Investment Rating - The report maintains a "Buy" rating on JD Logistics (2618.HK) and has removed the "High Risk" rating due to improved earnings visibility [7][30]. Core Insights - JD Logistics is expected to report solid earnings in 3Q24, with a projected revenue growth of 5.6% year-over-year to RMB 44 billion, slightly below consensus estimates [3][4]. - The company is focusing on cost optimization, particularly in outsourcing transportation and rental costs, which is anticipated to lead to margin expansion despite a challenging revenue environment [3][22]. - The target price for JD Logistics has been raised to HK$17 from HK$13, reflecting a 21.4% expected return [7][31]. Revenue Outlook - The revenue growth for 1P ISC is expected to slow due to tougher comparisons, while 3P ISC is projected to grow by 10% year-over-year, offset by declining ARPU [4][19]. - Express revenue growth may decelerate due to increased competition in return parcels, but connections to major platforms like Taobao/Tmall could enhance JD Logistics' market share in high-end express demand [4][13]. Margin Trajectory - The report anticipates a gross profit margin of 10.6% for 3Q24, down from 11.9% in 2Q24, but expects adjusted operating profit margin to improve from 1.1% a year ago to 3.3% [3][5]. - The net profit margin is projected to contract slightly year-over-year in 4Q24 due to pricing adjustments, but there is potential for further upside during the peak season [5][19]. Earnings Estimates - Adjusted earnings before minority interest are projected at RMB 1.53 billion for 3Q24, significantly above consensus estimates of RMB 721 million [3][4]. - The report has revised earnings estimates upward for 2024, 2025, and 2026 by 34%, 31%, and 23% respectively, reflecting a solid margin outlook [3][19]. Company Overview - JD Logistics, established in 2007, is the largest provider of integrated supply-chain logistics services in China, with a strong infrastructure and technology platform [29][30]. - The company has been expanding its services to external customers since 2017 and operates over 1,200 warehouses with a gross floor area of approximately 23 million square meters [29].
花旗：京东物流-30 天 +CW，2024 年第三季度业绩有望强劲增长