prohibited or restricted from
express delivery. Express delivery companies must also examine whether the names, nature and
quantity of the postal articles are consistent with delivery form. According to the PRC Postal
Law, any failure to establish or implement such inspection system, or any unlawful acceptance
or delivery of prohibited or restricted parcels/articles may result in the sanctions to the
in-charge persons bearing direct responsibility and other persons subject to direct liability of
the express delivery companies and the suspension of the company’s business operation for
rectification or even cancelation of its Courier Service Operation Permit, being compelled to
make corrections and being imposed a fine up to RMB5,000.
According to the Interim Regulations on Express Delivery, express delivery operators shall
obtain the Courier Service Operation Permit for express delivery. Express delivery operators
and their branches may open express delivery terminal outlets which are required to file with
the local post administrations in the places where they are located for record within 20 days
from the date of opening their express delivery terminal outlets. The delivery terminal outlets
are not required to obtain a business license. Where an express delivery service operator fails
to file with the local post administrations for opening their express delivery terminal outlets,
such express delivery service company may be compelled to make corrections, imposed a fine
up to RMB50,000 and/or ordered to suspend business for rectification. In case an express
delivery service company intends to suspend operating express delivery services, it shall (i)
make public announcement ten days in advance, (ii) submit a written notice to the postal
administrative departments, (iii) return the Courier Service Operation Permit and (iv) make
proper arrangement on undelivered express parcels. Failure to comply with such requirements
may be compelled to make corrections, imposed a fine up to RMB50,000 and/or ordered to
suspend business for rectification. According to the Interim Regulations on Express Delivery,
express delivery operators shall also verify the identity of senders and register their identity
information when receiving express parcels. Where senders refuse to furnish their identity
information or furnish false identity information, express delivery operators shall not receive
their express parcels. According to the Interim Regulations on Express Delivery, the PRC
Postal Law and the Anti-Terrorism Law (), if any express delivery operator
fails to verify the identity of senders and registers their identity information, or identifies that
the senders provide false identity information, but still receives the express parcels, such
express delivery operator may be subject to a fine ranging from RMB100,000 to RMB500,000
or ordered to suspend business operation until cancelation of its Courier Service Operation
Permit, and the personnel directly in charge and other persons directly liable may be subject
to a fine ranging up to RMB100,000. The Interim Regulations on Express Delivery also
indicates that two or more express delivery operator may use a unified trademark, corporate
APPENDIX III REGULATORY OVERVIEW
– III-23 –


--- page 639 ---
name or express waybill to conduct the express delivery business. The express delivery
operators shall enter into a written agreement to define their respective rights and obligations,
carry out unified management of service quality, safety guarantee and business process, and
provide unified express mail tracking, inquiry and complaint handling services for clients.
Where the legitimate rights and interests of any client have been jeopardized due to the delay,
missing, damage or shortage of express parcels, the client may request the express delivery
operator to which the trademark, corporate name or express waybill belongs to offer
compensation, or request the actual express delivery provider to pay compensation.
Pursuant to the E-commerce Law of the PRC () promulgated
by Standing Committee of the National People’s Congress (the “ SCNPC ”), which took effect
on January 1, 2019, e-commerce businesses are subject to certain requirements, including but
not limited to the following: while handing over commodities, express logistics service
providers shall remind consignees to examine the commodities immediately on the spot; where
the commodities are received by others for consignees, such providers shall obtain the consent
of consignees. Express logistics service providers shall use environmental-friendly packaging
materials in accordance with the relevant provisions in an effort to reduce the consumption of
and recycle packaging materials. While offering express logistics services, the providers
thereof may agree to be entrusted by e-commerce operators to collect payments for goods. The
operation of our business is subject to E-commerce Law of the PRC. If our express delivery
services are not in compliance with the law, we may be required to make certain rectifications.
In accordance with the Measures for Administration of Packaging of Mails and Express Mails
(), which was promulgated by the Ministry of Transport on
February 8, 2021 and has come into effect on March 12, 2021, express delivery companies shall
give priority to recyclable materials for packaging mails while optimizing the design of express
packaging and reducing the use of filling materials, and may not use non-degradable plastic
materials. Where an express delivery company uses packaging that is not in compliance with
the law, or uses a toxic substance as filling material, it would be subject to a correction order
by the postal administration authority; if the express delivery company fails to make
corrections within a time limit, it would be fined from RMB5,000 to RMB10,000. Express
delivery companies shall formulate and revise their own packaging operation regulations, and
make filings in accordance with the regulations of the postal administration authorities of the
State Council. If an express delivery company fails to formulate packaging operation
regulations or to file with the State Council, such express delivery company may be compelled
to make corrections with a time limit, and be imposed a fine ranging from RMB3,000 to
RMB10,000.
On August 6, 2021, nine PRC governmental and regulatory agencies, including the MOFCOM,
the NDRC and the Ministry of Transport, jointly issued the Special Action Plan for the
High-Quality Development of Commercial Courier (ྌ
(2021-2025 ϋ)) (the “ Plan ”). The Plan proposes to, among others, support and encourage
qualified express delivery companies to optimize and expand its business scale through
mergers, reorganizations, listing and financing. It also calls for further developing courier
industry through technological innovation and business model innovation. The Plan aims to
build an efficient urban-rural distribution system and to promote the integration of regional
express delivery companies during the five-year plan period.
APPENDIX III REGULATORY OVERVIEW
– III-24 –


--- page 640 ---
ROAD TRANSPORTATION OPERATION PERMIT
Pursuant to the Regulations on Road Transportation of the PRC ( ʕശɛ͏΍ձ਷༸༩༶፩
ૢԷ) promulgated by the State Council in April 2004 and most recently amended in
September 2022, and the Provisions on Administration of Road Freight Transportation and
Stations (Sites) () issued by the Ministry of Transport in
June 2005 and most recently amended in June 2019 (the “ Road Freight Provisions ”), the
business operations of road freight transportation refer to commercial road freight
transportation activities that provide public services. The road freight transportation includes
general road freight transportation, special road freight transportation, road transportation of
large articles, and road transportation of hazardous cargos. Special road freight transportation
refers to freight transportation using special vehicles with containers, refrigeration equipment,
or tank containers, etc. The Road Freight Provisions set forth detailed requirements with
respect to vehicles and drivers.
Under the Road Freight Provisions, anyone engaged in the business of operating road freight
transportation must obtain a Road Transportation Operation Permit from the local county-level
road transportation administrative bureau, and each vehicle used for road freight transportation
must have a Road Transportation Certificate from the same authority. The incorporation of a
subsidiary of road freight transportation operator that intends to engage in road transportation
business is subject to the same approval procedure. If it intends to establish a branch, it should
file with the local road transportation administrative bureau where the branch is to be
established. Pursuant to the Notice on the Cancelation of the Road Transportation Operation
Permit and the Driver Qualification Certificate for Ordinary Freight V ehicles with a Total Mass
of 4.5 Tons or Less (՟ऊᐼሯඎ4.5ኚʿ˸ɨ౷ஷ஬༶ԓሿ༸༩༶፩
) promulgated by the Ministry of Transport, which took effect
on January 1, 2019, local transportation management departments will no longer issue road
transportation operation permit for ordinary freight vehicles with a total mass of 4.5 tons or
less, and shall not impose administrative penalties on such vehicles and drivers for the reasons
of operating without permits and driving freight transportation vehicles without corresponding
qualification certificates.
Although the Road Transportation Operation Permits have no limitation with respect to
geographical scope, several provincial governments in China, including Shanghai and Beijing,
promulgated local rules on administration of road transportation, stipulating that permitted
operators of road freight transportation registered in other provinces should also make
record-filing with the local road transportation administrative bureau where they carry out its
business.
REGULATIONS RELATING TO CARGO VEHICLES
Pursuant to the Administrative Provisions concerning the Running of Cargo V ehicles with
Out-of-Gage Goods () promulgated by the PRC Ministry
of Transport, which took effect on September 21, 2016 and was most recently amended on
August 11, 2021, cargo vehicles running on public roads shall not carry cargo weighing more
than the limits prescribed by this regulation and their dimensions shall not exceed those as set
forth by the same regulation. V ehicle operators who violate this regulation may be subject to
a fine of up to RMB30,000 for each violation. In the event of repeated violations, the regulatory
authority may suspend the operating license of the vehicle operator and/or revoke the business
operation registration of the relevant vehicle. In the event more than 10% of the total vehicles
of any road transportation enterprise are not in compliance with this regulation in any year,
such road transportation enterprise shall suspend its business for rectification and its road
transportation license may be revoked.
APPENDIX III REGULATORY OVERVIEW
– III-25 –


--- page 641 ---
The operation of our truck fleet is subject to this regulation. If our trucks are not in compliance
with this regulation, we may be required to modify such trucks to reduce their length or
purchase new ones to replace them. Otherwise, we may be subject to penalties under this
regulation if we continue to operate those trucks that exceed the limits set forth in the
regulation. See “Risk Factors – Risks Related to Our Business and Industry – Our business and
the business of our network partners are subject to a broad range of laws and regulations.”
REGULATIONS RELATING TO INTERNATIONAL FREIGHT FORWARDING
BUSINESS
Administrative Provisions on International Freight Forwarders of the PRC ( ʕശɛ͏΍ձ਷
) promulgated in 1995 and its detailed rules issued in 2004
regulate the business of international freight forwarding. According to the provisions and its
detailed rules, the minimum amount of registered capital must be RMB5 million for an
international freight forwarder by sea, RMB3 million for an international freight forwarder by
air and RMB2 million for an international freight forwarder by land or for an entity operating
international express delivery services. An international freight forwarder must, when each
time applying for setting up a branch, increase its registered capital (or the excess amount over
its minimum registered capital) by RMB500,000. Under the Measures on Filing of
International Freight Forwarders (Interim) (ࣩ(ᅲБ)) announced
in March 2005 and amended in August 2016, all international freight forwarders and their
branches registered with the SAMR must be filed with the MOFCOM or its authorized organs.
REGULATIONS RELATING TO COMMERCIAL FRANCHISING
Pursuant to the Administrative Regulations on Commercial Franchising Operations ( ਠุत
஢຾ᐄ၍ଣૢԷ) promulgated by the State Council on February 6, 2007, which became
effective on May 1, 2007, and the Administrative Measures on the Record Filing of
Commercial Franchises () issued by MOFCOM on December
12, 2011, which became effective on February 1, 2012, collectively the Regulations and
Provisions on Commercial Franchising, commercial franchising refers to the business activities
where an enterprise that possesses the registered trademarks, enterprise logos, patents,
proprietary technology or any other business resources allows such business resources to be
used by another business operator through contract and the franchisee follows the uniform
business model to conduct business operations and pay franchising fees to the franchisor
according to the contract. We and our network partners are therefore subject to regulations on
commercial franchising. Under the Regulations and Provisions on Commercial Franchising,
within 15 days of the first conclusion of franchising contract, the franchisor must carry out
record-filing with MOFCOM or its local counterparts and must report the status of its
franchising contracts in the previous year in the first quarter of each year after record-filing.
The MOFCOM announces the names of franchisors who have completed filing on the
government website and makes prompt updates. If the franchisor fails to comply with these
Regulations and Provisions on Commercial Franchising, the MOFCOM or its local
counterparts have the discretion to take administrative measures against the franchisor,
including fines and public announcements. The Regulations and Provisions on Commercial
Franchising also sets forth requirements on the contents of franchising contracts. J&T Express
China has signed franchising contracts under the Regulations and Provisions on Commercial
Franchising with its direct network partners. If we are deemed as a franchisor who fails to
comply with the stipulations of filing with the competent commerce authority, a fine ranging
from RMB10,000 to RMB100,000 may be imposed.
APPENDIX III REGULATORY OVERVIEW
– III-26 –


