JD.Com's Retail Revenue To Fall In Q3: Analyst Reviews Sluggish Macro Trends In China

Benchmark analyst Fawne Jiang reiterated a Buy rating on JD.Com, Inc JD, lowering the price target to $67.

Jiang lowered 2H23 revenue estimates on JD, projecting a y/y growth at low single-digit vs. mid-single digit prior.

The analyst highlighted softer-than-expected Q3 China retail/e-commerce growth and a tough comp y/y on their leading electronic and home appliance SKUs (air conditioning, smartphones).

Jiang also cautioned about the disruption associated with their business adjustments and organizational restructuring that may take longer than expected to normalize.

Also Read: Why E-commerce Giant JD.Com Shares Are Falling Friday

For Q3, Jiang anticipates physical goods to grow at a high single-digit y/y rate in the Sept. Quarter, a notable decelerated growth compared with 14% y/y in the June Quarter.

Against a softer industry backdrop, JD may be more vulnerable, considering its category mix overweighed towards durable goods. 

In addition, JD may face tough comps y/y in some of their leading 3C SKUs, including air conditioning and smart phone (iPhone and Huawei). Furthermore, the analyst's checks suggested that their business adjustments and organizational restructuring may take longer than previous expectations to normalize, which could continue to weigh on GMV and revenue growth in 2H.

Net net, Jiang expects JD retail GMV to grow at low single y/y in 3Q with 3P outperforming 1P and 1P GMV down slightly y/y. 

On the revenue front, the analyst projects JD retail revenue down 1% y/y in 3Q.

The analyst's updated FY23 revenue and non-GAAP EPS are RMB1.077 billion (vs. RMB1.101 billion prior) and RMB19.53/$2.73 (vs. RMB RMB20.15/$2.82), respectively.  

Price Action: JD shares are trading lower by 3.04% to $26.99 on the last check Friday.