Investment Rating - The report maintains an "Outperform" rating for JD.com Inc (9618.HK) with a target price of 167 HKD, reflecting a 12x PE for 2026 [4][9]. Core Insights - JD's retail business continues to improve operational efficiency, with a significant increase in daily takeaway orders during the 618 shopping festival, which is expected to accelerate retail growth [1][13]. - The revenue for Q2 2025 reached 356.7 billion RMB, marking a year-on-year increase of 22.4%, the highest growth rate in three years [10]. - Non-GAAP net profit for Q2 2025 was 7.4 billion RMB, down 49% year-on-year, primarily due to investments in the takeaway business [12]. Financial Summary - Total revenue projections for JD.com are adjusted to 1,332.36 billion RMB for 2025, with a growth rate of 15% [4]. - Non-GAAP net profit estimates for 2025 are set at 26.54 billion RMB, reflecting a significant decrease from previous forecasts [4]. - The gross profit margin for Q2 2025 was 15.88%, indicating a continuous improvement in operational efficiency over 13 consecutive quarters [12]. Business Segment Performance - JD Retail's operating profit for Q2 2025 was 13.9 billion RMB, up 37.9% year-on-year, with an operating profit margin of 4.5% [11]. - The logistics segment reported an operating profit of 2 billion RMB, down 10.3% year-on-year, with an operating profit margin of 3.8% [11]. - New business operations incurred a loss of 14.8 billion RMB in Q2 2025, reflecting increased investments in the takeaway sector [11]. User Engagement - Active user numbers and shopping frequency both grew over 40% year-on-year, indicating strong customer engagement and retention [10].

Revenue Performance - The company achieved operating revenue of 356.7 billion yuan in the quarter, representing a year-over-year increase of 22% [1] - JD Retail revenue was 310.1 billion yuan, up 21% year-over-year, with self-operated categories benefiting from national subsidies, increasing by 23% [1] - JD Logistics revenue reached 51.6 billion yuan, a year-over-year increase of 17%, significantly accelerated compared to Q1, driven by strong retail growth [1] New Business Development - New business revenue was 13.9 billion yuan, showing a year-over-year increase of 199%, but incurred an operating loss of 14.8 billion yuan primarily due to the impact of the takeaway business [2] - The peak daily order volume exceeded 25 million, leading to a notable increase in user traffic, with QAC and purchase frequency both up 40% year-over-year [2] - The company is enhancing system capabilities and deepening e-commerce synergies to drive more GMV conversion [2] Profitability Analysis - The company's non-GAAP net profit was 7.4 billion yuan, down 49% year-over-year, with a non-GAAP net profit margin of 2.1% [2] - Retail business operating profit margin (OPM) was 4.5%, up 0.6 percentage points year-over-year, driven by scale effects and improved supply chain efficiency [2] - New business OPM was -107%, reflecting increased investment in the takeaway segment, with expectations of further losses during the peak season [2] Future Outlook - The company slightly raised revenue forecasts for 2025-2027 to 1,335.4 billion, 1,420.2 billion, and 1,488.7 billion yuan, with adjustments of 2%, 1%, and 0% respectively [3] - Due to higher-than-expected losses in the new business segment, the forecast for annual operating losses was adjusted from 16.4 billion to 42.7 billion yuan [3] - Adjusted net profit forecasts for 2025-2027 were lowered to 29.2 billion, 40.2 billion, and 56 billion yuan, with adjustments of -35%, -23%, and -2% respectively [3]

