JD Logistics Earnings: Good Set of Results; Non-IFRS Profit Margin Swung to Positive

JD Logistics’, or JDL’s, first-quarter 15% year-on-year revenue growth is tracking ahead of our full-year estimate of 9%. However, we maintain our forecasts and fair value estimate of HKD 10.70 per share as we expect full-year 2024 revenue growth to decelerate, given the higher base in the second half of 2023. JD.com reduced its free shipping threshold to CNY 59 from CNY 99 in August 2023, which led to higher parcel volume and revenue at JDL in the second half of 2023. While first-quarter non-IFRS margin was 1.6%, trailing our 1.9% full-year estimate, we think continuous efforts to increase efficiency and economies of scale—especially during the peak 6.18 and 11.11 shopping festivals—would help JDL to achieve our 2024 estimate. That said, we think this is reflected in its share price and JDL is fairly valued currently.