The company released FY1Q24 results, and profits exceeded expectations. 24Q1 achieved revenue of 260.5 billion yuan (Bloomberg's agreed forecast was 258.35 billion yuan), +7.0% year over year, and non-GAAP net profit of 8.90 billion yuan, +17.2% year over year.
Commodity revenue: The company achieved commodity revenue of 208.51 billion yuan (+6.6%) in 24Q1, and large supermarkets led to a rapid recovery in the Japanese category. 1) Charging category: 1Q24 achieved revenue of 123.2 billion yuan (+5.3%), while Social Zero Data Home Appliances/Communications/Cultural Office 24Q1 was +5.8%/+13.2%/-8.0% year-on-year respectively. 2) Daily 100:1Q24 achieved revenue of 85.3 billion yuan (+8.6%). Thanks to the strong recovery of the supermarket category, the daily 100 category momentum continued to pick up.
Service revenue: The company achieved service revenue of 51.54 billion yuan (+8.8%) in 24Q1. 1) Platform and advertising service revenue: 1Q24 achieved revenue of 19.29 billion yuan (+1.2%). 2) Logistics and other revenue: 1Q24 achieved revenue of 32.25 billion yuan (+13.8%).
Segment profit: 1) JD Retail: Achieved revenue of 226.84 billion yuan (+6.8%) and operating profit of 9.33 billion yuan (profit margin 4.1%, yoy-0.5pct). Q1 Liu Qiangdong joined the live broadcast room in the form of an AI digital person. The number of viewers exceeded 20 million in 1 hour, making it the first digital human live broadcast format for entrepreneurs in the industry. 2) JD Logistics: Achieving revenue of 42.1 billion yuan (+14.7%) and operating profit of 224 million yuan (profit margin 0.53%, yoy+3.59pct). Q1 JD Logistics continues to help Chinese brands go overseas in one stop, providing integrated supply chain logistics services for Mingchuang Premium.
The Group's gross margin increased in 24Q1. The 24Q1 company's gross margin was 15.3% (+0.47pct), and the performance/sales/R&D/management expense ratios were 6.5%/3.6%/1.6%/0.76%, respectively, +0.14/+0.26/-0.27pct, respectively. Sales expenses increased due to increased spending on promotion activities such as Spring Festival Gala sponsorship, and fulfillment costs increased due to the 59 free shipping launched at the end of August 23. It is expected that the impact on Q3 can be eliminated, and there is room for optimization on the cost side.
The company values shareholder returns. From January 1, 2024 to May 15, 2024, the company repurchased a total of $1.3 billion. According to the company's previous share repurchase plan (valid until March 18, 2027), the remaining amount is $2.3 billion.
According to the latest results announcement, we have adjusted our profit forecast to forecast revenue of 11574/12225/1299.5 billion yuan for 24-26 (the original 24-25 forecast was 11561/1221.8 billion yuan), and adjusted net profit to mother was 359/377/40.2 billion yuan (the original 24-25 forecast was 352/36.8 billion yuan). Referring to comparable companies, the JD retail business was given 11xPE in 2024. The segmental valuation calculated that the company's market value was 379.7 billion yuan, corresponding to a share price of HK$131.1 (RMB to HKD exchange rate of 1.10), maintaining a “buy” rating.
Risk warning: Industry competition is intensifying, new business incubation falls short of expectations, and industry regulations are getting stricter