Morgan Stanley highlighted in a report that JD.com (JD.US) plans to issue US$1.75 billion of convertible senior notes for buybacks and overseas expansion. Since the beginning of the year, JD has implemented US$1.3 billion of share buybacks, boosting investor confidence in its ability to significantly improve shareholder returns through buybacks. While JD said it would use the proceeds to accelerate its share repurchases, the broker expected the potential dilution from the issuance of the convertible bonds to offset some of the repurchase effects.
In addition, the market may continue to question the mismatch between JD's large cash balance and the cash available for repurchases, as well as potential additional financing activities that could drag down its shareholder returns, according to Morgan Stanley.
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