--- page 642 ---
REGULATIONS RELATING TO PERSONAL INFORMATION SECURITY AND
CONSUMER PROTECTION
The Administrative Provisions on the Security of Personal Information of Express Service
Users (), promulgated by the State Post Bureau on
March 26, 2014 and amended on February 13, 2023, provides for the protection of the personal
information of users of express or express delivery services, and the supervision on the express
operations of postal enterprises and express delivery companies. In accordance with these
provisions, the state postal administrative department and its local counterparts are the
supervising and administering authority responsible for the security of the personal
information of users of express or express delivery services, and postal enterprises and express
delivery companies must establish and refine systems and measures for the security of such
information. A user of express delivery services may further seek remedies by following the
Measures on Settling the Complaints of the Postal Users ()
issued by State Post Bureau, which took effect on October 1, 2020. The Postal Users
Complaints Settling Center implements the regime of mediation to handle the complaints from
users on the quality of the express delivery services. According to the Interim Regulations on
Express Delivery, an express delivery service company shall not sell, reveal or illegally provide
any information of client during the provision of express services. In case the information of
client is revealed or may be revealed, the express delivery service company shall take remedial
measures immediately and report to the local post administrations. Failure to comply with such
requirement may be subject to penalties including a fine ranging from RMB10,000 to
RMB100,000, suspension of business for rectification or revoke of its Courier Service
Operation Permit.
REGULATIONS RELATING TO DATA SECURITY
On July 1, 2015, the SCNPC issued the National Security Law of the PRC ( ʕശɛ͏΍ձ
), which came into effect on the same day, pursuant to which the state shall
safeguard the sovereignty, security and cybersecurity development interests of the state, and
that the state shall establish a national security review and supervision system to review, among
other things, foreign investment, key technologies, internet and information technology
products and services, and other important activities that are likely to impact the national
security of the PRC.
The Cybersecurity Law of the PRC (), promulgated by the
SCNCP on November 7, 2016 and became effective on June 1, 2017, requires network
operators to abide by the principles of legality, appropriateness and necessity when collecting
or using personal data. Network operators are prohibited from leaking, tampering with or
damaging collected personal data, and they should adopt technical and other necessary
measures to ensure security of personal data, safeguard against information leakage, damage
or loss, improve information management with respect to data published by users and establish
complaint and reporting mechanisms with respect to network data security.
On June 10, 2021, the SCNPC issued the Data Security Law of the PRC ( ʕശɛ͏΍ձ਷
) (the “ Data Security Law ”), which came into effect on September 1, 2021, to
regulate data processing activities and security supervision in the PRC. The Data Security Law
clarifies the scope of data to cover a wide range of information records generated from all
aspects of production, operation and management of government affairs and enterprises in the
process of the gradual transformation of digitalization, and requires that data collection shall
be conducted in a legitimate and proper manner, and theft or illegal collection of data is not
permitted. Data processors shall establish and improve the whole-process data security
management rules, organize and implement data security trainings as well as take appropriate
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technical measures and other necessary measures to protect data security. In addition, data
processing activities shall be conducted on the basis of the graded protection system for
cybersecurity. Monitoring of the data processing activities shall be strengthened, and remedial
measures shall be taken immediately in case of discovery of risks regarding data security
related defects or bugs. In case of data security incidents, responding measures shall be taken
immediately, and disclosure to users and report to the competent authorities shall be made in
a timely manner.
On August 20, 2021, the SCNPC promulgated the PRC Personal Information Protection Law
() (the “ PIPL ”), which came into effect on November 1,
2021. The PIPL further accentuates the importance of processors’ obligations and
responsibilities for personal information protection and sets out the basic rules for processing
personal information. It stipulates an expanded definition of personal information, providing a
long-arm jurisdiction in cross-border scenarios, emphasizing individual rights, and prohibiting
rampant infringement of personal information. The information processor may process
sensitive personal information only when the information processor has specific purpose and
sufficient necessity, and under circumstances where strict protection measures are taken.
On November 14, 2021, the CAC publicly solicited opinions on the Regulations on the
Administration of Cyber Data Security (Draft for Comments) ( ၣഖᅰኽτΌ၍ଣૢԷ(ᅄӋ
จԈᇃ)) (the “ Draft Data Security Regulations ”). According to the Draft Data Security
Regulations, data processors shall, in accordance with relevant state provisions, apply for cyber
security review when carrying the following activities: (i) the merger, reorganization or
separation of Internet platform operators that have acquired a large number of data resources
related to national security, economic development or public interests, which affects or may
affect national security; (ii) data processors that handle the personal information of more than
one million people intends to be listed abroad; (iii) the data processor intends to be listed in
Hong Kong, which affects or may affect national security; and (iv) other data processing
activities that affect or may affect national security. However, the Draft Data Security
Regulations provides no further explanation or interpretation for “affects or may affect national
security.” In addition, the Draft Data Security Regulations also regulate other specific
requirements in respect of the data processing activities conducted by data processors through
internet in view of personal data protection, important data safety, data cross-broader safety
management and obligations of internet platform operators.
On December 28, 2021, the CAC jointly with relevant authorities issued the Measures for
Cybersecurity Review () (the “ Cybersecurity Review Measures ”),
which became effective on February 15, 2022. Pursuant to the Cybersecurity Review Measures,
the member organizations of the working mechanism for cybersecurity review can initiate
cybersecurity review if they consider national security is or may be affected by any network
products or services, or data processing activities.
On July 7, 2022, the CAC promulgated the Data Outbound Transfer Security Assessment
Measures () (the “ Security Assessment Measures ”), which
became effective on September 1, 2022. The Security Assessment Measures provides that,
among others, data processors who transfer important data abroad shall apply to competent
authorities for security assessment where (1) a critical information infrastructure operator and
personal information processor that has processed personal information of more than one
million people, transferring personal information abroad; (2) a data processor who has
provided personal information of 100,000 individuals or sensitive personal information of
10,000 individuals to overseas recipients, in each case as calculated cumulatively, since
January 1 of the last year; or (3) other circumstances where the security assessment of data
cross-border transfer is required as prescribed by the CAC.
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On February 24, 2023, the CAC published the Standard Contract Measures which became
effective on June 1, 2023, with a built-in six-month grace period (i.e., up to December 1, 2023).
Under the Standard Contract Measures, handlers of PI that do not meet the threshold
requirements under the Security Assessment Measures and have not obtained a PI protection
certification from a qualified certification institution designated by the CAC, but that
nevertheless engage in the transfer of PI out of China based on contractual arrangements must
(1) execute standard form contracts that strictly comply with the “Standard Contract” published
by the CAC with the overseas recipients of the PI that the PI handlers transfer out of China;
(2) complete PI protection impact assessments; and (3) file the relevant standard contracts and
PI protection impact assessments to their provincial CAC branch within 10 business days of the
taking effect of each standard contract.
REGULATIONS RELATING TO PRICING
In China, the prices of a few numbers of products and services are set by the government.
According to Pricing Law of the PRC () (the “ Pricing Law ”)
promulgated on December 29, 1997, which became effective on May 1, 1998, operators must
indicate the service items, pricing structures and other related standards clearly. Operators may
not charge any fees that are not explicitly indicated. Operators must not commit unlawful
pricing activities, such as colluding with others to manipulate the market price, using false or
misleading prices to deceive consumers, or conducting price discrimination against other
business operators. Failure to comply with the Pricing Law may subject business operators to
administrative sanctions such as warning, ceasing unlawful activities, requiring compensation,
confiscating illegal gains, and fines. The business operators may be ordered to suspend
business for rectification or having their business licenses revoked if the violations are severe.
REGULATIONS RELATING TO LEASING
We lease properties for our offices, sorting centers, pickup and delivery outlets and other
facilities. Pursuant to the Law on Administration of Urban Real Estate of the PRC ( ʕശɛ
) which took effect in January 1995 with the latest amendment
on August 26, 2019, which became effective on January 1, 2020, lessors and lessees are
required to enter into a written lease contract, containing such provisions as the term of the
lease, the use of the premises, rental price, liability for repair, and other rights and obligations
of both parties. Both lessor and lessee are also required to file for registration and record the
lease contract with the real estate administration department. Pursuant to implementing rules
stipulated by certain provinces or cities, if the lessor and lessee fail to go through the
registration procedures, both lessor and lessee may be subject to fines.
According to the PRC Civil Code (Պ) which took effect on January
1, 2021, the lessee may sublease the leased premises to a third party, subject to the consent of
the lessor. Where the lessee subleases the premises, the lease contract between the lessee and
the lessor remains valid. The lessor is entitled to terminate the lease contract if the lessee
subleases the premises without the consent of the lessor. In addition, if the ownership of the
leased premises changes during the lessee’s possession in accordance with the terms of the
lease contract, the validity of the lease contract shall not be affected.
Pursuant to the PRC Civil Code, if the mortgaged property has been leased and transferred for
occupation prior to the establishment of the mortgage right, the original tenancy shall not be
affected by such mortgage right. According to the Interpretation of the Supreme People’s Court
on Several Issues concerning the Application of Law in the Trial of Cases about Disputes Over
Lease Contracts on Urban Buildings (2020 version) (ॡ༣Υ
༆ᙑ(2020͍)), which took effect on January 1,
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2021, if the ownership of the leased premises changes during lessee’s possession in accordance
with the terms of the lease contract, and the leasee requests the assignee to continue to perform
the original lease contract, the PRC court shall support it, except that the mortgage right has
been established before the lease of the leased premises and the ownership changes due to the
mortgagee’s realization of the mortgage right.
REGULATIONS RELATING TO FIRE SECURITY
Pursuant to the Fire Protection Law of the PRC () which was latest
revised on April 29, 2021, and the Measure for Supervision on and Inspection of Fire
Protection () amended in 2012, enterprises shall implement a fire safety
accountability system, install firefighting facilities and equipment, conduct a yearly
comprehensive inspection of firefighting facilities and keep the inspection records for future
reference, and perform other fire safety measures as well as other fire safety and protection
responsibilities. Pursuant to Interim Provisions on the Administration of Fire Protection Design
Review and Final Inspection of Construction Projects (᜕ϗ၍ଣᅲБ
)( “ Interim Provisions Regarding Fire Protection ”) effective on June 1, 2020, a
special construction project as stipulated in the Interim Provisions Regarding Fire Protection
shall be subject to fire protection design review before such project commenced construction
and shall be subject to fire protection inspection before such project was put into use.
Constructions projects other than a special construction project shall be subject to fire
protection inspection recordation, and the competent department of housing and urban-rural
development shall conduct a random fire protection inspection thereof. If the project fails to
pass the random fire protection inspection, such project shall cease to be used.
REGULATIONS RELATING TO TAXATION
Enterprise Income Tax
On March 16, 2007, the PRC NPC promulgated the Enterprise Income Tax Law of the PRC
() which was latest amended on December 29, 2018, and the
State Council enacted the Regulations for the Implementation of the Law on Enterprise Income
Tax of the PRC (ૢԷ) which were latest amended on
April 23, 2019 (collectively, the “ EIT Law ”). According to the EIT Law, taxpayers consist of
resident enterprises and non-resident enterprises. Resident enterprises are defined as
enterprises that are established in China in accordance with PRC laws, or that are established
in accordance with the laws of foreign countries but whose actual or de facto control is
administered from within the PRC. Non-resident enterprises are defined as enterprises that are
set up in accordance with the laws of foreign countries and whose actual administration is
conducted outside the PRC, but have established institutions or premises in the PRC, or have
no such established institutions or premises but have income generated from inside the PRC.
Under the EIT Law and relevant implementing regulations, a uniform corporate income tax rate
of 25% is applicable. However, if non-resident enterprises have not formed permanent
establishments or premises in the PRC, or if they have formed permanent establishment
institutions or premises in the PRC but there is no actual relationship between the relevant
income derived in the PRC and the established institutions or premises set up by them, the
enterprise income tax is, in that case, set at the rate of 10% for their income sourced from
inside the PRC.
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Value-Added Tax
Pursuant to the Provisional Regulations of the PRC on V alue-Added Tax ( ʕശɛ͏΍ձ਷
೼ᅲБૢԷ), which was promulgated by the State Council on December 13, 1993 and
latest amended on November 19, 2017, and the Implementation Rules for the Provisional
Regulations of the PRC on V alue-Added Tax (),
which was promulgated by the MOFCOM on December 25, 1993 and latest as amended on
October 28, 2011, and became effective on November 1, 2011, entities or individuals engaged
in the services are required to pay a value-added tax (“ VAT”).
On March 20, 2019, the MOFCOM, the SA T and the General Administration of Customs jointly
issued the Announcement on Policies for Deepening the V A T Reform (ࠧ
ʮѓ) (the “ Announcement 39 ”), to further slash value-added tax rates.
According to the Announcement 39, (i) for general V A T payers’ sales activities or imports that
are subject to V A T at an existing applicable rate of 16% or 10%, the applicable V A T rate is
adjusted to 13% or 9% respectively; (ii) for the agricultural products purchased by taxpayers
to which an existing 10% deduction rate is applicable, the deduction rate is adjusted to 9%; (iii)
for the agricultural products purchased by taxpayers for production or commissioned
processing, which are subject to V A T at 13%, the input V A T will be calculated at a 10%
deduction rate; (iv) for the exportation of goods or labor services that are subject to V A T at
16%, with the applicable export refund at the same rate, the export refund rate is adjusted to
13%; and (v) for the exportation of goods or cross-border taxable activities that are subject to
V A T at 10%, with the export refund at the same rate, the export refund rate is adjusted to 9%.
The Announcement 39 came into effect on April 1, 2019 and shall prevail in case of any
conflict with existing provisions.
Dividend Withholding Tax
Pursuant to the Enterprise Income Tax Law of the PRC and its implementation rules, if a
non-resident enterprise has not set up an organization or establishment in the PRC, or has set
up an organization or establishment but the income derived has no actual connection with such
organization or establishment, it will be subject to a withholding tax on its PRC-sourced
income at a rate of 10%. Pursuant to the Arrangement between Mainland China and the Hong
Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on
Income (τર), the
withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong
Kong enterprise is reduced to 5% from a standard rate of 10% if the Hong Kong enterprise
directly holds at least 25% of the PRC enterprise.
Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the
Application of the Dividend Clauses of Tax Agreements (ٰ֛
), if the relevant PRC tax authorities determine, in their discretion,
that a company benefits from such reduced income tax rate due to a structure or arrangement
that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment.
Furthermore, the Administrative Measures for Non-Resident Taxpayer to Enjoy Treatments
under Tax Treaties () (the “ SAT Circular 60 ”),
which became effective in November 2015, requires that non-resident enterprises which satisfy
the criteria for entitlement to tax treaty benefits may, at the time of tax declaration or
withholding declaration through a withholding agent, enjoy the tax treaty benefits, and be
subject to ongoing administration by the tax authorities. In the case where the non-resident
enterprises do not apply to the withholding agent to claim the tax treaty benefits, or the
materials and the information stated in the relevant reports and statements provided to the
withholding agent do not satisfy the criteria for entitlement to tax treaty benefits, the
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withholding agent should withhold tax pursuant to the provisions of the PRC tax laws. The SA T
issued the Announcement of State Taxation Administration on Promulgation of the
Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits (೼ਕᐼ҅
ʮѓ) (the “ SAT Circular 35 ”) on
October 14, 2019, which became effective on January 1, 2020. The SA T Circular 35 further
simplified the procedures for enjoying treaty benefits and replaced the SA T Circular 60.
According to the SA T Circular 35, no approvals from the tax authorities are required for a
non-resident taxpayer to enjoy treaty benefits, where a non-resident taxpayer self-assesses and
concludes that it satisfies the criteria for claiming treaty benefits, it may enjoy treaty benefits
at the time of tax declaration or at the time of withholding through the withholding agent, but
it shall gather and retain the relevant materials as required for future inspection, and accept
follow-up administration by the tax authorities. There are also other conditions for enjoying the
reduced withholding tax rate according to other relevant tax rules and regulations. According
to the Circular of the State Administration of Taxation on Several Issues regarding the
“Beneficial Owner” in Tax Treaties (ʕ“Ϟɛ”ٙ
ʮѓ), which was issued on February 3, 2018 by the SA T, effective as of April 1, 2018, when
determining the applicant’s status of the “beneficial owner” regarding tax treatments in
connection with dividends, interests or royalties in the tax treaties, several factors, including
without limitation, whether the applicant is obligated to pay more than 50% of its income in
twelve months to residents in third country or region, whether the business operated by the
applicant constitutes the actual business activities, and whether the counterparty country or
region to the tax treaties does not levy any tax or grant tax exemption on relevant incomes or
levy tax at an extremely low rate, will be taken into account, and it will be analyzed according
to the actual circumstances of the specific cases. This circular further provides that applicants
who intend to prove his or her status of the “beneficial owner” shall submit the relevant
documents to the relevant tax bureau according to the Administrative Measures for Non-
Resident Taxpayers to Enjoy Treatments under Tax Treaties.
REGULATIONS RELATING TO INTELLECTUAL PROPERTY RIGHTS
The PRC has adopted comprehensive legislation governing intellectual property rights,
including copyrights, patents, trademarks and domain names.
Copyright
Copyright in the PRC, including copyrighted computer software, is principally protected under
the Copyright Law of the PRC (), which was most recently
amended on November 11, 2020 and became effective on June 1, 2021 (the “ Copyright Law ”),
and its implementation rules. According to the Copyright Law, the term of protection for
copyrighted computer software shall be 50 years. Reproducing, distributing, performing,
projecting, broadcasting or compiling a work or communicating the same to the public via an
information network without permission from the owner of the copyright therein, unless
otherwise provided in the Copyright Law, shall constitute infringements of copyrights. The
infringer shall, according to the circumstances of the case, undertake to cease the infringement,
take remedial action, and offer an apology, pay damages, etc.
Patent
The Patent Law of the PRC () promulgated by the SCNPC on
March 12, 1984, which was most recently amended on October 17, 2020 and became effective
on June 1, 2021, provides for three types of patents, “invention”, “utility” and “design”. To be
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patentable, invention or utility models must meet three criteria: novelty, inventiveness and
practicability. The National Intellectual Property Administration is responsible for examining
and approving patent applications.
Trademark
The Trademark Law of the PRC () promulgated by the SCNPC on
August 23, 1982 with the latest amendment being effective on November 1, 2019, and its
implementation rules promulgated by the State Council on August 3, 2002 with the latest
amendment being effective on May 1, 2014, protect registered trademarks. The Trademark
Office of National Intellectual Property Administration is responsible for the registration and
administration of trademarks throughout the PRC. The Trademark Law has adopted a
“first-to-file” principle with respect to trademark registration. A registration application for a
trademark that is identical or similar to another trademark which has already been registered
or given preliminary examination may be rejected. Trademark registration is effective for a
renewable ten-year period, unless otherwise revoked.
Domain Name
Domain names are protected under the Administrative Measures on the Internet Domain Names
(), which was promulgated by the MIIT on August 24, 2017 and
became effective on November 1, 2017. The MIIT is the major regulatory body responsible for
the administration of the PRC internet domain names, under supervision of which the China
Internet Network Information Center (the “ CINIC ”) is responsible for the daily administration
of.cn domain names and Chinese domain names. CNNIC adopts the “first to file” principle
with respect to the registration of domain names. In November 2017, the MIIT promulgated the
Notice of the Ministry of Industry and Information Technology on Regulating the Use of
Domain Names in Providing Internet-based Information Services (஝ᇍ
), which became effective on January 1, 2018. Pursuant to
the notice, the domain name used by an internet-based information service provider in
providing internet-based information services must be registered and owned by such provider
in accordance with the law. If the internet-based information service provider is an entity, the
domain name registrant must be the entity (or any of the entity’s shareholders), or the entity’s
principal or senior manager.
REGULATIONS RELATING TO FOREIGN EXCHANGE
The principal regulations governing foreign currency exchange in China are the Foreign
Exchange Administration Regulations of the PRC ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ), which
was promulgated by the State Council on January 29, 1996 and was latest amended on August
5, 2008. Pursuant to these regulations and other PRC rules and regulations on currency
conversion, Renminbi is freely convertible for payments of current account items, such as trade
and service-related foreign exchange transactions and dividend payments, but not freely
convertible for capital account items, such as direct investment, loan or investment in securities
outside China unless prior approval of the SAFE or its local counterpart is obtained.
On March 30, 2015, SAFE promulgated the Circular on Reforming the Management Approach
regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprise (׵
) (the “ Circular 19 ”). According to
Circular 19, the foreign exchange capital of foreign-invested enterprises shall be subject to the
Discretionary Foreign Exchange Settlement, which means that the foreign exchange capital in
the capital account of a foreign-invested enterprise for which the rights and interests of
monetary contribution have been confirmed by the local foreign exchange bureau (or the
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book-entry registration of monetary contribution by the banks) can be settled at the banks
based on the actual operational needs of the foreign-invested enterprise, and if a foreign-
invested enterprise needs to make further payment from such account, it still needs to provide
supporting documents and proceed with the review process with the banks. Furthermore,
Circular 19 stipulates that the use of capital by foreign-invested enterprises shall follow the
principles of authenticity and self-use within the business scope of enterprises. The capital of
a foreign-invested enterprise and capital in Renminbi obtained by the foreign-invested
enterprise from foreign exchange settlement shall not be used for the following purposes: (i)
directly or indirectly used for payments beyond the business scope of the enterprises or
payments as prohibited by relevant laws and regulations; (ii) directly or indirectly used for
investment in securities unless otherwise provided by the relevant laws and regulations; (iii)
directly or indirectly used for granting entrust loans in Renminbi (unless permitted by the scope
of business), repaying inter- enterprise borrowings (including advances by the third-party) or
repaying the bank loans in Renminbi that have been sub-lent to third parties; or (iv) directly
or indirectly used for expenses related to the purchase of real estate that is not for self-use
(except for the foreign-invested real estate enterprises).
The Circular of Further Simplifying and Improving Foreign Exchange Administration Policies
on Foreign Direct Investment (݁
) (the “ SAFE Circular 13 ”) which became effective on June 1, 2015 and was
amended on December 30, 2019, cancels the administrative approvals of foreign exchange
registration of direct domestic investment and direct overseas investment and simplifies the
procedure of foreign exchange-related registration. Pursuant to SAFE Circular 13, investors
should register with banks for direct domestic investment and direct overseas investment.
The Circular on Reforming and Standardizing the Foreign Exchange Settlement Management
Policy of Capital Account () (the “ Circular
16”), was promulgated by SAFE on June 9, 2016. Pursuant to Circular 16, enterprises
registered in the PRC may also convert their foreign debts from foreign currency to Renminbi
on a self-discretionary basis. Circular 16 reiterates the principle that Renminbi converted from
foreign currency-denominated capital of a company may not be directly or indirectly used for
purposes beyond its business scope or prohibited by PRC laws, while such converted Renminbi
shall not be provided as loans to its non-affiliated entities.
On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign
Exchange Administration and Optimizing Genuineness and Compliance V erification (̮
), which stipulates
several capital control measures with respect to the outbound remittance of profit from
domestic entities to offshore entities, including: (i) banks should check board resolutions
regarding profit distribution, the original version of tax filing records, and audited financial
statements pursuant to the principle of genuine transactions; and (ii) domestic entities should
hold income to account for previous years’ losses before remitting the profits. Moreover,
pursuant to this circular, domestic entities should make detailed explanations of the sources of
capital and utilization arrangements, and provide board resolutions, contracts, and other proof
when completing the registration procedures in connection with an outbound investment.
On October 23, 2019, the SAFE promulgated the Notice for Further Advancing the Facilitation
of Cross-border Trade and Investment (л
 ), which, among other things, allows all foreign-invested enterprises to use
Renminbi converted from foreign currency-denominated capital for equity investments in
China, as long as the equity investment is genuine, does not violate applicable laws, and
complies with the negative list on foreign investment. However, since this circular is newly
promulgated, it is unclear how the SAFE and competent banks will carry it out in practice.
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According to the Circular of the SAFE on Optimizing Foreign Exchange Administration to
Support the Development of Foreign-related Business (ܵ
ٝthe “ SAFE Circular 8 ”) promulgated and effective on April 10, 2020
by the SAFE, the reform of facilitating the payments of incomes under the capital accounts
shall be promoted nationwide. Under the prerequisite of ensuring true and compliant use of
funds and compliance and complying with the prevailing administrative provisions on use of
income from capital projects, enterprises which satisfy the criteria are allowed to use income
under the capital account, such as capital funds, foreign debt and overseas listing, etc., for
domestic payment, without the need to provide proof materials for veracity to the bank
beforehand for each transaction.
Foreign Exchange Registration of Overseas Investment by PRC Residents
In 2014, SAFE issued the SAFE Circular on Issues Concerning Foreign Exchange
Administration over the Overseas Investment and Financing and Round-trip Investment by
Domestic Residents via Special Purpose V ehicles (ͦ
) (the “ SAFE Circular 37 ”). The
SAFE Circular 37 regulates foreign exchange matters in relation to offshore investments and
financing or round-trip investments of residents or entities by way of special purpose vehicles
in China. Under the SAFE Circular 37, a “special purpose vehicle” refers to an offshore entity
established or controlled, directly or indirectly, by PRC residents or entities for the purpose of
seeking offshore financing or making offshore investments, using legitimate onshore or
offshore assets or interests, while “round-trip investment” refers to direct investments in China
by PRC residents or entities through special purpose vehicles, namely, establishing foreign
investment enterprises to obtain ownership, control rights and management rights. The SAFE
Circular 37 provides that, before making a contribution into a special purpose vehicle, PRC
residents or entities are required to complete foreign exchange registration with SAFE or its
local branch, and in the event of a change of basic information, such as the individual
shareholder, name, operation term, etc., or if there is a capital increase, decrease, equity
transfer or swap, merger, spin-off or other amendment of material items, the PRC residents or
entities shall complete a change of foreign exchange registration formality for offshore
investments.
In 2015, SAFE promulgated the Notice on Further Simplifying and Improving the
Administration of the Foreign Exchange Concerning Direct Investment. This notice amended
the SAFE Circular 37 by requiring PRC residents or entities to register with qualified banks
rather than SAFE or its local branches in relation to their establishment or control of offshore
entities for the purpose of overseas investment or financing. PRC residents or entities who had
contributed legitimate onshore or offshore interests or assets to special purpose vehicles but
had not registered as required before the implementation of the SAFE Circular 37 must register
their ownership interests or control in the special purpose vehicles with qualified banks.
Amendments to the registration are required if there is any material change with respect to the
registered special purpose vehicle, such as any change of basic information (including change
of the PRC residents, name and operation term), increases or decreases in the investment
amount, transfers or exchanges of shares, or mergers or divisions. Failure to comply with the
registration procedures as set forth in the SAFE Circular 37 and the subsequent notice, or
making misrepresentations or failure to disclose the control of a foreign investment enterprise
which is established through round-trip investments, may result in restrictions being imposed
on the foreign exchange activities of the relevant foreign investment enterprise, including
payment of dividends and other distributions, such as proceeds from any reduction in capital,
share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the
offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC
foreign exchange administration regulations.
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Stock Incentive Plans
On February 15, 2012, SAFE promulgated the Notice on Foreign Exchange Administration
of PRC Residents Participating in Share Incentive Plans of Offshore Listed Companies ( ਷
) (the
“Stock Option Rules ”), replacing the previous rules issued by SAFE in March 2007. Under the
Stock Option Rules and other relevant rules and regulations, domestic individuals, which
means PRC residents and non-PRC citizens residing in China for a continuous period of not
less than one year, subject to a few exceptions, who participate in a stock incentive plan in an
overseas publicly-listed company, are required to register with SAFE or its local branches and
complete certain other procedures.
Participants of a stock incentive plan who are PRC residents must retain a qualified PRC agent,
which could be a PRC subsidiary of the overseas publicly-listed company or another qualified
institution selected by the PRC subsidiary, to conduct the SAFE registration and other
procedures with respect to the stock incentive plan on behalf of its participants. The
participants must also retain an overseas entrusted institution to handle matters in connection
with their exercise of stock options, the purchase and sale of corresponding stocks or interests
and fund transfers. In addition, the PRC agent is required to amend the SAFE registration with
respect to the stock incentive plan if there is any material change to the stock incentive plan,
the PRC agent or the overseas entrusted institution or other material changes. The PRC agents
must, on behalf of the PRC residents who have the right to exercise the employee share options,
apply to SAFE or its local branches for an annual quota for the payment of foreign currencies
in connection with the PRC residents’ exercise of the employee share options. The foreign
exchange proceeds received by the PRC residents from the sale of shares under the stock
incentive plans granted and dividends distributed by the overseas listed companies must be
remitted into the bank accounts in the PRC opened by the PRC agents before distribution to
such PRC residents. In addition, the SAFE Circular 37 provides that PRC residents who
participate in a share incentive plan of an overseas unlisted special purpose company may
register with SAFE or its local branches before exercising rights.
REGULATIONS RELATING TO LABOR
According to the Labor Law of the PRC () (the “ Labor Law ”),
which was promulgated by the SCNPC in July 1994, effective on January 1, 1995, and most
recently amended in December 2018, an employer shall develop and improve its rules and
regulations to safeguard the rights of its workers. An employer shall develop and improve its
labor safety and health system, stringently implement national protocols and standards on labor
safety and health, conduct labor safety and health education for workers, guard against labor
accidents and reduce occupational hazards.
The Labor Contract Law of the PRC () (the “ Labor Contract
Law”), which was promulgated by the SCNPC on June 29, 2007, effective on January 1, 2008,
and most recently amended in December 2012, and the Implementation Regulations on Labor
Contract Law of the PRC (ૢԷ), promulgated and
became effective on September 18, 2008, regulate both parties to a labor contract, namely the
employer and the employee, and contain specific provisions involving the terms of the labor
contract. It is stipulated by the Labor Contract Law and the Implementation Regulations on
Labor Contract Law that a labor contract must be made in writing. An employer and an
employee may enter into a fixed-term labor contract, an unfixed term labor contract, or a labor
contract that concludes upon the completion of certain work assignments, after reaching an
agreement upon due negotiations. An employer may legally terminate a labor contract and
dismiss its employees after reaching an agreement upon due negotiations with the employee or
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by fulfilling the statutory conditions. Labor contracts concluded prior to the enactment of the
Labor Contract Law and subsisting within the validity period thereof shall continue to be
honored. With respect to a circumstance where a labor relationship has already been
established but no formal contract has been made, a written labor contract shall be entered into
within one month from the effective date of the Labor Contract Law. In addition, the Labor
Contract Law also imposes requirements on the use of employees of temp agencies, who are
known in China as “dispatched workers”. Dispatched workers are entitled to equal pay with
fulltime employees for equal work. Employers are only allowed to use dispatched workers for
temporary, auxiliary or substitutive positions. The Interim Provisions on Labor Dispatching
(), issued by the Ministry of Human Resources and Social Security of
the PRC on January 24, 2014 and came into effect on March 1, 2014, requires the number of
dispatched workers to not exceed 10% of the total number of employees.
Enterprises in China are required by PRC laws and regulations to participate in certain
employee benefit plans, including social insurance funds, namely a pension plan, a medical
insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a
maternity insurance plan, and a housing provident fund, and contribute to the plans or funds
in amounts equal to certain percentages of salaries, including bonuses and allowances, of the
employees as specified by the local government from time to time at locations where they
operate their businesses or where they are located. According to the Social Insurance Law of
the PRC (), an employer that fails to make social insurance
contributions may be ordered to rectify the non-compliance and pay the required contributions
within a stipulated deadline and be subject to a late fee of up to 0.05% or 0.2% per day, as the
case may be. If the employer still fails to rectify the failure to make social insurance
contributions within the stipulated deadline, it may be subject to a fine ranging from one to
three times the amount overdue. According to the Regulations on Management of Housing
Fund (၍ଣૢԷ), an enterprise that fails to make housing fund contributions
may be ordered to rectify the non-compliance and pay the required contributions within a
stipulated deadline, otherwise, an application may be made to a local court for compulsory
enforcement.
On June 23, 2021, the State Post Bureau, the Ministry of Transport, the NDRC, the MOFCOM,
the Ministry of Human Resources and Social Security, the SAMR, and the All-China
Federation of Trade Unions jointly issued the Opinions on Protecting the Legal Rights and
Benefits of the Couriers Group (จԈ), which
provides certain guidelines in respect of, among others, the Couriers’ base salary, social
security and insurance policy. See also “Risk Factors – Risks Related to Doing Business in
Jurisdictions in Which We Operate – Our failure to fully comply with labor-related laws may
expose us to potential penalties.”
REGULATIONS RELATING TO OVERSEAS LISTING AND M&A
On August 8, 2006, six PRC governmental and regulatory agencies, including the MOFCOM
and the CSRC, jointly promulgated the Regulations on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors () (the “ M&A
Rules ”), a new regulation with respect to the mergers and acquisitions of domestic enterprises
by foreign investors that became effective on September 8, 2006 and revised on June 22, 2009.
Foreign investors shall comply with the M&A rules when they purchase equity interests of a
domestic company or subscribe for the increased capital of a domestic company, and thus
changing the nature of the domestic company into a foreign-invested enterprise; or when the
foreign investors establish a foreign-invested enterprise in the PRC for the purpose of
purchasing the assets of a domestic company and operating the asset; or when the foreign
investors purchase the asset of a domestic company, establish a foreign-invested enterprise by
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injecting such assets, and operate the assets. The M&A rules, among other things, purports to
require that an offshore special vehicle, or a special purpose vehicle, formed for listing
purposes and controlled directly or indirectly by PRC companies or individuals, shall obtain
the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s
securities on an overseas stock exchange.
On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas
Securities Offering and Listing by Domestic Companies ( ྤʫΆุྤ̮೯БᗇՎձɪ̹၍ଣ༊
جthe “ Trial Measures ”) and five supporting guidelines, which came into effect on
March 31, 2023. According to the Trial Measures, (i) domestic companies that seek to offer or
list securities overseas, both directly and indirectly, should fulfill the filing procedure and
report relevant information to the CSRC; if a domestic company fails to complete the filing
procedure or conceals any material fact or falsifies any major content in its filing documents,
such domestic company may be subject to administrative penalties, such as order to rectify,
warnings, fines, and its controlling shareholders, actual controllers, the person directly in
charge and other directly liable persons may also be subject to administrative penalties, such
as warnings and fines; (ii) if the issuer meets both of the following conditions, the overseas
offering and listing shall be determined as an indirect overseas offering and listing by a
domestic company: (a) any of the total assets, net assets, revenues or profits of the domestic
operating entities of the issuer in the most recent accounting year accounts for more than 50%
of the corresponding figure in the issuer’s audited consolidated financial statements for the
same period; (b) its major operational activities are carried out in China or its main places of
business are located in China, or the senior managers in charge of operation and management
of the issuer are mostly Chinese citizens or are domiciled in China; and (iii) where a domestic
company seeks to indirectly offer and list securities in an overseas market, the issuer shall
designate a major domestic operating entity responsible for all filing procedures with the
CSRC, and where an issuer makes an application for listing in an overseas market, the issuer
shall submit filings with the CSRC within three business days after such application is
submitted.
On the same day, the CSRC also held a press conference for the release of the Trial Measures
and issued the Notice on Administration for the Filing of Overseas Offering and Listing by
Domestic Companies (ٝwhich, among
others, clarifies that (i) the domestic companies that have already been listed overseas on or
before the effective date of the Trial Measures (i.e. March 31, 2023) shall be deemed as
existing applicants. Existing applicants are not required to complete the filling procedures
immediately, and they shall be required to file with the CSRC when subsequent matters such
as refinancing are involved; (ii) on or prior to the effective date of the Trial Measures, domestic
companies that have already submitted valid applications for overseas offering and listing but
fail to obtain an approval from overseas regulatory authorities or stock exchanges may
reasonably arrange the timing for submitting their filing applications with the CSRC, and must
complete the filing before the completion of their overseas offering and listing; (iii) a
six-month transition period will be granted to domestic companies which, prior to the effective
date of the Trial Measures, have already obtained the approval from overseas regulatory
authorities or stock exchanges, but have not completed the indirect overseas listing; if such
domestic companies complete their overseas offering and listing within such six-month period
(i.e., on or prior to September 30, 2023), they will be deemed as existing applicants. Within
such six-month transition period, however, if such domestic companies need to reapply for
offering and listing procedures to the overseas regulatory authority or securities exchanges, or
if they fail to complete their indirect overseas issuance and listing, such domestic companies
shall complete the filling procedures with the CSRC before completion of the overseas offering
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and listing; and (iv) the CSRC will solicit opinions from relevant regulatory authorities and
complete the filing of the overseas listing of companies with contractual arrangements which
duly meet the compliance requirements.
Furthermore, on February 24, 2022, the CSRC released the Provisions on Strengthening the
Confidentiality and Archives Administration Related to the Overseas Securities Offering and
Listing by Domestic Enterprises (၍ଣ
֛which became effective on March 31, 2023. It aims to expand the applicable
scope of the regulation to indirect overseas offerings and listings by PRC domestic companies
and emphasize the confidentiality and archive management duties of PRC domestic companies
during the process of overseas offerings and listings.
REGULATIONS RELATING TO ANTI-MONOPOLY
The currently effective Anti-Monopoly Law of PRC () (the
“Anti-Monopoly Law ”) was promulgated by SCNPC in 2007, and its latest revision became
effective on August 1, 2022. On February 7, 2021, the Anti-Monopoly Committee of the State
Council promulgated the Anti-Monopoly Guidelines for the Internet Platform Economy Sector
(), which stipulates that any concentration of
undertakings involving variable interest entities (VIE) shall fall within the scope of
anti-monopoly review. Moreover, the Anti-Monopoly Law also provides that when a foreign
investor participates in the concentration of undertakings by merging and acquiring a domestic
enterprise or by any other means, the matter may also be subject to review on national security
as is required by the relevant regulations.
REGULATIONS RELATING TO DIVIDEND DISTRIBUTION
The principal regulations governing distribution of dividends of wholly foreign-owned
enterprise, or WFOE, include the PRC Company Law, the FIL and the Implementation Rules
of the PRC Foreign Investment Law. Under these regulations, wholly foreign-owned
enterprises in China may pay dividends only out of their accumulated profits, if any,
determined in accordance with the PRC accounting standards and regulations. In addition,
foreign invested enterprises in the PRC are required to allocate at least 10% of their
accumulated profits each year, if any, to fund certain reserve funds unless these reserves have
reached 50% of the registered capital of the enterprises. These reserves are not distributable as
cash dividends.
LAWS AND REGULATIONS IN RELATION TO OUR BUSINESS IN MALAYSIA
REGULATORY OVERVIEW
Our business operations in Malaysia are subject to various laws and regulations. Please find
below an overview of the key laws and regulations relating our business.
REGULATIONS ON COURIER SERVICES OPERATORS
The primary legislation governing postal services in Malaysia is the Postal Services Act 2012
(“PS Act ”), and is enforced by the Malaysian Communications and Multimedia Commission
(“MCMC ”). Under the PS Act, an operator of courier services is required to hold a
non-universal service licence. There are three types of non-universal service licence under the
licensing regime regulated by the PS Act: (i) licence A to provide for international inbound and
outbound courier service and domestic courier service in Malaysia; (ii) licence B to provide for
international inbound courier service and domestic courier service in Malaysia; and (iii)
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licence C to provide for intra-state domestic courier service in Malaysia. A person who
provides postal services without a valid licence granted under the PS Act commits an offence
and shall, on conviction, be liable to a fine not exceeding Malaysia Ringgit (“ RM”) 500,000
or to imprisonment for a term not exceeding five years or to both.
A non-universal service licensee is required to comply with the prescribed standard conditions
of the licence stipulated under the Postal Services (Licensing) Regulations 2015 and any
additional conditions imposed by the Minister of Communications and Multimedia as he thinks
fit. Among some of the prescribed standard conditions are: (i) the licensee shall be a company
incorporated in Malaysia and maintain a registered office in Malaysia; (ii) the licensee shall
have sufficient working capital to enable it to carry out its services under the PS Act and the
non-universal service licence; (iii) the licensee shall provide courier service in accordance with
the type of the non-universal service licence and may provide for any other additional services
related to courier service; and (iv) the licensee shall pay to the MCMC an annual licence fee
as specified in the Postal Services (Licensing) Regulations 2015. A licensee who fails to
comply with any condition of a licence commits an offence and shall, on conviction, be liable
to a fine not exceeding RM300,000 or to imprisonment for a term not exceeding three years
or to both.
The board of directors and the chief executive officer of the licensee must also fulfil certain
qualifications prescribed under the Postal Services (Licensing) Regulations 2015: (i)
competent to carry out the role; (ii) is not an undischarged bankrupt; (iii) has never been issued
an order of detention, supervision, restricted residence, banishment or deportation or imposed
any form of restriction or supervision by bond or otherwise, under any written law relating to
prevention of crime; and (iv) has not held the position of a director or been directly concerned
in the management of any company which has been convicted of an offence in relation to
dishonesty, incompetence or malpractice during the tenure of his office unless he proves to the
MCMC that such offence was committed without his knowledge or consent and he was not in
a position to prevent the offence.
REGULATIONS ON FRANCHISING BUSINESS
The primary legislation governing franchises in Malaysia is the Franchise Act 1998.
Under Section 6(1) of the Franchise Act 1998, a franchisor or a foreign person who has
obtained an approval to sell a franchise in Malaysia or to any Malaysian citizen under Section
54 shall register his franchise with the Registrar before he can operate a franchise business or
make an offer to sell the franchise to any person. Penalties applicable to body corporates that
fail to comply with Section 6 of the Franchise Act 1998 include a fine not exceeding
RM250,000, and for a second or subsequent offence, a fine not exceeding RM500,000.
For completeness, under the Franchise Act 1998, “franchise” means a contract or an agreement,
either expressed or implied, whether oral or written, between two or more persons by which
(a) the franchisor grants to the franchisee the right to operate a business according to the
franchise system as determined by the franchisor during a term to be determined by the
franchisor; (b) the franchisor grants to the franchisee the right to use a mark, or a trade secret,
or any confidential information or intellectual property, owned by the franchisor or relating to
the franchisor, and includes a situation where the franchisor, who is the registered user of, or
is licensed by another person to use, any intellectual property, grants such right that he
possesses to permit the franchisee to use the intellectual property; (c) the franchisor possesses
the right to administer continuous control during the franchise term over the franchisee’s
business operations in accordance with the franchise system; (d) (Deleted by Act A1442:s.3);
(e) in return for the grant of rights, the franchisee may be required to pay a fee or other form
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of consideration; and (f)(Deleted by Act A1442:s.3).“Franchise agreement” means a contract
or an agreement made between a franchisor and a franchisee in respect of a franchise in return
for any form of consideration but does not include any contract or agreement made for the
purpose of direct selling as provided by the Direct Sales Act 1993 (Act 500).
REGULATIONS ON BUSINESS AND ADVERTISEMENT LICENCE
In general, there is a requirement to obtain business premises and advertisement licenses from
the relevant local councils and authorities in accordance with the Local Government Act 1976
and the relevant by-laws and regulations for operating business premises in Malaysia. Most
local or district councils have licensing of trades, businesses and industries by-laws which
stipulate, among others, that no person shall carry on any trade, business or industry in any
place or premises within the local or district council unless he is licensed and such licence shall
be subject to such conditions and restrictions as the local authority may prescribe. Each set of
by-laws applies within the boundaries of each local or district council.
Pursuant to the Local Government Act 1976, any person who fails to exhibit or produce his
licence on a business premises shall be liable to a fine not exceeding RM500 or imprisonment
for a term not exceeding six months or both. Further, as a general penalty, the Local
Government Act 1976 provides that a local authority may, by by-law, rule or regulation
prescribe for the breach of any by-law, rule or regulation, a fine not exceeding RM2,000 or a
term of imprisonment not exceeding 1 year or to both and in the case of a continuing offence
a sum not exceeding RM200 for each day during which such offence is continued after
conviction. The Local Authorities (Advertisements) By-Laws 2012 provides for a fine of not
more than RM5,000 and imprisonment of not more than 6 months for not having a signboard
licence.
REGULATIONS ON PERSONAL DATA PROTECTION
The Personal Data Protection Act 2010 regulates the processing of personal data in the course
of commercial transactions in Malaysia, and is enforced by the Personal Data Protection
Commissioner (“ PDP Commissioner ”). A licensee under the PS Act is required to submit an
application for registration to the PDP Commissioner. If such person processes personal data
without a certificate of registration issued by the PDP Commissioner, it shall, on conviction,
be liable to a fine not exceeding RM500,000 or to imprisonment for a term not exceeding three
years or to both.
The Personal Data Protection Act 2010 also sets out seven key data protection principles which
must be adhered to by data users (i.e. a person who either alone or jointly or in common with
other persons processes any personal data or has control over or authorises the processing of
any personal data, but does not include a processor) in Malaysia. Broadly, these principles
include: (i) the requirement to obtain consent prior to processing an individual’s personal data,
the requirement to provide written notice to individuals in both English and the Malay language
stating, among others, the purposes for which the personal data will be processed, the classes
of third parties to whom personal data will be disclosed, and the individual’s rights under the
Act; and (ii) the obligation to ensure that the personal data collected will be processed in a safe
and secure manner. The Personal Data Protection Standard 2015 further prescribes the
minimum requirement for data security in processing personal data.
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REGULATIONS ON ANTI-COMPETITIVE PRACTICES
The PS Act stipulates that a licensee under the PS Act shall not engage in any conduct which
has the purpose of substantially lessening competition in the postal market. It must not enter
into any understanding, agreement or arrangement, whether legally enforceable or not, which
provides for rate fixing, market sharing, or boycott of another competitor. Such licensee is also
prohibited from making it a condition for the provision or supply of a product or service in the
postal market that the person acquiring such product or service in the postal market is also
required to acquire or not to acquire any other product or service either from himself or from
another person.
If the MCMC determines that a licensee is in a dominant position in the postal market, the
MCMC may direct to cease conduct in that postal market which has, or may have, the effect
of substantially lessening competition in any postal market, and to implement appropriate
remedies. A person who commits an offence in respect of competition practices under the PS
Act shall, on conviction, be liable to a fine not exceeding RM500,000 or to imprisonment for
a term not exceeding five years or to both.
Apart from the anti-competitive practices regulated under PS Act described above, the
Competition Act 2010 applies to all commercial activities which have an effect on competition
in any market in Malaysia, whether such activities are carried out within or outside Malaysia,
save for commercial activities regulated under specific legislation (such as the
Communications and Multimedia Act 1998, the Energy Commission Act 2001 and the
Malaysian Aviation Commission Act 2015). The Competition Act 2010 is generally enforced
by the Malaysia Competition Commission. Infringements of the Competition Act 2010 may
result in, among other things, the imposition of a financial penalty of up to 10% of the
worldwide turnover of the enterprise for the period during which the infringement occurred.
The Malaysia Competition Commission may also take other actions, including issuing cease
and desist orders.
LAWS AND REGULATIONS IN RELATION TO OUR BUSINESS IN THAILAND
REGULATORY OVERVIEW
Our business operations in Thailand are subject to various laws and regulations. Please find
below an overview of the key laws and regulations relating our business.
The Foreign Business Act
The Foreign Business Act B.E. 2542 (1999) (the “ FBA”) provides a legal framework that
regulates the carrying on of business in Thailand by a foreign person or legal entity considered
a “foreigner” under the FBA (a “ Foreigner ”). Under the FBA, a Thai company in which half
or more of its shares are held by a foreign person or foreign legal entity is considered a
Foreigner. The FBA contains three lists (Annex 1, Annex 2, and Annex 3) which specify certain
types of business that a Foreigner is prohibited from carrying on unless the Foreigner obtains
permission from the Minister of Commerce, requiring prior approval from the Council of
Ministers (in respect of Annex 2) or permission from the Director General of the Department
of Business Development, the Ministry of Commerce, with the approval of the Foreign
Business Commission (in respect of Annex 3). It is not possible to obtain permission to carry
on the types of business specified in Annex 1 as a Foreigner.
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Domestic land transport is one of the restricted business types related to Thai national security
under Annex 2. Therefore, a Foreigner engaging in domestic land transport is required to obtain
permission from the Minister of Commerce, with prior approval from the Council of Ministers.
In addition, a service business that is not exempt under the FBA falls within the scope of Annex
3 of the FBA, where permission from the Director General of the Department of Business
Development, the Ministry of Commerce, and the approval of the Foreign Business
Commission must be obtained.
Under the FBA, it is also unlawful for a Thai national or legal entity to hold shares in a Thai
company as a nominee for or on behalf of a Foreigner in order to circumvent or violate the
foreign ownership restrictions of the FBA. In the case that there is a violation, such Thai
nominee will be liable for criminal penalties, including imprisonment and fines. The Foreigner
would be subject to the same penalties. In addition, the court is obliged to order the termination
of the business if there are any nominees in the shareholding structure which are in breach of
the provisions stipulated in the FBA. There are no clear official guidelines or criteria issued or
by the Ministry of Commerce for determining whether or not a Thai national or entity is
holding shares for or on behalf of a Foreigner.
The Land Transport Act
The Land Transport Act requires that service providers of (1) land transportation services and
(2) transportation management services obtain licenses under the Land Transport Act.
The Land Transport Act generally regulates and controls transportation operations, including
the licensing requirements for certain types of land transportation. The Land Transport Act
provides that operators of fixed-route transport, non-fixed-route transport, small vehicle
transport, and private transport are required to apply for licenses. Essentially, the Land
Transport Act imposes, among other things, key qualifications concerning the shareholding
structure and composition of the board of directors of an applicant, being a private limited
company or public limited company, for obtaining a license to operate fixed-route transport,
non-fixed-route transport, or transport by small vehicle, as follows:
(a) for a private limited company, not less than half of the directors of the operator must be
Thai nationals, and not less than 51% of its registered capital must be held by natural
persons of Thai nationality or by a registered ordinary partnership, limited partnership,
private limited company, ministry, sub-ministry, department, local government, state
enterprise under the law on budgetary procedure, or state organization under the law on
establishment of government organizations, or other such laws; and
(b) for a public limited company, not less than half of the directors of the operator must be
Thai nationals and not less than 50% of its total shares must be held by natural persons
of Thai nationality.
In the case that a shareholder of the private company or public limited company is a registered
ordinary partnership, limited partnership, private limited company, or a public limited
company, such shareholder must also satisfy the requirements specified in (a) or (b) above, as
applicable.
The license under the Land Transport Act is valid for five years from the date of license
issuance for non-fixed-route transport, small vehicle transport, and private transport.
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Under the Land Transport Act, the operator shall deposit securities with the registrar in the
form of cash, Thai government bond, or both, or an insurance contract and policy from an
insurance company approved by the registrar. In the case of an insurance contract and policy,
the operator shall be the insured party, while the third party whose damage results from the
transport operation of the licensee shall be the beneficiary for preliminary expenses in
compensation for injury to the life or body of the third party which the operator is liable to pay
on account of his transport operation, subject to the rules, procedures, and conditions
prescribed in the Ministerial Regulations. Moreover, when a vehicle of an operator causes
injury to the life or body of any person, the operator who is the owner of the vehicle causing
such injury shall be liable for preliminary expenses to the injured person or an heir of the
injured person in the case that the injured person is dead. The preliminary expenses to be paid
to the injured person shall be determined commensurate with the seriousness of the case,
subject to the rate prescribed in the Ministerial Regulations. Notwithstanding the foregoing, the
compensation of preliminary expenses shall not prejudice the right of the injured person to
claim compensation for damages resulting from tort under the Civil and Commercial Code.
The operator shall be required to comply with the conditions as described in the relevant
licenses set out by the registrar in accordance with the rules prescribed by the Central Land
Transport Control Board, e.g., the number of vehicles to be used in the transport operation, the
nature, type and size of the vehicles, the sign of the transport operator – which is to be made
apparent on every vehicle, the place for keeping, repairing, or maintaining the vehicles, etc.
Furthermore, the operator shall comply with the Land Transport Act, such as the condition
requiring the operator to have at least half of its directors be of Thai nationality as well as the
requirements with regard to transportation safety as prescribed in the Ministerial Regulations.
If the operator fails to do so, including failure to comply with the transportation liability
requirements under the preceding paragraph, the registrar shall have the power to order the
operator to rectify the matter within the period prescribed. If the operator still fails to do so,
or it is apparent that the operator is unable to comply with such conditions or requirements, or
if action by the operator would endanger the public or have a deleterious effect on the public
welfare, the registrar, with the approval of the Central Land Transport Control Board, may
revoke the license to operate non-fixed route transportation service.
Currently, a land transportation service using motorbikes is not regulated under the Land
Transport Act.
In regard to the operation of transportation management services, Section 4(8) of the Land
Transport Act defines “transportation management” as being engaged to gather persons,
animals, or things, and organizing other persons with licenses to deliver such things from one
place to another on behalf of the delivery organizer. Section 65 of the Land Transport Act
specifies that no one is allowed to operate a transportation management service without a
license. The requirements and procedures concerning the application for and the granting of a
license are set out in the Ministerial Regulations. As of the date of this Offering Circular, no
Ministerial Regulations have been issued under section 65 to implement the transportation
management license requirements and application process.
However, if Ministerial Regulations under section 65 of the Land Transport Act are issued in
the future that impose requirements and establish a process for requesting and approving
licenses for transportation management services, we shall apply for such licenses as required,
within the specified timeframes, and shall comply with the applicable requirements of the
Department of Land Transport. We continue to regularly monitor the status of and changes in
the Ministerial Regulations under section 65 of the Land Transport Act, as well as other
relevant regulations.
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The Vehicle Act
The V ehicle Act B.E. 2522 (1979), as amended, (the “ Vehicle Act ”) generally regulates and
controls the use of vehicles not subject to the Land Transport Act as mentioned above,
including motor-tricycles, motorcycles, public transport vehicles, and private vehicles that are
not used in transport for remuneration. The V ehicle Act imposes requirements in relation to the
use of vehicles, vehicle registration, annual tax payment, driving licenses, and other
requirements concerning road safety. The V ehicle Act provides that no person shall use a
vehicle for any purpose other than that which is specified under its registered category, subject
to some exemptions for certain categories (i.e., personal use of vehicles that are registered for
business services). Failure to comply with this requirement will result in the operator being
subject to a fine of not more than Thai Baht (“ THB”) 2,000 per violation.
The Land Traffic Act
The Land Traffic Act B.E. 2522 (1979), as amended (the “ Traffic Act ”), allows a traffic officer
to issue notifications or regulations with respect to traffic safety and traffic flow, including
restrictions on the movements of all or some types of vehicles, the parking or stopping of
vehicles, one-way systems, and other restrictions. There are regulations issued by the
nationwide traffic officer under the Traffic Act which prohibit 4-wheel trucks and 6-wheel
trucks from being driven in all areas of Bangkok from 6 a.m. to 9 a.m. and from 4 p.m. to 8
p.m. of every day, except official holidays. However, there are some exceptions with regard to
certain principal streets where the restrictions are more stringent. For example, on certain main
roads (such as Ladprao, Ramkhamhaeng, etc.), six-wheeled trucks are prohibited from being
driven during the periods of 5 a.m. to 10 a.m. and 3 p.m. to 9 p.m. Failure to comply with a
traffic officer’s order will result in a fine of THB1,000 per violation.
The Personal Data Protection Act
The Personal Data Protection Act B.E. 2562 (the “ PDPA”) is the key regulation on personal
data protection in Thailand. The PDPA has become effective on June 1, 2022.
The PDPA governs the collection, use, and disclosure of personal data by a data controller (i.e.,
a person or legal entity with decision-making power concerning the collection, use, or
disclosure of personal data) or a data processor (i.e., a person or legal entity who operates in
relation to the collection, use, or disclosure of personal data per the instructions of or on behalf
of a data controller) dealing with personal data owners residing in Thailand, whether the
collection, use, or disclosure is done in Thailand or not.
The data controller is generally prohibited from collecting, using, or disclosing personal data,
unless consent from the owner of the personal data has been obtained or otherwise permitted
by law. Amongst other requirements under the PDPA, the request for consent must clearly
provide the purpose(s) of collection, use, or disclosure. Consent may be revoked at any time,
but such revocation does not affect the collection, use, or disclosure of personal data carried
out prior to the revocation. Consent obtained pursuant to a request that is not in compliance
with the requirements under the PDPA is not binding on a personal data owner.
The PDPA also imposes certain obligations on data controllers and data processors, such as
data security measures, maintenance of records of use and disclosure, data breach notification,
appointment of data protection officer (as applicable), etc. Furthermore, transfer of personal
data to a foreign country may be made, provided that that country or the international
organization that receives the personal data has sufficient data protection standards in
accordance with the personal data protection criteria promulgated under the PDPA or another
legal exemption is obtained.
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The PDPA provides owners of personal data with various rights, including the right to access
personal data maintained by data controllers, the right to request the destruction of personal
data, and the right to suspension of use of personal data under certain circumstances.
The PDPA provides for civil liability, criminal liability, and administrative penalties in
connection with its violation. Civil liability under the PDPA includes compensation for damage
and punitive damages in an amount not exceeding twice the amount of the actual damage.
Criminal liability ranges from imprisonment of up to one year to a fine of up to THB1,000,000,
or both, depending on the nature of the violation. Administrative penalties include an
administrative fine of up to THB5,000,000, depending on the nature of the violation.
LAWS AND REGULATIONS IN RELATION TO OUR BUSINESS IN VIETNAM
REGULATORY OVERVIEW
Our business operations in Vietnam are subject to various laws and regulations. Please find
below an overview of the key laws and regulations relating our business.
VIETNAM INVESTMENT LAW
The Law on Investment No. 61/2020/QH14 adopted by the National Assembly of Vietnam on
June 17, 2020, as amended (collectively, the “ Law on Investment 2020 ”) sets out a legal
framework regulating, among others, the investment activities in Vietnam including foreign
investment into Vietnam.
Foreign investment in Vietnam
Under the Law on Investment 2020 and Decree No. 31/2021/ND-CP dated March 26, 2021 of
the Government guiding a number of articles of the Law on Investment 2020 (“ Decree 31 ”),
foreign investors are entitled to enjoy the market access conditions applicable to domestic
investors unless the business activities which are intended by the foreign investors fall into the
list of business activities that are conditional or not permitted for foreign investors’ market
access as specified under Annex 1 of Decree 31. There are a number of market access
conditions applied to foreign investors.
In addition to foreign investors, an economic organization that falls within any of the following
circumstances will be considered as a foreign investor equivalent entity (“ FIEE ”) and required
to fulfil conditions and carry out the relevant investment procedures applicable to foreign
investors (including the above-mentioned market access conditions) when establishing new
entity, contributing capital, purchasing shares or equity capital, and investing under a business
cooperation contract in Vietnam:
(i) foreign investors hold more than 50% of the charter capital of the economic organization
or majority of the partners of the economic organization in the form of partnerships are
foreign individuals;
(ii) economic organizations referred to in point (i) above hold more than 50% of the charter
capital of another economic organization; and
(iii) foreign investors and the economic organizations referred to in point (i) above jointly
hold more than 50% of the charter capital of another economic organization.
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Investment registration certificate
In order to invest in Vietnam in a form of establishment of an economic organization, a foreign
investor or a FIEE is required at the Law on Investment 2020 to satisfy the applicable market
access conditions, have the relevant investment project and obtain an investment registration
certificate (“ IRC”) for such investment project from the competent authority except in cases
of establishing small and medium sized innovative startup enterprises and innovative startup
investment funds. On the other hand, the IRC is optional for the domestic investors. Any
change to the contents of the IRC will trigger the application for amendment to the IRC.
M&A Approval
When a foreign investor or a FIEE acquires shares, capital contribution portion or makes
capital contribution in a Vietnamese company, the foreign investor or FIEE is not required to
obtain the IRC. Instead, the Law on Investment 2020 requires the foreign investor or FIEE to
obtain an approval on registration of its capital contribution, acquisition of shares or capital
contribution portion (the “ M&A Approval ”) from the competent investment authority
(normally the provincial Department of Planning and Investment or “ DPI”) in any of following
cases:
(i) The transaction results in the increase in the foreign ownership in the Vietnamese target
company, who has registered to implement any business lines for which the market access
is conditional for foreign investors;
(ii) The transaction results in (A) the foreign ownership in the Vietnamese target company
increasing from 50% or below 50% to more than 50%; or (B) the increase in the foreign
ownership where the existing foreign ownership in the Vietnamese target company has
already exceeded 50%; or
(iii) The Vietnamese company having land use right certificate in respect of land lots located
in border areas, coastal areas, or areas affecting national defense or security.
VIETNAM ENTERPRISES LAW
The Law on Enterprises No. 59/2020/QH14 adopted by the National Assembly of Vietnam on
June 17, 2020, as amended (collectively, the “ Law on Enterprises 2020 ”) regulates the
establishment and operation of a company in Vietnam and, together with the Law on
Investment 2020, improves the quality and efficiency of Vietnam’s investment environment by
providing conditions that are favorable for both domestic and foreign investors in
implementation of their investment projects, establishment and operation of companies in
Vietnam.
Enterprise Registration Certificate
Under the Law on Enterprises 2020, any company incorporated in Vietnam is required to obtain
the enterprise registration certificate (the “ ERC”) from the Business Registration Office of the
provincial DPI where the head office is located. The company is required to register with, or
serve notification to, the Business Registration Office of the provincial DPI about any change
to the content of the ERC within ten (10) days from occurrence of such change.
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Corporate Governance Structure of a Single-member Limited Liability Company
Under the Law on Enterprises 2020, a company may be incorporated in the form of, among
others, a single-member limited liability company (the “ Single-member LLC ”). Unlike a joint
stock company in which its charter capital is divided into shares, charter capital of the
Single-member LLC consists of capital contribution portions contributed by the owner that can
be either an individual or an organization. The organizational structure of a Single-member
LLC with owner being an organization could be in one of the following:
(i) The president and the (general) director; or
(ii) Members’ council and the (general) director.
From January 1, 2021, the Single-member LLC is no longer required to have an inspector (or
inspection committee) in its corporate governance as so required previously under old
enterprise laws.
Under the Law on Enterprises 2020, a company must have at least one legal representative
being an individual resides in Vietnam who (A) represents the company to exercise the
company’s rights and obligations arising from its transactions, (B) represents the company in
the capacity of a party requesting settlement of civil cases, plaintiff, respondent or person with
related interests or obligation before arbitration or court, and (C) has other rights and
obligations under the Vietnamese law. A Single-member LLC must have at least one legal
representative who is the chairman of members’ council (applicable for the Single-member
LLC having three (3) authorized representatives or more from its owner), the president
(applicable for the Single-member LLC having only one (1) authorized representative from its
owner) or the (general) director.
PROFIT DISTRIBUTIONS AND OVERSEAS REMITTANCE
Under the Law on Enterprises 2020, the owner of a Single-member LLC is not allowed to be
distributed profits by the Single-member LLC when the company has not yet paid in full its
debts and other financial obligations which become due. Pursuant to Circular No. 05/2014/TT-
NHNN dated March 12, 2014 of the State Bank of Vietnam guiding the opening and use of
indirect investment capital accounts (“ IICA ”) for implementation of foreign indirect
investment activities in Vietnam and Circular No. 06/2019/TT-NHNN dated June 26, 2019 of
the State Bank of Vietnam guiding the foreign exchange management for the foreign direct
investment in Vietnam (“ Circular 06/2019 ”), remittance of profit from a company
incorporated in Vietnam to foreign investors must be made through either (A) a direct
investment capital account (“ DICA ”) of the company if such company is required by the
Vietnamese law to open and maintain DICA at a licensed bank in Vietnam; or (B) an IICA of
the foreign investor if the DICA is not required for the company.
At least seven (7) business days prior to the remittance of profit offshore, a foreign investor
is required to directly or authorize the company to serve a notice on offshore remittance of
profits to the competent tax authority. Circular 186/2010/TT-BTC dated November 18, 2010 of
the Ministry of Finance guiding the overseas remittance of profits earned by foreign
organizations and individuals from their direct investment in Vietnam under the investment law
provides that the annual profit to be remitted offshore is equivalent to the amount of profit
distributable to investors for that fiscal year determined based on the audited financial
statement and declaration on tax finalization of the company plus (+) other profit amount (if
any) such as undistributed profit accrued from previous year(s) minus (-) amounts used or
undertaken to use by foreign investor to reinvest in Vietnam or used for payment of
expenditures of the foreign investors in Vietnam.
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POSTAL AND FREIGHT ROAD TRANSPORT SERVICES
Postal Services
Postal License
The Postal Law No. 49/2010/QH12 adopted by the National Assembly of Vietnam on June 17,
2010 (the “ Vietnamese Postal Law ”) provides regulations on, among others, investment in and
provision of postal services. A company providing courier services of mails and documents
having recipient address with unit weight of up to two (2) kilograms is required to obtain the
postal license with a term of no more than ten (10) years from the provincial Department of
Information and Communications (“ Provincial DIC ”) (if courier services are provided within
a province only) or from the Ministry of Information and Communications (“ MIC”) (if courier
services are provided nationwide and/or internationally) upon satisfaction of certain
conditions.
Written Certification of Notification of Postal Service Activities
In addition, under the Vietnamese Postal Law, a postal service provider is also required to
notify the Provincial DIC or MIC (where applicable) about provision of any of the following
postal services:
(i) letter services with unattended recipient weighing up to two (2) kilograms;
(ii) letter services with unit weight of up to two kilograms;
(iii) parcel services:
(iv) acting as an agent for a foreign postal service provider;
(v) receiving a commercial franchise in the postal sector from abroad into Vietnam;
(vi) acting as a representative for a foreign postal service provider;
(vii) acting as a branch or representative office of a postal service provider established under
the Vietnamese law; and
(viii) acting as a representative office of a foreign postal service provider.
Upon receipt of the notification application dossier of the company, either Provincial DIC or
MIC (where applicable) will issue the Written Certification of Notification of Postal Service
Activities.
Notice and reporting obligations of a postal service provider
Decree No. 47/2011/ND-CP dated June 17, 2011 of the Government guiding in details certain
articles of the Vietnamese Postal Law, as amended, further provides that the postal service
provider is required to service a written notice to the competent authorities issuing the postal
license and the written certification of notification of postal service activities within seven (7)
business days from occurrence of any of the following changes:
(i) change in the legal representative, or contacting phone number of the legal representative,
or charter capital of the postal service provider;
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(ii) change in price of postal service; or
(iii) change in service quality criteria, or templates of contract on supplying or using postal
service, or complaint handling and compensation rules in relation to postal services of the
postal service provider.
Besides, the postal service provider is obliged to submit (A) bi-annual and annual reports on
the business and provision of postal services in forms as prescribed under Circular No.
35/2016/TT-BTTTT dated December 26, 2016 of the MIC regulating postal reports to the
Provincial DIC and the MIC; and (B) quarterly reports on, among others, revenue, volume of
the postal services and contribution amount made to the State budget in forms as prescribed
under Circular No. 04/2022/TT-BTTTT dated June 22, 2022 of the MIC regulating statistics
reporting scheme in information and communication sector.
Freight Road Transport Services
Under the Law on Road Traffic No. 23/2008/QH12 adopted by the National Assembly of
Vietnam on November 13, 2008, as amended, the freight transportation by automobile services
comprise of (A) ordinary freight transportation, (B) freight transportation by taxi truck, (C)
transportation of oversized and overweight cargoes, and (D) transportation of dangerous
cargoes. A freight transport service provider is required to obtain the Automobile
Transportation License issued by the provincial Department of Transport.
Furthermore, a freight transport company must comply with a number of requirements
applicable to freight road transport business provided under Decree No. 10/2020/ND-CP of the
Government dated January 17, 2020 guiding transport by automobiles business and conditions
for transport by automobiles business, as amended (“ Decree 10/2020 ”) and Circular No.
12/2020/TT-BGTVT dated May 29, 2020 of the Ministry of Transport guiding organization and
management of auto transport operations and auxiliary services of road transport as amended
(“Circular 12/2020 ”) including, among others, requirements on transporting automobiles,
management of drivers and training, transport documents, road transport safety, information
storage, information system and technical equipment. The freight transport company is also
required to submit monthly reports in the form prescribed under Circular 12/2020 to the
provincial Department of Transport.
FRANCHISING ACTIVITIES
Unlike inward franchising activities into Vietnam which is subject to the registration
requirement with the Ministry of Industry and Trade under Decree 35/2006/ND-CP of the
Government dated March 31, 2006 providing detailed guidance the Law on Commerce in
franchising activities as amended (“ Decree 35/2006 ”), parties carrying out domestic
franchising activities are required to report to the provincial Department of Industry and Trade
about their franchising activities (Article 17a.2 of Decree 35/2006).
LABOR, SOCIAL INSURANCE AND EMPLOYMENT-RELATED HYGIENE AND
SAFETY REGULATIONS
Labor Code and Labor Contracts
The Labor Code No. 45/2019/QH14 adopted by the National Assembly of Vietnam on
November 20, 2019 (the “ Labor Code 2019 ”) sets out legal framework on labor-related
matters. The Government and the Ministry of Labor, War Invalids and Social Affairs have also
issued a number of decrees and circulars to implement the Labor Code 2019.
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Under the Labor Code 2019, any labor contract must be made in writing or in permitted
electronic form and signed by and between employee and the authorized representatives of the
employer, except for those with a term of less than one month. A labor contract must include
a number of mandatory provisions.
The term of a labor contract could be indefinite or a fixed term for a duration of up to thirty-six
(36) months and the wages paid to the employee shall not be lower than the minimum amount
provided by the Government based on categories of geographical regions in Vietnam.
Internal Labor Rules
Under the Labor Code 2019, a company incorporated in Vietnam with more than ten (10)
employees must prepare and approve the internal labor rules (“ ILR”) which contains a number
of mandatory principle contents and, within ten (10) days from the issuance, register such ILR
with the relevant Department of Labor, Invalids and Social Affairs (“ DOLISA ”) of the city or
province where the company has registered for its business operations.
Foreign employees
A foreign employee working in Vietnam is required to obtain a work permit, except for certain
exemption cases under the Labor Code 2019 including, among others, foreign employees being
the owner or member/investor of a limited liability company having the charter capital of
Vietnamese Dong (“ VND”) three (3) billion or more, internal transfer in sectors permitted by
the Government, foreign employees entering into Vietnam for less than three (3) months for
introduction of services or handling of complicated technical and technological incidents. In
such exemption cases, the employer must obtain confirmation on work permit exemption from
the competent labor authorities. In addition, pursuant to Decree No. 152/2020/ND-CP dated
December 30, 2020 of the Government providing details guidance on the implementation of the
Labor Code 2019 on foreign employees working in Vietnam, as amended, the employer having
foreign employees is required to submit bi-annual reports on employment status of its foreign
employees to the provincial DOLISA.
Compulsory insurances
Under the Law on Social Insurance No. 58/2014/QH13 adopted by the National Assembly of
Vietnam on November 20, 2014, the Law on Health Insurance No. 25/2008/QH12 adopted by
the National Assembly of Vietnam on November 14, 2008 (as amended), the Law on
Employment No. 38/2013/QH13 adopted by the National Assembly of Vietnam on
November 16, 2013 and the Law on Labor Safety and Hygiene No. 84/2015/QH13 adopted by
the National Assembly of Vietnam on June 25, 2015 (as amended), employees and employers
are required to make contributions to the social insurance schemes which include social, health,
occupational accidents and diseases and unemployment insurances in Vietnam in favor of
Vietnamese employees (and certain categories of foreign employees). The contributions are
calculated based on the employee’s wage or salary specified under the labor contract and made
by both employee and employer in specific percentage set forth by laws.
Occupational training for drivers
Under Decree 10/2020 and Circular 12/2020, a freight transport company is required to
organize transportation profession and safety trainings for its drivers every three (3) years.
Upon completion of the trainings, the drivers will be issued with the training certificates by the
relevant training service provider.
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ENVIRONMENT AND FIREFIGHTING AND FIRE PREVENTION
Firefighting and fire prevention
The Law on Fire Fighting and Prevention No. 27/2001/QH10 adopted by the National
Assembly of Vietnam on June 29, 2001, as amended (collectively, the “ Law on Fire Fighting
and Prevention ”) imposes various rules on fire-fighting and prevention that a company must
comply.
In particular, owners of construction works that are listed under Annex III of Decree No.
136/2020/ND-CP dated November 24, 2020 of the Government providing guidance on certain
articles of the Law on Fire Fighting and Prevention (“ Decree 136/2020 ”) are required to
comply with a number of firefighting and prevention requirements.
Compulsory fire and explosive insurance
Pursuant to Decree No. 23/2018/ND-CP dated February 23, 2018 of the Government providing
compulsory fire and explosion insurance (or Decree No. 67/2023/ND-CP dated September 06,
2023 of the Government from September 06, 2023) and Decree 136/2020, any facility which
falls within the list of facilities at fire and explosion risk under Annex II of Decree 136/2020
is required to purchase compulsory insurance including warehouses for storing flammable
goods or non-flammable goods in flammable packaging with total volume of 5,000 cube meter
and above.
DATA PRIV ACY
In Vietnam, there is not a single comprehensive data protection law. Instead, regulations on
data protection and privacy can be found in various legal instruments. The Civil Code No.
91/2015/QH13 adopted by the National Assembly of Vietnam on November 24, 2015 provides
an individual with the fundamental right in privacy, personal and family secrecy and requires
any collection, storage, use and disclosure of an individual’s personal information must be
subject to his/her consent. Currently, the key regulations on data privacy in Vietnam are the
Law on Cyber Security No. 24/2018/QH14 (the “ Law on Cyber Security ”) adopted by the
National Assembly of Vietnam on June 12, 2018 and the Law on Cyber Information Security
No. 86/2015/QH13 (the “ Law on Cyber Information Security ”) adopted by the National
Assembly of Vietnam on November 19, 2015.
Under the Law on Cyber Information Security, any organization and individual who processes
personal information (the “ Information Processing Entities ”) has the following
responsibilities:
(i) Collecting personal information only after obtaining the consents from the relevant
individual regarding the scope and purpose of collection and use of such information;
(ii) Using the collected information for purposes other than the initial one only after obtaining
the consent from the relevant individual; and
(iii) Refraining from providing, sharing or spreading collected personal information to a third
party, unless otherwise agreed by the relevant individual or at request of the competent
authorities.
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Upon receiving the request of the individual for updating, altering or removing his/her personal
information or stopping the information sharing with third parties, the Information Processing
Entities are required to:
(i) Perform requests of the individual and notifying him/her about the fulfillment of the
requests or granting the individual with the access right to update, alter or remove
information by his/her self; and
(ii) Take appropriate measures to protect personal information and notify the individual
owning such information in case of being unable to fulfil his/her request due to technical
or other reasons.
In addition, under the Vietnamese Postal Law, the postal service provider also has obligations
to not disclose information of the service users including personal information except for the
security reason.
Vietnam’s data and privacy protection regime continues to evolve. The recent Decree
No. 13/2023/ND-CP on Personal Data Protection dated April 17, 2023 (taking effect from July
1, 2023) (“ Decree 13/2023 ”) is similar to other data privacy and protection laws enacted
around the globe. It codifies and tightens personal data protection regulations in Vietnam. In
particular, a data owner’s consent to disclose, process, use for advertising purposes and transfer
personal data must be in printable/copyable or verifiable form, and such consent may be
withdrawn at any time and at the discretion of the data owner. Silence or non-response is not
deemed to be consent from the data owner. In addition, any processing of personal data or
cross-border transfer of personal data out of Vietnam is subject to the assessment by the
Department of Cybersecurity and High-tech Crime Prevention and Control, the supervisory
authority of personal data protection in Vietnam. Failure to comply with personal data
protection regulations will result in administrative fines, having licenses required to process
personal data being revoked or suspended or in extreme cases, criminal liability.
Vietnam has also passed laws which stipulated that individuals and companies must implement
measures to assure data security. For example, entities providing information technology
services must comply with regulations on data localization and storage, and are required to
apply blocking and handling measures upon receipt of a notice that sending such information
is illegal and implement measures to allow recipients to refuse the receipt of information.
INTELLECTUAL PROPERTY
In order to provide the legal framework for the use of intellectual properties in Vietnam, the
National Assembly of Vietnam adopted the Law on Intellectual Property No. 50/2005/QH11 on
November 29, 2005 and subsequently amended in June 19, 2009 and June 14, 2019 and June
16, 2022 (collectively, the “ Law on Intellectual Property ”) under which the main subject
matters of intellectual property rights are, among others, industrial property rights including,
but not limited to, industrial designs, trade secrets, trademarks and trade names.
An organization or an individual has the right to register the intellectual property right for
goods that such organization or individual produces and services that such organization or
individual provides. The trademark registration certificate takes effect from the issuance date
and expires after ten (10) years from the submission of the registration application and can be
renewed for multiple consecutive 10-year terms.
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The industrial property owner (including trademark owner) may transfer the ownership of or
license the rights to use the industrial property to another organization or individual. Under the
Law on Intellectual Property, the industrial property right transfer agreement must be made in
writing and may only come into force upon completion of the registration of such transfer
agreement with the competent industrial property authority while the industrial property right
license agreement will be effective as agreed between the parties.
COMPETITION LAW
The Law on Competition No. 23/2018/QH14 adopted by the National Assembly of Vietnam on
June 12, 2018 (the “ Law on Competition 2018 ”), together with its implementing decrees
issued by the Government, including Decree No. 75/2019/ND-CP of the Government dated
September 26, 2019 on administrative sanctions in competition sector (“ Decree 75/2019 ”) and
Decree No. 35/2020/ND-CP of the Government dated March 24, 2020 guiding the
implementation of a number of articles of the Law on Competition 2018 (“ Decree 35/2020 ”),
set out a legal framework for competition law of Vietnam.
Agreements on competition restraint
The Law on Competition 2018 provides the list of anti-competition agreements which are
subject to prohibition or restriction, categorized in horizontal agreements and vertical
agreements, along with regime for possible exemption for certain types of anti-competition
agreements subject to discretion of the competition authority.
Economic concentration
In addition, the Viet Nam Competition Commission supervises merger control in Vietnam. Any
transaction regarded as an economic concentration that reaches certain reportable thresholds
based on the size of transaction (applicable to onshore transactions only), total assets in
Vietnam, total sales (or total purchase volume) in Vietnam or market share in the relevant
market, is subject to a notification of economic concentration and regulatory consent before the
transaction is conducted. The Vietnam competition law provides a two-phase appraisal process
of a merger filing: preliminary appraisal (taking up to 30 days) and official appraisal (taking
between 90 and 150 days). The official appraisal will only be conducted if the conclusion of
the preliminary appraisal is that it is required.
Any party committing violation of the Vietnam competition law will, depending on the nature
and seriousness of relevant violations, be subject to discipline measures, administrative
sanctions or criminal liabilities. In case of causing damages to the interests of the State,
legitimate rights and interests of organizations and individuals, the violating party will be
subject to compensation responsibility for such damages.
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Set out below is a summary of certain provisions of the Memorandum and Articles of
Association of the Company and of certain aspects of the company laws of the Cayman Islands.
The Company was incorporated in the Cayman Islands as an exempted company with limited
liability on October 24, 2019 under the Cayman Companies Act. The Company’s constitutional
documents consist of its Memorandum and Articles of Association.
1. MEMORANDUM OF ASSOCIATION
1.1 The Memorandum provides, inter alia , that the liability of members of the Company is
limited and that the objects for which the Company is established are unrestricted
(and therefore include acting as an investment company), and that the Company shall
have and be capable of exercising any and all of the powers at any time or from time to
time exercisable by a natural person or body corporate whether as principal, agent,
contractor or otherwise and, since the Company is an exempted company, that the
Company will not trade in the Cayman Islands with any person, firm or corporation
except in furtherance of the business of the Company carried on outside the Cayman
Islands.
1.2 By special resolution the Company may alter the Memorandum with respect to any
objects, powers or other matters specified in it.
2. ARTICLES OF ASSOCIATION
The Articles were conditionally adopted on October 11, 2023. A summary of certain
provisions of the Articles is set out below.
2.1 Shares
(a) Classes of shares
The share capital of the Company consists of Class A Shares and Class B Shares.
The authorised share capital of the Company is US$50,000 divided into 979,333,410
Class A Shares of a par value of US$0.000002 each and 24,020,666,590 Class B
Shares of a par value of US$0.000002 each.
(b) Rights attaching to shares
Subject to the Articles of Association, the holders of Class A Shares and Class B
Shares shall at all times vote together as one class on all resolutions submitted to a
vote by the members. Subject to this paragraph, on each resolution subject to a vote
at general meetings on a poll, each Class A Share shall entitle its holder to ten votes
and each Class B Share shall entitle its holder to one vote.
The Company shall not take any action (including the issue or repurchase of Shares
of any class) that would result in (a) the aggregate number of votes entitled to be cast
by all holders of Class B Shares (for the avoidance of doubt, excluding those who
are also holders of Class A Shares) present at a general meeting to be less than 10%
of the votes entitled to be cast by all members at a general meeting; or (b) an
increase in the proportion of Class A Shares to the total number of shares in issue.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND THE COMPANY LAWS OF THE CAYMAN ISLANDS
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No further Class A Shares shall be issued by the Company, except with the prior
approval of the Stock Exchange and pursuant to (i) an offer to subscribe for shares
made to all the members pro rata (apart from fractional entitlements) to their
existing holdings; (ii) a pro rata issue of shares to all the members by way of scrip
dividends; or (iii) a stock split or other capital reorganisation provided that the Stock
Exchange is satisfied that the proposed allotment or issuance will not result in an
increase in the proportion of Class A Shares in issue, so that:
(i) if, under a pro rata offer, any holder of Class A Shares does not take up any part
of the Class A Shares or the rights thereto offered to him, such untaken shares
(or rights) shall only be transferred to another person on the basis that such
transferred rights will only entitle the transferee to an equivalent number of
Class B Shares; and
(ii) to the extent that rights to Class B Shares in a pro rata offer are not taken up
in their entirety, the number of Class A Shares that shall be allotted, issued or
granted in such pro rata offer shall be reduced proportionately.
Class A Shares shall only be held by Mr. Jet Jie Li ( ҽ௫΋͛) (the “Founder”) or
(1) a partnership of which the Founder is a partner and the terms of which must
expressly specify that the voting rights attached to any and all of the Class A Shares
held by such partnership are solely dictated by the Founder; (2) a trust of which the
Founder is a beneficiary and that meets the following conditions: (A) the Founder
must in substance retain an element of control of the trust and any immediate
holding companies of, and retain a beneficial interest in any and all of the Class A
Shares held by such trust; and (B) the purpose of the trust must be for estate
planning and/or tax planning; or (3) a private company or other vehicle wholly-
owned and wholly controlled by the Founder or by a trust referred to in paragraph
(2) above purposes (a “ Founder Holding Vehicle ”). Subject to the Listing Rules or
other applicable laws or regulations, each Class A Share shall be automatically
converted into one Class B Share upon the occurrence of any of the following
events:
(i) the death of the holder of such Class A Share (or, where the holder is a Founder
Holding V ehicle, the death of the Founder);
(ii) the holder of such Class A Share ceasing to be the Founder or a Founder
Holding V ehicle for any reason;
(iii) the holder of such Class A Share (or, where the holder is a Founder Holding
V ehicle, the Founder) being deemed by the Stock Exchange to be incapacitated
for the purpose of performing his duties as a Director;
(iv) the holder of such Class A Share (or, where the holder is a the Founder Holding
V ehicle, the Founder) being deemed by the Stock Exchange to no longer meet
the requirements of a director set out in the Listing Rules; or
(v) the transfer to another person of the beneficial ownership of, or economic
interest in, such Class A Share or the control over the voting rights attached to
such Class A Share (through voting proxies or otherwise), including where a
Founder Holding V ehicle holding such Class A Share no longer complies with
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
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--- page 672 ---
Rule 8A.18(2) of the Listing Rules (in which event the Company and the
Founder or the Founder Holding V ehicle shall notify the Stock Exchange of the
details of the non-compliance as soon as practicable), other than (i) the grant
of any encumbrance, lien or mortgage over such share which does not result in
the transfer of the legal title or beneficial ownership of, or the voting rights
attached to, such share, until the same is transferred upon the enforcement of
such encumbrance, lien or mortgage; and (ii) a transfer of the legal title to such
share by the Founder to a Founder Holding V ehicle, or by a Founder Holding
V ehicle to the Founder or another Founder Holding V ehicle.
Notwithstanding the foregoing, (i) the weighted voting rights attached to the
Founder’s Class A Shares must cease upon transfer to another person of the
beneficial ownership of, or economic interest in, such Class A Shares or the control
over the voting rights attached to them (through voting proxies or otherwise); (ii) a
Founder Holding V ehicle may hold Class A Shares carrying weighted voting rights
on behalf of the Founder of weighted voting rights provided that such an
arrangement does not result in a circumvention of sub-paragraph (i) above; and (iii)
if a Founder Holding V ehicle holding Class A Shares carrying weighted voting rights
in the Company on behalf of the Founder no longer complies with sub-paragraph (ii)
above, the Founder’s weighted voting rights in the Company must cease, and the
Company and the Founder must notify the Stock Exchange as soon as practicable
with details of the non-compliance.
Any conversion of Class A Shares into Class B Shares pursuant to the Articles shall
be effected by the re-designation of each Class A Share into one Class B Share. Such
conversion shall become effective forthwith upon entries being made in the register
of shareholders of the Company to record the re-designation of the relevant Class A
Shares as Class B Shares.
All of the Class A Shares in the authorised share capital shall be automatically
re-designated into Class B Shares in the event all of the Class A Shares in issue are
converted into Class B Shares in accordance with this paragraph, and no further
Class A Shares shall be issued by the Company.
Notwithstanding any provisions in the Articles to the contrary, each Class A Share
and each Class B Share shall entitle its holder to one vote on a poll at a general
meeting in respect of a resolution on any of the following matters:
(i) any amendment to the Memorandum or the Articles, however framed,
including the variation of the rights attached to any class of shares;
(ii) the appointment, election or removal of any independent non-executive
Director;
(iii) the appointment or removal of the auditors; or
(iv) the voluntary liquidation or winding-up of the Company.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
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--- page 673 ---
Notwithstanding the foregoing, where a holder of Class A Shares is permitted by the
Stock Exchange from time to time to exercise more than one vote per share when
voting on a resolution to amend the Memorandum or the Articles, any holder of
Class A Share may elect to exercise such number of votes per share as is permitted
by the Stock Exchange, up to the maximum number of votes attached to each
Class A Share.
Save and except for the rights, preferences, privileges and restrictions set out in this
Appendix, the Class A Shares and the Class B Shares shall rank pari passu in all
other respects and shall have the same rights, preferences, privileges and
restrictions.
(c) V ariation of rights of existing shares or classes of shares
The Company shall not vary the rights of the Class A Shares so as to increase the
number of votes to which each Class A Share is entitled.
Subject to the Cayman Companies Act, if at any time the share capital of the
Company is divided into different classes of shares, all or any of the special rights
attached to any class of shares may (unless otherwise provided for by the terms of
issue of the shares of that class) be varied, modified or abrogated with the consent
in writing of the holders of at least three-fourths of the issued Shares of that class,
or with the approval of a resolution passed by at least three-fourths of the votes cast
by the holders of the Shares of that class present and voting in person or by proxy
at a separate meeting of such holders. The provisions of the Articles relating to
general meetings shall apply mutatis mutandis to every such separate general
meeting, provided that the necessary quorum shall be two persons together holding
(or, in the case of a shareholder being a corporation, by its duly authorised
representative), or representing by proxy at least one-third of the issued shares of
that class. Every holder of shares of the class shall be entitled on a poll to one vote
for every such share held by him, and any holder of shares of the class present in
person or by proxy may demand a poll.
For so long as any Class A Share is in issue and unless such change is otherwise
required by law or the Listing Rules, (a) any change to the composition of the Board
set out in paragraph 2.2(a) below; (b) any change in the proportion of votes required
to pass a resolution of the shareholders, whether as an ordinary resolution or a
special resolution or in respect of particular matters or generally; (c) any variation
to the number of votes attached to a share of any class, except any such variation
arising from an automatic conversion of a Class A Share into a Class B Share
pursuant to paragraph 2.1(b) above; and (d) any change to this sub-paragraph, to the
matters in respect of which each Class A Share and each Class B Share shall entitle
its holder to one vote on a poll at a general meeting as summarised in paragraph 2.1
(b) above, or any change to the quorum requirements for meetings of the directors
as summarised in paragraph 2.3 below, shall require the consent in writing of the
holders of not less than three-fourths in nominal value of the issued Class A Shares.
Any special rights conferred upon the holders of any shares or class of shares shall
not, unless otherwise expressly provided in the rights attaching to the terms of issue
of such shares, be deemed to be varied by the creation or issue of further shares
ranking pari passu therewith.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND THE COMPANY LAWS OF THE CAYMAN ISLANDS
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--- page 674 ---
(d) Alteration of capital
The Company may, by an ordinary resolution of its members: (a) increase its share
capital by the creation of new shares of such amount as it thinks expedient;
(b) consolidate and divide all or any of its share capital into shares of a larger
amount than its existing shares; (c) subdivide its existing shares or any of them into
shares of smaller amount than is fixed by the Memorandum or into shares without
par value; (d) cancel any shares which, at the date of the resolution, have not been
taken or agreed to be taken by any person and diminish the amount of its share
capital by the amount of the shares so cancelled; (e) make provision for the
allotment and issue of shares which do not carry any voting rights; (f) change the
currency of denomination of its share capital; and (g) reduce its share premium
account in any manner authorised and subject to any conditions prescribed by law.
(e) Transfer of shares
Subject to the Cayman Companies Act and the requirements of the Stock Exchange,
all transfers of shares shall be effected by an instrument of transfer in the usual or
common form or in such other form as the Board may approve and may be under
hand or, if the transferor or transferee is a Clearing House (as defined in the Articles)
or its nominee(s), under hand or by machine imprinted signature, or by such other
manner of execution as the Board may approve from time to time.
Execution of the instrument of transfer shall be by or on behalf of the transferor and
the transferee, provided that the Board may dispense with the execution of the
instrument of transfer by the transferor or transferee or accept mechanically
executed transfers. The transferor shall be deemed to remain the holder of a share
until the name of the transferee is entered in the register of members of the Company
in respect of that share.
The Board may, in its absolute discretion, at any time and from time to time remove
any share on the principal register to any branch register or any share on any branch
register to the principal register or any other branch register.
Unless the Board otherwise agrees, no shares on the principal register shall be
removed to any branch register nor shall shares on any branch register be removed
to the principal register or any other branch register. All removals and other
documents of title shall be lodged for registration and registered, in the case of
shares on any branch register, at the relevant registration office and, in the case of
shares on the principal register, at the place at which the principal register is located.
The Board may, in its absolute discretion, decline to register a transfer of any share
(not being a fully paid up share) to a person of whom it does not approve or on which
the Company has a lien, or if the proposed transfer does not comply with the Articles
or any requirements of the Listing Rules. It may also decline to register a transfer
of any share issued under any share option scheme upon which a restriction on
transfer subsists or a transfer of any share to more than four joint holders.
The Board may decline to recognise any instrument of transfer unless a certain fee,
up to such maximum sum as the Stock Exchange may determine to be payable, is
paid to the Company, the instrument of transfer is properly stamped (if applicable),
is in respect of only one class of share and is lodged at the relevant registration
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND THE COMPANY LAWS OF THE CAYMAN ISLANDS
– IV-5 –


