Investment Rating - The report maintains a "Buy" rating for the company with a target price adjusted to HKD 173 / USD 44, reflecting a potential upside of 22% from the current price of HKD 141.6 / USD 35.73 [3][5][25]. Core Insights - The company's revenue for Q1 2025 reached RMB 301.1 billion, representing a year-on-year growth of 15.8%, which is better than market expectations, with further acceleration in growth anticipated for Q2 [1]. - The strong growth in revenue is driven by the government's subsidy policies, particularly benefiting the electronics category, which saw a 17.1% year-on-year increase [1]. - The food delivery business is undergoing dynamic adjustments, introducing uncertainty to profit margins, with a gross margin of 15.9% in Q1, up 0.6 percentage points year-on-year [2]. - Adjusted net profit for Q1 increased by 43% to RMB 12.8 billion, exceeding market expectations, with an adjusted net profit margin of 4.2% [2]. Summary by Sections Revenue and Growth - Q1 2025 revenue was RMB 301.1 billion, up 15.8% year-on-year, with product revenue growing 16.2% and service revenue increasing by 14% [1]. - The core categories, particularly electronics, benefited from the government's trade-in policies, leading to a robust growth outlook for Q2 [1]. Profitability - The company reported a gross margin of 15.9% in Q1, an improvement of 0.6 percentage points year-on-year, with adjusted net profit rising to RMB 12.8 billion [2]. - The adjusted net profit margin improved to 4.2%, primarily due to enhanced retail operating profit margins [2]. Business Strategy - The food delivery segment is expanding rapidly, with over one million merchants and nearly 20 million daily orders, although the impact on overall revenue remains limited [2]. - The company is increasing investments in the food delivery sector to enhance user engagement and purchase frequency, but this may introduce uncertainties regarding profit margin improvements [2]. Financial Projections - The report forecasts revenue growth for FY25E at RMB 1,279.2 billion, with adjusted net profit expected to reach RMB 48.4 billion [4]. - The adjusted net profit growth rate is projected to be 5.3% lower than previously estimated due to the anticipated impact of food delivery investments on profitability [3].
京东集团-SW：国补助推强劲增长，外卖对利润带来不确定性-20250516