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JD.com Inc ADR JD

Morningstar Rating
$30.27 −0.93 (2.98%)
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Company Report

JD.com Earnings: Higher Investment to Pressure Near-Term Margins; Shares Undervalued

Wide-moat JD.com’s first-quarter revenue was broadly in line with LSEG consensus as of May 14 and our estimate. While non-GAAP net profit was 14% above consensus due to better-than-expected earnings at JD Logistics, it was in line with our earnings estimate. Non-GAAP net margin in the quarter rose 30 basis points year on year to 3.4%, above our 2.7% full-year estimate. Nevertheless, we leave our estimates unchanged as we expect more promotional spending in the 6.18 and 11.11 shopping festivals, which will pressure margins for the rest of the year. We estimate non-GAAP net profit to decline 7% year on year this year, as management is investing more heavily into the business to generate higher gross merchandise volume. We keep our fair value estimates at USD 46 per ADS and HKD 179 per share. We continue to think that JD.com is undervalued and that its intangible asset moat source, backed by high-quality delivery services, will help JD.com retain and attract customers in the long run.

Price vs Fair Value

JD is trading at a 26% premium.
Price
$31.20
Fair Value
$28.00
Uncertainty
High
1-Star Price
$39.90
5-Star Price
$21.10
Economic Moat
Wgxy
Capital Allocation
Sxcqrstg

Bulls Say, Bears Say

Bulls

JD.com’s new free return, exchange, and shipping policies substantially increase the new user base, purchase frequency, and average order value, leading to better-than-expected profit for the firm.

Bears

Many customers associate the JD.com brand with a substantially poorer quality of products and services and insufficiently competitive prices as JD.com pushes its third-party platform, leading to lower-than-expected sales.

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News

Trading Information

Previous Close Price
$31.20
Day Range
$30.1731.10
52-Week Range
$20.8241.95
Bid/Ask
$30.36 / $30.40
Market Cap
$46.32 Bil
Volume/Avg
19.0 Mil / 14.9 Mil

Key Statistics

Price/Earnings (Normalized)
9.68
Price/Sales
0.32
Dividend Yield (Trailing)
2.33%
Dividend Yield (Forward)
2.33%
Total Yield
3.16%

Company Profile

JD.com is a leading e-commerce platform with its 2022 China GMV being similar to Pinduoduo (GMV not reported), on our estimate, but still lower than Alibaba. it offers a wide selection of authentic products with speedy and reliable delivery. The company has built its own nationwide fulfilment infrastructure and last-mile delivery network, staffed by its own employees, which supports both its online direct sales, its online marketplace and omnichannel businesses.
Sector
Consumer Cyclical
Industry
Internet Retail
Stock Style Box
Large Value
Total Number of Employees
517,124

Competitors

Valuation

Metric
JD
PDD
BABA
Price/Earnings (Normalized)
9.6818.741.16
Price/Book Value
1.537.121.42
Price/Sales
0.325.561.56
Price/Cash Flow
5.0514.487.49
Price/Earnings
JD
PDD
BABA

Financial Strength

Metric
JD
PDD
BABA
Quick Ratio
0.801.501.71
Current Ratio
1.161.931.80
Interest Coverage
8.661,402.3993.02
Quick Ratio
JD
PDD
BABA

Profitability

Metric
JD
PDD
BABA
Return on Assets (Normalized)
6.08%24.01%4.42%
Return on Equity (Normalized)
16.33%45.95%7.83%
Return on Invested Capital (Normalized)
8.28%36.17%7.04%
Return on Assets
JD
PDD
BABA
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