--- page 675 ---
office or the place at which the principal register is located accompanied by the
relevant share certificate(s) and such other evidence as the Board may reasonably
require is provided to show the right of the transferor to make the transfer (and if
the instrument of transfer is executed by some other person on his behalf, the
authority of that person so to do).
The register of members may, subject to the Listing Rules, be closed in accordance
with the terms equivalent to the relevant section of the Hong Kong Companies
Ordinance at such time or for such period not exceeding in the whole 30 days in each
year as the Board may determine (or such longer period as the members of the
Company may by ordinary resolution determine, provided that such period shall not
be extended beyond 60 days in any year).
Fully paid shares shall be free from any restriction on transfer (except when
permitted by the Stock Exchange) and shall also be free from all liens.
(f) Power of the Company to purchase its own shares
The Company may purchase its own shares subject to certain restrictions and the
Board may only exercise this power on behalf of the Company subject to any
applicable requirement imposed from time to time by the Articles or any code, rules
or regulations issued from time to time by the Stock Exchange and/or the Securities
and Futures Commission of Hong Kong.
Where the Company purchases for redemption a redeemable share, purchases not
made through the market or by tender shall be limited to a maximum price and, if
purchases are by tender, tenders shall be available to all members alike.
In the event the Company reduces the number of Class B Shares in issue through a
purchase of its own shares, the holders of Class A Shares shall reduce their voting
rights in the Company proportionately, whether through a conversion of a portion of
their Class A Shares or otherwise, if the reduction in the number of Class B Shares
in issue would otherwise result in an increase in the proportion of Class A Shares to
the total number of shares in issue.
(g) Power of any subsidiary of the Company to own shares in the Company
There are no provisions in the Articles relating to the ownership of shares in the
Company by a subsidiary.
(h) Calls on shares and forfeiture of shares
The Board may, from time to time, make such calls as it thinks fit upon the members
in respect of any monies unpaid on the shares held by them respectively (whether on
account of the nominal value of the shares or by way of premium) and not by the
conditions of allotment of such shares made payable at fixed times. A call may be
made payable either in one sum or by instalments. If the sum payable in respect of
any call or instalment is not paid on or before the day appointed for payment thereof,
the person or persons from whom the sum is due shall pay interest on the same at
such rate not exceeding 20 per cent per annum as the Board shall fix from the day
appointed for payment to the time of actual payment, but the Board may waive
payment of such interest wholly or in part. The Board may, if it thinks fit, receive
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND THE COMPANY LAWS OF THE CAYMAN ISLANDS
– IV-6 –


