Oppenheimer Says JD.Com 'Continues To Expand'

In a report published on Sunday, Oppenheimer analyst Ella Ji commented that

reported "satisfactory" first quarter results last week and the company continues to expand in to new categories which reaffirm a bullish stance on shares. Ji noted JD.Com maintained "solid" gross merchandise volume (GMV) in the quarter which grew 99 percent year-over-year to RMB87.8 billion (approximately $14.136 billion), primarily driven by 63 percent year-over-year growth in 1P (JD.Com's own inventory) business while 3P (third party) GMV growth of 185 percent year-over-year was lower than expected. Meanwhile, active customers rose 90 percent year-over-year to 105 million, and remains the main driver of growth moving forward. JD.com began fresh food deliver in Beijing and will expand to all top-tier cities and key provincial capitals throughout 2015. The initiative will likely raise fulfillment expenses, but Ji argued that the company's expertise in logistics and last-mile delivery makes the company "one of the best" e-commerce names to operate this business model. Also, JD.Com aims to have five bonded warehouses by the end of 2015 and become a national distributor of popular overseas brands in China eventually. Looking forward, JD.Com's management provided "encouraging" second quarter revenue guidance growth of 52 percent to 56 percent year-over-year, with the mid-point of that range topping Ji's estimates by 5 percent. Bottom line, new initiatives and the upcoming "6.18" promotion is likely to weigh on margins. As such the analyst reduced his full year fiscal 2015 earnings per share estimate to $0.03 from a previous $0.06. Shares remain Outperform rated with an unchanged $44 price target.