JD(US:JD) Zhao Yin Guo Ji·2024-10-15 07:39Investment Rating - The report maintains a "BUY" rating for JD.com, with a target price revised up by 3% to US$53.5, indicating a potential upside of 22.1% from the current price of US$43.83 [2][4][7]. Core Insights - JD.com is expected to achieve inline revenue growth for 3Q24, with a better-than-expected non-GAAP net profit driven by efficient cost control and increased revenue from services. The company is shifting focus from ROI and cost control to GMV and revenue growth due to improving consumption sentiment [2][5]. - The retail segment is projected to see a sequential recovery in year-over-year revenue growth, with estimated revenue of RMB223.6 billion for JD Retail in 3Q24, reflecting a 5% year-over-year increase [2][3]. - The report highlights a revision in revenue and earnings forecasts, maintaining the 2024 revenue forecast while increasing the non-GAAP net profit forecast by 1.4% due to better-than-expected cost control impacts [2][5]. Revenue and Profit Forecast - For FY24E, JD.com is expected to generate revenue of RMB1,138.9 billion, representing a 5% year-over-year growth, with non-GAAP net profit projected at RMB42.3 billion [3][6]. - The adjusted net profit for FY24E is estimated at RMB42.3 billion, with an adjusted EPS of RMB26.66, translating to a P/E ratio of 13.1x [3][14]. Financial Summary - JD.com reported a revenue of RMB1,084.7 billion for FY23A, with a net profit of RMB24.2 billion. The company is expected to continue its growth trajectory with projected revenues of RMB1,138.9 billion for FY24E and RMB1,204.8 billion for FY25E [3][10]. - The gross profit margin is expected to improve to 15.3% in FY24E, with a non-GAAP net margin of 3.7% [5][12]. Valuation Metrics - The DCF-based target price of US$53.5 is based on a WACC of 11.8% and a terminal growth rate of 1.5%, translating into a 14x 2024E PE [7][8]. - The report indicates a significant improvement in profitability metrics, with an expected return on equity (ROE) of 14.9% for FY24E [12][13].