On March 2, Beijing time, JD.com released its fourth quarter and full-year financial report for 2019. According to the financial report, Jingdong's performance in revenue and net profit are better than market expectations. Affected by the release of the financial report, after closing on Monday, Jingdong's stock price rose 12.44% to $ 43.3, with a market value of more than $ 63.2 billion, far exceeding the more than $ 43.6 billion.
From the perspective of market sentiment, investors are quite satisfied with JD.com's financial performance this quarter. Looking back at JD.com's stock price performance last year, it is not an exaggeration to describe its share price trend by opening low and moving high. According to a report by Tiger Securities, JD.com's stock price rose by 68.32% throughout 2019, leading many Chinese stocks.
Not inferior to the fourth-quarter financial report performance, JD.com has been highly recognized by the outside world in its anti-epidemic performance, whether it is in terms of logistics efficiency, donations, or social responsibility of large enterprises undertaken by JD.com. In this new financial report, Jingdong's annual active user growth is quite eye-catching. The overall growth rate is longer and faster, and even the growth rate is far higher than its peers. At present, it has 220,000 employees and GMV has exceeded the 2 trillion yuan mark for the first time. Where did the motivation for JD.com's "elephant dance" come from?
Revenue and net profit growth exceeded expectations core data indicators hit a new high
The financial report shows that Jingdong's net income in the fourth quarter was 170.7 billion yuan (about 24.5 billion US dollars), a year-on-year increase of 26.6%. The net profit attributable to common stock shareholders in the fourth quarter was 3.6 billion yuan (approximately US $ 500 million), and the net loss attributable to common stock shareholders was 4.8 billion yuan in the same period in 2018. In the fourth quarter of 2019, non-GAAP non-GAAP net profit attributable to ordinary shareholders was RMB 800 million (approximately USD 100 million), compared with RMB 750 million in the same period in 2018.
In terms of business revenue, JD.com ’s revenue for the quarter reached RMB 149.7 billion this quarter, an increase of 25% year-on-year; net service revenue was RMB 21 billion (approximately US $ 3 billion), an increase of 43.6% year-on-year. From the perspective of revenue share, Jingdong's income structure is changing.
In terms of active user data, JD.com ’s annual number of annual active purchases increased to 362 million, compared with Q3 ’s growth of 27.6 million. The number of new annual active purchases in a single quarter reached a new high since the past 12 quarters. Seventy percent comes from third- to sixth-tier cities; in December 2019, the number of monthly active users on JD Mobile increased by 41% compared with the same period in 2018.
The performance of core data for the whole year of 2019: The net income for the whole year was 576.9 billion yuan (approximately USD 82.9 billion), a year-on-year increase of 24.9%. The annual net merchandise sales revenue increased by 22.7% year-on-year, and the net service revenue increased by 44.1% year-on-year. The net profit attributable to shareholders of ordinary shares for the whole year of 2019 was 12.2 billion yuan (approximately US $ 1.8 billion), and the net profit attributable to shareholders of common shares under Non-GAAP for the full year of 2019 increased by 211% To 10.7 billion yuan (about 1.5 billion US dollars).
As of December 31, 2019, JD.com ’s cash and cash equivalents, restricted funds and short-term investments totaled 64.5 billion yuan (approximately US $ 9.3 billion). As of December 31, 2018, JD.com ’s cash and cash equivalents, restricted funds and short-term investments totaled RMB 39.5 billion.
Due to the impact of the epidemic, the entire retail and Internet industry has been affected. Previously, many Internet and e-commerce companies have clearly stated that revenue in the first quarter of this year is expected to decline. Prior to this, Wall Street investment banks had expected growth for JD in the first quarter of this year. Although optimism only gives single-digit growth judgment, according to JD ’s forecast, net income in the first quarter of 2020 will increase by at least 10% over the same period in 2019. Of course, this expectation is JD ’s initial expectation for the current It has changed due to the uncertainty brought about by the development of the new coronary pneumonia epidemic.
