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Sunday, May 4th, 2025

JD Logistics Q3 Earnings Soar 313% YoY: Strong Beat and Upbeat Growth Outlook






JD Logistics Inc: A Deep Dive into Financial Performance and Future Prospects

JD Logistics Inc: A Deep Dive into Financial Performance and Future Prospects

Broker: UOB Kay Hian Private Limited | Date: Monday, 18 November 2024

Introduction to JD Logistics Inc

JD Logistics Inc, a leading player in China’s technology-driven supply chain solutions and logistics services, is capturing attention with its efficient warehouse-based distribution model. This report delves into the company’s recent financial performance, strategic partnerships, and future growth outlook, as analyzed by UOB Kay Hian.

3Q24 Financial Performance: A Strong Beat

The financial performance of JD Logistics (JDL) in the third quarter of 2024 has exceeded expectations, with core net profit soaring to Rmb2.29 billion, marking a staggering 313% year-on-year increase. The nine-month core earnings for 2024 have already surpassed the full-year estimate by 21%, setting the stage for a record-high performance in the current year. This exceptional growth is bolstered by the collaboration with Alibaba, expanding JDL’s avenues for growth.

Valuation and Target Price

JDL is trading at a compelling valuation of 11.7x 2025 core Price-to-Earnings ratio, or 5.6x when excluding net cash. This attractive valuation has led to a maintained ‘BUY’ recommendation, with the target price raised to HK\$22.00, reflecting a potential upside of 55.4% from the current share price of HK\$14.16.

Revenue and Profit Margins

In 3Q24, JDL’s revenue grew by 6.6% year-on-year to Rmb44.4 billion, in line with projections. Revenue from supply chain customers, including JD.com, rose by 5.4% to Rmb20.7 billion. The company also reported significant margin improvements due to effective cost control, with gross profit margin, core operating margin, and core net margin improving by 3.8, 3.9, and 3.8 percentage points respectively, compared to 3Q23.

Growth Outlook and Strategic Initiatives

Looking ahead, JDL is poised for a record-high profit in 2024, with expectations of steady financial performance in the seasonally strong fourth quarter, driven by the 11.11 sales promotion period and the initial impacts of the Alibaba collaboration. The company is actively pursuing growth by developing standardized logistics service products to penetrate the lower-tier market and plans to double its international warehouse presence outside China by the end of 2025.

Handling Challenges and Market Rumors

Recently, JDL faced rumors regarding a fire incident in one of its warehouses in Wuxi. The company has refuted claims of significant merchandise damage, clarifying that the warehouse involved was a storage facility for low-value goods, and that insurance covers most damages. This incident has not materially impacted JDL’s financial position.

Financial Forecast and Risks

The financial outlook for JDL remains robust, with core net profit forecasts for 2025, 2026, and 2027 raised by 79%, 78%, and 68% respectively. This revision accounts for improved margin projections and anticipated revenue growth from increased e-commerce logistics volume share on Taobao/Tmall platforms. However, risks such as potential macroeconomic challenges and competitive pressures remain.

Conclusion and Recommendation

Overall, JD Logistics Inc stands out as a top pick in the China logistics sector, characterized by market leadership, strong growth potential from strategic collaborations, and attractive valuation metrics. UOB Kay Hian maintains a ‘BUY’ recommendation, emphasizing JDL’s prospects in capturing a larger share of the e-commerce logistics market and furthering its growth trajectory.


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