CMSC maintains a "strong buy" rating on JD-SW (09618) and remains optimistic about the company's growth resilience and profit improvement potential in the long term.

The CMSC report predicts that the total revenue of JD-SW (09618) in Q3 2025 is expected to increase by +12.6% year-on-year, with Non-GAAP net profit attributable to the parent company reaching approximately 4.2 billion yuan. Q3 retail revenue is expected to maintain double-digit growth of around 10%, with daily necessities and 3P revenue showing strong momentum. The retail operating profit margin is performing better than expected. The company's growth resilience under its self-operated barriers and the profit improvement potential under its strong negotiation ability in the supply chain are viewed favorably in the long term, maintaining a "strongly recommended" rating. Key points of the CMSC report are as follows: The growth rate of Q3 group and retail revenue is in line with expectations, with steady growth in daily necessities and 3P revenue. In Q3 2025, the total revenue of the group is expected to increase by +12.6% year-on-year, while JD retail revenue is expected to increase by +10% year-on-year, basically meeting market expectations. By category, the growth rate of electronics is expected to gradually slow down in Q3 due to entering the peak period of national subsidies at the end of August, as well as the strong impact on computer sales last August from the Black Wukong myth, resulting in a high base. It is expected that the growth rate of electronics will be under pressure in the future due to the high base and tightening of national subsidy levels. Daily necessities revenue is expected to maintain rapid growth in Q3 under the healthy growth of categories such as supermarkets, fashion home, and health. 3P merchants' advertising and commission revenue are also expected to maintain a fast growth rate in Q3. The performance of retail operating profit and group profit in Q3 is expected to exceed expectations. In terms of profitability, it is expected that the year-on-year increase in JD's retail operating profit margin in Q3 will reach around 5.5%, an increase of about 0.3 percentage points, mainly driven by the improvement in GPM driven by the supply chain, as well as the faster revenue growth and proportion increase of high-profit margin business such as advertising and commission. The Q3 group's Non-GAAP net profit attributable to the parent company is expected to be around 42 billion yuan, performing better than previously expected. JD's Double 11 promotion starts early, focusing on its performance during the big sale. JD's Double 11 began selling directly on October 9th at 8 PM, earlier than last year. This year, JD's big promotion has been greatly simplified, providing users with low-priced goods through official discounts and coupon packages. Additionally, during the promotional period, there will be further discounts through channels such as month black high wind, flash sales, hundred subsidies, and PLUS memberships. Pay attention to the performance of JD's Double 11 promotion. In terms of food delivery, focus on the marketing investment and performance of e-commerce and food delivery during the promotion.