JD.com: Raising Near-Term Margin Estimate Ahead of its Interim Earnings

We raise our estimate for wide-moat JD.com’s second-quarter non-GAAP net margin to 3.0% from 2.5%, and raise our full-year non-GAAP net margin estimate to 3.3% from 2.9% due to lower marketing costs. We now expect 2023 non-GAAP net profit to grow 23% to CNY 35 billion. Our revenue forecast for 3.9% year-on-year second-quarter revenue growth is unchanged, with retail revenue to eke out a 1% rise and gross merchandise volume, or GMV, to improve 6%. Our fair value estimate stays at USD 88 per ADS (HKD 341 per share). We still think JD.com is worth buying. As China’s consumption sentiment improves, we expect to see JD.com’s more premium positioning to allow it to register faster top-line growth.