--- page 676 ---
from any member willing to advance the same, either in money or money’s worth,
all or any part of the money uncalled and unpaid or instalments payable upon any
shares held by him, and in respect of all or any of the monies so advanced the
Company may pay interest at such rate (if any) not exceeding 20 per cent per annum
as the Board may decide.
If a member fails to pay any call or instalment of a call on the day appointed for
payment, the Board may, for so long as any part of the call or instalment remains
unpaid, serve not less than 14 days’ notice on the member requiring payment of so
much of the call or instalment as is unpaid, together with any interest which may
have accrued and which may still accrue up to the date of actual payment. The notice
shall name a further day (not earlier than the expiration of 14 days from the date of
the notice) on or before which the payment required by the notice is to be made, and
shall also name the place where payment is to be made. The notice shall also state
that, in the event of non-payment at or before the appointed time, the shares in
respect of which the call was made will be liable to be forfeited.
If the requirements of any such notice are not complied with, any share in respect
of which the notice has been given may at any time thereafter, before the payment
required by the notice has been made, be forfeited by a resolution of the Board to
that effect. Such forfeiture will include all dividends and bonuses declared in respect
of the forfeited share and not actually paid before the forfeiture.
A person whose shares have been forfeited shall cease to be a member in respect of
the forfeited shares but shall, nevertheless, remain liable to pay to the Company all
monies which, as at the date of forfeiture, were payable by him to the Company in
respect of the shares together with (if the Board shall in its discretion so require)
interest thereon from the date of forfeiture until payment at such rate not exceeding
20 per cent per annum as the Board may prescribe.
2.2 Directors
(a) Appointment, retirement and removal
At any time or from time to time, the Board shall have the power to appoint any
person as a Director either to fill a casual vacancy on the Board or as an additional
Director to the existing Board subject to any maximum number of Directors, if any,
as may be determined by the members in general meeting or the Articles. Any
Director so appointed to fill a casual vacancy or as an addition to the existing Board
shall hold office only until the first annual general meeting of the Company after his
appointment and be eligible for re-election at such meeting. Any Director so
appointed by the Board shall not be taken into account in determining the Directors
or the number of Directors who are to retire by rotation at an annual general
meeting.
At each annual general meeting, one-third of the Directors for the time being shall
retire from office by rotation. However, if the number of Directors is not a multiple
of three, then the number nearest to but not less than one-third shall be the number
of retiring Directors. Every Director (including those appointed for a specific term
and the independent non-executive Directors) shall be subject to retirement by
rotation at least once every three years. The Directors to retire in each year shall be
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
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--- page 677 ---
those who have been in office longest since their last re-election or appointment but,
as between persons who became or were last re-elected Directors on the same day,
those to retire shall (unless they otherwise agree among themselves) be determined
by lot.
No person, other than a retiring Director, shall, unless recommended by the Board
for election, be eligible for election to the office of Director at any general meeting,
unless notice in writing of the intention to propose that person for election as a
Director and notice in writing by that person of his willingness to be elected has
been lodged at the head office or at the registration office of the Company. The
Company shall include the particulars of such proposed person for election as a
Director in its announcement or supplementary circular, and shall give the
shareholders at least seven days to consider the relevant information disclosed in
such announcement or supplementary circular prior to the date of the meeting of the
election.
A Director is not required to hold any shares in the Company by way of qualification
nor is there any specified upper or lower age limit for Directors either for accession
to or retirement from the Board.
A Director may be removed by an ordinary resolution of the members of the
Company before the expiration of his term of office (but without prejudice to any
claim which such Director may have for damages for any breach of any contract
between him and the Company) and the Company may by ordinary resolution
appoint another in his place (including a managing director or other executive
director). Any Director so appointed shall be subject to the retirement by rotation
provisions. The number of Directors shall not be less than two.
The office of a Director shall be vacated if he:
(i) resigns;
(ii) dies;
(iii) is declared to be of unsound mind and the Board resolves that his office be
vacated;
(iv) becomes bankrupt or has a receiving order made against him or suspends
payment or compounds with his creditors generally;
(v) he is prohibited from being or ceases to be a director by operation of law;
(vi) without special leave, is absent from meetings of the Board for six consecutive
months, and the Board resolves that his office is vacated;
(vii) has been required by the stock exchange of the Relevant Territory (as defined
in the Articles) to cease to be a Director; or
(viii) is removed from office by no less than three-fourths in number of the Directors
pursuant to the Articles.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND THE COMPANY LAWS OF THE CAYMAN ISLANDS
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--- page 678 ---
From time to time the Board may appoint one or more of the Directors to be
managing director, joint managing director or deputy managing director or to hold
any other employment or executive office with the Company for such period and
upon such terms as the Board may determine, and the Board may revoke or
terminate any of such appointments. The Board may also delegate any of its powers
to committees consisting of such Director(s) or other person(s) as the Board thinks
fit, and from time to time it may also revoke such delegation or revoke the
appointment of and discharge any such committees either wholly or in part, and
either as to persons or purposes, but every committee so formed shall, in the exercise
of the powers so delegated, conform to any regulations that may from time to time
be imposed upon it by the Board.
The appointment or re-appointment of Directors, including independent non-
executive Directors, must be subject to the recommendation of the nomination
committee.
(b) Power to allot and issue shares and warrants
Subject to the provisions of the Memorandum and the Articles, compliance with the
Listing Rules and the Code on Takeovers and Mergers and Share Buy-back issued
by the Securities and Futures Commission of Hong Kong and any direction that may
be given by the Company in general meeting, and without prejudice to any special
rights conferred on the holders of any shares or class of shares, any share may be
issued with or have attached to it such rights, or such restrictions, whether with
regard to dividend, voting, return of capital or otherwise, as the Company may by
ordinary resolution determine (or, in the absence of any such determination or so far
as the same may not make specific provision, as the Board may determine), provided
that (1) no new class of Shares with voting rights superior to those of Class B Shares
will be created; and (2) any variations in the relative rights as between the different
classes will not result in the creation of a new class of Shares with voting rights
superior to those of Class B Shares.
The Board may issue warrants to subscribe for Class B shares or other securities of
the Company on such terms as it may from time to time determine.
Where warrants are issued to bearer, no certificate in respect of such warrants shall
be issued to replace one that has been lost unless the Board is satisfied beyond
reasonable doubt that the original certificate has been destroyed and the Company
has received an indemnity in such form as the Board thinks fit with regard to the
issue of any such replacement certificate.
Subject to the provisions of the Cayman Companies Act, the Articles and, where
applicable, the rules of any stock exchange of the Relevant Territory and without
prejudice to any special rights or restrictions for the time being attached to any
shares or any class of shares, all unissued shares in the Company shall be at the
disposal of the Board, which may offer, allot, grant options over or otherwise
dispose of them to such persons, at such times, for such consideration and on such
terms and conditions as it in its absolute discretion thinks fit, provided that no shares
shall be issued at a discount.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND THE COMPANY LAWS OF THE CAYMAN ISLANDS
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--- page 679 ---
Neither the Company nor the Board shall be obliged, when making or granting any
allotment of, offer of, option over or disposal of shares, to make, or make available,
any such allotment, offer, option or shares to members or others whose registered
addresses are in any particular territory or territories where, in the absence of a
registration statement or other special formalities, doing so is or may, in the opinion
of the Board, be unlawful or impracticable. However, no member affected as a result
of the foregoing shall be, or be deemed to be, a separate class of members for any
purpose whatsoever.
(c) Power to dispose of the assets of the Company or any of its subsidiaries
While there are no specific provisions in the Articles relating to the disposal of the
assets of the Company or any of its subsidiaries, the Board may exercise all powers
and do all acts and things which may be exercised or done or approved by the
Company and which are not required by the Articles or the Cayman Companies Act
to be exercised or done by the Company in general meeting, but if such power or act
is regulated by the Company in general meeting, such regulation shall not invalidate
any prior act of the Board which would have been valid if such regulation had not
been made.
(d) Borrowing powers
The Board may exercise all the powers of the Company to raise or borrow money,
to mortgage or charge all or any part of the undertaking, property and uncalled
capital of the Company and, subject to the Cayman Companies Act, to issue
debentures, debenture stock, bonds and other securities of the Company, whether
outright or as collateral security for any debt, liability or obligation of the Company
or of any third party.
(e) Remuneration
The Directors shall be entitled to receive, as ordinary remuneration for their
services, such sums as shall from time to time be determined by the Board or the
Company in general meeting, as the case may be, such sum (unless otherwise
directed by the resolution by which it is determined) to be divided among the
Directors in such proportions and in such manner as they may agree or, failing
agreement, either equally or, in the case of any Director holding office for only a
portion of the period in respect of which the remuneration is payable, pro rata . The
Directors shall also be entitled to be repaid all expenses reasonably incurred by them
in attending any Board meetings, committee meetings or general meetings or
otherwise in connection with the discharge of their duties as Directors. Such
remuneration shall be in addition to any other remuneration to which a Director who
holds any salaried employment or office in the Company may be entitled by reason
of such employment or office.
Any Director who, at the request of the Company, performs services which in the
opinion of the Board go beyond the ordinary duties of a Director may be paid such
special or extra remuneration as the Board may determine, in addition to or in
substitution for any ordinary remuneration as a Director. An executive Director
appointed to be a managing director, joint managing director, deputy managing
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
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--- page 680 ---
director or other executive officer shall receive such remuneration and such other
benefits and allowances as the Board may from time to time decide. Such
remuneration shall be in addition to his ordinary remuneration as a Director.
The Board may establish, either on its own or jointly in concurrence or agreement
with subsidiaries of the Company or companies with which the Company is
associated in business, or may make contributions out of the Company’s monies to,
any schemes or funds for providing pensions, sickness or compassionate allowances,
life assurance or other benefits for employees (which expression as used in this and
the following paragraph shall include any Director or former Director who may hold
or have held any executive office or any office of profit with the Company or any
of its subsidiaries) and former employees of the Company and their dependents or
any class or classes of such persons.
The Board may also pay, enter into agreements to pay or make grants of revocable
or irrevocable, whether or not subject to any terms or conditions, pensions or other
benefits to employees and former employees and their dependents, or to any of such
persons, including pensions or benefits additional to those, if any, to which such
employees or former employees or their dependents are or may become entitled
under any such scheme or fund as mentioned above. Such pension or benefit may,
if deemed desirable by the Board, be granted to an employee either before and in
anticipation of, or upon or at any time after, his actual retirement.
(f) Compensation or payments for loss of office
Payments to any present Director or past Director of any sum by way of
compensation for loss of office or as consideration for or in connection with his
retirement from office (not being a payment to which the Director is contractually
or statutorily entitled) must be approved by the Company in general meeting.
(g) Loans and provision of security for loans to Directors
The Company shall not directly or indirectly make a loan to a Director or a director
of any holding company of the Company or any of their respective close associates,
enter into any guarantee or provide any security in connection with a loan made by
any person to a Director or a director of any holding company of the Company or
any of their respective close associates, or, if any one or more Directors hold(s)
(jointly or severally or directly or indirectly) a controlling interest in another
company, make a loan to that other company or enter into any guarantee or provide
any security in connection with a loan made by any person to that other company.
(h) Disclosure of interest in contracts with the Company or any of its subsidiaries
With the exception of the office of auditor of the Company, a Director may hold any
other office or place of profit with the Company in conjunction with his office of
Director for such period and upon such terms as the Board may determine, and may
be paid such extra remuneration for that other office or place of profit, in whatever
form, in addition to any remuneration provided for by or pursuant to any other
Articles. A Director may be or become a director, officer or member of any other
company in which the Company may be interested, and shall not be liable to account
to the Company or the members for any remuneration or other benefits received by
him as a director, officer or member of such other company. The Board may also
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
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--- page 681 ---
cause the voting power conferred by the shares in any other company held or owned
by the Company to be exercised in such manner in all respects as it thinks fit,
including the exercise in favour of any resolution appointing the Directors or any of
them to be directors or officers of such other company.
No Director or intended Director shall be disqualified by his office from contracting
with the Company, nor shall any such contract or any other contract or arrangement
in which any Director is in any way interested be liable to be avoided, nor shall any
Director so contracting or being so interested be liable to account to the Company
for any profit realised by any such contract or arrangement by reason only of such
Director holding that office or the fiduciary relationship established by it. A Director
who is, in any way, materially interested in a contract or arrangement or proposed
contract or arrangement with the Company shall declare the nature of his interest at
the earliest meeting of the Board at which he may practically do so.
There is no power to freeze or otherwise impair any of the rights attaching to any
share by reason that the person or persons who are interested directly or indirectly
in that share have failed to disclose their interests to the Company.
A Director shall not vote or be counted in the quorum on any resolution of the Board
in respect of any contract or arrangement or proposal in which he or any of his close
associate(s) has/have a material interest, and if he shall do so his vote shall not be
counted nor shall he be counted in the quorum for that resolution. This prohibition
shall not apply to any of the following matters:
(i) the giving of any security or indemnity to the Director or his close associate(s)
in respect of money lent or obligations incurred or undertaken by him or any
of them at the request of or for the benefit of the Company or any of its
subsidiaries;
(ii) the giving of any security or indemnity to a third party in respect of a debt or
obligation of the Company or any of its subsidiaries for which the Director or
his close associate(s) has/have himself/themselves assumed responsibility in
whole or in part whether alone or jointly under a guarantee or indemnity or by
the giving of security;
(iii) any proposal concerning an offer of shares, debentures or other securities of or
by the Company or any other company which the Company may promote or be
interested in for subscription or purchase, where the Director or his close
associate(s) is/are or is/are to be interested as a participant in the underwriting
or sub-underwriting of the offer;
(iv) any proposal or arrangement concerning the benefit of employees of the
Company or any of its subsidiaries, including the adoption, modification or
operation of either: (i) any employees’ share scheme or any share incentive or
share option scheme under which the Director or his close associate(s) may
benefit; or (ii) any of a pension fund or retirement, death or disability benefits
scheme which relates to Directors, their close associates and employees of the
Company or any of its subsidiaries and does not provide in respect of any
Director or his close associate(s) any privilege or advantage not generally
accorded to the class of persons to which such scheme or fund relates; and
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
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--- page 682 ---
(v) any contract or arrangement in which the Director or his close associate(s)
is/are interested in the same manner as other holders of shares, debentures or
other securities of the Company by virtue only of his/their interest in those
shares, debentures or other securities.
(i) Independent non-executive Directors
The role of an independent non-executive Director shall include, but is not limited
to:
(i) participating in Board meetings to bring an independent judgment to bear on
issues of strategy, policy, performance, accountability, resources, key
appointments and standards of conduct;
(ii) taking the lead where potential conflicts of interests arise;
(iii) serving on the audit, remuneration, nomination and corporate governance
committees, if invited; and
(iv) scrutinising the Company’s performance in achieving agreed corporate goals
and objectives, and monitoring performance reporting.
The independent non-executive Directors shall give the Board and any committees
on which they serve the benefit of their skills, expertise and varied backgrounds and
qualifications through regular attendance and active participation. They should also
attend general meetings and develop a balanced understanding of the views of the
members.
The independent non-executive Directors shall make a positive contribution to the
development of the Company’s strategy and policies through independent,
constructive and informed comments.
2.3 Proceedings of the Board
The Board may meet anywhere in the world for the despatch of business and may adjourn
and otherwise regulate its meetings as it thinks fit. Questions arising at any meeting shall
be determined by a majority of votes. In the case of an equality of votes, the chairman of
the meeting shall have a second or casting vote.
2.4 Alterations to the constitutional documents and the Company’s name
To the extent that the same is permissible under the Cayman Islands laws and subject to
the Articles, the Memorandum and Articles of the Company may only be altered or
amended, and the name of the Company may only be changed, with the sanction of a
special resolution of the Company.
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2.5 Meetings of members
(a) Special and ordinary resolutions
A special resolution of the Company must be passed by a majority of not less than
three-fourths of the voting rights held by such members as, being entitled so to do,
vote in person or by proxy or, in the case of members which are corporations, by
their duly authorised representatives or by proxy at a general meeting of which
notice specifying the intention to propose the resolution as a special resolution has
been duly given.
Under the Cayman Companies Act, a copy of any special resolution must be
forwarded to the Registrar of Companies in the Cayman Islands within 15 days of
being passed.
An ordinary resolution, by contrast, is a resolution passed by a simple majority of
the votes of such members of the Company as, being entitled to do so, vote in person
or, in the case of members which are corporations, by their duly authorised
representatives or by proxy at a general meeting of which notice has been duly
given.
A resolution in writing signed by or on behalf of all members shall be treated as an
ordinary resolution duly passed at a general meeting of the Company duly convened
and held, and where relevant as a special resolution so passed.
(b) V oting rights and right to demand a poll
Subject to any special rights, restrictions or privileges as to voting for the time being
attached to any class or classes of shares at any general meeting: (a) on a poll every
member present in person or by proxy or, in the case of a member being a
corporation, by its duly authorised representative shall have one vote for every share
which is fully paid or credited as fully paid registered in his name in the register of
members of the Company, provided that no amount paid up or credited as paid up
on a share in advance of calls or instalments is treated for this purpose as paid up
on the share; and (b) on a show of hands every member who is present in person (or,
in the case of a member being a corporation, by its duly authorised representative)
or by proxy shall have one vote. Where more than one proxy is appointed by a
member which is a Clearing House or its nominee(s), each such proxy shall have one
vote on a show of hands. On a poll, a member entitled to more than one vote need
not use all his votes or cast all the votes he does use in the same way.
At any general meeting a resolution put to the vote of the meeting is to be decided
by poll save that the chairman of the meeting may, pursuant to the Listing Rules,
allow a resolution to be voted on by a show of hands. Where a show of hands is
allowed, before or on the declaration of the result of the show of hands, a poll may
be demanded by (in each case by members present in person or by proxy or by a duly
authorised corporate representative):
(i) at least two members;
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(ii) any member or members representing not less than one-tenth of the total voting
rights of all the members having the right to vote at the meeting; or
(iii) a member or members holding shares in the Company conferring a right to vote
at the meeting on which an aggregate sum has been paid equal to not less than
one-tenth of the total sum paid up on all the shares conferring that right.
Should a Clearing House or its nominee(s) be a member of the Company, it may
appoint proxies or authorise such person or persons as it thinks fit to act as its
representative(s), who enjoy rights equivalent to the rights of other members, at any
meeting of the Company (including but not limited to general meetings and creditors
meetings) or at any meeting of any class of members of the Company provided that,
if more than one person is so authorised, the authorisation shall specify the number
and class of shares in respect of which each such person is so authorised. A person
authorised in accordance with this provision shall be deemed to have been duly
authorised without further evidence of the facts and be entitled to exercise the same
rights and powers on behalf of the Clearing House or its nominee(s) as if such
person were an individual member, including the right to speak and vote
individually on a show of hands or on a poll.
All Shareholders of the Company (including a Shareholder which is a Clearing
House (or its nominee(s)) shall have the right to (a) speak at a general meeting and
(b) vote at a general meeting except where a Shareholder is required by the Listing
Rules to abstain from voting to approve the matter under consideration. Where any
member is, under the Listing Rules, required to abstain from voting on any
particular resolution or restricted to voting only for or only against any particular
resolution, in which case any votes cast by or on behalf of such member in
contravention of such requirement or restriction shall not be counted.
(c) Annual general meetings
The Company must hold an annual general meeting in each financial year. Such
meeting must be held within six months after the end of the Company’s financial
year.
(d) Notices of meetings and business to be conducted
An annual general meeting of the Company shall be called by at least 21 days’ notice
in writing, and any other general meeting of the Company shall be called by at least
14 days’ notice in writing. The notice shall be exclusive of the day on which it is
served or deemed to be served and of the day for which it is given, and must specify
the time, place and agenda of the meeting and particulars of the resolution(s) to be
considered at that meeting and, in the case of special business, the general nature of
that business.
Except where otherwise expressly stated, any notice or document (including a share
certificate) to be given or issued under the Articles shall be in writing, and may be
served by the Company on any member personally, by post to such member’s
registered address or (in the case of a notice) by advertisement in the newspapers.
Any member whose registered address is outside Hong Kong may notify the
Company in writing of an address in Hong Kong which shall be deemed to be his
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registered address for this purpose. Subject to the Cayman Companies Act and the
Listing Rules, a notice or document may also be served or delivered by the Company
to any member by electronic means.
Although a meeting of the Company may be called by shorter notice than as
specified above, if permitted by the Listing Rules, such meeting may be deemed to
have been duly called if it is so agreed:
(i) in the case of an annual general meeting, by all members of the Company
entitled to attend and vote thereat; and
(ii) in the case of any other meeting, by a majority in number of the members
having a right to attend and vote at the meeting holding not less than 95 per
cent of the total voting rights in the Company.
All business transacted at an extraordinary general meeting shall be deemed special
business. All business shall also be deemed special business where it is transacted
at an annual general meeting, with the exception of certain routine matters which
shall be deemed ordinary business.
(e) Quorum for meetings and separate class meetings
No business shall be transacted at any general meeting unless a quorum is present
when the meeting proceeds to business, and continues to be present until the
conclusion of the meeting.
The quorum for a general meeting shall be two members present in person (or in the
case of a member being a corporation, by its duly authorised representative) or by
proxy and entitled to vote. In respect of a separate class meeting (other than an
adjourned meeting) convened to sanction the modification of class rights, the
necessary quorum shall be two persons holding or representing by proxy not less
than one-third in nominal value of the issued shares of that class.
(f) Proxies
Any member of the Company entitled to attend and vote at a meeting of the
Company is entitled to appoint another person as his proxy to attend and vote instead
of him. A corporation which is a member may execute a form of proxy under the
hand of a duly authorised officer. A member who is the holder of two or more shares
may appoint more than one proxy to represent him and vote on his behalf at a
general meeting of the Company or at a class meeting. A proxy need not be a
member of the Company and shall be entitled to exercise the same powers on behalf
of a member who is an individual and for whom he acts as proxy as such member
could exercise. In addition, a proxy shall be entitled to exercise the same powers on
behalf of a member which is a corporation and for which he acts as proxy as such
member could exercise as if it were an individual member present in person at any
general meeting. On a poll or on a show of hands, votes may be given either
personally (or, in the case of a member being a corporation, by its duly authorised
representative) or by proxy.
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The instrument appointing a proxy shall be in writing under the hand of the
appointor or of his attorney duly authorised in writing, or if the appointor is a
corporation, either under seal or under the hand of a duly authorised officer or
attorney. Every instrument of proxy, whether for a specified meeting or otherwise,
shall be in such form as the Board may from time to time approve, provided that it
shall not preclude the use of the two-way form. Any form issued to a member for
appointing a proxy to attend and vote at an extraordinary general meeting or at an
annual general meeting at which any business is to be transacted shall be such as to
enable the member, according to his intentions, to instruct the proxy to vote in
favour of or against (or, in default of instructions, to exercise his discretion in
respect of) each resolution dealing with any such business.
(g) Members’ requisition for meetings
One or more members holding, as at the date of deposit of the requisition, in
aggregate not less than one-tenth of the voting rights (on a one vote per share basis)
in the share capital of the Company may also make a requisition to convene an
extraordinary general meeting and/or add resolutions to the agenda of a meeting.
Such requisition shall be made in writing to the Board or the secretary of the
Company for the purpose of requiring an extraordinary general meeting to be called
by the Board for the transaction of any business specified in such requisition. Such
meeting shall be held within two months after the deposit of such requisition. If
within 21 days of such deposit, the Board fails to proceed to convene such meeting,
the requisitionist(s) himself (themselves) may do so in the same manner, and all
reasonable expenses incurred by the requisitionist(s) as a result of the failure of the
Board shall be reimbursed to the requisitionist(s) by the Company.
2.6 Accounts and audit
The Board shall cause proper books of account to be kept of the sums of money received
and expended by the Company, and of the assets and liabilities of the Company and of all
other matters required by the Cayman Companies Act (which include all sales and
purchases of goods by the Company) necessary to give a true and fair view of the state
of the Company’s affairs and to show and explain its transactions.
The books of accounts of the Company shall be kept at the head office of the Company
or at such other place or places as the Board decides and shall always be open to
inspection by any Director. No member (other than a Director) shall have any right to
inspect any account, book or document of the Company except as conferred by the
Cayman Companies Act or ordered by a court of competent jurisdiction or authorised by
the Board or the Company in general meeting.
The Board shall from time to time cause to be prepared and laid before the Company at
its annual general meeting balance sheets and profit and loss accounts (including every
document required by law to be annexed thereto), together with a copy of the Directors’
report and a copy of the auditors’ report, not less than 21 days before the date of the
annual general meeting. Copies of these documents shall be sent to every person entitled
to receive notices of general meetings of the Company under the provisions of the Articles
together with the notice of annual general meeting, not less than 21 days before the date
of the meeting.
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Subject to the rules of the stock exchange of the Relevant Territory, the Company may
send summarised financial statements to shareholders who have, in accordance with the
rules of the stock exchange of the Relevant Territory, consented and elected to receive
summarised financial statements instead of the full financial statements. The summarised
financial statements must be accompanied by any other documents as may be required
under the rules of the stock exchange of the Relevant Territory, and must be sent to those
shareholders that have consented and elected to receive the summarised financial
statements not less than 21 days before the general meeting.
The members shall appoint auditor(s) to hold office by an ordinary resolution of the
members until the conclusion of the next annual general meeting on such terms and with
such duties as may be agreed with the Board. The auditors’ remuneration shall be fixed
by the members in general meeting by an ordinary resolution of the members or by the
Board if authority is so delegated by the members. The members may, at any general
meeting convened and held in accordance with the Articles, remove the auditors by
ordinary resolution at any time before the expiration of the term of office and shall, by
ordinary resolution, at that meeting appoint new auditors in their place for the remainder
of the term.
The auditors shall audit the financial statements of the Company in accordance with
generally accepted accounting principles of Hong Kong, the International Accounting
Standards or such other standards as may be permitted by the Stock Exchange.
2.7 Dividends and other methods of distribution
The Company in general meeting may declare dividends in any currency to be paid to the
members but no dividend shall be declared in excess of the amount recommended by the
Board.
Except in so far as the rights attaching to, or the terms of issue of, any share may
otherwise provide:
(a) all dividends shall be declared and paid according to the amounts paid up on the
shares in respect of which the dividend is paid, although no amount paid up on a
share in advance of calls shall for this purpose be treated as paid up on the share;
(b) all dividends shall be apportioned and paid pro rata in accordance with the amount
paid up on the shares during any portion(s) of the period in respect of which the
dividend is paid; and
(c) the Board may deduct from any dividend or other monies payable to any member all
sums of money (if any) presently payable by him to the Company on account of
calls, instalments or otherwise.
Where the Board or the Company in general meeting has resolved that a dividend should
be paid or declared, the Board may resolve:
(i) that such dividend be satisfied wholly or in part in the form of an allotment of shares
credited as fully paid up, provided that the members entitled to such dividend will
be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such
allotment; or
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(ii) that the members entitled to such dividend will be entitled to elect to receive an
allotment of shares credited as fully paid up in lieu of the whole or such part of the
dividend as the Board may think fit.
Upon the recommendation of the Board, the Company may by ordinary resolution in
respect of any one particular dividend of the Company determine that it may be satisfied
wholly in the form of an allotment of shares credited as fully paid up without offering any
right to members to elect to receive such dividend in cash in lieu of such allotment.
Any dividend, bonus or other sum payable in cash to the holder of shares may be paid by
cheque or warrant sent through the post. Every such cheque or warrant shall be made
payable to the order of the person to whom it is sent and shall be sent at the holder’s or
joint holders’ risk and payment of the cheque or warrant by the bank on which it is drawn
shall constitute a good discharge to the Company. Any one of two or more joint holders
may give effectual receipts for any dividends or other monies payable or property
distributable in respect of the shares held by such joint holders.
Whenever the Board or the Company in general meeting has resolved that a dividend be
paid or declared, the Board may further resolve that such dividend be satisfied wholly or
in part by the distribution of specific assets of any kind.
The Board may, if it thinks fit, receive from any member willing to advance the same, and
either in money or money’s worth, all or any part of the money uncalled and unpaid or
instalments payable upon any shares held by him, and in respect of all or any of the
monies so advanced may pay interest at such rate (if any) not exceeding 20 per cent per
annum, as the Board may decide. A payment in advance of a call shall not entitle the
member to receive any dividend or to exercise any other rights or privileges as a member
in respect of the share or the due portion of the shares upon which payment has been
advanced by such member before it is called up.
All dividends, bonuses or other distributions unclaimed for one year after having been
declared may be invested or otherwise used by the Board for the benefit of the Company
until claimed and the Company shall not be constituted a trustee in respect thereof. All
dividends, bonuses or other distributions unclaimed for six years after having been
declared may be forfeited by the Board and, upon such forfeiture, shall revert to the
Company.
No dividend or other monies payable by the Company on or in respect of any share shall
bear interest against the Company.
The Company may exercise the power to cease sending cheques for dividend entitlements
or dividend warrants by post if such cheques or warrants remain uncashed on two
consecutive occasions or after the first occasion on which such a cheque or warrant is
returned undelivered.
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2.8 Inspection of corporate records
For so long as any part of the share capital of the Company is listed on the Stock
Exchange, any member may inspect any register of members of the Company maintained
in Hong Kong (except when the register of members is closed in accordance with the
terms equivalent to the relevant section of the Hong Kong Companies Ordinance) without
charge and require the provision to him of copies or extracts of such register in all
respects as if the Company were incorporated under and were subject to the Hong Kong
Companies Ordinance.
2.9 Rights of minorities in relation to fraud or oppression
There are no provisions in the Articles concerning the rights of minority members in
relation to fraud or oppression. However, certain remedies may be available to members
of the Company under the Cayman Islands laws, as summarised in paragraph 3.6 of this
Appendix.
2.10 Procedures on liquidation
A resolution that the Company be wound up by the court or be wound up voluntarily shall
be a special resolution.
Subject to any special rights, privileges or restrictions as to the distribution of available
surplus assets on liquidation for the time being attached to any class or classes of shares:
(a) if the Company is wound up and the assets available for distribution among the
members of the Company are more than sufficient to repay the whole of the capital
paid up at the commencement of the winding up, then the excess shall be distributed
pari passu among such members in proportion to the amount paid up on the shares
held by them respectively; and
(b) if the Company is wound up and the assets available for distribution among the
members as such are insufficient to repay the whole of the paid-up capital, such
assets shall be distributed so that, as nearly as may be, the losses shall be borne by
the members in proportion to the capital paid up on the shares held by them,
respectively.
If the Company is wound up (whether the liquidation is voluntary or compelled by the
court), the liquidator may, with the sanction of a special resolution and any other sanction
required by the Cayman Companies Act, divide among the members in specie or kind the
whole or any part of the assets of the Company, whether the assets consist of property of
one kind or different kinds, and the liquidator may, for such purpose, set such value as
he deems fair upon any one or more class or classes of property to be so divided and may
determine how such division shall be carried out as between the members or different
classes of members and the members within each class. The liquidator may, with the like
sanction, vest any part of the assets in trustees upon such trusts for the benefit of members
as the liquidator thinks fit, provided that no member shall be compelled to accept any
shares or other property upon which there is a liability.
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--- page 690 ---
2.11 Subscription rights reserve
Provided that it is not prohibited by and is otherwise in compliance with the Cayman
Companies Act, if warrants to subscribe for shares have been issued by the Company and
the Company does any act or engages in any transaction which would result in the
subscription price of such warrants being reduced below the par value of the shares to be
issued on the exercise of such warrants, a subscription rights reserve shall be established
and applied in paying up the difference between the subscription price and the par value
of such shares.
3. COMPANY LAWS OF THE CAYMAN ISLANDS
The Company was incorporated in the Cayman Islands as an exempted company on
October 24, 2019 subject to the Cayman Companies Act. Certain provisions of the
company laws of the Cayman Islands are set out below but this section does not purport
to contain all applicable qualifications and exceptions or to be a complete review of all
matters of the company laws of the Cayman Islands, which may differ from equivalent
provisions in jurisdictions with which interested parties may be more familiar.
3.1 Company operations
An exempted company such as the Company must conduct its operations mainly outside
the Cayman Islands. An exempted company is also required to file an annual return each
year with the Registrar of Companies of the Cayman Islands and pay a fee which is based
on the amount of its authorised share capital.
3.2 Share capital
Under the Cayman Companies Act, a Cayman Islands company may issue ordinary,
preference or redeemable shares or any combination thereof. Where a company issues
shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount
or value of the premiums on those shares shall be transferred to an account, to be called
the share premium account. At the option of a company, these provisions may not apply
to premiums on shares of that company allotted pursuant to any arrangements in
consideration of the acquisition or cancellation of shares in any other company and issued
at a premium. The share premium account may be applied by the company subject to the
provisions, if any, of its memorandum and articles of association, in such manner as the
company may from time to time determine including, but without limitation, the
following:
(a) paying distributions or dividends to members;
(b) paying up unissued shares of the company to be issued to members as fully paid
bonus shares;
(c) any manner provided in section 37 of the Cayman Companies Act;
(d) writing-off the preliminary expenses of the company; and
(e) writing-off the expenses of, or the commission paid or discount allowed on, any
issue of shares or debentures of the company.
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Notwithstanding the foregoing, no distribution or dividend may be paid to members out
of the share premium account unless, immediately following the date on which the
distribution or dividend is proposed to be paid, the company will be able to pay its debts
as they fall due in the ordinary course of business.
Subject to confirmation by the court, a company limited by shares or a company limited
by guarantee and having a share capital may, if authorised to do so by its articles of
association, by special resolution reduce its share capital in any way.
3.3 Financial assistance to purchase shares of a company or its holding company
There are no statutory prohibitions in the Cayman Islands on the granting of financial
assistance by a company to another person for the purchase of, or subscription for, its
own, its holding company’s or a subsidiary’s shares. Therefore, a company may provide
financial assistance provided the directors of the company, when proposing to grant such
financial assistance, discharge their duties of care and act in good faith, for a proper
purpose and in the interests of the company. Such assistance should be on an arm’s-length
basis.
3.4 Purchase of shares and warrants by a company and its subsidiaries
A company limited by shares or a company limited by guarantee and having a share
capital may, if so authorised by its articles of association, issue shares which are to be
redeemed or are liable to be redeemed at the option of the company or a member and, for
the avoidance of doubt, it shall be lawful for the rights attaching to any shares to be
varied, subject to the provisions of the company’s articles of association, so as to provide
that such shares are to be or are liable to be so redeemed. In addition, such a company
may, if authorised to do so by its articles of association, purchase its own shares,
including any redeemable shares; an ordinary resolution of the company approving the
manner and terms of the purchase will be required if the articles of association do not
authorise the manner and terms of such purchase. A company may not redeem or purchase
its shares unless they are fully paid. Furthermore, a company may not redeem or purchase
any of its shares if, as a result of the redemption or purchase, there would no longer be
any issued shares of the company other than shares held as treasury shares. In addition,
a payment out of capital by a company for the redemption or purchase of its own shares
is not lawful unless, immediately following the date on which the payment is proposed
to be made, the company shall be able to pay its debts as they fall due in the ordinary
course of business.
Shares that have been purchased or redeemed by a company or surrendered to the
company shall not be treated as cancelled but shall be classified as treasury shares if held
in compliance with the requirements of section 37A(1) of the Cayman Companies Act.
Any such shares shall continue to be classified as treasury shares until such shares are
either cancelled or transferred pursuant to the Cayman Companies Act.
A Cayman Islands company may be able to purchase its own warrants subject to and in
accordance with the terms and conditions of the relevant warrant instrument or certificate.
Thus there is no requirement under the laws of the Cayman Islands that a company’s
memorandum or articles of association contain a specific provision enabling such
purchases. The directors of a company may under the general power contained in its
memorandum of association be able to buy, sell and deal in personal property of all kinds.
A subsidiary may hold shares in its holding company and, in certain circumstances, may
acquire such shares.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
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3.5 Dividends and distributions
Subject to a solvency test, as prescribed in the Cayman Companies Act, and the
provisions, if any, of the company’s memorandum and articles of association, a company
may pay dividends and distributions out of its share premium account. In addition, based
upon English case law which is likely to be persuasive in the Cayman Islands, dividends
may be paid out of profits.
For so long as a company holds treasury shares, no dividend may be declared or paid, and
no other distribution (whether in cash or otherwise) of the company’s assets (including
any distribution of assets to members on a winding up) may be made, in respect of a
treasury share.
3.6 Protection of minorities and shareholders’ suits
It can be expected that the Cayman Islands courts will ordinarily follow English case law
precedents (particularly the rule in the case of Foss vs. Harbottle and the exceptions to
that rule) which permit a minority member to commence a representative action against
or derivative actions in the name of the company to challenge acts which are ultra vires,
illegal, fraudulent (and performed by those in control of the Company) against the
minority, or represent an irregularity in the passing of a resolution which requires a
qualified (or special) majority which has not been obtained.
Where a company (not being a bank) is one which has a share capital divided into shares,
the court may, on the application of members holding not less than one-fifth of the shares
of the company in issue, appoint an inspector to examine the affairs of the company and,
at the direction of the court, to report on such affairs. In addition, any member of a
company may petition the court, which may make a winding up order if the court is of
the opinion that it is just and equitable that the company should be wound up.
In general, claims against a company by its members must be based on the general laws
of contract or tort applicable in the Cayman Islands or be based on potential violation of
their individual rights as members as established by a company’s memorandum and
articles of association.
3.7 Disposal of assets
There are no specific restrictions on the power of directors to dispose of assets of a
company, however, the directors are expected to exercise certain duties of care, diligence
and skill to the standard that a reasonably prudent person would exercise in comparable
circumstances, in addition to fiduciary duties to act in good faith, for proper purpose and
in the best interests of the company under English common law (which the Cayman
Islands courts will ordinarily follow).
3.8 Accounting and auditing requirements
A company must cause proper records of accounts to be kept with respect to: (i) all sums
of money received and expended by it; (ii) all sales and purchases of goods by it; and (iii)
its assets and liabilities.
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--- page 693 ---
Proper books of account shall not be deemed to be kept if there are not kept such books
as are necessary to give a true and fair view of the state of the company’s affairs and to
explain its transactions.
If a company keeps its books of account at any place other than at its registered office or
any other place within the Cayman Islands, it shall, upon service of an order or notice by
the Tax Information Authority pursuant to the Tax Information Authority Act
(2021 Revision) of the Cayman Islands, make available, in electronic form or any other
medium, at its registered office copies of its books of account, or any part or parts thereof,
as are specified in such order or notice.
3.9 Exchange control
There are no exchange control regulations or currency restrictions in effect in the Cayman
Islands.
3.10 Taxation
The Cayman Islands currently levy no taxes on individuals or corporations based upon
profits, income, gains or appreciations and there is no taxation in the nature of inheritance
tax or estate duty. There are no other taxes likely to be material to the Company levied
by the Government of the Cayman Islands save for certain stamp duties which may be
applicable, from time to time, on certain instruments.
3.11 Stamp duty on transfers
No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands
companies save for those which hold interests in land in the Cayman Islands.
3.12 Loans to directors
There is no express provision prohibiting the making of loans by a company to any of its
directors. However, the company’s articles of association may provide for the prohibition
of such loans under specific circumstances.
3.13 Inspection of corporate records
The members of a company have no general right to inspect or obtain copies of the
register of members or corporate records of the company. They will, however, have such
rights as may be set out in the company’s articles of association.
3.14 Register of members
A Cayman Islands exempted company may maintain its principal register of members and
any branch registers in any country or territory, whether within or outside the Cayman
Islands, as the company may determine from time to time. There is no requirement for an
exempted company to make any returns of members to the Registrar of Companies in the
Cayman Islands. The names and addresses of the members are, accordingly, not a matter
of public record and are not available for public inspection. However, an exempted
company shall make available at its registered office, in electronic form or any other
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND THE COMPANY LAWS OF THE CAYMAN ISLANDS
– IV-24 –


