JD-SW (09618.HK) +1.700 (+1.284%) Short selling $196.38M; Ratio 10.404% 's 1Q24 earnings have beaten market forecasts by 21%, mainly due to higher-than-expected gross margins and operating margins at JD Logistics, Daiwa remarked in a research note.
Daiwa believed it would take at least 2 to 3 quarters for the group to narrow the gap between GMV and revenue, but expected improved gross margins to drive flexible growth in JD Retail's margins this year. Given that JD has repurchased US$1.3 billion of shares year-to-date, the broker believed the group may slow down the pace of buybacks in 2H24. Daiwa also believed the key catalyst for the stock is local government policies to promote home appliance trade-in and support measures.
Daiwa mentioned that JD's supermarket merchandise sales rebounded to double-digit percentage growth in 1Q24, while JD Retail's revenue grew 7% YoY. The broker expected JD Retail's revenue to increase 6% YoY from a high base in 2Q24, which included the 618 shopping festival.
According to JD's management, home appliance sales driven by the trade-in policy accounted for a medium-to-high percentage of the group's home appliance sales last year, but the impact of the policy on 1Q has been limited so far. In addition, the broker expected JD Retail's profit margin to decrease by 0.4 ppts YoY to 2.8% in 2Q.
Daiwa raised JD's 2024-26 EPS forecast by 3%, reiterated its Buy rating, and added its target price from HK$140 to HK$157.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-05-17 16:25.)
