JD.com (JD.US) has successfully revamped the operations of its self-operating platform (1P) and is likely to resume mid-to-high single-digit revenue growth, CLSA noted in a report. At the same time, margins may decline as the company invests more in users and content in 2024.
The broker expected JD's total revenue to grow by 6% YoY in 1FQ24. JD Retail's revenue is estimated to grow by 5% YoY, mainly due to the continued market share expansion of its offline electronics shops, as well as the resumption of growth in department store sales. The broker also forecasted JD's adjusted EBITDA to grow by 4% YoY. JD is a potential beneficiary of China's consumer recovery and should benefit from the home appliances ‘trade-in’ policy.
CLSA raised JD's US ADR target price from US$34 to US$40. The broker believed JD's valuation is still low, equivalent to only 9x adjusted 2025 P/E, with a total return of about 4%, and therefore maintained the group's Buy rating.
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