JD.com: Raising Salaries Has a Mixed Impact on Earnings; Fair Value Estimate Maintained

JD.com will raise the fixed salaries of front-line employees, such as sourcing and sales personnel, by nearly 100% starting Jan. 1, 2024, and will increase the salaries of all JD Retail employees by an average of no less than 20% in early 2024. This was a surprise to us as JD.com cut salaries of senior staff by 10%-20% in 2023. We estimate that at most, 14% of JD.com staff will benefit from an almost 100% increase in salary and over 80% of staff will not be affected by this salary change. We maintain our forecasts and fair value estimates at USD 43 per ADS and HKD 167 per share. PDD Holdings remains our preferred pick in the China e-commerce space.