This report is read as follows:
The impact of the 22Q2 epidemic has an impact on JD.com 's demand and performance end, income growth is expected to slow significantly but maintain positive growth; benefit efficiency and focus on profit margins and cash flow, profit margins are expected to remain robust.
Summary:
Maintain the "overweight" rating. The stricter control of 22Q2 nationwide has a great impact on both the demand side and the performance side, but JD.com 's performance advantage is still obvious, and the continuous repurchase of loyal users and the continuous penetration of supermarket daily necessities have become important driving forces. The company pays attention to profit margin and cash flow, and new business shrinks and reduces losses. It is estimated that the company's adjusted net profit for 22-24 will be RMB297370 billion, adjusted EBITDA225/288/398 billion and 27xPE 2023, with a target market capitalization of RMB 801.9 billion, corresponding to HK $935.7 billion and a target price of HK $298.9.
The epidemic has hit both sides of demand and compliance at the same time, and income growth is expected to slow but still grow. Under the background of ① epidemic and containment, the limited scene, declining ability and low desire are the three major shocks on the demand side. JD.com 's core customers focus on quality and experience, which has relatively little impact. The impact on the performance side of ② is even greater: a wide range of logistics control has led to the limitation of JD.com 's performance, and brought about a certain degree of increase in the return rate, and so on. The above shocks are concentrated in April-May, and as the situation improves in June, compensated consumption and 618 promotion drivers are obviously repaired. ③ We estimate that the overall operating income of 22Q2 is 259.645 billion / + 2.38%, in which the growth rate of GMV is expected to be in line with the online market in the second quarter, with online retail business of 221.8 billion / + 0.94% and service revenue of 38.08 billion / + 11.64%.
Under the lean growth, the marketing is cautious, and the epidemic affects the rate of performance expenses. The ① epidemic has limited the compliance capacity of some warehouses, resulting in the possibility of an increase in the rate of 22Q2 compliance costs. We expect the rate of 22Q2 compliance costs to increase to 6.8% (22Q1 6.5%). ② sales expense rate is mainly related to the pace of new business subsidy customer acquisition. In the environment of lean growth and strategic contraction, subsidized customer acquisition is not cost-effective with new business launch, so we expect 22Q2 marketing expense rate to further drop to 3.5% (22Q1 is 3.6%).
Focus on profitability and growth quality, and profit margins are expected to be flat in the second quarter compared with the same period last year. ① began to adopt new cost management measures in 22Q1, and it is expected that the efficiency will still be improved, and the above effect will be reflected gradually. ②, we expect JD.com 22Q2 to make an adjusted profit of 5.984 billion yuan in the second quarter, with an adjusted operating profit margin of 2.3% (21Q2 is 2.1%). The adjusted homing net profit is 4.778 billion yuan / + 3.27%, and the adjusted homing net profit margin is 1.84%, which is the same as that of 21Q2.
Risk hint: increased competition in the industry affects profit margins, and slowing economic growth affects consumer demand.