20260814-招银国际-Driving_continued_operating_efficiency_improvement_7页_1mb

JD.com (JD US) Summary

Core Content Overview

JD.com (JD US) reported its second-quarter 2026 financial results, which exceeded expectations in terms of non-GAAP net profit, despite a decline in revenue. The company highlighted its continued focus on operating efficiency improvement amid macroeconomic uncertainties. The report also includes updated forecasts for the third-quarter and beyond, along with a DCF-based target price and an analysis of its financial performance.

Main Points

Financial Performance in 2Q26

• Revenue: RMB346.4bn, down 2.9% YoY, but 2% ahead of forecast and in line with Visible Alpha consensus.
• Non-GAAP Net Profit: RMB8.9bn, up 20.8% YoY, 14% ahead of forecast and 12% ahead of consensus.
• JD Retail (JDR): Revenue of RMB295.4bn, down 4.7% YoY, but operating profit rose to RMB13.5bn, down 3.3% YoY. Operating margin expanded 0.1ppt YoY to 4.6%.
• New Businesses: Operating loss narrowed to RMB9.9bn in 2Q26, down from RMB14.8bn in 2Q25. The food delivery (FD) business saw a >50% YoY reduction in losses, with management attributing this to more disciplined user subsidies, higher operating efficiency, a better order mix, and increased commission and advertising revenue.

3Q26E Forecasts

• Revenue Growth: Expected to recover sequentially, with total revenue growth of 4.0% YoY.
• JD Retail: Forecasted to grow revenue by 3% YoY to RMB260.0bn and maintain an OPM of 5.9%.
• Net Product Revenue: Expected to grow 2.5% YoY, with net services revenue increasing 8.6% YoY.
• FD Losses: Expected to halve YoY to RMB6.6bn in 3Q26E.

Shareholder Returns

• JD repurchased approximately 25.4mn Class A shares in 2Q26 and 69.9mn shares in 1H26, totaling US$1.0bn.
• The remaining authorization under the share repurchase program as of 30 Jun 2026 stands at US$1.0bn, valid through Aug 2027.

Key Financial Metrics

Business Forecasts and Valuation

• Revenue Growth: Expected to recover across business lines in 3Q26E, with a total revenue growth of 4.0% YoY.
• Non-GAAP Net Profit Growth: Forecasted to grow 18% YoY for the group in 2026E.
• Target Price: Lifted to US$48.30, implying a 11.7x 2027E non-GAAP PE.
• DCF Valuation: Based on a WACC of 11.8% and terminal growth of 1.0%, the total equity valuation is estimated at RMB496bn, translating to US$48.3 per ADS.

Risks

1. Consumption Recovery: May take longer than expected.
2. Business Competition: Could intensify beyond expectations.
3. FD Business Investment: More aggressive investment could weigh on earnings growth.

Share Performance

Shareholding Structure

Market Data

Summary of Financial Highlights

• Operating Efficiency: JD has made progress in improving operating margins and reducing losses, particularly in the FD business.
• Share Repurchases: JD has been actively repurchasing shares, indicating confidence in its financial position and long-term value.
• Valuation Outlook: The DCF-based target price reflects positive expectations for future growth and profitability.

Analyst Ratings

• BUY: Stock with potential return of over 15% over the next 12 months.
• HOLD: Stock with potential return of +15% to -10% over the next 12 months.
• SELL: Stock with potential loss of over 10% over the next 12 months.

Analyst Certification

The analyst certifies that the views expressed in this report accurately reflect their personal views and that no part of their compensation is related to the specific views in this report.

Disclaimer

This report is for informational purposes only and is not tailored to individual investors. It does not constitute investment advice. Past performance is not indicative of future results.