--- page 694 ---
medium, such register of members, including any branch register of member, as may be
required of it upon service of an order or notice by the Tax Information Authority
pursuant to the Tax Information Authority Act (2021 Revision) of the Cayman Islands.
3.15 Register of directors and officers
Pursuant to the Cayman Companies Act, the Company is required to maintain at its
registered office a register of directors, alternate directors and officers. The Registrar of
Companies shall make available the list of the names of the current directors of the
Company (and, where applicable, the current alternate directors of the Company) for
inspection by any person upon payment of a fee by such person. A copy of the register
of directors and officers must be filed with the Registrar of Companies in the Cayman
Islands, and any change must be notified to the Registrar of Companies within 30 days
of any change in such directors or officers, including a change of the name of such
directors or officers.
3.16 Winding up
A Cayman Islands company may be wound up by: (i) an order of the court; (ii) voluntarily
by its members; or (iii) under the supervision of the court.
The court has authority to order winding up in a number of specified circumstances
including where, in the opinion of the court, it is just and equitable that such company be
so wound up.
A voluntary winding up of a company (other than a limited duration company, for which
specific rules apply) occurs where the company resolves by special resolution that it be
wound up voluntarily or where the company in general meeting resolves that it be wound
up voluntarily because it is unable to pay its debt as they fall due. In the case of a
voluntary winding up, the company is obliged to cease to carry on its business from the
commencement of its winding up except so far as it may be beneficial for its winding up.
Upon appointment of a voluntary liquidator, all the powers of the directors cease, except
so far as the company in general meeting or the liquidator sanctions their continuance.
In the case of a members’ voluntary winding up of a company, one or more liquidators
are appointed for the purpose of winding up the affairs of the company and distributing
its assets.
As soon as the affairs of a company are fully wound up, the liquidator must make a report
and an account of the winding up, showing how the winding up has been conducted and
the property of the company disposed of, and call a general meeting of the company for
the purposes of laying before it the account and giving an explanation of that account.
When a resolution has been passed by a company to wind up voluntarily, the liquidator
or any contributory or creditor may apply to the court for an order for the continuation
of the winding up under the supervision of the court, on the grounds that: (i) the company
is or is likely to become insolvent; or (ii) the supervision of the court will facilitate a more
effective, economic or expeditious liquidation of the company in the interests of the
contributories and creditors. A supervision order takes effect for all purposes as if it was
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND THE COMPANY LAWS OF THE CAYMAN ISLANDS
– IV-25 –


--- page 695 ---
an order that the company be wound up by the court except that a commenced voluntary
winding up and the prior actions of the voluntary liquidator shall be valid and binding
upon the company and its official liquidator.
For the purpose of conducting the proceedings in winding up a company and assisting the
court, one or more persons may be appointed to be called an official liquidator(s).The
court may appoint to such office such person or persons, either provisionally or otherwise,
as it thinks fit, and if more than one person is appointed to such office, the court shall
declare whether any act required or authorised to be done by the official liquidator is to
be done by all or any one or more of such persons. The court may also determine whether
any and what security is to be given by an official liquidator on his appointment; if no
official liquidator is appointed, or during any vacancy in such office, all the property of
the company shall be in the custody of the court.
3.17 Reconstructions
Reconstructions and amalgamations may be approved by (i) 75% in value of the members
or class of members or (ii) a majority in number representing 75% in value of the
creditors or class of creditors, in each case depending on the circumstances, as are present
at a meeting called for such purpose and thereafter sanctioned by the Grand Court of the
Cayman Islands. Whilst a dissenting member has the right to express to the court his view
that the transaction for which approval is being sought would not provide the members
with a fair value for their shares, it can be expected that the court would approve the
transaction if it is satisfied that (i) the company is not proposing to act illegally or beyond
the scope of our corporate authority and the statutory provisions as to majority vote have
been complied with, (ii) the members have been fairly represented at the meeting in
question, (iii) the transaction is such as a businessman would reasonable approve and (iv)
the transaction is not one that would more properly be sanctioned under some other
provisions of the Companies Act or that would amount to a “fraud on the minority”. If the
transaction is approved, no dissenting member would have any rights comparable to the
appraisal rights (namely the right to receive payment in cash for the judicially determined
value of his shares), which may be available to dissenting members of corporations in
other jurisdictions.
3.18 Take-overs
Where an offer is made by a company for the shares of another company and, within four
months of the offer, the holders of not less than 90 per cent of the shares which are the
subject of the offer accept, the offeror may, at any time within two months after the
expiration of that four-month period, by notice require the dissenting members to transfer
their shares on the terms of the offer. A dissenting member may apply to the Cayman
Islands courts within one month of the notice objecting to the transfer. The burden is on
the dissenting member to show that the court should exercise its discretion, which it will
be unlikely to do unless there is evidence of fraud or bad faith or collusion as between
the offeror and the holders of the shares who have accepted the offer as a means of
unfairly forcing out minority members.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND THE COMPANY LAWS OF THE CAYMAN ISLANDS
– IV-26 –


--- page 696 ---
3.19 Indemnification
The laws of the Cayman Islands do not limit the extent to which a company’s articles of
association may provide for indemnification of officers and directors, save to the extent
any such provision may be held by the court to be contrary to public policy, for example,
where a provision purports to provide indemnification against the consequences of
committing a crime.
3.20 Economic Substance
The Cayman Islands enacted the International Tax Co-operation (Economic Substance)
Act (2021 Revision) together with the Guidance Notes published by the Cayman Islands
Tax Information Authority from time to time. The Company is required to comply with
the economic substance requirements from July 1, 2019 and make an annual report in the
Cayman Islands as to whether or not it is carrying on any relevant activities and if it is,
it must satisfy an economic substance test.
4. GENERAL
Harney Westwood & Riegels, the Company’s legal adviser on the laws of the Cayman
Islands, have sent to the Company a letter of advice summarising certain aspects of the
Cayman Companies Act. This letter, together with a copy of the Cayman Companies Act,
is available for inspection as referred to in the paragraph headed “Documents delivered
to the registrar of companies and on display” in Appendix VI to this prospectus. Any
person wishing to have a detailed summary of the Cayman Companies Act or advice on
the differences between it and the laws of any jurisdiction with which he is more familiar
is recommended to seek independent legal advice.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND THE COMPANY LAWS OF THE CAYMAN ISLANDS
– IV-27 –


--- page 697 ---
1. FURTHER INFORMATION ABOUT OUR GROUP
1.1 Incorporation of our Company
We were incorporated in the Cayman Islands under the Cayman Companies Act as an exempted
company with limited liability on October 24, 2019. We have established a principal place of
business in Hong Kong at 5/F, Manulife Place, 348 Kwun Tong Road, Kowloon, Hong Kong,
and registered with the Registrar of Companies in Hong Kong as a non-Hong Kong company
under Part 16 of the Companies Ordinance on March 31, 2022 under the same address. Ms. Yin
Shan Hui has been appointed as the authorized representative of our Company for the
acceptance of service of process and notices on behalf of the Company in Hong Kong. The
address for service of process is 5/F, Manulife Place, 348 Kwun Tong Road, Kowloon, Hong
Kong.
As we were incorporated in the Cayman Islands, our operations are subject to the Cayman
Companies Act as well as the Memorandum of Association and Articles of Association. A
summary of the relevant aspects of the Cayman Companies Act and certain provisions of the
Memorandum of Association and Articles of Association is set out in “Summary of the
Constitution of Our Company and the Company Laws of the Cayman Islands” in Appendix IV
to this prospectus.
1.2 Changes in the share capital of our Company
Our Company was incorporated with an authorized share capital of US$50,000 divided into
5,000,000,000 Ordinary Shares with a par value of US$0.00001 each.
The following sets out the changes in the share capital of our Company during the two years
immediately preceding the date of this prospectus:
(a) In October 2021, the Company redesignated and reclassified 212,765,236 Class A
Ordinary Shares into Series C1 Preferred Shares, and 72,250,382 Class A Ordinary Shares
into Series C2 Preferred Shares. On October 29, 2021, we issued an aggregate of
123,058,094 Series C1 Preferred Shares, each with a par value of US$0.00001, to Deep
Red Holdings Limited, TB Racing Rabbits Investment Holdings L.P ., Eternal Earn
Holding Limited, D1 SPV Master Holdco I (Hong Kong) Limited, D1 SPV Jupiter (Hong
Kong) Limited, GCM Grosvenor JT SPV , LLC, AMF-9 Holdings Limited, JNRY III
HOLDINGS LIMITED, Jallion Global Limited, Ultra Height Fund L.P ., Dahlia
Investments Pte. Ltd., SC GGF III Holdco, Ltd., Portland Street Partners Limited and SAI
Growth Fund I, LLLP .
(b) On November 16, 2021, we issued 2,836,870 Series C1 Preferred Shares to LINK
Delivery Investment Limited.
(c) On December 8, 2021, we issued 3,546,087 Series C1 Preferred Shares to Hidden Hill
SPV VIII.
(d) On December 31, 2021, we repurchased an aggregate of 24,440,890 Shares from Topping
Summit Limited, Strict Forward Limited, Square Lord Limited, LONG ORIGIN
LIMITED, STARLIGHT HERO LIMITED, EASY INNOV A TION LIMITED, LONG
SHINING LIMITED, Super Explorer Investment Limited, Joyous Sound Limited,
Ambitious River Limited, Team Spirit Group Limited, Grow Profit Enterprises Limited,
V ast Admire Limited, Fast Rabbit Global Limited, Joyous Tempinis Limited, Fast
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-1 –


