vested
JD.com (JD US / 9618 HK) - Strong 3Q momentum
E-commerce is emerging stronger post-COVID-19 on deepened penetration across products and in the lower-tier cities.
Annual active customer account momentum in 3Q was strong, growing 5.8% QoQ to 441.6m.
Management noted that ~80% of new users were from lower-tier cities.
While no formal guidance was provided, management noted that their Singles Day festival performance was robust and exceeded their internal expectations.
On the topic of the fresh food market, we agree with management that this specific opportunity in China is significant, with different players competing in this arena.
In their view, there are a variety of models that can be employed in China, but a localized approach is needed – to that end, JD will be leveraging its core supply chain capabilities and will look to grow in a prudent manner rather than engaging in heavy subsidies.
We expect some near-term margin volatility, as we believe that management is likely to reinvest to expand JD Super categories as well as user acquisition.
BUY (JD US) / HOLD (9618 HK).
Source: OCBC