JD Earnings: Maintaining Our Estimates Despite Margin Surprise in the First Quarter

Wide-moat JD.com’s, or JD's, first-quarter non-GAAP net margin surprised to the upside. However, we leave our full-year non-GAAP net margin estimate unchanged due to our expectation that JD will need to increase sales and marketing expenses throughout the rest of the year, especially for the June 18 and Nov. 11 shopping festivals. Our fair value estimate has been trimmed by 2% to USD 88.00 per ADS and HKD 341.00 per share due to minor tweaks. The share price is still attractive for long-term investors, but we think there is near-term weakness and uncertainty amid JD’s corporate overhaul that began in 2022. We think JD’s intangible assets of quality logistics and cost advantage remain.