Revenue was in line with expectations, Non-GAAP profits far exceeded expectations, and JD.com 's retail profitability continued to improve: the company's revenue in the fourth quarter of 2022 was 295.4 billion yuan, an increase of 7.1% over the same period last year; the net profit of Non-GAAP homing was 7.7 billion yuan, an increase of 114.8% over the same period last year. Bloomberg unanimously expected 295.5 billion yuan and 5.5 billion yuan respectively, with revenue in line with market expectations and profits exceeding market expectations.

All kinds of revenue grew steadily, and logistics business continued to grow faster than expected: 2022Q4 commodity sales revenue increased by 1.2% compared with the same period last year. 3P merchants continued to improve their diversification, online and offline distribution continued to advance; driven by factors such as great promotion, advertising revenue exceeded expectations. The revenue from logistics and other services was 33.2 billion yuan, an increase of 75.1% over the same period last year, and the profit margin of logistics operation was 2.1%. Compared with Q3, the 1.4pct was improved again, and the growth momentum of logistics revenue was stable.

The Japanese grocery category continues to expand, and the 3C strong category is more resilient: the net income of 2022Q4 electronics and household appliances is 141.7 billion yuan, up 0.5% from the same period last year, and Bloomberg unanimously expected it to be 145.8 billion yuan; sales revenue from daily department stores was 95.9 billion yuan, up 2.3% from the same period last year, and Bloomberg unanimously expected it to be 96.5 billion yuan. The company's core 3C home appliances category is still resilient.

Cost reduction and efficiency efficiency continued to move forward, and various expense rates decreased steadily: 2022Q4 performance costs increased by 3.3% to 16.9 billion yuan compared with the same period last year, and the implementation cost rate was 5.7%, which decreased 0.2pct over the same period last year. The advantage effect of scale has brought about a continuous decline in the rate of performance expenses. In the current quarter, the rate of management expenses was 1.23%, down 0.12pct from the same period last year; the rate of sales expenses was 4.06%, a decrease of 0.78pct compared with the same period last year.

Profit forecast and investment rating: due to the intensification of competition in the industry and the continuous promotion of the company's 10 billion subsidies, we have lowered our EPS (Non-GAAP) forecast for 2023-2024 from 12.8 Non-GAAP to 10.0 Non-GAAP 12.9 yuan. We expect the EPS (Non-GAAP) to be 15.8 yuan in 2025, corresponding to a PE of 14.0 pound 10.8 times (HK $/ RMB = 0.8801, 2023312). Although the company's continuous investment affects the company's performance in the short term, it will build a stronger and stronger competitive advantage, and we maintain the company's "buy" rating.

Risk hints: repeated epidemic risk, commodity supply chain expansion risk, macroeconomic fluctuation risk