JD's revenue is expected to maintain a growth rate higher than Social Security Zero. On July 15, the National Bureau of Statistics released the latest data: 2024H1, a total of 23596.9 billion yuan, up 3.7% year on year, and online retail sales of physical products increased 8.8% year on year, accounting for 25.3% of social zero. Among them, sales of basic lifestyle and upgraded products increased relatively well, and sales of energy-efficient household appliances and smart home appliances achieved relatively rapid growth. Considering the continued increase in the penetration rate of online shopping and the positive growth trend of social zero as a whole, we expect that JD's revenue will continue to grow at a higher rate than social zero.
At the revenue level, electrified products may slow down the overall growth rate in Q2, and the Nippon 100 category is expected to grow significantly. First, the revenue of the electrified category may be under pressure in 2024Q2. By category, 1) Air conditioning may be affected by last year's high base, and air conditioners account for a relatively high share of household appliances. At the same time, it is estimated that the home appliance category also accounts for a relatively high share of the company's overall electrified category, which may also slow down overall revenue growth. However, we expect that after excluding the impact of the high base figure in the second half of the year, the growth rate of household appliances revenue may improve markedly. 2) In terms of mobile phones, according to IDC, 2024Q2 global smartphone shipments maintained high unit growth. At the same time, the advance of the domestic 618 shopping festival was also conducive to a recovery in mobile phone sales growth in the second quarter. It is expected that the company's mobile phone category will also maintain positive growth in the second quarter. 3) On the PC side, according to IDC statistics, Q2 shipments increased 3% year over year. We expect the launch of more AI PC products in the second half of the year, which may lead to a continued recovery in PC shipments.
Second, due to the relatively low base of the Nibai and supermarket categories last year, we expect the daily department store category revenue to increase appreciably in Q2 this year, and the growth rate may reach a high number of units.
At the profit level, it is expected that the company's strict control of investment will pay off. From the perspective of profit structure, we judge that the increase in the share of large supermarkets is expected to make a positive contribution to profit margins. From the perspective of a strategic approach, while focusing on growth, the company is also expected to increase the company's overall profit level by grasping the actual ROI of each investment and reducing unnecessary investment. As a result, we expect the company's non-GAAP operating margin to improve to 3.5% year over year in 2024Q2, and the non-GAAP net profit margin to mother is expected to improve to 3.3%.
Maintain an “Overweight” rating. We forecast the company's 2024-2026 revenue of 1137.2/1198.9/1261.1 billion yuan, up 5%/5% year on year, and non-GAAP net profit of 37.4/41/46.1 billion yuan, up 6%/10%/13% year on year.
Based on JD's retail 7 times 2024e P/E valuation and other partial valuations, we believe that JD's reasonable market value is 343.1 billion yuan, corresponding to the target price of (JD.O) 30 US dollars and (9618.HK) 116 Hong Kong dollars, maintaining the “gain” rating.
Risk warning: Platform merchant ecosystem development falls short of expectations; consumer spending intentions fall short of expectations; innovative business losses exceed expectations; investment exceeds expectations.