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Reducing JD’s FVE by 8%; Consumer Sentiment Will Improve in 2022; COVID-19 Variant an Uncertainty  

Chelsey Tam Senior Equity Analyst

Analyst Note

| Chelsey Tam |

We are lowering our fair value estimate of wide-moat to USD 105 (and HKD 407 for the Hong Kong traded share class) from USD 113 (HKD 438), as we expect losses in some new businesses to weigh on the pace of margin expansion in the near term. We previously assumed that JD non-GAAP operating margin could reach 2.3% in 2022, after a year of particularly low level of 1.3%, versus 2.1% in 2020. Now we expect non-GAAPoperating margin to reach 1.2% in 2022, after registering 1.1% in 2021. By 2030, non-GAAP operating margin is expected to reach 4.8% now, versus 5.5% previously. We continue to believe that JD is trading at an attractive valuation for long-term investors. We project 24% topline year-over-year growth in the fourth quarter this year, a slowdown from 28.6% registered from double 11 sales to reflect weakness after the double 11 event. We expect to generate a non-GAAP net margin of 1.0% in the quarter with non-GAAP net income of CNY 2.7 billion.

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Company Profile

Business Description is China's second-largest e-commerce company after Alibaba in terms of transaction volume, offering a wide selection of authentic products at competitive prices, with speedy and reliable delivery. The company has built its own nationwide fulfilment infrastructure and last-mile delivery network, staffed by its own employees, which supports both its online direct sales, its online marketplace and omnichannel businesses. launched its online marketplace business in 2010.

No. 18 Kechuang 11 Street, 20th Floor, Building A, Yizhuang Economic and Technological Development Zone
Beijing, 101111, China, People's Republic of
T +86 4006065500
Sector Consumer Cyclical
Industry Internet Retail
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 320,000