Core view: (Unless otherwise specified, the currency in this article is in RMB units)
JD issued the 2Q24 announcement. 2Q24 revenue was 291.4 billion yuan (RMB, same below), up 1.2% year over year, which is basically in line with expectations. 2Q24 non-GAAP net profit was 14.5 billion yuan, up 69.0% year over year; non-GAAP net profit margin reached 5.0% for the first time, a record high since listing, which greatly exceeded expectations. The net profit side's performance exceeded expectations due to the continued increase in retail gross margin; JD Logistics's profit exceeded expectations, as well as other profit contributions such as interest income. 2Q24's gross profit margin was 15.8%, up 1.37 pps from 2Q23. As the company continues to improve its supply chain, the gross profit performance of most categories has improved due to scale effects.
2Q24 retail revenue was 257 billion yuan, up 1.5% year over year, and order volume and shopping frequency increased significantly. The revenue growth rate of the uncharged category was faster than that of the charged category: (1) the revenue of the 2Q24 category was 145.1 billion yuan, down 4.6% from the previous year, affected by the high base; (2) the 2Q24 revenue of the supermarket category was 88.9 billion yuan, up 8.7% year on year, benefiting from continued improvements in product supply and service quality.
2Q24 service revenue was $57.5 billion, up 6.3% year over year. Among them, advertising and commission revenue was 23.4 billion yuan, up 4.1% year over year: we estimate that the decline in commissions narrows as the impact of commission cuts subsides, and H2 is expected to achieve positive growth; the high increase in the number of 3P merchants drives advertising revenue growth.
According to the company's performance report, as of 24Q2, the company had repurchased 3.3 billion US dollars in 24, and the number of shares fell by 7.1%, which strongly exceeded market expectations. Currently, the repurchase plan still has a limit of 0.4 billion US dollars.
Profit forecast and investment advice: We expect JD's 2024-2026 revenue to be 1137.8/1195/1251.4 billion yuan, up 4.9%/5.0%/4.7% year on year, and non-GAAP net profit to mother of 39.8/44.5/49.1 billion yuan, respectively, up 13.1%/11.9%/10.2% year over year.
We gave the Group a valuation of 10X PE in 2024, corresponding to a reasonable value of US$36.92/ADS for US stocks and HK$143.94 per share for Hong Kong stocks, maintaining a “buy” rating.
Risk warning: Increased competition has slowed user growth; ARPU growth has slowed; industry price wars have escalated, and the company's gross profit level has been affected.