According to this financial report of JD.com, we can see that there are many "surprise". Although the revenue fell slightly from 29% in the previous quarter, considering the large peak season base, it is normal for the growth rate to be slightly adjusted back. It can be confirmed that this growth rate of JD.com is satisfactory to the market. In terms of net profit, reversing the loss situation in the same period last year and now achieving a profit of 3.6 billion yuan, this shows that Jingdong's "adjusting the track" has achieved remarkable results. On the one hand open source, on the other hand throttling, two-pronged approach to the capital market to hand over a transcript beyond expectations.
In addition to the impressive performance of revenue and net profit, JD.com's growth in active users at the end of this year has stunned many of the downcast. Once this data made the outside world worry about Jingdong. The user data disclosed this time not only grew longer and faster, but also grew more than its peers. How did Jingdong overtake?
Annual active users added 27.6 million JD.com in a single season. What did you do right?
This time, JD.com's active user growth reached a new high in the fourth quarter, an increase of 8.3% month-on-month, and the growth rate was significantly higher than that of Q1 to Q3 quarters of 1.7%, 3.4% and 4.1%. Previously, JD.com ’s active user growth was weaker than its peers, but this time the growth exceeded Alibaba ’s 18 million during the same period, which means that JD.com ’s ability to acquire traffic has improved significantly. Why can JD.com's annual active users grow longer and faster? Behind the steady growth, Jingdong's internal skills for many years are working?
## 1. The sinking market taps incremental users. Lightning speed pushes "Jingxi" to pull new effects.
Entering the second half of the Internet industry, the user growth of e-commerce platforms in first- and second-tier cities has approached saturation. In order to tap into new incremental markets, e-commerce giants last year focused on the low-end market. More than 70% of the new users of JD.com came from third- and sixth-tier cities. This is mainly due to JD.com's rapid launch of social e-commerce platform in the industry-JX.com.
In the earnings conference call, Xu Lei, CEO of JD Retail Group, also affirmed Jingxi's performance. He said: We have observed that the customers brought by the Jingxi business are more from low-tier cities. They prefer the attribute of socializing, with more impulsive purchases and higher conversion rates.
Compared with its peers, Jingxi has more social advantages in grabbing users in the low-end market. At the first-level entrance of WeChat, Jingxi's marketing method based on social network and social e-commerce interaction with users makes it easier to actively go out and find users in the sinking market on the third to sixth lines outside the station. The new users will not only increase GMV, but also bring more orders to JD Logistics, and the internal synergy will be further highlighted. During the epidemic, Jingxi launched the "Jingxi Agricultural Assistance Program" to help the sales of related slow-moving fresh agricultural products increase by about 10 times year-on-year.
In addition to the growth of users who have tapped into the lower-tier market online, with JD.com ’s many retail infrastructures beginning to see results offline, with a strong supply chain and logistics system, it has also begun to The expansion of various scenarios such as home appliance super experience stores is also the key to its ability to acquire more new users through multiple channels.
This time during the epidemic, JD.com also further saw the potential for community growth. Xu Lei, CEO of Jingdong Retail Group, said that for Jingdong, the real "battlefield" is in the community, which is also the weak link in China's overall consumer retail channel. The process of domestic community is very fast, but the coverage of retail or service in the community is insufficient, which will be a new point. It is reported that Jingdong has launched the community e-commerce fragrance in the early stage, which will lay a solid foundation for it to expand into new markets in the future.
This time during the Spring Festival and the epidemic, we can see from the data that more and more users are more inclined to choose JD.com. In the early stage of the epidemic, Jingdong Group quickly linked more than 270,000 merchants to strictly control the price of commodities, maintain the order of the platform, and ensure that the products on the platform are available for users to place orders. In addition to the large variety of products and guaranteed prices, JD.com ’s delivery service and efficiency advantages are highlighted. How does Jingdong use the service card to gather the hearts of users?
2. Service is becoming JD.com ’s second trump card, logistics value is further highlighted
In the past two years, as JD.com gradually opened up retail infrastructure, net service revenue increased significantly this quarter. Behind this business growth, perhaps this is inseparable from the strategic positioning of "supply chain-based technology and service companies" established by JD.com.
