Core Insights - JD.com shares have declined 11.2% over the past six months, underperforming the Zacks Retail-Wholesale sector's return of 6.6% and the Zacks Internet-Commerce industry's increase of 5.3% [1][9] - The stock's decline is attributed to profitability concerns stemming from new business investments, slowing growth in electronics after the end of government subsidies, and ongoing losses in food delivery [1][9] Financial Performance - JD's food delivery segment reported an operating loss of RMB 15.7 billion in Q3 2025, reflecting a shift to a hyperlocal logistics network that increases operational complexity [5] - The Zacks Consensus Estimate for JD's Q4 EPS is 56 cents, down 45.1% year over year, indicating continued profitability pressure [9][11] - Free cash flow decreased to RMB 12.6 billion as of September 30, down from RMB 33.6 billion a year earlier, highlighting the impact of capital-intensive growth [10][11] Competitive Landscape - JD faces intense competition from Meituan, PDD Holdings, and Alibaba, leading to increased marketing expenses, which surged 110.5% year over year in Q3 [8] - PDD Holdings' aggressive discounting and Alibaba's asset-light strategy are exerting pricing pressure on JD, particularly in low-margin categories [8][11] User Engagement and Growth - JD's annual active customers surpassed 700 million in October 2025, with quarterly active users and shopping frequency both increasing over 40% year over year in Q3 [12] - Revenue from core retail reached RMB 250.6 billion in Q3, with operating margin improving to 5.9% from 5.2% a year earlier [13] Revenue and Valuation - General merchandise revenues grew 18.8% year over year, while marketplace and marketing revenues increased by 23.7%, driven by higher merchant participation [14] - JD shares trade at a forward P/E ratio of 9.33x, significantly below the industry average of 23.69x and the sector average of 24.52x, indicating a valuation discount [15][16] Strategic Outlook - The current valuation discount reflects a transition phase rather than structural weakness, with ongoing investments in food delivery and logistics expected to broaden JD's growth potential [16] - Despite near-term profitability pressures, JD's resilience in user engagement and revenue mix suggests potential upside as operating efficiency improves [19]

Industry Trends - Intense price war in China's food delivery sector is causing more damage than expected to e-commerce giants [1] Financial Impact - Analysts and investors are slashing share price targets due to the price war [1]

Investment Rating - The report maintains a "Buy" rating for JD, Kuaishou, PDD, and Alibaba, while also recommending Meituan due to its significant market share despite profit declines [7][10][9]. Core Insights - The eCommerce landscape in China is experiencing heightened competition, particularly in food delivery and on-demand services, leading to revised earnings estimates for Alibaba and JD, with cuts ranging from -1% to -10% for 2025E-27E [1]. - June online retail goods GMV increased by 5% year-over-year, showing a moderation from 8% in May, with overall retail sales growing by 4.8% in June [2][28]. - The report anticipates profit declines across transaction platforms in the second half of 2025, with a potential inflection point for eCommerce share prices expected in the latter half of 2025 [7]. Summary by Sections eCommerce Tracker - Daily order volumes in the food delivery and on-demand retail industry peaked at approximately 250 million on July 12, with Meituan capturing significant market share through discounts [1]. - Alibaba is leveraging synergies between Taobao Instant Commerce and Ele.me, achieving over 80 million daily orders through its fulfillment network [1]. Market Performance - The national online retail goods GMV for June was reported at a 5% increase year-over-year, with a sequential moderation from 8% in May [2]. - The overall retail sales growth in June was 4.8% year-over-year, with notable strength in home appliances at 32% growth [28]. Parcel Volume Growth - The average daily parcel volume in July to date is approximately 531 million, maintaining a year-over-year growth rate of 15% [6][27]. - The report maintains a 2025E industry online GMV growth estimate at 6%, while adjusting the parcel volume growth estimate down to 17% from 19% [6]. Stock Implications - The report highlights a preference for sectors such as games, mobility, and internet verticals over eCommerce due to stronger near-term earnings setups [7]. - JD's market has largely priced in expected profit declines, while PDD is favored for its non-participation in the food delivery battle [9][10].