Incidents:
On March 6, 2024, JD Logistics announced its 2023 annual results:
In 2023, the company achieved revenue of 166.625 billion yuan, an increase of 21.27% over the previous year. Net profit of 1,167 billion yuan was achieved, successfully turning a loss into profit (net loss of 1.09 billion yuan in the previous year). Net profit attributable to mother was 616 million yuan, turning a year-on-year loss into a profit. Completed non-IFRS profit of $2,761 billion, an increase of 218.79% year over year.
Based on this, we estimate that in 2023Q4, the company achieved revenue of 47.200 billion yuan, an increase of 9.75% over the previous year. Net profit of 1,242 billion yuan increased by 152.46% year over year. Net profit attributable to mother was 1,039 million yuan, an increase of 195.17% over the previous year. Completed non-IFRS profit of $1,804 million, an increase of 79.61% over the previous year.
Investment highlights:
Self-hematopoietic ability has been verified, and gross profit and expense ratios have been improved to consolidate the basic profit. The company recorded net profit of 616 million yuan to the mother in 2023, turning a loss into a profit; in 2023Q4, it recorded a net profit of 1,039 million yuan to the mother, an increase of 195.17% over the previous year. According to our estimates, after excluding the contribution portion of Debon shares, the company recorded net profit of 284 million yuan in 2023, which is still positive; 2023Q4 recorded net profit to mother of 916 million yuan, an increase of 340.42% over the previous year. After excluding the contribution portion of Debon shares, the company's profitability was still positive, and its self-hematopoietic ability was initially verified.
In 2023, the company's other net revenue was 859 million yuan, compared to a loss of 572 million yuan in the same period last year. This partial reversal is mainly due to: 1) the increase in net other income/loss from $08 billion in 2022 to $727 million in 2023, mainly due to increased government subsidies and a reduction in losses due to changes in the fair value of financial assets; 2) Financial revenue increased 127.63% year-on-year from 617 million yuan in 2022 to 1,404 billion yuan in 2023, mainly due to increased interest income from bank deposits and financial investments (taken together, the company's financial management capabilities have been strengthened, which contributed to profits); 3) Financial expenses were 10.37 100 million yuan, compared to 893 million yuan in the same period last year; 4) Credit impairment losses were 255 million yuan, compared to 291 million yuan in the same period last year.
Although high performance growth is related to other significant net increases, we believe that improving gross margin and consolidating the basic profit market are the foundation for the company's ability to make its own hematopoiesis. As the scale of the company's business continues to expand, economies of scale continue to show. Furthermore, we will continue to promote the organic combination of technological innovation and operating scenarios, and continuously improve refined operation capabilities. In 2023, the company's operating costs increased 20.93% year over year, which is lower than the revenue growth rate for the same period (21.27%), leading to an improvement in gross margin. In 2023, the company recorded gross profit of 12.683 billion yuan, up 25.58% year on year; gross margin was 7.61%, up 0.26pcts year on year. 2023Q4 recorded gross profit of 4.353 billion yuan, up 14.07% year on year; gross margin was 9.22%, up 0.35 pcts year on year.
In addition, the company strengthened cost control. In 2023, the three fees (sum of sales, R&D, and management expenses) totaled 11.923 billion yuan, and the cost ratio decreased by 0.37 pcts to 7.16% year on year. Among them, the sales/R&D/management expense ratios were +0.04pcts/-0.13pcts/-0.29pcts, respectively, further consolidating the company's profitability.
External revenue boosted growth, accounting for nearly 70%. Excluding Debon and achieving steady growth in split revenue, in 2023, JD Group's internal revenue reached 50,063 billion yuan, up 3.73% year on year, accounting for 30.1% of revenue, down 5.1 pcts year on year; external revenue reached 116.561 billion yuan, up 30.76% year on year, accounting for 70% of revenue, up 5.1 pcts year on year. The further increase in the company's share of external revenue shows that the company's ability to expand overseas customers has been further strengthened, and revenue growth is mainly driven by external revenue.
Among external revenue, external integrated supply chain customers contributed 31.4 billion yuan in revenue, an increase of 7.7% over the previous year. The company is deeply involved in leading customers in various industries such as Volvo Cars and Ideal Auto to achieve steady growth. The number of customers contributing at least RMB 10 million in annual revenue in 2023 increased 6.08% year over year to 384, and the average revenue of a single customer increased 8.77% year over year to 45.9 million yuan. Average revenue growth reflects the company's continued expansion of the breadth of cooperation with customers and enhanced depth of service. We are optimistic that the company will use the advantages of integrated supply chain services to acquire more leading customers and achieve qualitative growth by improving service depth.
In addition, among external revenue, other customers contributed 85.54 billion yuan in revenue, an increase of 42.00% over the previous year, accounting for 51.11% of revenue, and has become the main source of revenue for the company.
After excluding the revenue contributed by Debon shares, other customers (pure distribution business) contributed 48.875 billion yuan in revenue, an increase of 7.22% over the previous year. The company continues to upgrade its products and services in terms of express delivery. In December 2023, JD Express launched the “Second Morning Delivery” service: consumers can receive delivery packages as soon as 8 a.m. the next morning. Furthermore, the company continues to expand cooperation with e-commerce platforms such as Douyin and Kuaishou to provide them with high-quality delivery services and obtain steady revenue growth.
Profit forecast and investment rating Based on the latest disclosed annual results, we adjusted and introduced the 2026 profit forecast. We expect JD Logistics's 2024-2026 revenue to be 183,974 billion yuan, 1998.37 billion yuan and 216.164 billion yuan, respectively, and net profit to mother of 1,271 billion yuan, 1.937 billion yuan and 2,802 billion yuan, respectively. The corresponding PE for 2024-2026 will be 37.45 times, 24.57 times, and 16.98 times, respectively. The company's self-hematopoietic ability has been verified, optimistic about subsequent performance growth, and maintains an “increase” rating.
Risks indicate related transaction risks brought by JD Group Holdings; market expansion falls short of expectations; market competition increases risk; demand sentiment declines; mergers and acquisitions are falling short of expectations; and the macro environment falls short of expectations.