E-commerce retailer JD.Com (NAS100:JD) releases its latest earnings report on Thursday after some weakness in the stock.
JD – Daily Chart
The price of JD has found support at 31.38, and the stock needs an earnings boost to move back into a bullish phase.
JD.Com will release its earnings on Thursday, November 13 and ahead of the release, Morgan Stanley analyst Eddy Wang downgraded the stock. Wang reduced his position to Sell and gave the company a price target of $28, citing margin pressure and the end of benefits from China’s trade-in policy aimed at boosting domestic consumption. The policy allowed consumers to trade in old products for new ones.
Wang also wrote that, compared with e-commerce peers like Alibaba (BABA) and PDD Holdings (PDD), JD was the biggest winner from the trade-in policy, given its gross merchandise value (GMV) and sales exposure to home appliances and electronics.
That will make it harder for JD to beat expectations in the coming quarters. Diminishing benefits of the trade-in policy and slower top-line growth are expected to create less operating leverage over the next 12 months. Wang added that he expects JD’s continued investments in new businesses to weigh on long-term margins and ROE (return on equity).
On the positive side, JD still trades at a steep valuation discount to Alibaba, with a forward P/E of 11.95x and strong margin expansion over 13 consecutive quarters. JD trades at a much more attractive valuation than BABA in almost every key multiple. JD’s forward P/E of 11.95x compares well to BABA’s 22.96x.
While the benefits of the trade-in have disappeared, management has been looking to diversify into many different areas. The company has been active in new areas such as coffee, supermarkets and delivery-only kitchens, alongside a car.
The AION UT Super, a new EV jointly developed by JD, GAC AION, and CATL, is called the “Guomin Haoche” (people’s car) and was rolled off the production line at a factory in Changsha. GAC and CATL unveiled the AION UT Super on October 23, featuring CATL’s 99 “Choco-Swap” battery-swapping tech, a 500 km range, and flexible ownership options. The Aion UT Super is sold exclusively through JD, marking a first for e-commerce-based vehicle sales. JD has begun pre-sales and test drives, offering the first 3,000 participants up to ¥600 (about $83) in JD e-cards that can be used as a direct discount toward the purchase price of the car.
