Yamato: Reiterate "Buy" rating on JD Logistics (02618), raise target price to HK$20.

Daiwa Research report stated that JD Logistics (02618) reported strong growth in first-quarter earnings, coupled with the first-ever share buyback program and the active adoption of artificial intelligence. They believe that the stock is a hidden gem and currently forecast a P/E ratio of only 9 times. Daiwa reiterated its "Buy" rating and raised the 12-month target price from HK$19.5 to HK$20. The report pointed out that JD Logistics' first-quarter adjusted earnings rose 40% year-on-year to RMB 1.052 billion; revenue increased by 29%, with gross margin and operating margin expanding by 0.8 and 1.2 percentage points to 8% and 1.6% respectively. The company's board approved the first share buyback plan, which will use $1.2 billion over the next 48 months to repurchase at least 10% of shares. Daiwa believes that while the dividend opportunity for 2026 is low, share buybacks are a strong catalyst for stock prices and a positive move to enhance shareholder returns. Daiwa holds a positive view on JD Logistics' revenue growth potential, including on-demand service demand from existing customers, revenue contributions from new businesses, the recovery of the express delivery industry, and market share gains from external customers. Management has stated that fuel costs account for less than 1% of total revenue and can be mitigated through measures, hence the pressure on the delivery company is relatively low. Daiwa has raised JD Logistics' earnings per share forecasts for 2026 to 2028 by 1% to 8%, with the current forecast 7% to 21% higher than market consensus, mainly reflecting a more optimistic outlook on revenue growth.