As the online retail leader, it is Retail businesses deliver a cycle of rapid expansion of large-scale profits and innovative businesses. The company’s value judgment should be viewed from three dimensions:
1) the leading efficiency of the retail industry, steady growth of revenue, sustained climbing profit margins; JD Logistics, JD.com, Dada Group and JD.com Have independently financed and thickened the company’s value.
Company profile: the first self-employed e-commerce, quality growth re-launched.
JD.com’s internal adjustment in the organization, business and personnel dimensions since 2018 has been basically completed, and business has rebounded seasonally: 2019Q3 single-quarter revenue of RMB134.8 billion, yoy s28.7% (19Q1/Q2 yoy s 20.9%/2 2.9%); Cumulative Non-GAAP net profit/net profit of RMB9.94 billion/2.45% (VS18 full-year RMB3.46 billion/0.75%), FCF (TTM) RMB15.6 billion, rebounding to its highest level since Q4 2017Q4.
E-commerce industry: the leading advantage is stable, low-line upgrade just in time.
After three rounds of dividends from PC Internet (1999-2010), Mobile Internet (2011-2015), High Line Upgrade and Low Line Users (2015-2018), the popularity of e-commerce users has been basically completed, and the low-line user upgrade and multi-more/Taobao user spill is the industry’s main incremental point of view: 2019Q3, Top3 strong e-commerce strong, a total share of 90.40%. At the same time, JD.com’s single-quarter AAU net increase of 13.1 million people, the highest since 2017Q4;
JD.com Retail: Scale effect releases into profit-boosting cycle.
1) Self-employment: scale expansion and operational efficiency improvement into a benign improvement cycle. 2019Q1-3, JD.com Composite Gross margin yoy to 14.87%, period rate yoy-1.26pct s to 13.55%, inventory turnover days yoy-4 days to 35.1 days.
2) Performance: Dismantling the cost of JD.com, 2014-2018, JD.com single performance/distribution costs from 22.2 yuan / 11.5 yuan to 17.8 yuan / 8.9 yuan, JD.com actual logistics efficiency significantly improved;
3) 3P platform: for the standard Tmall, JD.com platform monetization rate still has upside space (JD.com 2018 4.48% VS Tmall 4.91% – 7.95%), is expected to 2019 commission advertising revenue yoy to 42.55 billion yuan, is an important source of traffic realisation in JD.com;
4) Jingxi: the mature style of friends, on-line March stable day single volume of more than a million. Independent operational input is controlled, helping JD.com’s low-line market to pull new.
JD.com Innovation: To build JD.com’s second growth curve.
1) Logistics outside the bill: income end large-scale growth, profit-side reduction of losses. JD Logistics external single to warehouse-based, to build a full link service capacity. Logistics Group revenue is expected to reach RMB34.8 billion to RMB59.8 billion in 2019 (exceeding Shunfeng 2016), of which revenue from non-logistics single service reaches about RMB23 billion;
2) Around the retail ecological incubation, JD Logistics, JD.com, Dada Group and JD.com Health have independently financed, thickening the value of listed companies.
Technological change sedits the industry pattern, the socialization of logistics is not up to expectation, and the competition in the low-line market is intensified.
Revenue growth is solid, profit margins climb, and quality growth cycles are opened. In 2019-2021, the Company’s revenue is expected to be RMB5742/7012/841.5 billion yuan, up 24.3%/22.1%/20% YoY, and non-GAAP net profit will be RMB107.4/144.2/19.61 billion. The spin-off retail e-commerce, logistics services and eco-group valuation, with a reasonable market value of $63.2 billion, corresponding to $43.3/ADS, covers the first “buy” rating.