Source: Beast Finance Author: Beast Finance
Beast Finance learned that CITIC Securities recently issued a research report to maintain JD.com’s (JD) buy rating. In the research report, CITIC Securities predicts that JD.com’s revenue in the first quarter of 2023 will reach 238.3 billion yuan / a year-on-year decrease of -0.6%, Non-GAAP Net profit of 5.06 billion yuan / net profit rate of 2.13%. In 2023, it is still in a period of weak recovery of consumer sentiment after the epidemic. It is expected that JD.com’s short-term revenue growth will be under pressure, and its profit margin is expected to rise steadily year-on-year. Under the interweaving of multiple factors such as the adjustment of category operation strategy, the reform of separation of procurement and sales, the acquisition of customers through tens of billions of subsidized marketing, and the adjustment of organizational structure, it is expected that 2023 will be a year of long-term innovation for JD. However, the above-mentioned adjustments in the medium and long term are expected to enhance the core competitiveness of the platform.
Considering that the potential impact of JD.com’s internal category strategy adjustment and organizational structure adjustment on revenue exceeds our previous expectations, CITIC Securities lowered JD.com’s 2023E~25E revenue forecast to 10,729/11,813/1309 billion yuan (the previous forecast value was 11,471/12,851/14,135 yuan) 100 million yuan), and lowered JD.com’s Non-GAAP net profit forecast to 300/364/40.7 billion yuan (the previous forecast value was 326/371/42.6 billion yuan). Based on the 2023E Jingdong Mall operating profit expectation after tax deduction, referring to the 2023ENon-GAAPPE valuation level of comparable companies (Alibaba 12x, Pinduoduo 16x, Bloomberg consensus), give Jingdong Retail 2023E 16x PE.
The main views of CITIC Securities are as follows:
It is expected that JD.com’s revenue growth will be under pressure in the first quarter of 2023, and its profit margin will improve year-on-year. We expect JD.com’s revenue in the first quarter of 2023 to be 238.3 billion yuan/year-on-year decrease -0.6%; non-GAAP net profit is expected to be 5.06 billion yuan, corresponding to a net profit rate of 2.13%/year-on-year +0.44pct, in terms of business lines:
JD Retail: We expect JD.com’s 23Q11P product revenue to be RMB 196.4 billion/-3.9% YoY, and advertising and marketing revenue to be RMB 17.1 billion/-3.4% YoY. Considering that the first quarter of 2023 is still in the post-epidemic consumption recovery stage, and some categories in the superimposed company’s category operation strategy adjustment have changed from 1P to 3P, we expect JD Retail’s revenue growth in the first quarter of 2023 to be under pressure (we expect GMV to Slightly negative, lower than the income end). However, after the adjustment of the category structure, 1P profitability will increase, and the proportion of 3P business revenue with a higher profit margin will increase. Operating margin for the quarter remained flat year-over-year.
Logistics & innovative business: We estimate that JD’s logistics and innovative business revenue in the first quarter of 2023 will be 24.8 billion yuan / +41.4% year-on-year. Among them, 1) the logistics business, we expect to continue to benefit from the growth boost brought by the merger of Debon. It is estimated that Debon will bring 6.4 billion yuan in revenue growth in the first quarter of 2023. Excluding the base effect of Debon, it is estimated that 2) For new businesses, we expect that they are still in the stage of continuous optimization, and overseas businesses and Jingxi will continue to shrink and reduce losses.
Multiple adjustments are intertwined, focusing on the effect of change. Since the second half of 2022, Jingdong Group has actively sought changes to cope with market competition, and actively promoted the reform of the separation of procurement and sales, and the adjustment of operating strategies for different categories. Since 2023, the company has continued to operate projects to test the water and adjust the organizational structure. On March 6th, JD.com launched the "10 billion subsidy" project, through the subsidy column, it strengthened its price intelligence and stabilized its share; around April 11th, JD.com Retail promoted the organizational structure reform, adjusted the business group system to the business department system, and gave category leaders more More independent decision-making power, and open up 1P/3P within the business unit to encourage fair competition. The above-mentioned adjustments may cause disturbances to the visibility of the company's revenue in the short term, but if they can effectively stimulate the vitality of the platform's ecology and the vitality of the group organization, we believe that it will be of great strategic significance to maintain JD's long-term competitiveness, and we recommend continuing to pay attention to the adjustment results.
Risks: The recovery of consumer demand is slower than expected, the regulation of the Internet and e-commerce industry is becoming stricter, the degree of competition in the e-commerce industry has intensified beyond expectations, the progress of the "10 billion subsidy" is less than expected, large subsidies disturb the platform's price system, and the effectiveness of organizational structure adjustments Less than expected.