JD.com, Inc (JD) PT Lowered to $30 at Susquehanna

Susquehanna analyst Shyam Patil lowered the price target on JD.com, Inc (NASDAQ: JD) to $30.00 (from $35.00) while maintaining a Neutral rating.

The analyst comments "Our thoughts. Revenue remains under pressure, though management remains committed to driving operational efficiencies despite ongoing investments. While we continue to view JD as solidly positioned in the large Chinese e-commerce market, macro uncertainty and the current investment cycle keep us at Neutral. 2Q revenue declines, but efficiency gains aid bottom line. 2Q total revenue fell 3% y/y to ¥346b, decelerating from 5% growth in 1Q, 1% below our estimate but 1% above consensus. The company called out category-specific base effects and market dynamics, including higher component costs, which pressured JD Retail revenue, especially within the electronics and home appliances category. By segment, product revenue was broadly in line with our estimate and 2% above consensus, while services revenue was 4% below our estimate and 2% below consensus. Management noted that general merchandise remained resilient with nearly double-digit growth from JD Supermarket, and marketplace and marketing revenues maintained solid performance, driven by growth in advertising revenues. Despite the decline in revenue, management noted that user trends remained healthy, sustaining double-digit y/y growth across MAUs, quarterly active customers, and PLUS members while improving marketing efficiency. The company’s new businesses continued to scale, with JD Food Delivery maintaining solid order volume growth while narrowing its total losses by over 50% y/y. JoyBuy furthered its fulfillment and localization capabilities in Europe and doubled revenue over the past two quarters, while Jingxi continued to penetrate lower-tier markets, growing quarterly active customers by over 40% y/y and accounting for more than 40% of JD’s new active customers in 2Q. Management continues to highlight cross-selling opportunities across its new businesses, especially between food delivery and core B2C e-commerce. EBITDA of ¥7.93 was 9% below our estimate but broadly in line with consensus, while EPADS of ¥6.29 was 9% ahead of our estimate and 12% above consensus. Management called out y/y improvements to JD Retail’s gross margin and operating margin in 2Q and stated that the narrowing losses of JD Food Delivery also helped drive improved profitability."

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