Incidents:
On August 15, 2024, the company announced that 2024Q2 achieved operating income of 291.4 billion yuan (YoY +1%, QoQ +12%); gross profit of 45.9 billion yuan (YoY +11%, QoQ +16%), operating profit of 10.5 billion yuan (YoY +27%, QoQ +36%), net profit of 13.6 billion yuan (YoY +96%, QoQ +85%), net profit of 12.6 billion yuan (YoY+ 92%, QoQ +77%), non-GAAP net profit of 14.5 billion yuan (YoY +69%, QoQ +62%). As of June 30, 2024, the company has repurchased a total of 3.3 billion US dollars this year, accounting for about 7.1% of the shares repurchased at the end of 2023.
Our point of view:
Overall performance: The company's 2024Q2 revenue basically met Bloomberg's agreed expectations. The platform continued to focus on user experience and content ecosystem construction to drive steady growth in JD retail and JD logistics businesses; the company's profit growth was strong, and 2024Q2 net profit and adjusted net profit surpassed Bloomberg's agreed expectations, mainly due to JD Logistics's operating profit margin performance exceeding Bloomberg's agreed expectations.
Operational performance: The platform continues to upgrade the user experience, and has performed well in terms of user growth and user engagement. The high-end and low-end markets both showed strong user growth. The number of active users and user shopping frequency maintained double-digit growth in the 2024Q2 quarter.
JD Retail: JD's retail revenue grew steadily, and profit margins slightly exceeded Bloomberg's agreed expectations.
2024Q2 JD's retail revenue was 257.1 billion yuan (YoY +1%, QoQ +13%), mainly driven by active users and increased order volume. The overall shopping frequency and order volume achieved double-digit year-on-year growth during the quarter. Among them, 3P orders increased 20% year over year, and the growth rate hit a new high in two years. The decline in 2024Q2 commission revenue has narrowed, mainly due to the gradual decline in commission rates. At the same time, the platform further optimized traffic distribution efficiency to drive 3P advertising revenue to achieve double-digit growth, which is higher than GMV. By category, ① the Q2 revenue of the charged category fell 5% year on year, mainly due to seasonal factors and the high sales base of some home appliances in the same period last year; ② the daily necessities category Q2 revenue increased 9% year over year, and supermarket revenue achieved a double-digit year-on-year growth rate, thanks to a strong increase in order volume and an increase in user mentality. 2024Q2 JD's retail operating profit was 10.1 billion yuan, with an operating profit margin of 3.9%, an increase of 0.7 pct over the previous year, slightly exceeding Bloomberg's unanimous expectations, mainly due to the company's effective cost control.
JD Logistics: JD Logistics 2024Q2 revenue was 44.2 billion yuan (YoY +8%, QoQ +5%), and operating profit margin increased 3.7 pct to 4.9% year over year; of these 1) integrated supply chain customer revenue increased 4% to 21.3 billion yuan year over year, mainly due to increased revenue from JD Group and average revenue per customer in the external integrated supply chain; 2) Revenue from other customers increased 11% year on year to 22.9 billion yuan, mainly due to express express service business volume Driven by growth. Thanks to the enhanced business scale effect and improved operational efficiency, JD Logistics's 2024Q2 operating margin surpassed Bloomberg's unanimous expectations.
Profit forecast and investment rating: Considering that the profit margins of JD Retail and JD Logistics exceeded expectations, and that the company's 3P and low price ecosystem construction continues to advance, we have adjusted the profit forecast. The company's revenue forecasts for 2024-2026 are 1138.3/1197.4/1257.3 billion yuan, respectively, net profit to mother is 36.5/39.2/43 billion yuan, corresponding diluted EPS is 11.7/12.3/13.4 yuan, non-GAAP net profit is 43.6/45.1/47.9 billion yuan, and corresponding non-GAAPP/E is 7.3/7.0/6.6X; according to the SOTP valuation method, we give The total target market value of JD Group in 2025 is 461.6 billion yuan, corresponding to the target price of 145 yuan/HK$158, maintaining a “buy” rating.
Risk warning: Macroeconomic growth falls short of expectations; increased competition in the retail/logistics industry; sinking market development falls short of expectations; platform merchant ecosystem development falls short of expectations; user growth falls short of expectations; 10 billion subsidy effects fall short of expectations, etc.