|作者：||Leo LIU,Matt MA|
|摘要：||Report title:JD.com (JD US) - Back in the fast lane
Analyst:Leo LIU,Matt MA
■ 1Q19 top-line/ non-GAPP earnings beat consensus by 1%/ 187%
■ Record earnings attributable to margin expansions from both core retail and service segments, and fulfilment efficiency recovery
■ Sufficient ammunition drives rev reacceleration in 2Q19
Record earnings in 1Q19 thanks to improved core retail and service GPM
1Q19 top-line reached RMB121bn, +21% YoY, beat consensus by 1%. Non-GAAP net income reached record high at RMB3.3bn, +215% YoY, beat consensus significantly by 187%. The exceptional earnings was mainly attributable to JD Retail’s GPM expansion and Service and others’ GPM recovery; which combined lead to a 14.8% (+0.9ppt YoY and +0.8ppt QoQ) Non-GAAP GPM. JD Retail’s GPM expansion was mainly due to 1P biz’ improved economies of scale as well as mix shift to higher GPM categories. On the other hand, Service and others’ GPM recovery was largely due to better capacity utilization and less discount rates to merchants, which also led to improved fulfillment expense ratio from 7.2% in 1Q18 to 6.7% in 1Q19. R&D expense ratio increased to 3.1% in 1Q19 from 2.4% in 1Q18 as company invested heavily to strengthen its technology capability, and the amount should normalize going forward. Non-GAAP NPM was 2.7% in 1Q19, higher than mgmt’s previous guidance at 0.8%-1.2% (2019), and leaves a big room for cushion. We believe with the exceptional earnings in 1Q19, JD will ramp up its investments in marketing and subsidies during the 618 promotional season to reaccelerate the revenue growth in 2Q19. Currently mgmt. guided 1Q19 net revenue to reach RMB145bn-150bn, or 19%-23% YoY, in-line with street’s estimate of RMB145bn.
Concerns on customer growth receded due to better customer acquisition
Annual active customer: eased previous concerns by recording 2% sequential growth to 311mn in 1Q19 (0% in 4Q18). Quarterly active customer grew 15% YoY (20% in 4Q18), due to company’s customer acquisition efforts through: 1) acquiring new customers through new business scenarios and promotional activities; and 2) awaking old dormant customers. JD Pingou is able to contribute some customer increments, but should need more time to take full effects, as lower tier city supply chain built out is difficult. Moreover, JD extended its partnership with Tencent (700 HK; BUY; TP HK$423) on multiple initiatives including: 1) WeChat’s lv1 and lv2 gateway connection, 2) advertising, and 3) membership system with benefits from QQ Music and Tencent Video. We believe the collaboration will continue contributing to Co.’s customer acquisition.
Maintain BUY; TP slightly raised to US$36
We revised FY19/20/21E non-GAAP net profit up by 31%/16%/16% to RMB6.3bn/9.4bn/13.1bn respectively, reflecting company’s faster than expected ramp-up in capacity utilization and efficiency improvements. We maintain BUY rating with TP slightly raised to US$36 (from US$35), based on DCF method, using WACC of 11.6%, and implying 0.6x FY19E P/S. JD is currently trading at 0.5x FY19E P/S, lower than historical average of 0.8x.