Citigroup expects JD Logistics to continue organic growth, maintaining a target price of 18 yuan and reiterating a buy recommendation

Citigroup's research report indicates that JD Logistics (02618.HK) exceeded revenue expectations in the third quarter, with adjusted earnings meeting market expectations. However, the gross margin and adjusted operating profit margin fell short of the bank's expectations, primarily due to intensified competition and business restructuring faced by its subsidiary, Deppon Logistics. Excluding the newly merged food delivery business, the bank believes that the company's Integrated Supply Chain (ISC) business maintained solid momentum in the third quarter.

Looking ahead to the fourth quarter, although the home appliance category will face high base challenges, its contribution to overall business volume is relatively limited. JD Logistics' ISC business momentum is expected to continue, and its profit margins are anticipated to gradually recover during the peak season. As for 2026, the bank believes that after completing capacity investments, organic growth can still reach ideal levels, and the profit margins excluding Deppon Logistics are also expected to improve with increased utilization. The target price remains unchanged at 18 yuan, with a rating of "Buy."