Matters:

JD Group is about to release financial results for the third quarter of 2024.

Guoxin Internet's opinion: 1) Revenue and profit performance in the third quarter was impressive. Revenue is expected to be +5% year over year, and non-GAAP net margin +0.1 pct year over year: On the revenue side, we expect JD Group to achieve revenue of 259.6 billion yuan in Q3, or +5% year over year. The retail revenue growth rate of JD is expected to be +5%. Among them, the growth rate of the charged category is positive, and the daily 100 categories are growing by a single digit. The growth rate of the POP model is faster than the market. The revenue of the Q3 advertising platform is expected to accelerate compared to Q2. The commission growth rate is corrected, and the advertising growth rate is similar to GMV's growth rate. The Q2 revenue growth rate of JD Retail/JD Logistics/New Business is expected to be +5%/10%/7%, respectively. On the profit side, the company's 2024Q3 non-GAAP net profit margin was 4.3%, up 0.1 pct year-on-year. The company has always maintained disciplined investment, and gross profit has rebounded due to increased self-employment bargaining power. It is expected that gross profit will drive adjusted net profit to increase 6% year over year. Looking ahead to the full year, the Group's adjusted net profit is expected to increase by double digits. 2) Maintaining superior market ratings: The trade-in national subsidy policy was officially issued at the end of August 2024. It is expected that JD will significantly benefit from policy support. We adjusted the 2024-2026 company revenue forecast to 1134.2/1201.6/1280.9 billion yuan, an adjustment of -0.1%/-0.1%/-0.1%, and the 2024-2026 adjusted net profit forecast to 41.9/46.9/52 billion, mainly Since there is still uncertainty about the investment of Q4 Double Eleven marketing expenses, the company currently implied an adjusted net profit of 12xPE in 2024. The total shareholder return for the company's dividends and repurchases in 2023 was about 4%, maintaining a target price of HK$162-194, which is 1%-21% from the current increase, and continues to maintain a “superior to the market” rating.

Commentary:

Overall: Revenue and profit performance for the third quarter was impressive. Revenue is expected to be +5% year over year, and non-GAAP net margin +0.1 pct year over year. We expect Q3 JD Group to achieve revenue of 259.6 billion yuan, +5% year over year. The retail revenue growth rate of JD is expected to be +5%. Among them, the growth rate of the charged category is positive, and the daily 100 categories are growing by a single digit. The growth rate of the POP model is faster than the market. The revenue of the Q3 advertising platform is expected to accelerate compared to Q2. The commission growth rate is corrected, and the advertising growth rate is similar to GMV's growth rate. The Q2 revenue growth rate of JD Retail/JD Logistics/New Business is expected to be +5%/10%/7%, respectively.

Looking at the GMV dimension, we expect high single-digit growth in JD's Q3, mainly driven by trade-in in the charging category at the end of August, and is expected to end at the end of 2024; on the merchant side, active Q3 merchants maintained double-digit growth; on the user side, quarterly active purchasers grew by double digits year on year, and DAU growth rate was close to 20% year on year, mainly affected by this year's key investment in boosting revitalization. Looking ahead to Double 11, the company will increase platform subsidies and add support from the national supplement policy for trade-in home appliances and computers. It is expected that the GMV growth rate will continue the Q3 trend and is expected to exceed the general market growth rate.

The company's 2024Q3 non-GAAP net profit margin was 4.3%, up 0.1 pct year-on-year. The company has always maintained disciplined investment, and gross profit has rebounded due to increased self-employment bargaining power. It is expected that gross profit will drive adjusted net profit to increase 6% year over year. Looking ahead to the full year, the Group's adjusted net profit is expected to increase by double digits.