CCB International has revised its target price for JD.com (JD, Financial) while maintaining an "outperform" rating. The target price for its U.S. shares has been reduced by 13% from $49 to $42.6. Similarly, the Hong Kong shares target price drops from HKD 191.1 to HKD 166.2, reflecting the same 13% decrease.
The report anticipates JD's second quarter investment in the food delivery business to be RMB 10 billion, potentially peaking at RMB 13 billion in the third quarter. By 2025's second quarter, total revenue is expected to rise by 15% year over year to RMB 334 billion, following a 16% year-over-year increase in the first quarter. This growth is predominantly driven by JD Retail's (JDR) 15% growth.
Government policies supporting electronic and home appliance sales are projected to boost sales annually by 15%. Enhanced consumer awareness is likely to fuel a 14% annual growth in general merchandise sales this season.
JDR's operating profit margin is expected to stabilize at 3.93% year over year, prompting a 15% increase in operating profit to RMB 11.6 billion. However, the RMB 10 billion investment in food delivery almost negates this profit. Overall, JD's second quarter non-GAAP net profit is projected to decline by 69% year over year to RMB 4.5 billion.
