Analyst Note| Chelsey Tam |
We were slightly disappointed about wide-moat JD.com’s lower-than-industry sales growth in the second quarter, but were surprised by the stronger-than-expected margin improvement across all reported business segments. We raise our fair value estimate to USD 104 (HKD 403) from USD 102 (HKD 395), due to our forecast of greater cost rationalization efforts across all business lines than we had previously expected. We have raised our non-GAAP net margin forecast to 2.2% both this year and next year, up from our previous forecasts of 1.7% and 2.1%. JD.com continues to be our top pick in the general e-commerce sector.