Furui: JD Logistics (02618) Quarterly Earnings Exceed Expectations, Target Price Raised to HK$18.5

Credit Suisse has released a research report stating that, based on the latest business trends, it maintains a "buy" rating on JD LOGISTICS (02618) and raises its target price from HK$18.4 to HK$18.5. JD LOGISTICS had a steady performance in the first quarter of this year, with total revenue increasing by 29% year-on-year to 60.6 billion RMB, exceeding market and the bank's expectations by 3.5% and 3.3%, respectively. Revenue from integrated supply chain customers increased by 25.9% to 29.2 billion RMB, while revenue from other customers increased by 32% to 31.4 billion RMB. Gross profit increased by 42.6% year-on-year to 4.8 billion RMB, with a gross margin improvement of 0.8 percentage points to 8%. Non-GAAP profit was 1.05 billion RMB, in line with market and the bank's expectations, with a non-GAAP profit margin of 1.7%. The bank noted that JD LOGISTICS made significant progress in the European market. With JD Group officially launching its online retail business "Joybuy" in Europe, JD LOGISTICS' express delivery brand "JD Express" has also started operations in core areas such as the UK, Germany, the Netherlands, and France, replicating its domestic "211" express delivery service standard. Credit Suisse believes that the impact of oil price fluctuations on the company's gross margin is lighter compared to pure express delivery companies, as the integrated supply chain business accounts for nearly half of the business. The company has implemented measures such as optimizing capacity structures, using artificial intelligence, and signing oil-price linkage mechanisms with customers, effectively offsetting most of the impact. As a result, management maintains its annual profit guidance unchanged.