7 Billion 300 Million Profits Record, But Jingdong's Position In The Electricity Business Is Declining.

Despite the record quarter earnings performance and the renewal of WeChat's WeChat entry agreement with Tencent Holdings (0700.HK), the JD.com Inc. (NASDAQ:JD) Jingdong shares closed higher on Friday in the "V shape" reversal of the Chinese and US stock markets.

As of the end of March, the net profit of Jingdong was 7 billion 319 million 100 thousand yuan, or about 1 billion 90 million 600 thousand US dollars, up 380% from the 1 billion 524 million 900 thousand yuan in the first quarter of 2018. The share ADS increased from 1.04 yuan in the same period last year to 4.96 yuan, and EPS increased from 0.52 yuan to 2.48 yuan, far exceeding Refinitiv's expected 0.80 yuan.

The adjusted ADS increased from 0.71 yuan in the same period last year to 2.23 yuan or 0.33 US dollars, far exceeding the $0.12 expected by the market.

At the same time, the Jingdong announced the renewal of the WeChat entry agreement with Tencent. The agreement has been in effect for three years since May 27, 2019, and the WeChat platform continues to provide one level and two level traffic support for Jingdong.

In addition, Jingdong said it would continue to cooperate with WeChat in communications, advertising and membership services.

It is estimated that Tencent's support value is about $800 million, while Jingdong will issue about $250 million of common stock to Tencent during its cooperation.

Over the expected EPS performance and Tencent support, JD.com Inc. (NASDAQ:JD) Jingdong shares rose more than 10% before the stock market.

On Friday, the US stock market opened at 30.19 US dollars and opened 9.74% higher. The highest value in the morning market was 30.47 US dollars, up 10.76%. After the opening up, Jingdong shares plunged rapidly. They only closed up 2.40% yuan and 28.17 US dollars a day. They went up and down with the Nasdaq, the Dow, the S & P and a Chinese stock market. The V reversal is quite different.

In the first quarter, Jingdong's revenue growth continued to hit a new low, with an increase of 20.9% in the period from 100 billion 127 million 900 thousand yuan to 121 billion 81 million 100 thousand yuan, while the four quarter and full year revenue growth in 2018 was 22.4% and 27.5%, respectively, exceeding Refinitiv's expected 120 billion 100 million yuan.

In the earnings report, Jingdong rarely listed GMV data for the first time. It was also shocking in the analysts' conference call.

At the same time, Jingdong in the first quarter of EPS significantly exceeded the expected situation, and no increase in the performance of the year is expected, is also considered to be an important reason for the company's share price on Friday.

In addition, profit growth is mainly driven by the increase in the control of sales costs and investors' confidence has not been lifted.

During the period, Jingdong's product revenue increased by 18.7% from 91 billion 498 million 100 thousand yuan to 108 billion 651 million 300 thousand yuan, of which 3C income increased by 14.5% to 70 billion 701 million 600 thousand yuan, compared to 61 billion 755 million 900 thousand yuan in 2018, and the general merchandise sector's revenue increased 27.6% to 37 billion 949 million 700 thousand yuan, and the first quarter of 2018 was 29 billion 742 million 200 thousand yuan.

This independent disclosure of 3C and GM's two major departments' independent quarterly revenue is the first time in the three quarter of 2017 that Jingdong ceased to disclose two major sectors of GMV for the first time to disclose relevant quarterly data independently.

Before stopping the disclosure of quarterly GMV of 3C and GM's two major sectors, in 2017, during the "618" period, Jingdong's GM sector, which was dominated by clothing and home business, suffered a serious blow from rival Alibaba Group Holding Ltd. (NYSE:BABA), Alibaba's Tmall.com Tmall platform, "two election one", including a large number of Chinese casual wear giants such as Jiangnan Buyi, Taiping bird, JEANSWEST, GXG and so on.

However, Alibaba's "two election one" policy is more tilted at the Pinduoduo Inc. (NYSE:PDD), a new business tycoon born out of the world. It shows that Jingdong's position as Alibaba's only competitor in the field of electricity supplier has declined rapidly.

Relying on WeChat social property users and GMV's sharp expansion, after last year's listing, the market value was close to the Jingdong who encountered the founder's "sexual assault scandal". However, after disclosing its quarterly results, a lot of stock prices continued to fall, and the market value of the two sides is now about $14 billion away.

Although the criminal risk of "sexual assault scandal" by Jingdong founder Liu Qiangdong has been lifted at the end of last year, the Chinese tycoon and its founding company suffered civil lawsuits this year. Liu Jingyao, a female student, formally filed a civil lawsuit against a court in Minneapolis in mid 4 this year, accusing Liu Qiangdong of six counts of sexual assault and illegal detention.

However, due to the smaller risk of civil litigation against Liu Qiangdong and the company it founded, the performance of Jingdong in the open market is basically not affected by the incident, which only caused a huge public opinion storm in China.

By the end of March, Jingdong had 310 million 500 thousand active users, compared with a 2.9% increase in the first quarter of 2018. The company claims that the quarterly active users have a 15% increase, but only disclose the giant data.

In the first quarter, Jingdong's adj operating profit margin was 1.6% year-on-year, a substantial improvement of 80 basis points, of which 60 of the business profits from Jingdong mall changed to Jingdong retail business. The adj EBITDA profit margin recorded 2.6%, up 100 basis points.

Gross profit margin increased by 90 basis points in the first quarter of 15% compared with the same period last year, mainly benefiting from Jingdong's retail business gross margin improvement by 36 basis points.