＜Research＞UOB Kay Hian Slightly Cuts JD-SW (09618.HK) TP to $150; Flat Growth for JD Retail in 2FQ Miss

　　UOB Kay Hian noted in a report that JD-SW (09618.HK) -3.000 (-2.812%) Short selling $177.60M; Ratio 17.366% 's revenue for 2FQ24 is guided to be flat or up 1% YoY to RMB290.4 billion, with JD Retail's revenue guided to also be flat or up 1% YoY, implying a 2-year CAGR of 4%, which is weaker than the broker's expectations. JD guided its earnings growth for 2FQ to be strong, based on its user-centric strategy and focus on return on investment.

　　The broker expected JD's net profit for 2FQ to deliver a positive surprise, with non-GAAP operating profit of RMB9.9 billion and RMB40.8 billion for the quarter and the full year respectively, with operating margins of 3.5% and 3.4% correspondingly, as the company continued to drive 3P (third-party platform) revenue growth. The broker expected JD's adjusted net profit to grow 6% YoY to RMB9.1 billion in 2FQ, with net profit margin remaining stable at 3.1% YoY amidst a significant reduction in subsidies.

　　In addition, JD Retail's earnings are expected to maintain steady growth this year as it cuts back on subsidies amid fierce competition. JD as a whole is expected to post mid-to-high single-digit revenue growth this year. The broker lowered its forecasts for JD's revenue by 5% and 1% for 2FQ and the full year respectively, and raised its forecast for JD's non-GAAP net profit by 4% for the 2FQ, but trimmed that by 1% for the full year, reflecting the cutback in subsidies and changes in product mix.

　　UOB Kay Hian maintained its Buy rating on JD's H-shares, with its target price slightly cut from HK$151 to HK$150.

　　(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-07-15 16:25.)