--- page 698 ---
Creative Zone Limited, Jaunty Global Limited, Rhododendron Investment Limited, JNRY
III HOLDINGS LIMITED, SC GGF III Holdco, Ltd, V ast Elegance Limited, BLESSED
TIGER LIMITED, ZWC JT Investment Limited and XN Origin International Limited.
We issued an aggregate of 29,050,803 Shares, each with a par value of US$0.00001, to
Ultra Height Fund L.P ., Speedy Innovation L.P . and Yimeter Holding Limited on the same
day.
(e) On January 19, 2022, we issued 8,510,609 Series C1 Preferred Shares to Parallel Cluster
Investment Limited.
(f) On January 29, 2022, we repurchased an aggregate of 10,394,682 Shares from Topping
Summit Limited, Strict Forward Limited, Square Lord Limited, LONG ORIGIN
LIMITED, STARLIGHT HERO LIMITED, EASY INNOV A TION LIMITED, LONG
SHINING LIMITED, Super Explorer Investment Limited, Joyous Sound Limited,
Ambitious River Limited, Fast Rabbit Global Limited, Team Spirit Group Limited, Grow
Profit Enterprises Limited, V ast Admire Limited, Joyous Tempinis Limited, Fast Creative
Zone Limited, Jaunty Global Limited, Rhododendron Investment Limited, JNRY III
HOLDINGS LIMITED, SC GGF III Holdco, Ltd, V ast Elegance Limited, BLESSED
TIGER LIMITED, ZWC JT Investment Limited and XN Origin International Limited.
We issued 10,394,682 Series C2 Preferred Shares, each with a par value of US$0.00001,
to Tickking Holding Limited on the same day.
(g) On February 28, 2022, we issued an aggregate of 3,900,696 Series C1 Preferred Shares,
each with a par value of US$0.00001, to Hidden Hill Investment 123 and Tranquility
V entures Limited.
(h) On March 2, 2022, we repurchased an aggregate of 13,772,356 Shares from Jumping
Summit Limited, Strict Forward Limited, Square Lord Limited, LONG ORIGIN
LIMITED, STARLIGHT HERO LIMITED, EASY INNOV A TION LIMITED, LONG
SHINING LIMITED, Super Explorer Investment Limited, Joyous Sound Limited,
Ambitious River Limited, Team Spirit Group Limited, Grow Profit Enterprises Limited,
V ast Admire Limited, Fast Rabbit Global Limited, Joyous Tempinis Limited, Fast
Creative Zone Limited, Jaunty Global Limited, Rhododendron Investment Limited, JNRY
III HOLDINGS LIMITED, SC GGF III Holdco, Ltd, V ast Elegance Limited, BLESSED
TIGER LIMITED, ZWC JT Investment Limited and XN Origin International Limited. On
the same day, 709,217 Series C1 Preferred Shares held by Jallion Global Limited were
surrendered and cancelled.
We issued 13,772,356 Series C2 Preferred Shares, each with a par value of US$0.00001,
to Yimeter Holding Limited on the same day.
(i) On March 3, 2022, we issued 1,060,915 Series C1 Preferred Shares, each with a par value
of US$0.00001, to Hidden Hill Investment 112.
(j) On March 21, 2022, we issued 614,057 Series C1 Preferred Shares to Ultra Height Fund
L.P and 22,287,975 Class A Ordinary Shares each with a par value of US$0.00001 each
to Jumping Summit Limited. The Class A Ordinary Shares issued to Jumping Summit
Limited were converted to Class B Ordinary Shares on the same day.
(k) On April 8, 2022, we issued 1,474,280 Class A Ordinary Shares to Woncher Holding
Limited.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-2 –


--- page 699 ---
(l) On August 25, 2022, we repurchased an aggregate of 6,920,379 Shares from Uranus
Holding Limited. We completed the issuance of 6,920,379 Series C2 Preferred Shares to
Precision World Limited on the same day.
(m) On September 28, 2022, we issued 38,000,000 Class A Ordinary Shares to NP Investment
Platform Limited.
(n) On September 30, 2022, we repurchased an aggregate of 1,449,568 Shares from Super
Explorer Investment Limited, Top V alley Limited, Lead Sky Capital Limited and
Constant Power Investment Limited.
(o) On May 17, 2023, the Company’s share capital was reclassified and re-designated as
follows: i) 3,719,302,324 Class A Ordinary Shares of par value of USD0.00001 each; (ii)
195,866,682 Class B Ordinary Shares of par value of USD0.00001 each; (iii) 74,666,665
Series Pre-A1 Preferred Shares of par value of USD0.00001 each; (iv) 54,266,667 Series
Pre-A2 Preferred Shares of par value of USD0.00001 each; (v) 269,921,165 Series A
Preferred Shares of par value of USD0.00001 each; (vi) 22,462,293 Series B Preferred
Shares of par value of USD0.00001 each; (vii) 255,864,131 Series B+ Preferred Shares
of par value of USD0.00001 each; (viii) 266,173,696 Series C1 Preferred Shares of par
value of USD0.00001 each; (ix) 115,332,586 Series C2 Preferred Shares of par value of
USD0.00001 each; and (x) 26,143,791 Series D Preferred Shares of par value of
USD0.00001 each.
(p) On May 17, 2023, we issued: (i) 24,557,934 Class B Ordinary Shares to Jumping Summit
Limited; (ii) 261,438 Class A Ordinary Shares to Woncher Holding Limited; (iii) an
aggregate of 118,745,672 Series C1 Preferred Shares to Deep Red Holdings Limited, TB
RACING RABBITS INVESTMENTS HOLDINGS L.P ., Eternal Earn Holding Limited,
D1 SPV Master Holdco I (Hong Kong) Limited, D1 SPV Jupiter (Hong Kong) Limited,
GCM Grosvenor JT SPV , LLC, AMF-9 Holdings Limited, JNRY III HOLDINGS
LIMITED, Jallion Global Limited, Ultra Height Fund L.P ., DAHLIA INVESTMENTS
PTE. LTD., SC GGF III Holdco, Ltd., Portland Street Partners Limited, SAI Growth Fund
I, LLLP , LINK Delivery Investment Limited, Hidden Hill SPV VIII, Speedy Innovation
L.P ., Parallel Cluster Investment Limited, Hidden Hill Investment 123, Tranquility
V entures Limited and Hidden Hill Investment 112; (iv) an aggregate of 43,082,204 Series
C2 Preferred Shares to Yimeter Holding Limited, Tickking Holding Limited, LINK
Delivery Investment Limited, China Logistic Investment Holding (11) Limited, China
Logistic Investment Holding (12) Limited, Uranus Holding Limited (excluding the
redesignation and reclassification of 16,722,075 Series C2 Shares) and Precision World
Limited; and (v) 26,143,791 Series D Preferred Shares to CELESTIAL OCEAN
INVESTMENTS LIMITED.
Save as disclosed above and in this prospectus, there has been no alteration in the authorized
or issued share capital of our Company during the two years immediately preceding the date
of this prospectus.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-3 –


--- page 700 ---
1.3 Changes in the share capital of our major subsidiaries and operating entities
A summary of the corporate information and the particulars of our subsidiaries are set out in
note 18b to the Accountant’s Report as set out in Appendix I to this prospectus.
Our Company was granted a waiver from strict compliance with the requirements of paragraph
26 of Part A of Appendix 1 to the Listing Rules in respect of disclosing the particulars of any
alterations in the capital of any member of our Group within two years immediately preceding
the issue of this Prospectus. For details, see “Waivers – Waiver in relation to the disclosure
requirements with respect to changes in share capital”.
The following alterations in the registered capital of our selected subsidiaries have taken place
within the two years preceding the date of this document:
i) The registered share capital of Winner Star Holdings Limited was increased from HK$1
to HK$1,000,000 on January 31, 2022.
1.4 Substantial shareholders of other members of the Group
So far as is known to any Director or chief executive of the Company, as at the Latest
Practicable Date, the following persons are directly or indirectly interested in 10% or more of
the issued voting shares of the following major subsidiaries of the Company:
Name of Subsidiary Name of Shareholder
Approximate
Percentage of
Ownership
Infinity Jet Holding Limited Suteemon Aggarwal 51%
J&T Express (Fujian) Supply Chain
Management Co., Ltd.
Chongqing Jiesheng Supply
Chain Technology Co., Ltd
15%
J&T Express (Hebei) Acme Supply Chain
Management Co., Ltd.
Chongqing Jiehong Supply
Chain Technology Co., Ltd
15%
J&T Express (Henan) Acme Supply Chain
Management Co., Ltd.
Chongqing Jieben Supply
Chain Technology Co., Ltd
15%
J&T Express (Shandong) Supply Chain
Co., Ltd.
Chongqing Qiyue Supply
Chain Technology Co., Ltd
15%
J&T Express (Jieyang) Supply Chain
Management Co., Ltd.
Chongqing Zhujie Supply
Chain Technology Co., Ltd
15%
To the best of their knowledge, our Directors are not aware of any arrangement which may at
a subsequent date result in a change of control of our Company or any other member of our
Group.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-4 –


--- page 701 ---
1.5 Resolutions passed in the meeting of our Shareholders dated October 11, 2023
Pursuant to the written resolutions of our Shareholders passed on October 11, 2023, resolutions
were passed under which, among other things:
(i) the Memorandum and the Articles of Association were conditionally approved and
adopted with effect from the Listing Date;
(ii) conditional on: (a) the Stock Exchange granting approval of the listing of, and permission
to deal in, the Shares in issue and to be issued as mentioned in this prospectus; and (b) the
obligations of the Underwriters under the Underwriting Agreements becoming
unconditional and not being terminated in accordance with the terms of the Underwriting
Agreements or otherwise, in each case on or before the dates as may be specified in the
Underwriting Agreements:
(a) the Reclassification, Redesignation and Share Subdivision were approved;
(b) the Global Offering (including the Over-allotment Option) was approved, and the
proposed allotment and issue of the Offer Shares under the Global Offering were
approved, and the Directors were authorized to determine the Offer Price for, and to
allot and issue the Offer Shares;
(c) a general unconditional mandate was given to our Directors to exercise all powers
of our Company to allot, issue and deal with Class B Shares or securities convertible
into Class B Shares and to make or grant offers, agreements or options (including
any warrants, bonds, notes and debentures conferring any rights to subscribe for or
otherwise receive Class B Shares) which might require Class B Shares to be allotted
and issued or dealt with subject to the requirement that the aggregate nominal value
of the Class B Shares so allotted and issued or agreed conditionally or
unconditionally to be allotted and issued, otherwise than by way of the Global
Offering, rights issue or pursuant to the exercise of any subscription rights attaching
to any warrants which may be allotted and issued by the Company from time to time
or, pursuant to the exercise of any options which may be granted under the allotment
and issue of Class B Shares in lieu of the whole or part of a dividend on Class B
Shares in accordance with the Articles of Association on a specific authority granted
by our Shareholders in general meeting, shall not exceed 20% of the aggregate
nominal value of the Shares in issue immediately following the completion of the
Global Offering, excluding any Class B Shares to be issued pursuant to the exercise
of the Over-allotment Option and Class B Shares to be issued upon conversion of
Class A Shares into Class B Shares on a one to one basis;
(d) a general unconditional mandate (the “ Repurchase Mandate ”) was given to our
Directors to exercise all powers of our Company to repurchase on the Stock
Exchange or on any other stock exchange on which the securities of our Company
may be listed and which is recognised by the SFC and the Stock Exchange for this
purpose, such number of Shares as will represent up to 10% of the total number of
Shares in issue immediately following the completion of the Global Offering,
excluding any Class B Shares to be sold, or issued and allotted pursuant to the
exercise of the Over-allotment Option and Class B Shares to be issued upon
conversion of Class A Shares into Class B Shares on a one to one basis; and
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-5 –


--- page 702 ---
(e) the Repurchase Mandate was extended by the addition to the aggregate nominal
value of the Shares which may be allotted and issued or agreed to be allotted and
issued by our Directors pursuant to such general mandate of an amount representing
the aggregate nominal value of the Shares purchased by our Company pursuant to
the mandate to purchase Shares referred to in paragraph (e) above (up to 10% of the
aggregate nominal value of the Shares in issue immediately following the
completion of the Global Offering, excluding any Class B Shares to be sold, or
issued and allotted pursuant to the exercise of the Over-allotment Option and Class
B Shares to be issued upon conversion of Class A Shares into Class B Shares on a
one to one basis.
Each of the general mandates referred to in sub-paragraphs (d), (e), and (f) above will remain
in effect until whichever is the earliest of:
 the conclusion of the next annual general meeting of our Company;
 the expiration of the period within which the next annual general meeting of our Company
is required to be held by any applicable law or the Articles of Association; and
 the time when such mandate is revoked or varied by an ordinary resolution of the
Shareholders in general meeting.
1.6 Explanatory statement on repurchase of our own securities
The following paragraphs include, among others, certain information required by the Stock
Exchange to be included in this prospectus concerning the repurchase of our own securities.
Provision of the Listing Rules
The Listing Rules permit companies with a primary listing on the Stock Exchange to
repurchase their own securities on the Stock Exchange subject to certain restrictions, the most
important of which are summarised below:
Shareholders’ Approval
All proposed repurchases of securities (which must be fully paid up in the case of shares) by
a company with a primary listing on the Stock Exchange must be approved in advance by an
ordinary resolution of the shareholders in a general meeting, either by way of general mandate
or by specific approval of a particular transaction.
Pursuant to a resolution passed by our Shareholders on October 11, 2023, the Repurchase
Mandate was given to our Directors authorising them to exercise all the powers of our
Company to repurchase Shares on the Stock Exchange, or on any other stock exchange on
which the securities of our Company may be listed and which is recognised by the SFC and
the Stock Exchange for this purpose, such number of Shares as will represent up to 10% of the
total number of Shares in issue immediately following the completion of the Global Offering
(excluding any Class B Shares to be sold, or issued and allotted pursuant to the exercise of the
Over-allotment Option and Class B Shares to be issued upon conversion of Class A Shares into
Class B Shares on a one to one basis), with such mandate to expire at the earliest of (i) the
conclusion of the next annual general meeting of our Company (ii) the expiration of the period
within which the next annual general meeting of our Company is required to be hold by any
applicable law or the Articles of Association, and (iii) the date when it is varied or revoked by
an ordinary resolution of our Shareholders in general meeting.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-6 –


--- page 703 ---
Source of funds
Purchases must be funded out of funds legally available for the purpose in accordance with the
Memorandum and Articles of Association and the applicable Laws of Hong Kong and the
Cayman Islands. A listed company may not purchase its own securities on the Stock Exchange
for a consideration other than cash or for settlement otherwise than in accordance with the
trading rules of the Stock Exchange from time to time. As a matter of the laws of the Cayman
Islands, any purchases by the Company may be made out of profits or out of the proceeds of
a new issue of shares made for the purpose of the purchase or from sums standing to the credit
of our share premium account or out of capital, if so authorised by the Articles of Association
and subject to the Cayman Companies Act. Any premium payable on the purchase over the par
value of the shares to be purchased must have been provided for out of profits or from sums
standing to the credit of our share premium account or out of capital, if so authorised by the
Articles of Association and subject to the Cayman Companies Act.
Trading restrictions
The total number of shares which a listed company may repurchase on the Stock Exchange is
the number of shares representing up to a maximum of 10% of the aggregate number of shares
in issue. A company may not issue or announce a proposed issue of new securities for a period
of 30 days immediately following a repurchase (other than an issue of securities pursuant to
an exercise of warrants, share options or similar instruments requiring the company to issue
securities which were outstanding prior to such repurchase) without the prior approval of the
Stock Exchange. In addition, a listed company is prohibited from repurchasing its shares on the
Stock Exchange if the purchase price is 5% or more than the average closing market price for
the five preceding trading days on which its shares were traded on the Stock Exchange.
The Listing Rules also prohibit a listed company from repurchasing its securities if the
repurchase would result in the number of listed securities which are in the hands of the public
falling below the relevant prescribed minimum percentage as required by the Stock Exchange.
A company is required to procure that the broker appointed by it to effect a repurchase of
securities discloses to the Stock Exchange such information with respect to the repurchase as
the Stock Exchange may require.
Status of repurchased Shares
The listing of all purchased securities (whether on the Stock Exchange or otherwise) is
automatically cancelled and the relative certificates must be cancelled and destroyed. Under
the laws of the Cayman Islands, unless, prior to the purchase the directors of the Company
resolve to hold the shares purchased by the Company as treasury shares, shares purchased by
the Company shall be treated as cancelled and the amount of the Company’s issued share
capital shall be diminished by the nominal value of those shares. However, the purchase of
shares will not be taken as reducing the amount of the authorised share capital under the laws
of the Cayman Islands.
Suspension of repurchase
A listed company may not make any repurchase of securities after a price sensitive
development has occurred or has been the subject of a decision until such time as the price
sensitive information has been made publicly available. In particular, during the period of one
month immediately preceding the earlier of (a) the date of the board meeting (as such date is
first notified to the Stock Exchange in accordance with the Listing Rules) for the approval of
a listed company’s results for any year, half-year, quarterly or any other interim period
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-7 –


--- page 704 ---
(whether or not required under the Listing Rules) and the deadline for publication of an
announcement of a listed company’s results for any year or half-year under the Listing Rules,
or quarterly or any other interim period (whether or not required under the Listing Rules), the
listed company may not repurchase its shares on the Stock Exchange other than in exceptional
circumstances. In addition, the Stock Exchange may prohibit a repurchase of securities on the
Stock Exchange if a listed company has breached the Listing Rules.
Reporting requirements
Certain information relating to repurchases of securities on the Stock Exchange or otherwise
must be reported to the Stock Exchange not later than 30 minutes before the earlier of the
commencement of the morning trading session or any pre-opening session on the following
business day. In addition, a listed company’s annual report is required to disclose details
regarding repurchases of securities made during the year, including a monthly analysis of the
number of securities repurchased, the purchase price per share or the highest and lowest price
paid for all such repurchases, where relevant, and the aggregate prices paid.
Core connected persons
The Listing Rules prohibit a company from knowingly purchasing securities on the Stock
Exchange from a “core connected person”, that is, a director, chief executive or substantial
shareholder of the company or any of its subsidiaries or a close associate of any of them (as
defined in the Listing Rules) and a core connected person shall not knowingly sell their
securities to the company.
Reasons for repurchases
Our Directors believe that it is in the best interests of our Company and Shareholders for our
Directors to have a general authority from the Shareholders to enable our Company to
repurchase Shares in the market. Such repurchases may, depending on market conditions and
funding arrangements at the time, lead to an enhancement of the net asset value per Share
and/or earnings per Share and will only be made where our Directors believe that such
repurchases will benefit our Company and Shareholders.
Funding of repurchases
Repurchase of the Shares must be funded out of funds legally available for such purpose in
accordance with the Articles of Association and the applicable laws of the Cayman Islands. Our
Directors may not repurchase the Shares on the Stock Exchange for a consideration other than
cash or for settlement otherwise than in accordance with the trading rules of the Stock
Exchange. Subject to the foregoing, our Directors may make repurchases with profits of the
Company or out of a new issuance of shares made for the purpose of the repurchase or from
sums standing to the credit of our share premium account or, if authorised by the Articles of
Association and subject to the Cayman Companies Act, out of capital and, in the case of any
premium payable on the repurchase, out of profits of the Company or from sums standing to
the credit of the share premium account of the Company or, if authorised by the Articles of
Association and subject to the Cayman Companies Act, out of capital.
However, our Directors do not propose to exercise the general mandate to such an extent as
would, in the circumstances, have a material adverse effect on the working capital requirements
of the Company or its gearing levels which, in the opinion of our Directors, are from time to
time appropriate for the Company.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-8 –


--- page 705 ---
General
The exercise in full of the Repurchase Mandate, on the basis of 8,812,166,235 Shares in issue
immediately following the completion of the Global Offering (assuming that (i) the
Over-allotment Option is not exercised and (ii) the Reclassification, Redesignation and Share
Subdivision are completed), could accordingly result in up to approximately 881,216,623
Shares being repurchased by our Company during the period prior to the earliest of:
 the conclusion of the next annual general meeting of our Company unless renewed by an
ordinary resolution of our Shareholders in a general meeting, either unconditionally or
subject to conditions;
 the expiration of the period within which the next annual general meeting of our Company
is required to be held by any applicable law or the Articles of Association; and
 the date when it is varied or revoked by an ordinary resolution of our Shareholders in
general meeting.
None of our Directors nor, to the best of their knowledge having made all reasonable enquiries,
any of their associates currently intends to sell any Shares to our Company.
Our Directors have undertaken to the Stock Exchange that, so far as the same may be
applicable, they will exercise the Repurchase Mandate in accordance with the Listing Rules
and the applicable laws in the Cayman Islands.
If, as a result of any repurchase of Shares, a Shareholder’s proportionate interest in the voting
rights of our Company increases, such increase will be treated as an acquisition for the
purposes of the Takeovers Code. Accordingly, a Shareholder or a group of Shareholders acting
in concert could obtain or consolidate control of our Company and become obliged to make a
mandatory offer in accordance with Rule 26 of the Takeovers Code. Save as aforesaid, our
Directors are not aware of any consequences which would arise under the Takeovers Code as
a consequence of any repurchases pursuant to the Repurchase Mandate.
Any repurchase of Shares that results in the number of Shares held by the public being reduced
to less than 25% of the Shares then in issue or such other minimum percentage prescribed by
the Stock Exchange could only be implemented if the Stock Exchange agreed to waive the
Listing Rules requirements regarding the public shareholding referred to above. It is believed
that a waiver of this provision would not normally be granted other than in exceptional
circumstances.
No core connected person of our Company has notified our Company that they have a present
intention to sell Shares to our Company, or have undertaken not to do so, if the Repurchase
Mandate is exercised.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-9 –


--- page 706 ---
2. FURTHER INFORMATION ABOUT OUR BUSINESS
2.1 Summary of material contracts
The following contracts (not being contracts entered into in the ordinary course of business)
were entered into by our Company, our subsidiaries or Consolidated Affiliated Entities within
the two years preceding the date of this prospectus and are or may be material as well as
contracts required to be disclosed pursuant to the Stock Exchange’s Listing Decision
HKEX-LD43-3:
(1) an exclusive business cooperation agreement dated January 18, 2023 entered into among
Chongqing Y unqing and Shanghai Yishangshiye, pursuant to which Chongqing Y unqing
agreed to provide exclusive technical and business support and consultation services to
Shanghai Yishangshiye in return for service fees;
(2) an exclusive option agreement dated January 18, 2023 entered into among Chongqing
Y unqing, Mr. Liu Wei ( ᄎਃ), Ms. Wu Rongmei (޵and Shanghai Yishangshiye,
pursuant to which Mr. Liu Wei ( ᄎਃ) and Ms. Wu Rongmei (޵agreed to grant
Chongqing Y unqing or its designated person(s) an exclusive and irrevocable option to
purchase from Mr. Liu Wei ( ᄎਃ) and Ms. Wu Rongmei (޵all or part of their
equity interests in Shanghai Yishangshiye and from Shanghai Yishangshiye all or any part
of the assets of Shanghai Yishangshiye and its subsidiaries;
(3) a loan agreement dated January 18, 2023 entered into among Chongqing Y unqing, Mr. Liu
Wei ( ᄎਃ) and Ms. Wu Rongmei (޵pursuant to which Chongqing Y unqing enjoys
the right of the creditor against Mr. Liu Wei ( ᄎਃ) and Ms. Wu Rongmei (޵i na n
aggregate amount of RMB10 million (the “ Loans ”), and such Loans have been used for
contribution to paid-in capital of Shanghai Yishangshiye;
(4) a shareholder rights proxy agreement dated January 18, 2023, entered into among
Chongqing Y unqing, Mr. Liu Wei ( ᄎਃ), Ms. Wu Rongmei (޵and Shanghai
Yishangshiye, pursuant to which Mr. Liu Wei ( ᄎਃ) and Ms. Wu Rongmei (޵)
appoints Chongqing Y unqing or its designated persons to exercise all of the rights as
registered shareholders of Shanghai Yishangshiye;
(5) an equity pledge agreement dated January 18, 2023 entered into among Chongqing
Y unqing, Mr. Liu Wei ( ᄎਃ), Ms. Wu Rongmei (޵and Shanghai Yishangshiye,
pursuant to which Mr. Liu Wei ( ᄎਃ) and Ms. Wu Rongmei (޵agreed to pledge all
of their existing and future equity interests in Shanghai Yishangshiye to Chongqing
Y unqing;
(6) a spouse undertaking dated January 18, 2023 executed by Ms. Tong Ke ( ប᭿), Mr. Liu
Wei ( ᄎਃ), Chongqing Y unqing and Shanghai Yishangshiye, pursuant to which Ms. Tong
Ke ( ប᭿) undertook, among others, that she has no right to or control over Shanghai
Yishangshiye in which Mr. Liu Wei ( ᄎਃ) holds interests and will not have any claim
over such interests;
(7) a spouse undertaking dated January 18, 2023 executed by Mr. Li Jiaxing ( ҽԳጳ),
Ms. Wu Rongmei (޵Chongqing Y unqing and Shanghai Yishangshiye, pursuant to
which Mr. Li Jiaxing ( ҽԳጳ) undertook, among others, that he has no right to or control
over Shanghai Yishangshiye in which Ms. Wu Rongmei (޵holds interests and will
not have any claim over such interests;
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-10 –


--- page 707 ---
(8) a loan agreement dated March 29, 2022 entered into by and between PT. CAHAY A
GLOBAL BERJAY A and PT. GLOBAL JET EXPRESS, pursuant to which PT. CAHAY A
GLOBAL BERJAY A agreed to provide loans in an aggregate amount of Rp 3,000,000,000
to PT. GLOBAL JET EXPRESS to support its business operations;
(9) a guarantee agreement dated March 29, 2022, entered into by and among Effendy, Robin
Lo and PT. CAHAY A GLOBAL BERJAY A, pursuant to which Effendy and Robin Lo,
jointly holding 100% of the shares of PT CAKRAW ALA LINTAS BENUA, have agreed
to guarantee to PT. CAHAY A GLOBAL BERJAY A, the payment obligation of PT
GLOBAL JET EXPRESS under the loan agreement;
(10) a guarantee agreement dated March 29, 2022, entered into by and among Effendy, Robin
Lo and PT. CAHAY A GLOBAL BERJAY A, pursuant to which Effendy and Robin Lo,
jointly holding 100% of the shares of PT SUKSES INDO INVESTAMA, have agreed to
guarantee to PT. CAHAY A GLOBAL BERJAY A, the payment obligation of PT GLOBAL
JET EXPRESS under the loan agreement;
(11) a guarantee agreement dated March 29, 2022, entered into by and among PT
CAKRAW ALA LINTAS BENUA, PT SUKSES INDO INVESTAMA and PT. CAHAY A
GLOBAL BERJAY A, pursuant to which PT CAKRAW ALA LINTAS BENUA and PT
SUKSES INDO INVESTAMA have agreed to guarantee to PT. CAHAY A GLOBAL
BERJAY A, the payment obligation of PT GLOBAL JET EXPRESS under the loan
agreement;
(12) an exclusive option agreement dated March 29, 2022, entered into by and among Effendy,
PT. CAHAY A GLOBAL BERJAY A and PT CAKRAW ALA LINTAS BENUA, pursuant to
which both Effendy and PT CAKRAW ALA LINTAS BENUA have agreed to grant the
exclusive options to PT. CAHAY A GLOBAL BERJAY A and undertakes to sell to PT.
CAHAY A GLOBAL BERJAY A or its designee all of Effendy’s equity interests in PT
CAKRAW ALA LINTAS BENUA and all the assets of PT CAKRAW ALA LINTAS
BENUA to secure the payment obligation of PT GLOBAL JET EXPRESS to PT.
CAHAY A GLOBAL BERJAY A;
(13) an exclusive option agreement dated March 29, 2022, entered into by and among Effendy,
PT. CAHAY A GLOBAL BERJAY A and PT SUKSES INDO INVESTAMA, pursuant to
which both Effendy and PT SUKSES INDO INVESTAMA have agreed to grant the
exclusive options to PT. CAHAY A GLOBAL BERJAY A and undertakes to sell to PT.
CAHAY A GLOBAL BERJAY A or its designee all of Effendy’s equity interests in PT
SUKSES INDO INVESTAMA and all the assets of PT SUKSES INDO INVESTAMA to
secure the payment obligation of PT GLOBAL JET EXPRESS to PT. CAHAY A GLOBAL
BERJAY A;
(14) an exclusive option agreement dated March 29, 2022, entered into by and among Robin
Lo, PT. CAHAY A GLOBAL BERJAY A and PT CAKRAW ALA LINTAS BENUA,
pursuant to which both Robin Lo and PT CAKRAW ALA LINTAS BENUA have agreed
to grant the exclusive options to PT. CAHAY A GLOBAL BERJAY A and undertakes to
sell to PT. CAHAY A GLOBAL BERJAY A or its designee all of Robin Lo’s equity
interests in PT CAKRAW ALA LINTAS BENUA and all the assets of PT CAKRAW ALA
LINTAS BENUA to secure the payment obligation of PT GLOBAL JET EXPRESS to PT.
CAHAY A GLOBAL BERJAY A;
(15) an exclusive option agreement dated March 29, 2022, entered into by and among Robin
Lo, PT. CAHAY A GLOBAL BERJAY A and PT SUKSES INDO INVESTAMA, pursuant
to which both Robin Lo and PT SUKSES INDO INVESTAMA have agreed to grant the
exclusive options to PT. CAHAY A GLOBAL BERJAY A and undertakes to sell to PT.
CAHAY A GLOBAL BERJAY A or its designee all of Robin Lo’s equity interests in PT
SUKSES INDO INVESTAMA and all the assets of PT SUKSES INDO INVESTAMA to
secure the payment obligation of PT GLOBAL JET EXPRESS to PT. CAHAY A GLOBAL
BERJAY A;
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-11 –


