JD Logistics, Inc. announced the results for 2021: 1) the income realized in 2021 was 104.7 billion yuan, an increase of 42.7 percent over the same period last year; the annual loss was 15.66 billion yuan, which was mainly due to an one-time loss of 12.84 billion yuan caused by changes in the fair value of convertible redeemable preferred shares after the listing of the company. the adjusted net profit was 1.23 billion yuan. 2) 21H2's income was 56.2 billion yuan, an increase of 34.4% over the same period last year, and a loss of 450 million yuan. After adjustment, the net profit was 280 million yuan, and the profitability was significantly improved.

The proportion of 21H2 external customers' revenue increased to 58%, and the revenue of single customers in the integrated supply chain increased steadily compared with the same period last year. 1) in terms of revenue structure, the income from external customers in 2021 was 59.1 billion yuan, an increase of 72.7% over the same period last year, accounting for more than 56.5%. The business income from JD.com Group was about 45.5 billion yuan, an increase of 15.2% over the same period last year, and the proportion further dropped to 43.5%. Among them, the income of 21H2 external customers is 32.6 billion yuan, accounting for 58%, which is further higher than that of 21H1. 2) further split: it is estimated that the revenue of external customer integrated supply chain reached 25.5 billion yuan, an increase of 54.7% over the same period last year. The number of external customers in the integrated supply chain reached 74602, an increase of 41.7% over the same period last year, the average income of a single customer increased to 341400 yuan, an increase of 9.2% over the same period last year, and customer stickiness was further enhanced; other business income of external customers reached 33.6 billion yuan, an increase of 93.3% over the same period last year, mainly due to the growth of table consolidation and express delivery business across Express, of which Cross-Express revenue contributed about 11.3 billion yuan for the whole year. Other income of 21H2 external customers was 18.8 billion yuan, an increase of 59.3% over the same period last year.

21H2 fine management improved significantly, gross profit margin and adjusted net profit margin increased. Cost side: benefiting from the company's fine management, revenue side: benefiting from decoupling and standardizing supply chain service products to adapt to the expansion of mid-waist customers, 21H2 achieved a gross profit of 4 billion yuan, an increase of 79% over the same period last year, 127% higher than H1, 7.1% gross profit, 1.7% year-on-year increase and 3.4% higher than H1. The adjusted net profit of 21H2 is 280 million yuan, and the adjusted net profit margin is 0.5%, an improvement of 1.2 percentage points over the same period last year.

Continue to cultivate the integrated supply chain business. The company focuses on six major industries, such as FMCG, home appliance furniture, clothing, 3C, automobile and fresh, among which FMCG, home appliance furniture and 3C account for more than 65% of the revenue of the external integrated supply chain. The number of head customers with annual income contribution of more than 10 million yuan reached 296, an increase of 65% over the same period last year. By the end of 2021, the storage area managed by the company (including cloud warehouses) reached 24 million square meters, and the number of managed warehouses exceeded 3000 (including 1700 cloud warehouses), leading the country. The company always attaches importance to the important role of logistics technological innovation, relying on technological innovation to improve the operational efficiency of the warehousing network.

Future highlights: inside and JD.com ecological positive cycle, outward look at the digital intelligent supply chain market set sail against the wind. 1) to ensure the sustained growth of the group's retail business internally, which has become one of the core barriers to competition, and the JD.com ecosystem also supports JD Logistics, Inc. 's export of stable business flow. 2) bring cost reduction and efficiency to brand enterprises and production enterprises through integrated supply chain services. We believe that the B-end market is in a huge dividend strategy period, and the company is expected to grow with the times.

Investment suggestions: 1) profit forecast: based on the loss caused by the change in the fair value of convertible redeemable preferred shares has been released, the scale effect of the previous investment of the superimposed company has been gradually released. We adjust the 2022-23 profit forecast to return to the home net profit of-3.14,9 million yuan (the original forecast is-17.1, 240 million yuan), and the additional 24-year profit forecast is expected to realize the return net profit of 215 million yuan. 2) Investment advice: the company is currently in a period of business expansion, which is share-oriented rather than pursuing short-term profits. we use the PS method to value it, valuing it twice as much as PS in 2022, with an one-year target market value of about HK $170 billion, corresponding to a share price of HK $27.4, which is expected to be 44% higher than the current price, and maintains a "recommended" rating based on the overall risk preference of the H-share market.

Risk hint: JD.com 's growth rate is lower than expected, third-party business development is lower than expected, and labor costs are rising sharply.