Stock Deep-Dive: JD.com (NASDAQ: JD)

Business Overview & Competitive Advantage

JD.com is a leading supply chain-based technology and service provider, operating one of China's largest e-commerce platforms. The company offers a broad range of authentic products—including electronics, appliances, and general merchandise—through both direct online retail and a third-party marketplace. It also delivers integrated supply chain and logistics services across various industries, leveraging proprietary technology to enhance efficiency and customer experience.

• Revenue Sources:

  • Online Retail Sales: JD.com purchases inventory from over 60,000 suppliers and sells products directly to consumers through its digital platforms.

  • Third-Party Marketplace: Offers a platform for external merchants to reach JD.com’s vast customer base, with strict quality and service standards.

  • Digital Marketing Services: Provides AI-powered branding and performance-based advertising solutions to merchants and partners.

  • Logistics and Fulfillment Services: Operates over 1,600 warehouses and a vast delivery network across China, offering B2B and B2C logistics solutions.

  • Retail Technology Services: Commercializes JD’s AI, big data, and cloud computing capabilities, helping partners optimize inventory and customer engagement.

• Key Growth Drivers:

  • E-commerce Expansion in China: Rising internet penetration and growing consumer demand are fueling online retail growth.

  • Industry Digitization: Increasing adoption of AI and big data in retail supply chains is creating strong demand for JD’s technology solutions.

  • Logistics Network Scale: Continued investment in infrastructure, particularly in lower-tier cities, is unlocking new customer segments.

  • Strategic Partnerships: Collaborations with Walmart, Sam’s Club, and other major players enhance JD’s ecosystem reach and fulfillment capabilities.

  • Offline-to-Online Integration: Initiatives like 7FRESH and JD NOW bridge the gap between digital and physical retail, improving customer access and convenience.

Competitive Moat 

JD.com’s advantage lies in its vertically integrated supply chain, proprietary technology, and nationwide logistics network, which collectively deliver unmatched speed, reliability, and scalability. The company’s focus on product authenticity, customer service, and AI-driven personalization also reinforces strong brand trust and customer loyalty. With over 465,000 logistics employees and 32 million square meters of warehouse space, JD’s scale is difficult to replicate.

Financial Analysis - Fundamentals

Key Financial Metrics

_{Prices as of 17/04/2025}

Revenue & Profitability Trends

Sea Limited has demonstrated strong revenue growth, significantly outpacing the industry.

• Revenue Growth: The company reported sales growth of 7% over the past year, compared to the industry average of 9%. Over a five-year period, the company’s sales have grown at a compound annual growth rate (CAGR) of 15%, which is broadly in line with the industry’s 16% growth rate.

• Margins: On a five-year average basis, the company’s gross margin is 8.4%, operating margin is 1.9%, and net profit margin is 2.6%. These figures are below the industry averages of 35.6%, 5.5%, and 4.4% respectively, indicating comparatively lower profitability margins.

• The company shows a current ratio of 1.29, higher than the industry average of 1.08, indicating a relatively stronger liquidity position. Its debt-to-equity ratio is 29%, significantly lower than the industry’s 62%, suggesting a more conservative capital structure

• On the profitability side, the company has a Return on Equity (ROE) of 15% (TTM) and a 5-year average ROE of 11%, compared to the industry’s 27% TTM and 22% average. Return on Assets (ROA) and Return on Investment (ROI) also trail the industry, at 2% and 4% respectively versus 7% and 11% for peers..

Full-Year 2024 Highlights

JD.com closed out 2024 with strong financial performance, marked by accelerating revenue growth and significant profitability gains:

• Full-Year Revenue: RMB1,158.8 billion (US$158.8 billion), up 6.8% year-over-year.

• Full-Year Operating Income: RMB38.7 billion (US$5.3 billion), up from RMB26.0 billion in 2023.

• Full-Year Operating Margin: 3.3%, up from 2.4% in 2023.

• Full-Year Net Income: RMB41.4 billion (US$5.7 billion), a 71% YoY increase, with net margin rising to 3.6% (from 2.2%).

• Diluted Net Income per ADS: RMB26.86 (US$3.68), up 76.4% YoY.

_{(1) The Company defines adjusted operating cash flow as operating cash flow adjusting the impact from consumer financing receivables included in the operating cash flow. (2) The Company defines free cash flow as operating cash flow adjusting the impact from consumer financing receivables included in the operating cash flow and capital expenditures, net of related sales proceeds.}

JD.com’s Q4 momentum was driven by double-digit growth across product categories and an increase in both active users and shopping frequency, reinforcing its expanding market presence as it heads into 2025.

Valuation Analysis

Based on trailing twelve-month (TTM) figures:

• The company’s P/E ratio is 9.44, compared to the industry average of 33.21.

• Its Price-to-Sales ratio is 0.31, versus an industry average of 2.47.

• The Price-to-Free Cash Flow ratio is 22.79, while the industry average is 54.48.

These figures indicate that, across these valuation multiples, the company is currently trading below the broader industry averages.

_{Prices as of 17/04/2025}

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