--- page 708 ---
(16) an exclusive option agreement dated March 29, 2022, entered into by and among PT
CAKRAW ALA LINTAS BENUA, PT. CAHAY A GLOBAL BERJAY A and PT GLOBAL
JET EXPRESS, pursuant to which both PT CAKRAW ALA LINTAS BENUA and PT
GLOBAL JET EXPRESS have agreed to grant the exclusive options to PT. CAHAY A
GLOBAL BERJAY A and undertakes to sell to PT. CAHAY A GLOBAL BERJAY A or its
designee all of their rights to PT CAKRAW ALA LINTAS BENUA’s equity interest in PT
GLOBAL JET EXPRESS and all the assets of PT GLOBAL JET EXPRESS to secure the
payment obligation of PT GLOBAL JET EXPRESS to PT. CAHAY A GLOBAL
BERJAY A;
(17) an exclusive option agreement dated March 29, 2022, entered into by and among PT
SUKSES INDO INVESTAMA, PT. CAHAY A GLOBAL BERJAY A and PT GLOBAL JET
EXPRESS, pursuant to which both PT SUKSES INDO INVESTAMA and PT GLOBAL
JET EXPRESS have agreed to grant the exclusive options to PT CAHAY A GLOBAL
BERJAY A and undertakes to sell to PT. CAHAY A GLOBAL BERJAY A or its designee all
of their rights to PT SUKSES INDO INVESTAMA’s equity interest in PT GLOBAL JET
EXPRESS and all the assets of PT GLOBAL JET EXPRESS to secure the payment
obligation of PT GLOBAL JET EXPRESS to PT. CAHAY A GLOBAL BERJAY A;
(18) a pledge of shares agreement dated March 29, 2022, entered into by and among Effendy,
PT. CAHAY A GLOBAL BERJAY A and PT CAKRAW ALA LINTAS BENUA, pursuant to
which Effendy agrees to pledge his entire equity interest in PT CAKRAW ALA LINTAS
BENUA to PT. CAHAY A GLOBAL BERJAY A to secure the payment obligation of PT
GLOBAL JET EXPRESS to PT. CAHAY A GLOBAL BERJAY A;
(19) a pledge of shares agreement dated March 29, 2022, entered into by and among Robin Lo,
PT. CAHAY A GLOBAL BERJAY A and PT CAKRAW ALA LINTAS BENUA, pursuant to
which Robin Lo agrees to pledge his entire equity interest in PT CAKRAW ALA LINTAS
BENUA to PT. CAHAY A GLOBAL BERJAY A to secure the payment obligation of PT
GLOBAL JET EXPRESS to PT. CAHAY A GLOBAL BERJAY A;
(20) a pledge of shares agreement dated March 29, 2022, entered into by and among Effendy,
PT. CAHAY A GLOBAL BERJAY A and PT SUKSES INDO INVESTAMA, pursuant to
which Effendy agrees to pledge his entire equity interest in PT SUKSES INDO
INVESTAMA to PT. CAHAY A GLOBAL BERJAY A to secure the payment obligation of
PT GLOBAL JET EXPRESS to PT. CAHAY A GLOBAL BERJAY A;
(21) a pledge of shares agreement dated March 29, 2022, entered into by and among Robin Lo,
PT. CAHAY A GLOBAL BERJAY A and PT SUKSES INDO INVESTAMA, pursuant to
which Robin Lo agrees to pledge his entire equity interest in PT SUKSES INDO
INVESTAMA to PT. CAHAY A GLOBAL BERJAY A to secure the payment obligation of
PT GLOBAL JET EXPRESS to PT. CAHAY A GLOBAL BERJAY A;
(22) a pledge of shares agreement dated March 29, 2022, entered into by and among PT
CAKRAW ALA LINTAS BENUA, PT. CAHAY A GLOBAL BERJAY A and PT GLOBAL
JET EXPRESS, pursuant to which PT CAKRAW ALA LINTAS BENUA agrees to pledge
its entire equity interest in PT GLOBAL JET EXPRESS to PT. CAHAY A GLOBAL
BERJAY A to secure the payment obligation of PT GLOBAL JET EXPRESS to PT.
CAHAY A GLOBAL BERJAY A;
(23) a pledge of shares agreement dated March 29, 2022, entered into by and among PT
SUKSES INDO INVESTAMA, PT. CAHAY A GLOBAL BERJAY A and PT GLOBAL JET
EXPRESS, pursuant to which PT SUKSES INDO INVESTAMA agrees to pledge its
entire equity interest in PT GLOBAL JET EXPRESS to PT. CAHAY A GLOBAL
BERJAY A to secure the payment obligation of PT GLOBAL JET EXPRESS to PT.
CAHAY A GLOBAL BERJAY A;
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-12 –


--- page 709 ---
(24) an amendment and restatement of exclusive technical services agreement dated March 29,
2022, entered into by and between PT. CAHAY A GLOBAL BERJAY A and PT GLOBAL
JET EXPRESS, pursuant to which PT GLOBAL JET EXPRESS agreed to retain PT.
CAHAY A GLOBAL BERJAY A to provide management consultancy services to PT
GLOBAL JET EXPRESS in return for service fees;
(25) an irrevocable power of attorney to sell dated March 29, 2022, entered into by and
between Effendy and PT. CAHAY A GLOBAL BERJAY A, pursuant to which Effendy
agreed to grant power of attorney to PT. CAHAY A GLOBAL BERJAY A to act as his
proxy in respect of the sale, transfer or otherwise disposal of his equity interest in PT
CAKRAW ALA LINTAS BENUA;
(26) an irrevocable power of attorney to sell dated March 29, 2022, entered into by and
between Effendy and PT. CAHAY A GLOBAL BERJAY A, pursuant to which Effendy
agreed to grant power of attorney to PT. CAHAY A GLOBAL BERJAY A to act as his
proxy in respect of the sale, transfer or otherwise disposal of his equity interest in PT
SUKSES INDO INVESTAMA;
(27) an irrevocable power of attorney to sell dated March 29, 2022, entered into by and
between Robin Lo and PT. CAHAY A GLOBAL BERJAY A, pursuant to which Robin Lo
agreed to grant power of attorney to PT. CAHAY A GLOBAL BERJAY A to act as his
proxy in respect of the sale, transfer or otherwise disposal of his equity interest in PT
CAKRAW ALA LINTAS BENUA;
(28) an irrevocable power of attorney to sell dated March 29, 2022, entered into by and
between Robin Lo and PT. CAHAY A GLOBAL BERJAY A, pursuant to which Robin Lo
agreed to grant power of attorney to PT. CAHAY A GLOBAL BERJAY A to act as his
proxy in respect of the sale, transfer or otherwise disposal of his equity interest in PT
SUKSES INDO INVESTAMA;
(29) an irrevocable power of attorney to sell dated March 29, 2022, entered into by and
between PT CAKRAW ALA LINTAS BENUA and PT. CAHAY A GLOBAL BERJAY A,
pursuant to which PT CAKRAW ALA LINTAS BENUA agreed to grant power of attorney
to PT. CAHAY A GLOBAL BERJAY A to act as its proxy in respect of the sale, transfer
or otherwise disposal of its equity interest in PT GLOBAL JET EXPRESS;
(30) an irrevocable power of attorney to sell dated March 29, 2022, entered into by and
between PT SUKSES INDO INVESTAMA and PT. CAHAY A GLOBAL BERJAY A,
pursuant to which PT SUKSES INDO INVESTAMA agreed to grant power of attorney to
PT. CAHAY A GLOBAL BERJAY A to act as its proxy in respect of the sale, transfer or
otherwise disposal of its equity interest in PT GLOBAL JET EXPRESS;
(31) an irrevocable power of attorney to exercise shareholders rights dated March 29, 2022,
entered into by and between Effendy and PT. CAHAY A GLOBAL BERJAY A, pursuant to
which Effendy agreed to grant power of attorney to PT. CAHAY A GLOBAL BERJAY A
to act as his proxy in respect of the exercise of all rights of ownership upon shares in PT
CAKRAW ALA LINTAS BENUA;
(32) an irrevocable power of attorney to exercise shareholders rights dated March 29, 2022,
entered into by and between Effendy and PT. CAHAY A GLOBAL BERJAY A, pursuant to
which Effendy agreed to grant power of attorney to PT. CAHAY A GLOBAL BERJAY A
to act as his proxy in respect of the exercise of all rights of ownership upon shares in PT
SUKSES INDO INVESTAMA;
(33) an irrevocable power of attorney to exercise shareholders rights dated March 29, 2022,
entered into by and between Robin Lo and PT. CAHAY A GLOBAL BERJAY A, pursuant
to which Robin Lo agreed to grant power of attorney to PT. CAHAY A GLOBAL
BERJAY A to act as his proxy in respect of the exercise of all rights of ownership upon
shares in PT CAKRAW ALA LINTAS BENUA;
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-13 –


--- page 710 ---
(34) an irrevocable power of attorney to exercise shareholders rights dated March 29, 2022,
entered into by and between Robin Lo and PT. CAHAY A GLOBAL BERJAY A, pursuant
to which Robin Lo agreed to grant power of attorney to PT. CAHAY A GLOBAL
BERJAY A to act as his proxy in respect of the exercise of all rights of ownership upon
shares in PT SUKSES INDO INVESTAMA;
(35) an irrevocable power of attorney to exercise shareholders rights dated March 29, 2022,
entered into by and between PT CAKRAW ALA LINTAS BENUA and PT. CAHAY A
GLOBAL BERJAY A, pursuant to which PT CAKRAW ALA LINTAS BENUA agreed to
grant power of attorney to PT. CAHAY A GLOBAL BERJAY A to act as its proxy in
respect of the exercise of all rights of ownership upon shares in PT GLOBAL JET
EXPRESS;
(36) an irrevocable power of attorney to exercise shareholders rights dated March 29, 2022,
entered into by and between PT SUKSES INDO INVESTAMA and PT. CAHAY A
GLOBAL BERJAY A, pursuant to which PT SUKSES INDO INVESTAMA agreed to
grant power of attorney to PT. CAHAY A GLOBAL BERJAY A to act as its proxy in
respect of the exercise of all rights of ownership upon shares in PT GLOBAL JET
EXPRESS;
(37) a spousal consent and undertaking dated March 29, 2022, executed by V erawaty, pursuant
to which V erawaty undertook, among others, to refuse and not claim any of Robin Lo’s
equity interests in PT CAKRAW ALA LINTAS BENUA;
(38) a spousal consent and undertaking dated March 29, 2022, executed by V erawaty, pursuant
to which V erawaty undertook, among others, to refuse and not claim any of Robin Lo’s
equity interests in PT SUKSES INDO INVESTAMA;
(39) the cornerstone investment agreement dated October 12, 2023 entered into between the
Company, Aspex Master Fund, Morgan Stanley Asia Limited, Merrill Lynch (Asia
Pacific) Limited, China International Capital Corporation Hong Kong Securities Limited
and CMB International Capital Limited, pursuant to which Aspex Master Fund agreed to
subscribe for such number of Class B Shares (rounded down to the nearest whole board
lot of 200 Class B Shares) at the Offer Price in the aggregate amount of the Hong Kong
dollar equivalent of US$10,000,000;
(40) the cornerstone investment agreement dated October 12, 2023 entered into between the
Company, Jallion Global Limited, Joyous Tempinis Limited, Morgan Stanley Asia
Limited, Merrill Lynch (Asia Pacific) Limited, China International Capital Corporation
Hong Kong Securities Limited, CMB International Capital Limited and CCB
International Capital Limited, pursuant to which each of Jallion Global Limited and
Joyous Tempinis Limited agreed to subscribe for such number of Class B Shares (rounded
down to the nearest whole board lot of 200 Class B Shares) at the Offer Price in the
aggregate amount of the Hong Kong dollar equivalent of US$11,000,000 and
US$16,261,530, respectively;
(41) the cornerstone investment agreement dated October 12, 2023 entered into between the
Company, D1 SPV Jupiter (Hong Kong) Limited, D1 SPV Master Holdco I (Hong Kong)
Limited, Morgan Stanley Asia Limited, Merrill Lynch (Asia Pacific) Limited, China
International Capital Corporation Hong Kong Securities Limited and CMB International
Capital Limited, pursuant to which each of D1 SPV Jupiter (Hong Kong) Limited and D1
SPV Master Holdco I (Hong Kong) Limited agreed to subscribe for such number of Class
B Shares (rounded down to the nearest whole board lot of 200 Class B Shares) at the Offer
Price in the aggregate amount of the Hong Kong dollar equivalent of US$10,766,491.65
and US$29,496,008.35, respectively;
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-14 –


--- page 711 ---
(42) the cornerstone investment agreement dated October 12, 2023 entered into between the
Company, Hidden Hill SPV VIII, Morgan Stanley Asia Limited, Merrill Lynch (Asia
Pacific) Limited, China International Capital Corporation Hong Kong Securities Limited
and CMB International Capital Limited, pursuant to which Hidden Hill SPV VIII agreed
to subscribe for such number of Class B Shares (rounded down to the nearest whole board
lot of 200 Class B Shares) at the Offer Price in the aggregate amount of the Hong Kong
dollar equivalent of US$5,000,000;
(43) the cornerstone investment agreement dated October 12, 2023 entered into between the
Company, SC GGF III Holdco, Ltd., Morgan Stanley Asia Limited, Merrill Lynch (Asia
Pacific) Limited, China International Capital Corporation Hong Kong Securities Limited
and CMB International Capital Limited, pursuant to which SC GGF III Holdco, Ltd.
agreed to subscribe for such number of Class B Shares (rounded down to the nearest
whole board lot of 200 Class B Shares) at the Offer Price in the aggregate amount of the
Hong Kong dollar equivalent of US$5,000,000;
(44) the cornerstone investment agreement dated October 12, 2023 entered into between the
Company, CELESTIAL OCEAN INVESTMENTS LIMITED, Morgan Stanley Asia
Limited, Merrill Lynch (Asia Pacific) Limited, China International Capital Corporation
Hong Kong Securities Limited and CMB International Capital Limited, pursuant to which
CELESTIAL OCEAN INVESTMENTS LIMITED agreed to subscribe for such number of
Class B Shares (rounded down to the nearest whole board lot of 200 Class B Shares) at
the Offer Price in the aggregate amount of the Hong Kong dollar equivalent of
US$30,000,000;
(45) the cornerstone investment agreement dated October 12, 2023 entered into between the
Company, Dahlia Investments Pte. Ltd., Morgan Stanley Asia Limited, Merrill Lynch
(Asia Pacific) Limited, China International Capital Corporation Hong Kong Securities
Limited and CMB International Capital Limited, pursuant to which Dahlia Investments
Pte. Ltd. agreed to subscribe for such number of Class B Shares (rounded down to the
nearest whole board lot of 200 Class B Shares) at the Offer Price in the aggregate amount
of the Hong Kong dollar equivalent of US$10,000,000;
(46) the cornerstone investment agreement dated October 12, 2023 entered into between the
Company, Parallel Cluster Investment Limited, Eternal Earn Holding Limited, Huang
River Investment Limited, Morgan Stanley Asia Limited, Merrill Lynch (Asia Pacific)
Limited, China International Capital Corporation Hong Kong Securities Limited and
CMB International Capital Limited, pursuant to which each of Parallel Cluster Investment
Limited, Eternal Earn Holding Limited and Huang River Investment Limited agreed to
subscribe for such number of Class B Shares (rounded down to the nearest whole board
lot of 200 Class B Shares) at the Offer Price in the aggregate amount of the Hong Kong
dollar equivalent of US$12,000,000, US$15,000,000 and US$35,000,000, respectively;
(47) the cornerstone investment agreement dated October 12, 2023 entered into between the
Company, JNRY III HOLDINGS LIMITED, Morgan Stanley Asia Limited, Merrill Lynch
(Asia Pacific) Limited, China International Capital Corporation Hong Kong Securities
Limited and CMB International Capital Limited, pursuant to which JNRY III HOLDINGS
LIMITED agreed to subscribe for such number of Class B Shares (rounded down to the
nearest whole board lot of 200 Class B Shares) at the Offer Price in the aggregate amount
of the Hong Kong dollar equivalent of US$10,000,000; and
(48) the Hong Kong Underwriting Agreement.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-15 –


--- page 712 ---
2.2 Intellectual property rights of our Group
As of the Latest Practicable Date, we have registered or have applied for the registration of the
following intellectual property rights which are material in relation to our business.
2.2.1 Trademarks
As of the Latest Practicable Date, we have registered the following trademarks which we
consider to be or may be material to our business:
No. Trademark Registered owner Class(es)
Place of
registration
Registration/
Application
number
Registration
Date
1.
 J&T Express
China
39 PRC 38630690 2020-03-28
2.
 J&T Express
China
39 PRC 38630692 2020-05-14
3.
 J&T Express
China
39 PRC 40937194 2020-04-21
4.
 J&T Express
China
39 PRC 43795680 2021-06-07
5.
 J&T Express
China
39 PRC 53060502 2021-11-07
6.
 J&T Express
China
39 PRC 54076632 2021-12-28
7.
 J&T Express
China
39 PRC 56554230 2022-01-07
8.
 Winner Star 9, 35, 39, 42 Hong Kong 305158800 2019-12-31
9.
 Winner Star 9, 35, 39, 42 Singapore 40202000424R 2020-06-06
10.
 Winner Star 35 Malaysia TM2020114458 2020-03-04
11.
 Winner Star 9, 35, 39, 42 Philippines 4/2020/00000644 2020-07-26
12.
 Winner Star 39 Hong Kong 305215121 2020-03-11
13.
 Winner Star 39 United Arab
Emirates
331425 2020-09-29
14.
 Winner Star 39 Mexico 2119528 2020-09-04
15.
 Winner Star 39 Saudi Arabia 1441028960 2020-11-04
16.
 Winner Star 9, 16, 17, 22, 35,
36, 37, 42
Singapore 40202008690T 2020-10-22
17.
 Winner Star 39 Singapore 40202012469U 2021-03-02
18.
 Winner Star 35, 36, 39 Singapore 40202027821W 2021-07-15
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-16 –


--- page 713 ---
No. Trademark Registered owner Class(es)
Place of
registration
Registration/
Application
number
Registration
Date
19. J&T Cargo Winner Star 39 Brazil,
Indonesia,
Cambodia,
Mexico,
Philippines,
Egypt
1618834 2021-07-29
20. J&T Cargo Winner Star 39 Malaysia,
Thailand and
Vietnam
1618834 Registration
in progress
21. ᧅՄ Winner Star 39 Mexico 2318297 2021-10-27
22. J&T AIRLINES
(Ѝ)
Winner Star 39 Indonesia IDM000629369 2017-12-08
23. J&T LOGISTIC
(Ѝ)
Winner Star 39 Indonesia IDM000629368 2017-12-08
24. J&T EXPRESS
(Ѝ)
Winner Star 39 Indonesia IDM000586998 2017-11-28
25. J&T Express Winner Star 39 Singapore 40201513615S 2016-01-20
26. J&T Logistic Winner Star 39 Singapore 40201513618Y 2016-01-13
27. J&T Airlines Winner Star 39 Singapore 40201513617W 2016-01-13
28. JET Express Winner Star 39 Singapore 40201513616V 2016-01-20
29. J&T Express Winner Star 39 Malaysia 2016059717 2016-05-27
30. J&T Logistic Winner Star 39 Malaysia 2016059715 2016-05-27
31. J&T Airlines Winner Star 39 Malaysia 2016059716 2016-05-27
32. JET Express Winner Star 39 Malaysia 2016059718 2016-05-27
33. J&T Express Winner Star 39 Thailand 171122442 2017-07-19
34. J&T Airlines Winner Star 39 Thailand 171122489 2017-07-19
35. J&T Logistic Winner Star 39 Thailand 171122491 2017-07-19
36. J&T Express Winner Star 39 Cambodia 63554 2017-04-21
37. J&T Logistic Winner Star 39 Cambodia 63552 2017-04-21
38. J&T Airlines Winner Star 39 Cambodia 63551 2017-04-21
39. JET Express Winner Star 39 Cambodia 63553 2017-04-21
40. J&T Express Winner Star 39 Philippines 504561 2016-06-23
41. J&T Express Winner Star 39 Vietnam 281490 2017-05-15
42. J&T Logistic Winner Star 39 Vietnam 281491 2017-05-15
43. J&T Airlines Winner Star 39 Vietnam 281492 2017-05-15
44.
Winner Star 39 Egypt 1561295 2020-10-14
45.
 Winner Star 39 Brazil 923153942 Registration in
progress
46. ᧅՄ Winner Star 9, 35, 39, 42 Thailand 221108236 2020-01-22
47. J&T ฽Մ਷ყ J&T Express 39 PRC 65197229 2022-12-21
48. J&T Cargo J&T Express 39 PRC 62862145 2022-12-13
49. J&T Cargo Winner Star 39 Singapore 40202117123W 2021-07-16
50. J&T Cargo Winner Star 39 United Arab
Emirates
360746 2021-09-29
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-17 –


--- page 714 ---
2.2.2 Patents
As of the Latest Practicable Date, we have eighteen pending patent applications in mainland
China.
2.2.3 Copyrights
As of the Latest Practicable Date, we had registered the following copyrights which we
consider to be or may be material to our business:
(i) Software ( ழ΁)
No. Copyright Version
Place of
Registration
Registration
Number
Registration
Date
1. JMS Prepayments
Management System
1.0 PRC 2021SR1113123 2021-07-28
2. JMS Capacity Platform
Route Management System
1.0 PRC 2021SR1106591 2021-07-27
3. Customer Electronic
Waybill Platform
Maintenance System
1.0 PRC 2021SR1106600 2021-07-27
4. Driver Signature and Task
Query APP
1.0 PRC 2021SR1112729 2021-07-28
5. WeChat Casual Client
Order Delivery System
1.0 PRC 2021SR1112584 2021-07-28
6. Project Work Order
Management System
1.0 PRC 2021SR1112746 2021-07-28
7. Recycling Transfer Package
APP
1.0 PRC 2021SR1112747 2021-07-28
8. Jiexiao Recycling Transfer
Package Backstage
Management System
1.0 PRC 2021SR1119739 2021-07-29
9. STO Global Official
Website Tracking Display
Docking System
1.0 PRC 2021SR1209297 2021-08-16
10. Procurement Price
Management System
1.0 PRC 2021SR1209791 2021-08-16
11. JMS Information Cockpit
Monitoring Platform
1.0 PRC 2021SR1209359 2021-08-16
12. Recycling Transfer Auto
Compilation of Packages
APP
1.0 PRC 2021SR1209360 2021-08-16
13. Platform Capacity
Management System
1.0 PRC 2021SR1209356 2021-08-16
14. Customer Claims
Management System
1.0 PRC 2021SR1281939 2021-08-30
15. Customer Complaint and
Feedback System
1.0 PRC 2021SR1281940 2021-08-30
16. Equipment Software
Information Management
System
1.0 PRC 2021SR1281941 2021-08-30
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-18 –


--- page 715 ---
No. Copyright Version
Place of
Registration
Registration
Number
Registration
Date
17. Driver Check-In and
Reporting System
1.0 PRC 2021SR1285863 2021-08-30
18. Web Complaints System 1.0 PRC 2021SR1285816 2021-08-30
19. Equipment Software
Information Management
System
2.0 PRC 2021SR1981607 2021-12-02
20. JTS Express Express
Station Management
System
1.0 PRC 2021SR2019527 2021-12-08
21. JTS Area Smart Planning
System
1.0 PRC 2021SR2019526 2021-12-08
22. J&T International API
Platform
1.0 PRC 2021SR2019525 2021-12-08
23. JTS Online Payments
Platform
1.0 PRC 2021SR1892275 2021-11-25
24. JTS Address Smart
Analysis Platform
1.0 PRC 2021SR1892274 2021-11-25
25. CRS Cross-Border Small
Parcel Management
Platform
1.0 PRC 2021SR1892273 2021-11-25
26. Y unlu COD Invoice
Management Platform
1.0 PRC 2021SR2011590 2021-12-07
27. JTS Nine Digit Code Smart
Sorting Platform
1.0 PRC 2021SR2012397 2021-12-07
28. CRS Cross Border Small
Parcel Fee Management
System
1.0 PRC 2021SR2012359 2021-12-07
29. JTS Electronic Contract
Management System
1.0 PRC 2021SR2037655 2021-12-10
30. JTS Airline Capacity
Management System
1.0 PRC 2021SR2037654 2021-12-10
31. Y unlu Concentrated
Transportation Warehouse
Management System
1.0 PRC 2021SR2019528 2021-12-08
32. BEST Huitong Express
Management System
Software
1.0 PRC 2012SR062628 2012-07-12
33. Winner Star Express
Delivery Management
System (Southeast Asia
V ersion)
1.0 PRC 2021SR1125898 2021-07-29
34. Winner Star Order
Management System
1.0 PRC 2021SR1125900 2021-07-29
35. Winner Star Express
Delivery Personnel Smart
APP Operating System
1.0 PRC 2021SR1125901 2021-07-29
36. Winner Star Scanning
Management System
1.0 PRC 2021SR1125899 2021-07-29
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-19 –


--- page 716 ---
No. Copyright Version
Place of
Registration
Registration
Number
Registration
Date
37. Winner Star Capacity
Management System
(International V ersion)
1.0 PRC 2021SR2108671 2021-12-22
38. Winner Star Infield
Transfer APP Software
(International V ersion)
1.0 PRC 2021SR2109387 2021-12-23
39. Winner Star Express
Delivery Management
Platform (International
V ersion)
1.0 PRC 2021SR2108672 2021-12-22
2.2.4 Domain names
As of the Latest Practicable Date, we have registered the following domain names which we
consider to be or may be material to our business:
No. Domain Registered owner Expiry Date
1. jtexpress.com J&T Express China 2027-12-18
2. jtexpress.group J&T Express International Logistics China 2029-06-17
3. jtexpress.com.cn J&T Express International Logistics China 2029-05-21
4. jtexpress.ae Winner Star 2025-01-14
5. jtexpress-sa.com Winner Star 2025-05-13
6. jtexpress.ph PH GLOBAL JET EXPRESS INC., doing
business under the name and style of J&T
Express
2029-11-26
7. jtexpress.my J&T Express (Malaysia) Sdn. Bhd. 2024-04-11
(1)
8. jtexpress.co.th Global Jet Express (Thailand) Co., Ltd. 2028-09-05
9. jtexpress.sg J&T Express Singapore Pte Ltd. 2023-12-04 (1)
10. jtexpress.vn Thuan Phong Express Company Limited 2028-12-04
11. jet.co.id PT. Global Jet Express 2025-5-15
12. jtexpress.mx Winner Star 2025-01-14
13. jtexpress.com.br Winner Star 2026-5-17
14. jtcargo.id PT. Global Jet Express 2024-06-29
(1)
15. jtexpress.com.eg Winner Star 2024-12-21 (1)
16. jtexpress.com.kh GLOBAL JET EXPRESS KHM CO., LTD. 2023-11-26 (1)
17. yoyistation.co.th Y oyi Station Co., Ltd. 2025-07-16
Note:
(1) We are in the process or will be renewing the registrations in accordance with relevant laws, regulations and
rules. We do not expect any legal impediment to renewing these registrations.
Save as disclosed above, as of the Latest Practicable Date, there were no other trade or service
marks, patents, intellectual or industrial property rights which were material in relation to our
business.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-20 –


--- page 717 ---
3. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUBSTANTIAL
SHAREHOLDERS
3.1 Disclosure of interests
Save as disclosed below, immediately following the completion of the Global Offering
(assuming that (i) the Over-allotment Option is not exercised and (ii) the Reclassification,
Redesignation and Share Subdivision are completed), so far as our Directors are aware, the
interests or short positions of our Directors and the chief executives in any Shares, underlying
shares and debentures of our Company or any associated corporations (within the meaning of
Part XV of the SFO), which will have to be notified to our Company and the Stock Exchange
pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions
which have been taken or deemed to have been taken under such provisions of the SFO) or
which will be required, pursuant to section 352 of the SFO, to be entered in the register or
which will be required to be notified to our Company and the Stock Exchange pursuant to the
Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing
Rules, will be as follows:
Interest in Shares of the Company
Name of Director
Capacity/Nature of
interest (1)
Number and class
of securities
Approximate %
shareholding
interest in each
class of Shares
immediate
following the
completion of the
Global Offering (2)
Jet Jie Li (3) Interest in a controlled
corporation
979,333,410
Class A Shares
100%
Alice Y u-fen Cheng
(4) Interest in a controlled
corporation
143,380,855
Class B Shares
1.83%
Y uan Zhang (5) Interest in a controlled
corporation
327,712,070
Class B Shares
4.18%
Notes:
(1) All interests stated are long position.
(2) The calculations are made assuming that (i) the Over-allotment Option is not exercised and (ii) the
Reclassification, Redesignation and Share Subdivision are completed.
(3) This includes the 979,333,410 Class A Shares held by Jumping Summit Limited; Topping Summit Limited, an
entity wholly-owned by Mr. Li, owns 5% equity interest of Jumping Summit Limited; Exceeding Summit
Holding Limited, which is held by Vistra Trust (Singapore) Pte. Limited as a trustee for a trust established by
Mr. Li for the benefit of Mr. Li and his family members, owns the remaining 95% equity interest in Jumping
Summit Limited. Accordingly, Mr. Li is deemed to be interested in the 979,333,410 Class A Shares held by
Jumping Summit Limited under the SFO.
(4) This includes the 143,380,855 Class B Shares held by EASY INNOV A TION LIMITED, which is wholly-
owned by Ms. Alice Y u-fen Cheng. Accordingly, Ms. Alice Y u-fen Cheng is deemed to be interested in the
143,380,855 Class B Shares held by EASY INNOV A TION LIMITED.
(5) This includes the 327,712,070 Class B Shares held by LONG ORIGIN LIMITED, which is wholly-owned by
Mr. Zhang Y uan. Accordingly, Mr. Zhang Y uan is deemed to be interested in the 327,712,070 Class B Shares
held by LONG ORIGIN LIMITED.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-21 –


