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Reducing JD’s 2021 Non-GAAP Net Margin to 1.5%; Improving User Stickiness; JD Is a Buy

Chelsey Tam Senior Equity Analyst

Analyst Note

| Chelsey Tam |

We like JD’s existing and new users’ increasing stickiness to JD’s platform, the improving 3P platform performance and Jingxi’s business update and strategy. We have reduced this year’s net margin on a non-GAAP basis to eliminate the higher base last year due to the social insurance rebate and to a lesser extent the potential of higher losses from Jingxi and JD Logistics. Outer-year non-GAAP net margin remains unchanged. JD is a buy with a fair value estimate of USD 106 per ADS and HKD 411 per share, up 6% from before as we roll our model.

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Company Profile

Business Description

JD.com 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. JD.com launched its online marketplace business in 2010.

Contact
No. 18 Kechuang 11 Street, 20th Floor, Building A, Yizhuang Economic and Technological Development Zone
Beijing, 101111, Cayman Islands
T +86 4006065500
Sector Consumer Cyclical
Industry Internet Retail
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 314,906

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