Analyst Note| Chelsey Tam |
The largest takeaway from JD's results is it will be able to carry forward its fast top-line growth in 2020 to 2021, but we think the non-GAAP net margin is unlikely to increase in 2021 due to reinvestment in the businesses. We increased 2021 sales growth to 29% from 20% previously. Our 2021 non-GAAP net margin is now flat versus 2020. We expect to see 10-year revenue CAGR reaching 16% by 2029 versus 13% before, and the non-GAAP net margin to reach 5.1% by 2029 compared with 5.5% previously. We think community group purchase business presents another growth area for JD, increasing JD’s long-term top-line growth, but margin expansion will be slower due to higher investments. As such, we raised JD’s fair value estimate by 37% to USD 100 per ADS or HKD 390 per share, implying a price/non-GAAP net income of 43 times for 2021. The shares are fairly valued.