Alibaba and Nio stocks, and the ADS of other China-based companies get a boost after JD's results

By Tomi Kilgore

JD.com's stock jumps more than 5% after Q1 profit beats expectations by a wide margin

The U.S.-listed shares of Nio Inc. and Alibaba Group Holding Ltd. rallied Thursday, as did the American depositary shares (ADS) of other China-based companies, in the wake of a big earnings beat from e-commerce giant JD.com Inc.

The Invesco Golden Dragon China exchange-traded fund (PGJ), which tracks the U.S.-listed stocks of companies headquartered in China, rose 2.8% in midday trading, with 20 of 63 components gaining ground.

Among the ETF's (PGJ) most-active components, the ADS of Shanghai-based electric-vehicle maker Nio (NIO) tacked on 2.5%, and have powered up 11.8% since they closed at a three-year low of $7.45 on May 2.

And Zhejiang-based Alibaba's stock (9988.HK) climbed 5.7%. The e-commerce company's shares have advanced 7.6% amid a six-day stretch, in which they have gained five times, since closing at a 2 1/2-month low of $81.48 on May 3.

JD shares (JD) ran up 5.3%, after the Beijing-based e-commerce company reported first-quarter adjusted earnings per ADS that soared 88.1% from a year ago to RMB4.76, which was well above the FactSet consensus of RMB3.53.

Revenue increased 1.4% to RMB242.96 billion ($35.4 billion), above the FactSet consensus of RMB240.81 billion. Product revenue fell 4.3% to RMB195.56 billion, just shy of the FactSet consensus of RMB195.89 billion, while services revenue jumped 34.5% to RMB47.39 billion, above expectations of RMB44.90 billion.

"In 2023, with COVID in the past, the macro economy and consumption have started to pick up, but organic forces driving consumption demand are not yet sufficient," said Chief Executive Officer Lei Xu in a post-earnings conference call with analysts, according to a translated transcript provided by FactSet. "We've seen different paces of recovery for different categories, as well as changes in the demographic structure and people's lifestyles and spending patterns."

Chief Financial Officer Sandy Xu added on the call: "We also see more encouraging trends in Q2, both financially and operationally, as we push forward our proactive adjustment."

Separately, JD said CEO Lei Xu will retire due to personal reasons, and current CFO Sandy Xu was named Lei Xu's successor.

Among other PGJ movers, the biggest gainer was the ADS of Dada Nexus Ltd. (DADA), which shot up 20.1%. The Shanghai-based e-commerce platform provider reported overnight a first-quarter adjusted per-share loss that narrowed to RMB0.18 from RMB0.49, and beat the FactSet loss consensus of RMB0.43.

Revenue increased 27.2% to RMB2.576 billion, just above the FactSet consensus of RMB2.573 billion.

JD owned 53% of Dada's outstanding shares as of Dec. 31, and has been consolidating Dada's financial results since February 2022.

Elsewhere, the ADS of EV maker Li Auto Inc. (LI) rallied 3.8%, of mobile marketplace company PDD Holdings Inc. (PDD) powered up 6.7%, of EV maker XPeng Inc. (XPEV) charged up 3.7% and of streaming-video company iQiyi Inc. (IQ) were up 3.4%.

Of the most-active PGJ decliners, shares of bitcoin miner Bit Digital Inc. (BTBT) dropped 7.5%, as bitcoin fell 1.6%, and of data-center operator GDS Holdings Ltd. (GDS) gave up 11.6%.

The PGJ has slipped 2.6% year to date, while the S&P 500 index has gained 7.5%.

-Tomi Kilgore

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05-11-23 1259ET

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