Tuesday, April 22nd, 2025

JD Logistics, Inc.: Leading China’s E-commerce Logistics with a Strong Turnaround and Growth Prospects

Date of Report: October 15, 2024
Broker Name: UOB Kay Hian

Company Overview

JD Logistics, Inc. (JDL) is China’s leading integrated supply chain and premium e-commerce logistics service provider. It boasts the largest domestic warehouse network and utilizes a warehouse-based distribution model that differentiates it from traditional express delivery operators. As of 2023, JDL held a 13.3% market share in China’s integrated supply chain market and a 35.7% market share in the premium e-commerce logistics segment (2022 data).

Stock Data

  • Bloomberg Ticker: 2618 HK
  • Market Capitalization: HK$92,765.1 million (approximately US$11,945.2 million)
  • Shares Issued: 6,626.1 million
  • 3-month Average Daily Turnover: US$19.9 million
  • 52-week High/Low: HK$15.60 / HK$6.61

Shareholders

The majority shareholder of JD Logistics is JD.com, holding 63.56% of the company.

Financial Performance

JD Logistics demonstrated a significant financial turnaround in 1H24. The company reported a net profit of HK$2.26 billion, marking its first positive 1H performance since listing. This recovery was driven by revenue growth and improved cost efficiencies.

  • 2024 Financial Forecasts:
    • Net turnover: RMB181,367 million
    • EBITDA: RMB16,755 million
    • Net Profit (adjusted): RMB4,151 million
    • Earnings Per Share (EPS): 64.6 fen
    • Price-to-Earnings (PE) Ratio: 19.8x

The company is expected to deliver a core earnings CAGR of 9.3% from 2025 to 2027, supported by growth in demand for its integrated supply chain and logistics services.

Collaboration with Alibaba

A key positive development for JDL is its new partnership with Alibaba, which has integrated JDL’s logistics services into the Taobao and Tmall platforms. Alibaba holds approximately 40% of China’s domestic e-commerce GMV, and this collaboration is expected to drive growth in JDL’s premium e-commerce logistics business. Although the financial forecasts do not yet account for this partnership, it is estimated that every 5% increase in JDL’s share of Alibaba’s premium logistics volume could raise its revenue by 3.4-3.9% and core earnings by 7.0-7.5% for 2025-2027.

Core Strengths

JD Logistics’ key strengths include:

  • Efficient warehouse-based distribution backed by China’s largest nationwide warehouse network.
  • Leadership in logistics technology and innovation.
  • Strong understanding of supply chain challenges across various industry verticals.
  • Self-operated last-mile network ensuring high service quality.
  • Robust brand image and customer recognition.
  • Comprehensive social welfare coverage for delivery personnel.

Growth Opportunities

JD Logistics is positioned to benefit from China’s domestic consumption growth. Over 95% of JDL’s revenue is derived from the domestic market, particularly from consumption-related sectors. Its leadership in integrated supply chain solutions makes it a direct beneficiary of any successful push to boost domestic consumption in China.

Valuation and Recommendation

The broker initiates coverage of JD Logistics with a “BUY” recommendation and a target price of HK$18.72, based on a discounted cash flow (DCF) valuation using a WACC of 11.0% and a terminal growth rate of 2.5%. JDL is currently trading at 1.5x its projected 2025 price-to-book (P/B) ratio, which is 0.5 standard deviations below its historical mean of 2.1x since its listing in May 2021.

Key Risks

The potential risks that could affect JD Logistics include:

  • Weaker macroeconomic conditions leading to reduced logistics demand.
  • Intensified competition in the logistics sector.
  • Unfavorable cost fluctuations.
  • Risks associated with mergers and acquisitions.

Conclusion

JD Logistics, Inc. has successfully positioned itself as the leader in China’s integrated supply chain and premium e-commerce logistics sectors. With strong financial performance, promising collaborations, and significant market potential, JDL is well-poised for continued growth and operational excellence in the coming years.

Tencent’s Game Revenue Surge in 3Q24F Boosts Growth Prospects

Date: October 14, 2024Broker: China Galaxy International Securities (Hong Kong) Game Revenue Growth Likely Accelerated in 3Q24F Tencent’s game revenue in the third quarter of 2024 likely saw accelerated growth, driven by its newly...

“Grab Holdings: AI Innovations Drive Growth, Enhance User Experience | Maybank Research Report”

Maybank Investment Bank Berhad April 10, 2025 Grab Holdings: GrabX Inaugural Event – Key Takeaways and Future Prospects Grab, a leading Southeast Asian superapp, recently hosted its first-ever annual product launch event, Grab X,...

SINGAPORE banks are optimistic about their earnings outlook moving into 2025, after yet another set of record quarterly earnings for the third quarter ended September 2024.

SINGAPORE banks are optimistic about their earnings outlook moving into 2025, after yet another set of record quarterly earnings for the third quarter ended September 2024. They also see upsides to net interest margins...