Bank of America Securities lowers JD.com target price to 141 yuan, expects last quarter's performance to meet expectations

Bank of America Securities published a research report, expecting JD.com (09618.HK) to announce its fourth quarter results for the fiscal year 2025 in March. The bank predicts JD.com's total revenue to be RMB 356 billion, a year-on-year increase of 2.6%, which is roughly in line with market consensus. It forecasts that direct sales revenue will decline by 3.1% year-on-year, primarily due to a 13% drop in sales of home appliances and electronic products, partially offset by continued double-digit growth in general merchandise sales. It expects revenue from platform services and other services to grow by 26% year-on-year. In terms of profitability, JD.com's retail operating profit is expected to be RMB 7.8 billion, a year-on-year decline of 22%, mainly due to significant subsidies during the "Double Eleven" shopping festival, especially in the home appliance category. The new business losses are expected to be RMB 14.9 billion, with the narrowing losses in food delivery offset by increased investments in Jingxi and overseas businesses. The bank estimates the group's non-GAAP net profit to be RMB 900 million, higher than the market expectation of RMB 600 million.

The bank has adjusted JD.com's revenue growth forecasts for the fiscal years 2025, 2026, and 2027 to 13%, 6%, and 8%, respectively, based on higher consumer incentives and losses in the food delivery business, and has lowered the non-GAAP net profit forecasts to RMB 27 billion, 29 billion, and 45 billion, from the previous RMB 27 billion, 34 billion, and 49 billion. The bank has lowered JD.com's target price from HKD 149 to HKD 141; JD.com (JD.US) target price from USD 38 to USD 36, and reiterated its "Buy" rating, supported by JD.com's solid core retail position, an attractive 10 times forecast non-GAAP earnings per share for fiscal year 2026, and a committed shareholder return (with a nearly 10% dividend yield in 2025)