The company announced FY4Q23 results: 23Q4 achieved revenue of 306.07 billion yuan (Bloomberg's agreed estimate of 299.9 billion yuan), +3.6% year-on-year, and non-GAAP net profit of 8.42 billion yuan, +9.9% year-on-year. For the full year of 2023, revenue was $1084.66 billion (+3.7%); non-GAAP net profit to mother was $35.20 billion (+24.7%).
Product revenue: The company achieved product revenue of 246.5 billion yuan (+3.7%) in 23Q4, and the electrified category performed well.
1) Charged category: The performance is superior to that of the social zero household appliances category as a whole. 4Q23 achieved revenue of 15.3 billion yuan (+6.1%), while Social Zero Data Home Appliances/Communications/Cultural Office 23Q4 was +3.6%/+14.3%/-4.3% year-on-year respectively. 2) Daily 100 categories:
4Q23 achieved revenue of 96.1 billion yuan (+0.2%), achieving a year-on-year correction in revenue growth. We look forward to further improvements.
Service revenue: The company achieved service revenue of 59.6 billion yuan (+3.0%) in 23Q4. 1) Revenue from platforms and advertising services: 4Q23 achieved revenue of 23.6 billion yuan (-4.0%), of which the advertising business had a high seasonal impact during the same period. In terms of commissions, the company vigorously developed the platform ecosystem to support merchants and is expected to have a certain impact on commission revenue. 2) Logistics and other revenue: 4Q23 achieved revenue of 35.95 billion yuan (+8.1%).
Segment profit: 1) JD Retail: Achieved revenue of 267.6 billion yuan (+3.4%) and operating profit of 6.94 billion yuan (profit margin 2.6%, yoy-0.4pct). Profit margins may have declined under the subsidy policy, but at the revenue level, JD's 2023 Double Eleven turnover, order volume, and number of users all reached new highs. 2) JD Logistics: Achieving revenue of 47.2 billion yuan (+9.8%) and operating profit of 1.33 billion yuan (profit margin 2.8%, yoy+0.7pct). Q4 JD Logistics provides integrated supply chain solutions for more Chinese overseas brands and global customers.
23Q4 Group gross margin increased and cost ratio optimized. The 23Q4 company's gross margin was 14.2% (+0.15pct), and the performance/sales/R&D/management expense ratios were 5.65%/4.3%/1.4%/0.78%, respectively, -0.06/-0.46pct year-on-year, respectively. Increased efficiency during the promotional season reduced the impact of the 59 free shipping launched at the end of August on contract performance costs.
The company values shareholder returns: the company announces dividend payments and new share repurchase plans. The company paid an annual dividend of approximately $1.2 billion for 2023 (corresponding to the closing price of about 3.3%) and announced a new repurchase plan. It is expected to repurchase shares worth no more than $3 billion within the next 36 months ending March 2027.
According to the latest results announcement, we have adjusted our profit forecast to forecast revenue of $10,847/11561/1221.8 billion (originally $10731/11949/1327.9 billion yuan) for 23-25, and adjusted net profit to mother of $352/352/36.8 billion (originally $308/345/41.1 billion yuan). Referring to comparable companies, the JD retail business was given 11xPE in 2024. The segmental valuation calculated that the company's market value was RMB 380.3 billion, corresponding to a share price of HK$131.9 (RMB to HKD exchange rate of 1.103), maintaining a “buy” rating.
Risk warning: Industry competition is intensifying, new business incubation falls short of expectations, and industry regulations are getting stricter