Macquarie's recent report on JD.com (JD, Financial) suggests the surge in orders is likely driven by aggressive promotional activities, surprising the analysts given JD.com's current operating pace. This may indicate JD.com's strong commitment and potential for higher future earnings impact.
The firm anticipates JD.com to incur a 10 billion yuan loss in fiscal 2025 due to its food delivery business, assuming daily order volumes approach 20 million by year-end. JD.com's focus on low-priced beverages could help scale quickly, but substantial discounts and minimal commission rates may exert significant short-term pressure on earnings until unit economics improve.
The summer season is seen as a crucial period for JD.com to build momentum and stress-test key metrics. Macquarie also foresees JD.com's non-GAAP operating profit reaching 47.5 billion yuan in fiscal 2025. While stable e-commerce dynamics and ongoing trade-in policies support JD Retail's profitability, additional expenses for ensuring full-time couriers and quality restaurant merchants are inevitable.
Consequently, Macquarie has lowered JD.com's adjusted net profit forecasts for fiscal 2025 and 2026 by 10% and 4%, respectively. The US stock price target was cut from $35 to $31, and the Hong Kong stock price target from HKD 132 to HKD 119, maintaining a "Neutral" rating.
