HK: BUY
Last Traded Price (H) ( 18 May 2021):HK$270.80(HSI : 28,594)
Price Target 12-mth (H):HK$487 (79.8% upside)


US: BUY
Last Traded Price (A) ( 19 May 2021):US$70.58(NASDAQ : 13,300)
Price Target 12-mth (A):US$126 (78.5% upside)


Analyst
Kennis Lau +852 36684153 kennislau@dbs.com
Tsz-Wang TAM, CFA +852 36684195 tszwangtam@dbs.com

Upping investments for bigger market share


Investment Thesis


Annual active user growth supporting revenue upside potential.
We expect JD’s number of annual active users to increase at a c.25% CAGR during FY21-23F, benefitting from expanding egrocery business and its lower-tier city penetration.


Rising revenue contribution of net service (3P) driving up monetisation. Tapping into wider product categories will expand the merchant base and grow the net service revenue at a CAGR of c.45% during FY21-23F, driving up overall monetisation.


Promising earnings outlook via increasing scale of logistics business. Revenue contribution from logistics business to net service revenue increased to 55% in 1Q21 from 16% in 2017. We expect margin improvement in the logistics business will bring a better profit outlook for JD as it scales up in the medium term.