京东：Entering into a clean base for growth

Investment Rating - The report maintains a "BUY" rating for the company with a target price of US$51.90, reflecting a potential upside of 54.4% from the current price of US$33.62 [1][12][28] Core Insights - The company reported better-than-expected 1Q24 results, with revenue of RMB260.0 billion, up 7% YoY, and non-GAAP net income of RMB8.9 billion, exceeding consensus estimates [12] - Management indicated that the general merchandise category has entered a clean base for growth since 1Q24, with commission revenue growth also expected to improve from 2Q24 [12] - The enhancement in shareholder returns through share repurchases is expected to support the company's valuation [12] Financial Performance Summary - Revenue projections for FY23A to FY26E are as follows: - FY23A: RMB1,084,662 million - FY24E: RMB1,160,996 million (YoY growth of 7.0%) - FY25E: RMB1,226,443 million (YoY growth of 5.6%) - FY26E: RMB1,281,843 million (YoY growth of 4.5%) [3][20] - Adjusted net profit is forecasted to grow from RMB35,200 million in FY23A to RMB46,162 million in FY26E [3][20] - The company’s P/E ratio is projected to decrease from 15.8x in FY23A to 9.2x in FY26E, indicating improving valuation metrics [3][32] Cash Flow and Balance Sheet - The net cash from operations is expected to be RMB39,928 million in FY24E, with capital expenditures of RMB16,254 million [10] - Current assets are projected to increase from RMB307,810 million in FY23A to RMB450,075 million in FY26E, reflecting a strong liquidity position [9] - Total liabilities are expected to rise from RMB332,578 million in FY23A to RMB379,832 million in FY26E, indicating manageable debt levels [9] Market Position and Competitive Landscape - The company is navigating a competitive landscape with a focus on efficient growth strategies, targeting core user base operations [12] - Management remains vigilant regarding industry competition, which is perceived to be more benign than previously expected [12] - Key catalysts for growth include the rollout of home appliance trade-in initiatives and better-than-expected margin expansion [12]