JD.Com's Cost Management In Focus - Analyst Maintains Core GMV Growth Assumptions

Benchmark analyst Fawne Jiang reiterated a Buy rating on JD.Com, Inc JD with a price target of $55.

Against a backdrop of healthy China retail/e-commerce growth in the first quarter, the analyst anticipates that JD should track largely on par with its guidance and expectations.

The analyst maintained core GMV growth assumptions that should grow at HSD year over year. Jiang also sees upside potential on earnings estimates thanks to disciplined cost management.

The analyst’s first quarter revenue projection is unchanged (+6% y/y). However, the non-GAAP NPM estimate is raised to 2.8% (vs. 2.6% prior). 

For FY24, the analyst sees GMV and revenue growing above China’s retail growth rate and a stable profit year over year.

The healthy GMV growth is expected to be underpinned by its core categories. 

The analyst forecasts that JD should continue to take market share in 3C, with its electronic and home appliances sustaining a healthy level of growth at HSD growth y/y in the first quarter, while FMCG should continue to recover solidly off a low base from last year. 

However, the analyst flagged that the current estimates have not factored in any meaningful impact from the potential stimulus policies despite the fact that China central govt. has recently pledged incremental funds to encourage consumers and businesses to replace old goods and equipment.

Per Jiang, these policies and the eventual impact would still variably depend on the local government executions and may take time to take effect. 

At the current stage, the analyst views it as an upside option for JD stock.

Price Action: JD shares are trading lower by 0.53% to $25.28 on the last check Tuesday.