--- page 718 ---
3.2 Substantial Shareholders
For information on the persons who will, immediately following the completion of the Global
Offering (assuming that (i) the Over-allotment Option is not exercised and (ii) the
Reclassification, Redesignation and Share Subdivision are completed), have interests or short
positions in our Shares or underlying Shares which would be required to be disclosed to our
Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the
SFO, see “Substantial Shareholders”.
Save as set out above, as of the Latest Practicable Date, our Directors are not aware of any
person who will, immediately following the completion of the Global Offering (assuming that
(i) the Over-allotment Option is not exercised and (ii) the Reclassification, Redesignation and
Share Subdivision are completed), be interested, directly or indirectly, in 10% or more of the
nominal value of any class of share capital carrying rights to vote in all circumstances at
general meetings of our Company or have an option in respect of such capital.
3.3 Directors’ service contracts and appointment letter
Executive Director
Our executive Director has entered into a service contract with our Company. Pursuant to this
agreement, he agrees to act as executive Director for an initial term of three years with effect
from the Listing Date until the third annual general meeting of our Company after the Listing
Date (whichever is earlier). Either party has the right to give not less than one month’s written
notice to terminate the agreement. Details of the Company’s remuneration policy is described
in “Directors and Senior Management – Directors’ Remuneration.”
No annual director’s fees are payable to the executive Director under the current arrangement.
Non-executive Directors
Each of our non-executive Directors has entered into an appointment letter with our Company.
The initial term of their appointment shall be three years from the Listing Date or until the third
annual general meeting of the Company after the Listing Date, whichever is earlier, (subject
to retirement as and when required under the Articles of Association) until terminated in
accordance with the terms and conditions of the appointment letter or by either party giving to
the other not less than one month’s prior notice in writing. Under these appointment letters,
each of the non-executive Directors will receive an annual director’s fee of HK$500,000 per
annum.
Independent Non-executive Directors
Each of our independent non-executive Directors has entered into an appointment letter with
our Company. The initial term of their appointment shall be three years from the Listing Date
or until the third annual general meeting of the Company after the Listing Date, whichever is
earlier, (subject to retirement as and when required under the Articles of Association) until
terminated in accordance with the terms and conditions of the appointment letter or by either
party giving to the other not less than one month’s prior notice in writing. Under these
appointment letters, each of the independent non-executive Directors will receive an annual
director’s fee of HK$500,000 per annum.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-22 –


--- page 719 ---
Save as disclosed above, none of our Directors has or will have a service contract with any
member of our Group, other than contracts expiring or determinable by the employer within
one year without the payment of compensation (other than statutory compensation).
3.4 Directors’ remuneration
The remuneration of our Directors are paid in the form of salaries, allowances, employee
benefits, discretionary bonuses, fees and retirement benefits.
For the years ended December 31, 2020, 2021 and 2022 and the six months ended June 30,
2023, the aggregate amounts of remuneration (including wages, salaries, bonuses, pension
costs, other employee benefits, but excluding share-based compensation expenses) paid by our
Company to the Directors were approximately US$1.83 million, US$12.85 million, US$5.03
million and US$2.15 million, respectively.
None of our Directors has or is proposed to have a service contract with the Company other
than contracts expiring or determinable by the employer within one year without the payment
of compensation (other than statutory compensation).
4. PRE-IPO SHARE INCENTIVE PLAN
Network Partner Equity Incentive Plan
The following is a summary of the principal terms of the Company’s Network Partner Equity
Incentive Plan of the Company as approved by all shareholders of the Company on February
26, 2022, and amended by way of Directors’ resolutions dated May 31, 2023 (the “ Network
Partners Plan ”). The terms of the Network Partners Plan are not subject to the provisions of
Chapter 17 of the Listing Rules.
4.1 Purpose of the Network Partners Plan
The purpose of the Network Partners Plan is to promote the success and enhance the value of
the Company by linking the personal interests of the Company’s network partners, regional
sponsors or other eligible individuals, who are authorized to operate J&T-branded express
delivery services, including but not limited to those who used to operate express delivery
services under other brand names as acquired by the Company from time to time but joined the
J&T network following the Company’s relevant acquisitions, to those of the Company’s
shareholders and by providing such individuals with an incentive to perform outstanding and
generate superior returns for the Company’s shareholders. This Network Partners Plan is
further intended to provide flexibility to the Company in its ability to motivate, attract, and
retain the services of, and cooperative relationships with, such individuals upon whose
judgment, interests, and special efforts the success of the Company is largely dependent.
4.2 Selected participants to the Network Partners Plan
Awards under the Network Partners Plan may be granted only to those persons that the
Administrator (as defined below) determines to be Eligible Individuals. An “Eligible
Individual” means any person who is the beneficial owner of an external network partner or a
regional sponsor of the Company that enters into cooperation relationship with the Company
or any Service Recipient (as defined below) and is authorized to operate J&T-branded express
delivery services, including but not limited to those who used to operate express delivery
services under other brand names as acquired by the Company from time to time but joined the
J&T network following the Company’s relevant acquisition, or another applicable legal entity
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-23 –


--- page 720 ---
or individual, as determined by the Administrator; provided, however, that Awards shall not be
granted to Consultants, Directors or other legal entities or individuals who are resident of any
country which pursuant to Applicable Laws does not allow grants to non-employees.
“Service Recipient” means the Company, any parent or subsidiary of the Company and any
related entity to which an Eligible Individual provides services or maintains cooperative
relationships as an external network partner, a regional sponsor or as an otherwise applicable
legal entity or individual.
Subject to the provisions of the Network Partners Plan, the Administrator may, from time to
time, select from among all Eligible Individuals to whom Awards in the form of options
(“Options ”), restricted share awards (“ Restricted Shares ”) and restricted share units (“ RSU”)
(collectively “ Awards ”) shall be granted and shall determine the nature and amount of each
option.
4.3 Maximum number of shares
The maximum aggregate number of shares which may be issued is 38,000,000 (or 190,000,000
Class B Shares, following completion of the Reclassification, Redesignation and Share
Subdivision) subject to any adjustments for other dilutive issuances.
4.4 Administration
The Network Partners Plan is administered by and all Awards under the Network Partners Plan
are authorized by the Administrator. The “ Administrator ” means the Chairman, namely the
chairman of the board of directors of the Company, or any authorized person to whom the
Chairman has delegated its authority, whom is entrusted to administer all or certain aspects of
the Network Partners Plan.
The Administrator shall have the power to interpret this Plan and the Award Agreement, and
to adopt such rules for the administration, interpretation and application of this Plan, to
interpret, amend or revoke any such rules and to amend any Award Agreement provided that
the rights or obligations of the Holder of the Award that is the subject of any such Award
Agreement are not affected adversely by such amendment, unless the consent of the Holder is
obtained or such amendment is otherwise permitted under the Network Partners Plan
provisions. Subject to any specific designation of the Network Partners Plan, the Administrator
has the exclusive power, authority and sole discretion to:
(i) designate Eligible Individuals to receive Awards;
(ii) determine the type or types of Awards to be granted to each Eligible Individual;
(iii) determine the Fair Market V alue of the Shares, namely, as of any date, the closing sales
price for such Shares (or the closing bid, if no sales were reported) as quoted on the
principal exchange or system on which the Shares are listed (as determined by the
Administrator) on the date of determination (or, if no closing sales price or closing bid
was reported on that date, as applicable, on the last trading date such closing sales price
or closing bid was reported), as reported in The Wall Street Journal or such other source
as the Administrator deems reliable;
(iv) determine the number of Awards to be granted and the number of Shares to which an
Award will relate;
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-24 –


--- page 721 ---
(v) determine the terms and conditions of any Award granted pursuant to the Network
Partners Plan, including, but not limited to, the exercise price, grant price, or purchase
price, any reload provision, any restrictions or limitations on the Award, any schedule for
vesting, lapse or forfeiture restrictions or restrictions on the exercisability of an Award,
and accelerations or waivers thereof, and any provisions related to non-competition, the
recapture of gains on an Award and the repurchase of Shares, based in each case on such
considerations as the Administrator in its sole discretion determines;
(vi) determine whether, to what extent, and pursuant to what circumstances an Award may be
settled in, or the exercise price of an Award may be paid in cash, Shares, or other Awards,
or other property, or an Award may be canceled, forfeited, or surrendered;
(vii) prescribe the form of each Award Agreement, which need not be identical for each
Holder;
(viii) determine whether a given company, partnership or individual constitutes a Competitor;
(ix) determine all matters and questions with respect to whether or not, with respect to a
certain Holder, a Termination of Service with the Company or the Service Recipient has
occurred, including without limitation whether such Termination of Service resulted from
the Cause, the specific date and time of such Termination of Service, and whether a
particular leave of absence constitutes a Termination of Service;
(x) determine whether Shares held by a Holder may be sold during the Company’s financing,
together with the specific amount, price, terms, conditions and other limitations;
(xi) determine lock-up periods of the Holder during the Company’s initial public offering,
together with the specific time, amount, terms and conditions with respect to the Holder’s
sale of the Shares following the Company’s initial public offering;
(xii) decide all other matters that must be determined in connection with an Award;
(xiii) establish, adopt or revise any rules and regulations as it may deem necessary or advisable
to administer the Network Partners Plan;
(xiv) interpret the terms of, and any matter arising pursuant to, the Network Partners Plan or
any Award Agreement; and
(xv) make all other decisions and determinations that may be required pursuant to the Network
Partners Plan or as the Administrator deems necessary or advisable to administer the
Network Partners Plan.
4.5 Grant of Awards
The Administrator may determine, at its sole discretion, whether to grant any Awards to any
Eligible Individual and the specific type, amount, limitations, terms and conditions of such
Awards, based on such Eligible Individual’s level, performance and the Company’s business
development conditions, etc.
The Administrator may, from time to time, select from among all Eligible Individuals, those to
whom an Award shall be granted and shall determine the nature and amount of each Award,
which shall not be inconsistent with the requirements of this Network Partners Plan. No
Eligible Individual shall be automatically granted any Award under this Network Partners Plan.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-25 –


--- page 722 ---
Each Award shall be evidenced by an Award Agreement.
Awards granted pursuant to this Network Partners Plan may, in the sole discretion of the
Administrator, be granted either alone, in addition to, or in tandem with, any other Award
granted pursuant to this Network Partners Plan. Awards granted in addition to or in tandem with
other Awards may be granted either at the same time as or at a different time from the grant
of such other Awards.
Unless be otherwise provided in the Award Agreement, the term of any Award granted under
this Network Partners Plan shall not exceed ten (10) years from the date such Award is granted.
Except as limited by any Applicable Laws, the Administrator (a) may extend the term of any
outstanding Award, (b) may extend the time period during which vested Awards may be
exercised, in connection with any Termination of Service of the Holder, and (c) may amend any
other term or condition of such Award relating to such a Termination of Service.
4.6 Restricted Stock Units (RSUs)
(i) Grant and V esting of Restricted Share Units
The Administrator is authorized to grant Restricted Stock Units to any Eligible Individual. The
number and terms and conditions of Restricted Stock Units shall be determined by the
Administrator. The Administrator shall specify the date or dates on which the Restricted Stock
Units shall become fully vested, and may specify such conditions to vesting as it deems
appropriate, including service to the Service Recipients and fulfillment of tax duties by the
Holder under the Applicable Laws, in each case on a specified date or dates or over any period
or periods, as the Administrator determines. The Administrator shall specify the conditions and
dates upon which the Shares underlying the Restricted Stock Units that shall be issued, which
dates shall not be earlier than the date as of which the Restricted Stock Units vest and become
nonforfeitable and which conditions and dates shall be subject to compliance with any
Applicable Laws. On the distribution dates, the Company shall issue to the Holder one
unrestricted, fully transferable Share (or the Fair Market V alue of one such Share in cash) for
each vested and nonforfeitable Restricted Stock Unit.
(ii) Purchase Price
The Administrator may establish the purchase price of a Restricted Stock Unit; provided
however that value of the consideration shall not be less than the par value of the Shares, unless
otherwise permitted by Applicable Laws. Restricted Stock Units may be paid in cash or in any
other consideration as determined by the Administrator.
(iii) Exercise upon Termination of Service
A Restricted Stock Unit award is exercisable or distributable only after the Trading Date and
prior to the Termination of Service of the Holder with the Company or the Service Recipient
(as applicable). The Administrator, however, in its sole discretion may provide that the
Restricted Stock Unit award may be exercised or distributed subsequent to a Termination of
Service in certain events.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-26 –


--- page 723 ---
4.7 Restricted Shares
(i) Award of Restricted Share
The Administrator is authorized to grant Restricted Shares to Eligible Individuals, and shall
determine the amount of, and the terms and conditions, including the restrictions applicable to
each award of Restricted Shares, which terms and conditions shall not be inconsistent with the
Network Partners Plan, and may impose such conditions on the issuance of such Restricted
Shares as it deems appropriate.
The Administrator will determine the purchase price, if any, and form of payment for Restricted
Shares; provided, however, that such purchase price shall be no less than the par value of the
Shares to be purchased, unless otherwise permitted by Applicable Laws. In all cases, legal
consideration (normally the par value of the Shares) shall be required for each issuance of
Restricted Shares.
(ii) Rights as Shareholders
Subject to the provisions of the Network Partners Plan, upon issuance of Restricted Shares, the
Holder shall have, unless otherwise provided by the Administrator, all the rights of a
shareholder with respect to said Shares, subject to the restrictions in his or her Award
Agreement, including the right to receive all dividends and other distributions paid or made
with respect to the Shares; provided, however, that in the sole discretion of the Administrator,
any extraordinary distributions with respect to the Shares shall be subject to such restrictions
and vesting requirements as the Administrator shall provide.
(iii) Repurchase or Forfeiture of Restricted Shares
If no price was paid by the Holder for the Restricted Shares, upon a Termination of Service the
Holder’s rights in unvested Restricted Shares then subject to restrictions shall lapse, and such
Restricted Shares shall be surrendered to the Company and cancelled without consideration. If
a purchase price was paid by the Holder for the Restricted Shares, upon a Termination of
Service the Company shall have the right to repurchase from the Holder the unvested
Restricted Shares then subject to restrictions at a cash price per share equal to the price paid
by the Holder for such Restricted Shares or such other amount as may be specified in the Award
Agreement. The Administrator in its sole discretion may provide that in the event of certain
events the Holder’s rights in unvested Restricted Shares shall not lapse, such Restricted Shares
shall vest and shall be non-forfeitable, and if applicable, the Company shall not have a right
of repurchase.
(iv) Share Certificate
Restricted Shares granted pursuant to the Network Partners Plan may be evidenced in such
manner as the Administrator shall determine. Certificates or book entries evidencing Restricted
Shares must include an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Share, and the Company may, in its sole discretion, retain
physical possession of any share certificate until such time as all applicable restrictions lapse.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-27 –


--- page 724 ---
4.8 Limitation on Transfer
Unless otherwise expressly provided in the Network Partners Plan, no Award and no Share
distributed from the Award may be sold, pledged, assigned or transferred in any manner other
than by will or the laws of testacy and distribution subject to the consent of the Administrator,
or as required under applicable domestic relations laws. In addition, the shares shall be subject
to the restrictions set forth in the applicable Award Agreement.
4.9 Adjustments
In the event of any distribution, share split, combination or exchange of Shares, amalgamation,
arrangement or consolidation, reorganization of the Company, including the Company
becoming a subsidiary in a transaction not involving a Corporate Transaction, spin-off,
recapitalization or other distribution (other than normal cash dividends) of Company assets to
its shareholders, or any other change affecting the Shares or the share price of a Share, the
Administrator shall make such proportionate and equitable adjustments, if any, to reflect such
change with respect to (a) the aggregate number and type of shares that may be issued under
this Plan (including, but not limited to, adjustments of the limitations and substitutions of
shares in a parent or surviving company); (b) the terms and conditions of any outstanding
Awards (including, without limitation, any applicable performance targets or criteria with
respect thereto); and (c) the grant or exercise price per share for any outstanding Awards under
this Plan. The form and manner of any such adjustments shall be determined by the
Administrator in its sole discretion.
4.10 Amendment, modification and termination
Except as otherwise provided in the Network Partners Plan, at any time and from time to time,
the Administrator may terminate, amend or modify the Network Partners Plan; provided,
however, that to the extent necessary and desirable to comply with Applicable Laws the
Company shall obtain Board approval of any Network Partners Plan amendment in such a
manner and to such a degree as required.
Outstanding RSUs granted
We have applied for, and have been granted a waiver from the Stock Exchange from strict
compliance with the disclosure requirements under Rule 17.02(1)(b) of the Listing Rules in
connection with the information of the RSUs granted under the Pre-IPO Share Incentive Plan;
For further details, see “Waivers – Waiver in relation to the Pre-IPO Share Incentive Plan of
the Company”.
RSUs
As of the Latest Practicable Date, none of the grantees of outstanding RSUs under the Pre-IPO
Share Incentive Plan is a Director, senior management or connected person of the Company.
Details of the outstanding RSUs granted to 670 other participants under the Pre-IPO Share
Incentive Plan as of the Latest Practicable Date are set out below:
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-28 –


--- page 725 ---
Grantee
Number of Shares
subject to the
RSUs granted (1)
Purchase
price of
the RSUs
Date of
Grant
Vesting
Period
Approximate percentage
shareholding immediately
following completion of the
Global Offering (2)
(HK$)
Connected Person
nil N/A N/A N/A N/A N/A
7 Grantees holding
50,000-199,999 Shares
subject to the RSUs
490,000 0.0 September
28, 2022
1-3 years 0.03%
469 Grantees holding
10,000-49,999 Shares
subject to the RSUs
5,322,000 0.0 September
28, 2022
1-3 years 0.30%
194 Grantees holding
below 10,000 Shares
subject to the RSUs
586,100 0.0 September
28, 2022
1-3 years 0.03%
Total 6,398,100 0.0 0.36%
(1) Prior to the Reclassification, Redesignation and Share Subdivision being completed.
(2) Approximate percentage of shareholding is calculated as the number of Shares subject to the RSUs granted to
a grantee following the completion of the Reclassification, Redesignation and Share Subdivision and divided
by the total number of Shares in issue immediately upon completion of the Global Offering.
Dilution Effect After Listing and Impact on Earnings per Share
The maximum number of shares which may be issued under the Pre-IPO Share Incentive Plan
is 38,000,000 class A ordinary shares (190,000,000 Class B Shares, following completion of
the Reclassification, Redesignation and Share Subdivision). Prior to the Listing, our Company
issued 38,000,000 class A ordinary shares of our Company on September 28, 2022 to NP
Investment Platform Limited at par value to facilitate the administration of the Pre-IPO Share
Incentive Plan. All outstanding RSUs under the Pre-IPO Share Incentive Plan will be granted
before Listing. No further Shares will be issued by our Company under the Pre-IPO Share
Incentive Plan upon Listing. The Pre-IPO Share Incentive Plan will not have any dilutive effect
on the shareholding of our Shareholders after the Listing. The impact on the earnings per
ordinary share for the years ended December 31, 2020 and 2021 is nil. The impact on the
earnings per ordinary share for the year ended December 31, 2022 and the six months ended
June 30, 2023 are (3.4) cents and nil, respectively.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-29 –


--- page 726 ---
5. OTHER INFORMATION
5.1 Estate Duty
Our Directors have been advised that no material liability for estate duty is likely to fall on our
Company or any of our subsidiaries or Consolidated Affiliated Entities.
5.2 Litigation
As of the Latest Practicable Date, save as disclosed in “Business”, no member of our Group
was engaged in any litigation, arbitration or claim of material importance, and no litigation,
arbitration or claim of material importance was known to the Directors to be pending or
threatened by or against our Group, that would have a material adverse effect on our business,
finance condition or results of operations.
5.3 Joint Sponsors
The Joint Sponsors satisfies the independence criteria applicable to sponsors set out in Rule
3A.07 of the Listing Rules. Each of the Joint Sponsors will receive a fee of US$1,000,000 for
acting as the sponsors for the Listing.
The Joint Sponsors have made an application on our behalf to the Stock Exchange for the
listing of, and permission to deal in, the Class B Shares in issue, the Class B Shares to be issued
pursuant to the Global Offering (including any Class B Shares which may fall to be issued
pursuant to the exercise of the Over-allotment Option) and Class B Shares to be issued upon
conversion of Class A Shares into Class B Shares on a one to one basis. Our Class A Shares
will remain unlisted upon the Company’s Listing as required under Rule 8A.08 of the Listing
Rules.
5.4 Preliminary expenses
The Company did not incur any material preliminary expenses.
5.5 No material adverse change
Our Directors confirm that there has been no material adverse change in the financial or trading
position or prospects of the Group since June 30, 2023 (being the date to which the latest
audited consolidated financial statements of our Group were prepared).
5.6 Promoters
Our Company has no promoter for the purpose of the Listing Rules. No cash, securities or other
benefit has been paid, allotted or given nor are any proposed to be paid, allotted or given to
any promoters in connection with the Global Offering and the related transactions described in
this prospectus within the two years immediately preceding the date of this prospectus.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-30 –


--- page 727 ---
5.7 Qualifications and consents of experts
The following are the qualifications of the experts who have given opinions or advice which
are contained in this prospectus:
Name Qualifications
Morgan Stanley Asia Limited A licensed corporation to conduct Type 1
(dealing in securities), Type 4 (advising on
securities), Type 5 (advising on futures
contracts), Type 6 (advising on corporate
finance) and Type 9 (asset management)
regulated activities as defined under the SFO
Merrill Lynch (Asia Pacific) Limited A licensed corporation to conduct Type 1
(dealing in securities), Type 4 (advising on
securities), Type 5 (advising on futures
contracts) and Type 6 (advising on corporate
finance) regulated activities as defined under
the SFO
China International Capital Corporation
Hong Kong Securities Limited
A licensed corporation to conduct Type 1
(dealing in securities), Type 2 (dealing in
futures contracts), Type 4 (advising on
securities), Type 5 (advising on futures
contracts) and Type 6 (advising on corporate
finance) regulated activities under the SFO
PricewaterhouseCoopers Certified Public Accountants under the
Professional Accountants Ordinance
(Cap. 50)
Registered Public Interest Entity Auditor
under the Accounting and Financial
Reporting Council Ordinance (Cap. 588)
DaHui Lawyers Legal advisers as to PRC law to our
Company
Harney Westwood & Riegels Cayman Islands attorney-at-law
SyCip Salazar Hernandez & Gatmaitan Legal advisers as to Philippines law to our
Company
Rahmat Lim & Partners Legal advisers as to Malaysian law to our
Company
Hutabarat Halim & Rekan Legal advisers as to Indonesian law to our
Company
Weerawong, Chinnavat & Partners Ltd. Legal advisers as to the laws of Thailand to
our Company
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-31 –


--- page 728 ---
Name Qualifications
Vietnam International Law Firm (VILAF) Legal advisers as to Vietnamese law to our
Company
Frost & Sullivan Limited Industry consultant
Each of the experts named above has given and has not withdrawn its consent to the issue of
this prospectus with the inclusion of its report, letter, summary of valuations, valuation
certificates and/or legal opinion (as the case may be) and references to its name included in the
form and context in which it respectively appears.
5.8 Binding Effect
This prospectus shall have the effect, if an application is made pursuant to this prospectus, of
rendering all persons concerned bound by all of the provisions (other than the penal provisions)
of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance insofar as applicable.
5.9 Bilingual Prospectus
The English language and Chinese language versions of this prospectus are being published
separately, in reliance upon the exemption provided by section 4 of the Companies Ordinance
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong). In case of any discrepancies between the English
language version and Chinese language version of this prospectus, the English language
version shall prevail.
5.10 Miscellaneous
5.10.1 Save as disclosed in this prospectus, within the two years immediately preceding
the date of this prospectus:
(i) there are no commissions (but not including commission to sub-underwriters) for
subscribing or agreeing to subscribe, or procuring or agreeing to procure subscriptions
for any shares in or debentures of our Company; and
(ii) there are no commissions, discounts, brokerages or other special terms granted in
connection with the issue or sale of any capital of any member of our Group, and no
Directors, promoters or experts named in the paragraph headed “7. Other information
– Qualifications and consents of experts” above received any such payment or benefit.
5.10.2 Save as disclosed in this prospectus:
(i) there are no founder, management or deferred shares in our Company or any member
of our Group;
(ii) we do not have any promoter and no cash, securities or other benefit has been paid,
allotted or given within the two years immediately preceding the date of this
prospectus, or are proposed to be paid, allotted or given to any promoters;
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-32 –


--- page 729 ---
(iii) none of the Directors or the experts named in the paragraph headed “7. Other
information – Qualifications and consents of experts” above has any interest, direct or
indirect, in the promotion of, or in any assets which have been, within the two years
immediately preceding the date of this prospectus, acquired or disposed of by or leased
to, any member of our Group, or are proposed to be acquired or disposed of by or
leased to any member of our Group;
(iv) as of the Latest Practicable Date, (a) CICC Qirong (Xiamen) Equity Investment Fund
Partnership (Limited Partnership) (઼ፄ (ژ)ΥྫΆุ(Υྫ))
(“CICC Qirong ”) was indirectly interested in approximately 0.0104% issued share
capital of the Company and approximately 0.06% issued share capital of Jet Global
Express Limited (a subsidiary of our Company). The general partner of CICC Qirong
is CICC Capital Management Co., Ltd., one of the wholly owned subsidiaries of China
International Capital Corporation Limited and (b) Ningbo Meishan Free Trade Port
Area CICC Puyu Investment Center (Limited Partnership) (ऌ
◔ҳ༟ʕː(Υྫ)) (“ CICC Puyu Fund ”) was indirectly interested in
approximately 0.0179% of the issued share capital of the Company. CICC Puyu Fund
is managed by a wholly-owned subsidiary of China International Capital Corporation
Limited. China International Capital Corporation Hong Kong Securities Limited, one
of the Joint Sponsors and an expert, is a wholly owned subsidiary of China
International Capital Corporation Limited. Save for the foregoing, none of the experts
named in the paragraph headed “7. Other information – Qualifications and consents of
experts” above has any shareholding in our Company or any of our subsidiaries or has
the right (whether legally enforceable or not) to subscribe for or to nominate persons
to subscribe for securities in our Company or any of our subsidiaries;
(v) there are no bank overdrafts or other similar indebtedness by our Company to any
member of our Group;
(vi) there are no hire purchase commitments, guarantees or other material contingent
liabilities of our Company or any member of our Group;
(vii) there are no outstanding debentures of our Company or any member of our Group;
(viii) there is no other stock exchange on which any part of the equity or debt securities of
our Company is listed or dealt in or on which listing or permission to deal is being or
is proposed to be sought;
(ix) no capital of any member of our Group is under option, or is agreed conditionally or
unconditionally to be put under option; and
(x) there are no contracts or arrangements subsisting at the date of this prospectus in which
a Director is materially interested or which is significant in relation to the business of
our Group.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-33 –


--- page 730 ---
DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES
The documents attached to a copy of this prospectus and delivered to the Registrar of
Companies in Hong Kong for registration were, among other documents:
(a) a copy of the GREEN Application Form;
(b) the written consents referred to in “Statutory and General Information – 5. Other
information – 5.7 Qualifications and consents of experts” in Appendix V to this
prospectus; and
(c) copies of the material contracts referred to in the section headed “Statutory and General
Information – 2. Further information about our Business – 2.1 Summary of material
contracts” in Appendix V to this prospectus.
DOCUMENTS ON DISPLAY
Copies of the following documents will be on display on the website of the Stock Exchange
at www.hkexnews.hk and our website at www.jtexpress.com during a period of 14 days from
the date of this prospectus:
(a) the Memorandum and Articles of Association;
(b) the Accountant’s Report on the historical financial information of the Group for the years
ended December 31, 2020, 2021 and 2022 and the six months ended June 30, 2023 from
PricewaterhouseCoopers, the text of which is set out in Appendix I to this prospectus;
(c) the report on the unaudited pro forma financial information from
PricewaterhouseCoopers, the text of which is set out in Appendix II to this prospectus;
(d) the audited consolidated financial statements of our Group for the years ended December
31, 2020, 2021 and 2022 and the six months ended June 30, 2023;
(e) the report issued by Frost & Sullivan Limited, the summary of which is set forth in
“Industry Overview”;
(f) the legal opinion prepared by Harney Westwood & Riegels, our legal advisor on Cayman
Islands law, summarising certain aspects of Cayman company law referred to in Appendix
IV;
(g) the legal opinion issued by DaHui Lawyers, our PRC Legal Adviser, in respect of certain
aspects of our Group in the PRC;
(h) the Indonesian legal opinions issued by Hutabarat Halim & Rekan on Indonesian law, in
respect of certain general corporate matters of our Group and certain aspects of
Indonesian law referred to in “Contractual Arrangements – Indonesia Contractual
Arrangements”;
(i) the Thai legal opinion issued by Weerawong, Chinnavat & Partners Ltd. in respect of the
laws of Thailand and certain general corporate matters of our Group;
APPENDIX VI DOCUMENTS DELIVERED TO THE REGISTRAR
OF COMPANIES AND ON DISPLAY
– VI-1 –


--- page 731 ---
(j) the Malaysian legal opinion issued by Rahmat Lim & Partners in respect of Malaysian law
and certain general corporate matters of our Group;
(k) the Philippines’ legal opinion issued by SyCip Salazar Hernandez & Gatmaitan in respect
of Philippines law and certain general corporate matters of our Group;
(l) the Vietnamese legal opinion issued by Vietnam International Law Firm (VILAF) in
respect of Vietnamese law and certain general corporate matters of our Group;
(m) the material contracts referred to in the section headed “Statutory and General
Information – 2. Further Information about our Business – 2.1 Summary of material
contracts” in Appendix V to this prospectus;
(n) the written consents referred to in the section headed “Statutory and General information
– 5. Other Information – 5.7 Qualifications and consents of experts” in Appendix V to this
prospectus;
(o) the service contracts and letters of appointment referred to in “Statutory and General
Information – 3. Further Information about our Directors and Substantial Shareholders –
3.3 Directors’ service contracts and appointment letter” in Appendix V to this prospectus;
(p) the terms of the Pre-IPO Share Incentive Plan; and
(q) the Cayman Companies Act.
DOCUMENT A V AILABLE FOR INSPECTION
A copy of a list of awardees under the Pre-IPO Share Incentive Plan, containing all details as
required under the Listing Rules, will be available for inspection at the office of Latham &
Watkins LLP , at 18/F, One Exchange Square, 8 Connaught Place, Central, Hong Kong, during
normal business hours up to and including the date which is 14 days from the date of this
prospectus.
APPENDIX VI DOCUMENTS DELIVERED TO THE REGISTRAR
OF COMPANIES AND ON DISPLAY
– VI-2 –


--- page 732 ---
Global Offering
J&T Global Express Limited
極兔速遞環球有限公司
Stock code : 1519
( A company controlled through weighted voting rights
and incorporated in the Cayman Islands with limited liability )
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Sponsors, Joint Sponsor-Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Overall Coordinator, Joint Global Coordinator, Joint Bookrunner, Joint Lead Manager and Financial Adviser
Joint Bookrunners and Joint Lead Managers
J&T Global Express Limited
極兔速遞環球有限公司
