Source: Wind
On January 14th, Tuesday, $JD.com (JD.US)$ U.S. stocks surged over 4%, closing at $34.73. UBS Group's latest research report suggests that after China launches the old-for-new subsidy policy for home appliances at the end of August 2024, consumer sentiment gradually stabilized in the fourth quarter. Given that JD.com accounts for up to 60% of GMV in the home appliance and 3C electronics sectors, its performance should surpass the industry and China's Retail Trade.
Will benefit from the 2025 consumer goods old-for-new policy.
On January 8th, the National Development and Reform Commission and the Ministry of Finance issued a notice regarding the implementation of the 2025 old-for-new policy for large-scale equipment updates and consumer goods, outlining the key tasks for the 2025 consumer goods old-for-new initiative.
Regarding home appliances, according to data from the press conference, since the implementation of the old-for-new policy for consumer goods in 2024 (mainly concentrated from September to December), the subsidy funds correspond to sales of over 56 million home appliance products, with sales reaching 240 billion yuan. The 2025 policy further expands on the eight major categories of traditional home appliances to include Microwave, water purifiers, dishwashers, Rice Cookers, and other "Consumption Upgrade" appliances.
In addition, in the Consumer Electronics sector, a new subsidy will be implemented in 2025 for the purchase of digital products such as mobile phones. Personal consumers purchasing mobile phones, tablets, or Asia Vets smartwatches and bands (with a single sale price not exceeding 6,000 yuan) will receive a subsidy of 15% based on the product sale price, with each consumer eligible for one subsidy per product category and each subsidy not exceeding 500 yuan.
UBS Group's latest Research Reports suggest that after China introduces the appliance trade-in subsidy policy at the end of August 2024, consumer sentiment is gradually stabilizing in the fourth quarter. Since JD.com accounts for as much as 60% of the GMV in the home appliance and 3C electronics sector, its performance should be better than the Industry and China Retail Trade.
UBS Group and Citigroup have significant Call space for JD.com's target stock price.
From the stock price performance, as of the close of U.S. stocks on January 13, JD.com's stock was reported at $33.39 per share, with a latest Market Cap of $53.1 billion. For the future stock price performance, both Citigroup and UBS Group have recently provided their Target Price. If calculated at $33.39 per share, the Target Prices for JD.com's U.S. stock from the two investment banks indicate an upside potential of 50% and over 90%, respectively.
Citigroup published a report stating that JD.com has made a good start for 2025, promoting a nationwide upgrade program through collaboration with major provinces such as Hubei, Jiangsu, and Hunan, and continues to lead. It believes that JD.com is providing the broadest national coverage, positioning the company as a preferred partner for many provincial and local governments. It thinks that the strength of the JD.com platform and its ability to capture the sustainability of the upgrade program may be underestimated by investors. The early positioning of JD.com in the upgrade program is expected to support GMV and revenue growth exceeding expectations in the first half of this year, with market forecasts carrying upward adjustment risks. The bank reiterates its "Buy" rating with a Target Price of $51 and initiates a 90-day positive catalyst observation.
UBS Group pointed out that entering 2025, the extension of upgrade subsidies and category expansions should alleviate market concerns about JD.com's revenue growth this year, as there is still potential for improvement in consumer and category penetration. The bank reaffirms JD.com as a preferred stock in the Mainland e-commerce Sector. Considering the market's low expectations, reasonable valuations, and the upward potential from macro stimulus measures, it finds JD.com’s risk-return to be very attractive, giving it a Target Price of $64 in U.S. stocks with a rating of "Buy."
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