We expect JD Group's total revenue +5.6% YoY, JD retail revenue +5% YoY, and non-GAAP net profit to mother +6% YoY. Q3 Trade-in drives a recovery in GMV and revenue growth, and profitability remains steady. Looking at the long-term, JD's self-operating model has strong bargaining power and strong long-term profit growth certainty. At the same time, the platform fully benefits from the trade-in policy, which is expected to drive new volume, is optimistic about the company's growth resilience and room for profit improvement, and maintains a “highly recommended” rating.

Q3 Trade-in led to a recovery in GMV and revenue growth, and profitability remained steady. 2024Q3 expects the Group's total revenue to be +5.6% year-on-year, and JD's retail revenue is +5% year-on-year, which is basically in line with Bloomberg's agreed expectations. GMV is expected to increase by a high single-digit year-on-year rate, and the growth rate is clearly picking up from the previous quarter, mainly due to the fact that the charging category benefited from an improvement in the trade-in rate in September and is expected to maintain a high single-digit revenue growth rate; in terms of 3P GMV's faster growth rate, which is expected to accelerate advertising revenue Growth drives overall revenue growth The trend is positive. On the profit side, bargaining power continued to increase and gross margin steadily increased year-on-year, supported by the strong large-scale effects of the platform's self-operation model. It is estimated that Q3 non-gaap net profit will be +6% year-on-year.

Q4 Looking at the performance of the Double 11 promotion, it is expected that investment will increase on the basis of ensuring that the annual profit guidelines are met. Looking ahead to the fourth quarter, the successive implementation of trade-in and the Double 11 promotion is expected to further drive rapid growth. At the same time, the company will further invest, including user growth investment and increased investment in fashion categories such as clothing and beauty. Starting in August, the company announced that it will invest more than 3 billion billion yuan in beauty subsidies and 1 billion yuan respectively in the apparel category, with the aim of improving the platform category layout and obtaining further user growth; in addition, compared to last year's Double 11 campaign period, the promotion intensity will increase year-on-year (adding an additional 60 yuan daily subsidy). Seek efficient growth on the basis of double-digit growth guidelines to ensure that non-GAAP net profit for the whole year is achieved.

Trade-in benefits JD home appliances to a greater extent, and is optimistic that the competitiveness of the charged market will be further stabilized. Since the end of August, various provinces and cities such as Beijing, Guangdong, and Shandong have implemented trade-in activities. Subsidies are limited to eight categories according to Level 1 and 2 energy efficiency/water efficiency standards. As the e-commerce platform with the highest share in the domestic home appliance market, JD has a strong sense of category mentality and genuine product guarantee. At the same time, the platform also provides door-to-door delivery and “three free and four unlimited” services. It has benefited to a greater extent from the excess growth brought about by trade-in, and is optimistic that the competitiveness of the JD charging market will be further stabilized.

Investment advice: JD's self-operated model has strong bargaining power and strong long-term profit growth certainty. At the same time, the platform fully benefits from trade-in, which is expected to drive additional volume, and is optimistic about the company's long-term growth resilience and profit improvement space. The net profit from non-GAAP to mother for 2024-2026 is estimated to be 425/ 468/50 billion yuan, giving the 2024 non-GAAP net profit 12 times PE, corresponding to the target price of HK$191.23, maintaining the “Highly Recommended” rating.

Risk warning: macroeconomic risks; increased competition in the industry.