At present, it is difficult for e-commerce platforms to drive user growth through commodities to widen the gap. In order to go further in the industry, only the first to establish their own competition barriers in the industry is the key. Now Jingdong has embarked on the development route driven by "commodity-driven" to "technology and service". It is precisely because JD.com adheres to this strategic positioning, which is why it will put users and merchant services in a higher position.
At the user level, JD Logistics and JD Customer Service are two important businesses that serve good users. Whether it is the JD customer service team, JD intelligent online customer service, or JD merchant intelligent customer service robots, it provides better services for users and merchants. During the epidemic period, JD Health opened a free doctor consultation and psychological counseling service platform, with more than 30,000 doctors and 24-hour online service. Not only does it serve customers well, but JD.com has formed a strong synergy in the supply chain.
At the level of the supply chain, throughout China, only JD's supply chain capabilities can compete with international retail giants. Last year, JD.com upgraded and adjusted the supply chain end. The typical case is JD.com ’s innovative launch of the "natural selection" system. The realization path of Wujin Tianzhi is that JD Logistics connects with offline outlets of Jingdong Department or partners, and users place orders online. Wujin Tianzhi will push orders to the closest offline outlets to users. This move means the decentralization of the logistics network, and its ultimate effect is that logistics costs are reduced and delivery time is greatly improved. During this epidemic situation, JD Logistics also successfully made a circle.
During the epidemic, except for SF Express, JD Logistics has not been affected by the epidemic, and many first-tier cities can even deliver the same day. Behind the high efficiency of merchandise distribution is precisely the two core advantages of JD. First, the self-operated system for many years has ensured the quality and sufficient supply of goods. Second, the logistics system for many years has forged the JD logistics network throughout the country and guaranteed the goods The speed of delivery. It is no exaggeration to say that JD.com can control the "capillaries" of its own logistics chain.
Previously, the three major express delivery companies, Shentong, Yuantong and Yunda, reported a significant decline in business volume in January, and business volume and revenue in February were not optimistic. This may also affect the revenue performance of several major e-commerce platforms in the next quarter. . After releasing its financial report, JD expects that net income will increase by at least 10% in the first quarter of 2020 compared with the same period in 2019. Why is JD.com confident of achieving year-on-year growth?
In the financial report conference call, Xu Lei said: In terms of the overall performance seen so far, JD's self-operated model has indeed performed relatively well in this epidemic, which is the first. Second, since last year, JD.com has increased the number of merchants entering the warehouse. Especially in 2020, it will provide corresponding resource support for the merchants entering the warehouse.
From this perspective, it is not accidental that JD.com achieved high growth this time, but it has benefited from the forward-looking strategic positioning of JD.com as a "supply chain-based technology and service company." The previous layout allowed all departments to form a seamless connection, and different modules were quickly spliced together to form a strong joint force, so that JD.com will continue to maintain accelerated quality growth in the future.
3. Technology injects more new blood into JD.com or will become a new engine for JD.com ’s growth
All along, JD.com's investment in technology has not been soft. In 2019, the total R & D investment of listed and non-listed companies affiliated with the JD.com system was 17.9 billion yuan, with a year-on-year increase of 47.8%. Judging from the financial reports of the Internet giants, the investment cost of technology research and development is not low. In the Internet e-commerce industry, JD.com is also using technology to stage a new round of growth.
The huge investment in technology is also obvious to the dividends generated by JD.com. From the financial data disclosed by JD.com, it can be seen that the combined ratio of its performance and market expenses is controlled at 10.3% in 2019, compared with 12.1% in 2016. In other words, it took only three years to compress 1.8 percentage points. Once these core data come down, it will be transformed into JD's core competitiveness.
During this anti-epidemic period, JD.com's technical force also ushered in a major outbreak. On January 29, JD Cloud and the AI team worked overtime and overtime, and at the first time continuously launched a number of free product services such as emergency resource information release platform, intelligent epidemic assistant, cloud video conference service, online classroom and programming courses, etc., covering tens of thousands Enterprise organizations, millions of users.
