Key Takeaways
HSBC Global Investment Research raised its price target on JD.com, Inc. (NASDAQ: JD, HKEX: 9618) after the Chinese e-commerce firm’s first-quarter revenue grew 4.9 percent, beating estimates on strong performance in its retail and logistics segments.
"This performance was anchored by the steady progress of JD Retail, as general merchandise categories and high-margin businesses including marketplace and marketing revenues continued to outperform," Chief Financial Officer Ian Su Shan said in a statement.
The bank lifted its target for JD.com's Hong Kong-traded shares to HKD144 from HKD137 and its U.S.-listed American depositary shares to $37 from $35, citing higher gross margin assumptions. JD.com reported total revenue of RMB 315.7 billion ($45.8 billion) and non-GAAP net income of RMB 7.4 billion for the quarter.
The upgrade suggests growing confidence in JD.com’s ability to drive profit growth from its core retail business and new ventures, even as it navigates near-term headwinds in the electronics sector. The company's shares rose over 5 percent in Hong Kong trading after the report.
JD.com's core retail segment, JD Retail, was a key driver of the positive results. Its operating profit rose 16.5 percent year-over-year to a record RMB 15 billion, with the operating margin expanding to 5.6 percent. Management attributed the improvement to better supply chain execution, a richer category mix, and stronger advertising revenue.
This resilience helped offset a continued slowdown in the company's traditional electronics and home appliances category, where revenue fell 8.4 percent against a high comparison base from a prior-year subsidy program. The decline was more than compensated for by a 14.9 percent jump in general merchandise revenue and an 18.8 percent increase in marketplace and marketing revenue.
Other segments also showed strong momentum. JD Logistics saw revenue grow 29 percent, supported by the company's food delivery business, which management said saw its steepest sequential loss reduction to date.
Looking ahead, HSBC noted that revenue growth in the second quarter may face pressure from a high comparison base and recent price hikes for smartphones. However, the bank expects performance to recover in the second half of 2026 as these effects ease.
JD.com continued to return capital to shareholders, repurchasing approximately 44.5 million shares for $631 million during the quarter. The company has $1.4 billion remaining under its current buyback authorization, which runs through August 2027.
The results show JD.com's strategy of diversifying its revenue streams is yielding improved profitability. Investors will now watch for a recovery in electronics and home appliance sales in the second half of the year to drive the next phase of growth.
This article is for informational purposes only and does not constitute investment advice.