Core Insights - JD Group reported a strong revenue growth of 22.4% year-on-year for Q2 2025, reaching 356.7 billion RMB (approximately 49.8 billion USD), surpassing market expectations and setting a new record for growth in the past three years [1] - The core retail business of JD Group continued to accelerate, with significant growth in most product categories, particularly in daily necessities and fresh food, which saw a 16.4% increase in revenue [1] - The service revenue experienced a notable increase of 29.1%, while the new business segment, particularly JD's food delivery service, saw a dramatic growth of 199% year-on-year [1] User Engagement and Performance - The number of active users and shopping frequency on JD's platform increased by over 40% year-on-year, marking the seventh consecutive quarter of double-digit growth in active users [1] - JD's retail revenue grew by 20.6% year-on-year, with an operating profit margin of 4.5%, the highest recorded for any major promotional quarter in the company's history [1] Future Outlook - JD's food delivery business is developing healthily, with growth in order volume, merchant numbers, and full-time rider recruitment, effectively collaborating with JD's retail and other existing businesses to achieve initial strategic goals [2] - The company aims to focus on user experience, cost, and efficiency while maintaining the core retail business as the foundation of its operations, alongside ongoing investments in new growth areas [2]

Core Viewpoint - The company is expected to see a 14.1% year-on-year revenue growth in Q2, driven by national subsidies and the "618" promotional event, with a projected adjusted net profit of 56 billion yuan [1][2] Group 1: Revenue and Growth Projections - The company's core e-commerce revenue is anticipated to maintain strong growth momentum [1] - JD Retail's revenue is expected to grow by 15% year-on-year in Q2, with the growth rate of electronic products likely outpacing that of daily necessities [1] - Despite some regions experiencing a temporary pause in national subsidies during the "618" event, the overall impact on the company's business has been minimal, with subsidies expected to continue until the end of the year [1] Group 2: Investment in Delivery Business - The company has made significant investments in the delivery market, with Q2 expenditures estimated at around 10 billion yuan [2] - During the "618" period, the company reported a peak daily order volume exceeding 25 million [2] - The delivery business is expected to further expand losses in Q3, although operational efficiency improvements may offset some of these losses [2] Group 3: Valuation and Rating - The target price has been adjusted to 146 HKD / 38 USD, maintaining a "Buy" rating [2] - The company's current stock price corresponds to a valuation of 7.3x P/E, which is considered low [2] - The adjusted net profit forecast for Q2 has been revised down to 56 billion yuan, while revenue predictions remain largely unchanged [2]

Core Viewpoint - JD.com is aggressively expanding into the hotel and travel sector, aiming to compete with established OTA platforms like Ctrip, Fliggy, and Tongcheng by offering higher salaries to attract talent and providing subsidies for hotel and flight bookings [1][4][12]. Group 1: Talent Acquisition and Recruitment - JD.com is reportedly offering three times the salary to recruit employees from major OTA platforms [2]. - The company has posted multiple job openings related to the travel sector, specifically targeting candidates from Ctrip and Meituan [2]. - Positions include product managers and operational roles, with salaries ranging from 25,000 to 50,000 RMB per month [2]. Group 2: Subsidies and User Experience - JD.com is providing subsidies for hotel and flight bookings, with promotional offers for new customers [4]. - The JD app features a "Travel" section that includes various travel-related services, emphasizing a "no bundling" approach for flight bookings to address user pain points [4][6]. - For example, a flight from Beijing to Shanghai costs 560 RMB on both JD and Ctrip, but JD's payment page only includes insurance, while Ctrip offers additional paid services [6]. Group 3: Strategic Intent and Market Position - The move into the travel sector is seen as a strategic shift for JD.com, especially under the leadership of former Meituan executive Guo Qing, who has a strong background in the travel industry [8][10]. - The online travel service market is lucrative, with Ctrip's core OTA business expected to exceed 1.2 trillion RMB in transaction volume by 2024 [12]. - Ctrip holds a significant market share in the OTA space, with projections indicating it will maintain over 56% market share in 2024 [12]. Group 4: Competitive Landscape - JD.com’s entry into the travel sector is expected to intensify competition with established players like Ctrip, which has a strong grip on hotel pricing and inventory management [17][18]. - The upcoming summer travel season presents an opportunity for JD.com to gain market traction, similar to its previous strategies in other sectors [19]. - The competitive dynamics may lead to ethical debates in the industry, as JD.com could leverage its market entry to challenge the practices of existing OTAs [18][20].