Goldman Sachs expected in a research report that JD-SW (09618.HK) +1.600 (+1.415%) Short selling $356.14M; Ratio 28.324% (JD.US) 's revenue growth will continue to slow to about 5% YoY in 2Q24, compared to market consensus of growing 6%, as well as the 7% growth reported in 1Q24, given the higher base in 2Q23. The broker maintained its 2024 forecasts of 6% YoY revenue growth and 7% YoY group net profit growth, with a return to YoY net profit growth in 2H24.
Even though Goldman adjusted its sub-sector preference for e-commerce due to soft online spending trends in June and flat short-term earnings from JD Retail, the broker identified more opportunities in the sector starting in 2H24, citing a lower base, an inflexion point in earnings from 2H, advertising technology potential and operational leverage across the sector, as well as the e-commerce sub-sector having the largest valuation discount to Chinese dotcom sector and global e-commerce peers.
The broker recently met with JD's management, in which they discussed the recent 6.18 trend and Mainland consumer preferences, competition among e-commerce companies, key drivers of the company's growth, profit forecasts to 2024, as well as shareholder return policy and the recent issuance of convertible bonds (CBs). Management mentioned that the company's expectation of mid-to-high single-digit sales growth for the full year remained unchanged, forecasted JD Retail's full-year profit to be flat or growing, and noted confidence in its long-term gross merchandise volume (GMV) margin potential of 3%.
Goldman has a target price of HK$161 for JD's Hong Kong shares and US$41 for its US shares, with Buy ratings maintained for both.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-06-17 16:25.) (Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)
