Shenwan Hongyuan Group: Maintains "buy" rating on JD INDUSTRIALS (07618) with customer growth driving margin improvement.

Shenwan Hongyuan Group released a research report stating that it maintains a "buy" rating for JD INDUSTRIALS (07618). The domestic industrial product market space exceeds 11 trillion, with the company expanding coverage for new customers and new product categories, increasing customer loyalty and value; following customers overseas, long-term localization development and global operations, with sufficient growth momentum. Internally, the company continues to improve supply chain efficiency, with the improvement of gross profit driven by the increase in long-term high-margin own brands and overseas market share. It maintains net profit forecasts for FY2026-2027 at 16.38 and 22.10 billion, increasing the profit forecast for FY2028 to 27.86 billion, year-on-year +44.9%, 34.9%, and 26.0%, respectively, corresponding to PE of 20, 15, 12X. Key points from Shenwan Hongyuan Group: Performance summary The company released the FY2025 report, with performance slightly exceeding expectations. FY2025 revenue was 23.952 billion, year-on-year +17.4%; H2FY25 revenue was 13.701 billion, year-on-year +16.3%; FY2025 net profit after adjustment was 1.131 billion, year-on-year +5.3%, slightly exceeding expectations. Steady growth in commodity sales revenue, rapid expansion of key KA customers FY2025 company's commodity sales revenue was 22.493 billion, year-on-year +17.3%, with 2HFY25 year-on-year +16.3%. FY2025 key KA customer GMV reached 16.5 billion, year-on-year +26.5%; FY2025 key KA customers reached 13,300, year-on-year growth of 26%. The company's coverage of customers in multiple industries, accelerated customer expansion primarily drove growth in FY2025. The GMV of small and medium-sized customers in FY2025 reached 17 billion, year-on-year +8.3%. Key KA customers have high loyalty, with individual transactions from old customers continuing to increase The company's Taipu full-process digital system continues to be optimized, continuously improving customer service experience and enhancing cooperation loyalty through deep integration of systems, data, and processes. In FY2025, the company's key KA customer transaction retention rate was 116.6%, year-on-year +10.9pct, reflecting the continuous increase in individual transaction amounts from old customers. Continuous cost reduction in the supply chain, optimization of gross profit margin In FY2025, the company's gross profit margin was 17.4%, year-on-year +1.2pct, continuing to trend upwards. The company continues to reduce costs in the supply chain by streamlining distribution levels, connecting with original factories, centralized procurement, and standardizing goods warehousing; in 2025, the company launched the first industrial large model JoyIndustrial, improving internal management intelligence to jointly promote the optimization and improvement of gross profit margin. Expansion of BOM and overseas new business, increased stage cost investment In FY2025, the company's net profit margin was 4.7%, year-on-year +0.6pct, mainly influenced by the increase in performance fees rate; in FY2025, the performance fee rate was 7.4%, year-on-year +1.8pct, mainly due to the company's investment in expenses for expanding new product categories through BOM and overseas new business, with the expectation of a decline in the performance fee rate as the scale of new business grows later. Risk warning Risk of pressure from external environment, difficulty in improving gross profit margin; risk of intensified industry competition, with sales revenue of commodities falling short of expectations; risk of industry digitalization improvement in industrial procurement falling short of expectations.