Jingdong Record 2014 Loss 5 Billion Fall Dispute

Jingdong released its fourth quarter and full year earnings report in 2014. Data show that Jingdong's net loss in the fourth quarter was 450 million yuan, an increase of 3 times compared with the same period last year, and the annual loss level also reached a scale of 5 billion yuan. From the book's perspective, this is also a record loss in Jingdong's development over 10 years.

By the end of 2013, after many years of burning doubt, Jingdong once turned round losses, so that people could see the dawn of full profits. But in 2014, the book number made Jingdong fall into controversy.

Behind the huge losses

5 billion loss, at first glance

The earnings report is very ugly.

In 2013, Jingdong lost 50 million yuan, and realized profits in the fourth quarter of that year.

With regard to the expansion of net losses, Jingdong said that it was mainly due to the increase in equity awards and the amortization of intangible assets arising from the acquisition of assets and business arising from strategic alliance with Tencent.

According to the information disclosed in the Jingdong prospectus, the equity award is mainly related to the founder and CEO Liu Qiangdong.

In the first quarter of 2014, on the eve of Jingdong listing, the board of directors gave Liu Qiangdong 3 billion 670 million scale equity incentive, resulting in Jingdong's quarterly loss of 3 billion 795 million yuan.

The quarter

It is also the biggest part of Jingdong's annual loss.

In the next few quarters, the net loss of Jingdong was 580 million, 160 million and 450 million respectively, and the latter three quarters were basically "amortization of intangible assets with Tencent".

"At present, losses are actually handled in accordance with the US accounting standards in the accounting books, and are not much related to the basic business operations of the company."

According to Jingdong, according to us accounting standards, traffic support and cooperation with Tencent should be counted as expenditure.

In accordance with non US accounting standards, Jingdong has actually made profits in two consecutive quarters, and its net profit in 2014 was 83 million 800 thousand yuan.

At the same time, a number of business indicators show that Jingdong's performance and expectations exceeded Wall Street's expectations.

Among them, Jingdong revenue in the fourth quarter of last year was $5 billion 600 million, an increase of 73% over the same period last year.

Wall Street is expected to be 5 billion 300 million dollars.

Due to its performance exceeding expectations, many investment banks have raised the Jingdong's target stock price.

Among them, Morgan Stanley maintained Jingdong's "overweight" rating and raised its target price from 34 US dollars to US $37; UBS maintained its "hold" rating, and the target price was raised from US $27.4 to US $31.

As of March 4th closing, Jingdong closed at $27.72.

Marriage Tencent pcript

After six months of running in, Jingdong and Tencent have achieved initial results in strategic cooperation.

In the Jingdong wireless layout, the support from Tencent resources is very large, especially WeChat and mobile QQ first level entry is regarded as the "golden signboard" of Jingdong.

With the support of Tencent resources, new users of Jingdong have increased in scale.

In 2014, Jingdong's active users reached 96 million 600 thousand, more than double that of 2013.

Morgan Stanley report predicts that in 2015, Tencent entry resources are expected to bring 3000 new users to Jingdong.

Jingdong reported that the proportion of orders from wireless terminal channels has reached 36% in the fourth quarter of 2014, and wireless orders grew by 372% over the same period last year.

In contrast, Jingdong's total station growth rate was 95% during the same period.

The growth of wireless terminal orders is much higher than that of the whole station.

"Compared with PC and mobile Jingdong, WeChat and QQ portals contribute a lot to our traffic, and repeat purchases are also good."

In the performance disclosure conference, Jingdong COO Shen Haoyu said that in the volume of Tencent contributed traffic, many from small cities users, small cities, the growth rate of orders, far more than a second tier cities, in addition to traffic contribution, Tencent in helping Jingdong attract new users has also made great contributions.

However, he also admitted that at present, in terms of conversion rate, the conversion rate of WeChat and mobile phone QQ is still lower than that of Jingdong.

In terms of unit price, WeChat mobile phones and QQ customers are lower than the price of Jingdong mobile customers, while the price of Jingdong customers is lower than that of PC websites. "Mainly because of different channels, there are different categories."

"In WeChat and QQ two ports, users buy more clothing and daily necessities."

Shen Haoyu said.

Although the book performance is still losing money, it still has a good voice for Jingdong.

According to the financial data, Jingdong's total paction volume in the fourth quarter of last year was 85 billion 800 million, of which 42 billion 800 million of electronic and home appliance products were traded, and 43 billion of daily commodities and other commodities accounted for 50.1%.

This also means that non 3C products occupy the first half of the Jingdong for the first time.

Although Jingdong has been involved in many fields of books, department stores, clothing, cosmetics and fresh products since 2010, and has launched many price wars, its 3C category has occupied an important share of Jingdong.

Relatively speaking, 3C as a standard product has been an important part of Jingdong's proprietary business, but its gross profit is relatively low. Similar to clothing and other non-standard products, Jingdong has repeatedly said that it will be open to third party sellers through the POP platform.

With the size of the third party sellers settled, the Jingdong's low margin situation has begun to improve gradually.

Its gross profit margin reached 11.6% in 2014, up 1.8 percentage points from 2013.

According to the latest data, there are already 6 000 third party sellers on the Jingdong platform.

However, compared to Ali, the scale is still very small, the latter Tmall and Taobao platform, has nearly about 8000000 sellers.

For the development of the third party business, Liu Qiangdong's explanation is that Jingdong will not deliberately pursue the number of businesses.

However, as early as 2013, Liu Qiangdong expressed great expectations for the POP business and regarded it as "a business related to the life and death of Jingdong".

According to the planning of Jingdong at that time, it is hoped that the third party seller business will occupy half of Jingdong in 2016.

In the whole year of 2014, the proportion of Jingdong's third party pactions has reached 39%, reaching 44% in the fourth quarter.

The report is expected to reach 46% this year. In the fourth quarter of this year, the proportion of third party pactions is expected to reach 50%.