The efficient operation of JD Logistics is also supported by technical support. The emergency material supply chain management platform launched by JD Logistics integrates the data and information of anti-epidemic materials in a digital form, and is unifiedly managed by a systematic supply chain platform to provide powerful logistic support for combating the epidemic situation. JD.com's unmanned vehicles, unmanned aerial vehicles and other black technologies have also become a savvy player in intelligent distribution during the anti-epidemic period. Based on the smart city operating system, JD.com assists the government to build a "high-risk population epidemic situation awareness system", uses big data and artificial intelligence to predict the distribution of high-risk populations, and has been applied in Beijing, Guangzhou and other cities.
Technology not only guarantees the effective operation of various departments under JD.com, but more importantly, it also allows JD.com to tap new growth points. Among them, Jingdong Cloud's growth is obvious to all. In the more than three years since its commercial launch, Jingdong Cloud has launched and updated as many as 300+ products and services, achieving 100% of orders on the cloud. As of 2019, JD Cloud has accumulated 40+ bases under construction and landing cities, 2,500+ partners, and 690,000+ registered users.
At present, JD.com has constructed the "ABCDE" technology strategy. With the deep integration of these technologies, it can enable JD.com to have a stronger vitality in the highly competitive Internet environment, better empower the platform business, and achieve scale. Lay a solid foundation. At the beginning of 2020, JD.com clearly defined its strategic positioning as a "supply chain-based technology and service company", which also means that JD.com is exporting its retail, logistics, digital technology, cloud and Iot technology, insurance, health and many other business sectors to the outside world. Open to gain greater synergy, and then continuously improve the efficiency of the entire society's supply chain.
Conclusion:
Judging from the Q4 financial report, we can see the growth highlights of JD.com's financial performance. Instead, the epidemic was a big examination of Jingdong's external review. In this assessment, Jingdong's performance among peers should be the best. It can be said that JD.com's elephant dance this time is not accidental, but it has relied on it for more than ten years to continue to practice its internal skills, thus polishing its strong ability to cope with supply chain, logistics and other retail infrastructure capabilities.
During the epidemic situation, JD.com assumed the social responsibilities that large enterprises should have. Relying on the advantages of supply chain and logistics, as of February 28, through a special channel for relief supplies across the country, JD Logistics has shipped a total of about 50 million pieces of medical emergency materials with a total weight of more than 15,000 tons. From January 20 to February 28, JD.com has supplied 220 million pieces of rice noodles and fresh products to the society, with a total weight exceeding 290,000 tons. JD.com ’s performance also received unanimous praise from the outside world, and was even named by the State Post Bureau. JD.com played an important supporting role in the fight against epidemic.
Faced with employees and merchants on the platform, JD.com has also taken various measures. A number of subsidy support measures have been launched for more than 270,000 merchants, especially for Hubei merchants to provide key support, and at the same time, additional 100 million yuan will be added to the merchants entering Jingdong Logistics for key subsidies. In terms of promoting social employment, JD.com strives to stabilize existing jobs and ensure the orderly resumption of 220,000 employees. For all employees in Hubei, JD.com will retain its jobs and pay wages on time, paying social insurance and provident funds; On the other hand, the Dada Group, jointly invested by it, recruited more than 35,000 formal and temporary employees for the whole society.
After the release of this financial report, JD.com has also received a number of investment agency ratings upgrades. On March 2, Jefferies, a well-known Wall Street investment bank, released a research report stating that JD.com users experienced strong growth, maintained a buy rating on JD and raised its target price to US $ 53.4. Last year, 22 analysts on Wall Street issued "Buy", "Hold" and "Sell" ratings on JD.Com. The stock currently has 5 holding ratings and 17 buy ratings, so the consensus recommendation is "buy."
Not only did this brilliant performance inject strong confidence into the capital market, but JD ’s announcement that the “next quarter revenue will increase by more than 10% year-on-year” will also attract more investors. Stability and forward-looking performance during headwinds. More and more analysts are singing more about the future development of JD.com, which shows that its current development is becoming more and more stable. While maintaining high growth in core business, JD.com has the ability to further enhance valuation growth with its strength.
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