In 2024, we aim to expand market share, increase dividend repurchases and increase shareholder returns, maintain “buy” ratings. Short-term companies increase user experience, merchant subsidies and marketing investment, but with improved logistics efficiency and strict management cost controls, we lowered the company's 2024-2025 non-GAAP net profit forecast to 355/40.7 billion yuan (previous value: 361/40.8 billion yuan), and added a 2026 non-GAAP net profit forecast of 45.3 billion yuan, corresponding to a year-on-year growth rate of 1.1%/14.7%/11.2%. It corresponds to the diluted EPS of 11.2/12.8/14.2 yuan after adjustment. The current stock price of 94.55 HKD corresponds to 7.8/6.8/6.1 times PE in 2024-2026. The valuation is low. Along with the expansion of its own market share, improved platform ecology, and macro-consumption recovery, steady performance has driven valuation repair and maintained a “buy” rating.
The 2023Q4 household appliances and electronics category drove revenue to slightly exceed expectations. Profits under performance and management improvements exceeded expectations by 3.6% year-on-year, slightly exceeding Bloomberg's agreed expectations, due to better-than-expected sales of electronics and home appliance products; non-GAAP net profit of 8.42 billion yuan, higher than Bloomberg's agreed expectations ($7.24 billion), due to improved operational efficiency. On the revenue side, (1) product sales revenue increased 3.7% year on year, electronics and home appliance revenue increased 6.1% year on year, and the share continued to expand; household goods revenue was basically stable year on year due to inventory accumulation and Spring Festival shopping season misalignment; (2) service revenue increased 3.0% year on year in 2023Q4, with platforms and advertising services falling 4% year on year, and the monetization rate of 3P merchants was low in the context of continuous platform ecosystem construction; logistics and other revenue increased 8% year over year. Profit side: Under the influence of price competition and subsidies, JD's retail operating profit margin fell 0.4 pct to 2.6% year on year; JD Logistics's operating profit margin increased 0.7 pct year on year to 2.8%.
The GMV growth rate is expected to surpass Social Zero in 2024, and the profit margin or short-term decline. The company indicates that the GMV growth rate in 2024 is expected to exceed Social Zero. The internal strategy is centered on improving user experience and market share, and the core charged categories are expected to benefit from consumer promotion policies such as trade-in. Increase investment in user experience, merchant subsidies and marketing in the short term, and profit margins are expected to decline in 2024 or in the short term. The company announced a dividend of approximately US$1.2 billion for 2023, corresponding to the current market capitalization dividend rate of approximately 3.1% (closing market capitalization of HK$30.6 billion on March 7, 2024, or US$38.3 billion); it will implement a new share repurchase plan of no more than US$3 billion over the next 36 months, which is approximately 7.8% of the current market value.
Risk warning: Increased competition in the industry, macroeconomic performance falling short of expectations, business adjustments falling short of expectations, and regulatory changes.