JD-affiliated HK stocks rise, financial reports boost market sentiment

After the Hong Kong stock market opened, JD.com and JD Health's share prices both rose by more than 3%, as the market responded positively to JD.com's first-quarter financial report released the night before.

JD.com achieved a net revenue of 315.69 billion yuan in the first quarter, a year-on-year increase of 4.9%, higher than the market's estimated 311.43 billion yuan. The adjusted earnings per ADS were 5.12 yuan, significantly higher than the analyst's expected 3.57 yuan. Although the adjusted EBITDA decreased by 41% year-on-year to 8.02 billion yuan, and the profit margin narrowed from 4.6% in the same period last year to 2.5%, both figures are still much better than the market's previous pessimistic estimates.

JD Health achieved revenue of 19.468 billion yuan in the first quarter, a year-on-year increase of 17%, and operating profit of 1.825 billion yuan, a year-on-year increase of 70.4%. The company also announced plans to repurchase up to 1 billion US dollars worth of shares in the open market, providing additional support for the share price.

JD Logistics was the fastest-growing segment in this quarter's financial report. Revenue in the first quarter was 60.58 billion yuan, a year-on-year increase of 29%, exceeding the estimated 58.51 billion yuan. Net profit was 880 million yuan, a year-on-year increase of 95%. JD Logistics also announced a repurchase plan of up to 1.2 billion US dollars.

From the group's overall perspective, changes in the revenue structure are worth noting. Revenue from electronic products and home appliances fell by 8.4% year-on-year, while revenue from daily necessities increased by 14.9% year-on-year, and service revenue increased by 20.6% year-on-year. According to a report in the Shanghai Securities News, JD.com's CEO Xu Ran frankly stated during the earnings conference call that the price increase in mobile phones and computers since March has dampened consumer demand in the short term, and the electric appliance category will still face pressure in the second quarter.

The data on the user side is even more convincing. As of the end of the first quarter, **JD's annual active user base has surpassed 740 million, with the number of quarterly active users maintaining double-digit growth for ten consecutive quarters.** Research and development investment increased by 59% year-on-year, and the company clearly stated that R&D expenses in the field of AI will continue to increase.

The collective strength of JD's portfolio today is due to the fact that several key indicators in the financial report exceeded market expectations, especially the earnings per share, which were far better than expected, alleviating previous market concerns about profit decline.

Several subsidiaries have launched large-scale repurchase plans at the same time, also sending a message to the market about the management's attitude towards valuation.

What needs to be followed up is the combined impact of the high base of national subsidies in the second quarter and the price increase of consumer electronics, as well as the pace of narrowing losses in new businesses such as JD's food delivery services.