Jingdong Listed For The First Time In 10 Years Of Earnings, Many Institutions Raise Target Price

On the night of March 2nd, Jingdong group released its fourth quarter and full year earnings in 2019.

According to the financial report, the net revenue of Jingdong in the fourth quarter of 2019 was 170 billion 700 million yuan, with a net profit of 3 billion 633 million yuan, and a loss of 4 billion 805 million yuan in the same period last year. The total revenue in 2019 was 517 billion 30 million yuan, net profit was 12 billion 184 million yuan, and the loss was 2 billion 490 million yuan last year. All financial data exceeded Wall Street's expectations. This is also the first annual profit of Jingdong in 10 years.

After the release of the earnings report, the US stock market rose sharply on the 2 th of March and opened up 12.44% to 43.3 dollars at the end of March. March 3rd before the continuation of the rising trend, up to 9:57 Beijing time rose 1.27% to 43.85 U.S. dollars. In fact, Jingdong's share price has risen from $21.27 at the beginning of the year to $35.23 at the end of 2019, or 65.63%. In 2020, Jingdong's share price continued to rise, which is 22.9% higher than the beginning of the year.

Jingdong's latest earnings report has not only continued to boost stock prices, but also many brokerage firms have expressed a lot of attitude. Shortly after the release of the earnings report, Goldman Sachs raised its target price from $47 to $52, while Credit Suisse increased its share price to $48 again after the fourth quarter of last year. JP Morgan raised its target price from $50 to $52 in.

The reason for the market is not only because of a simple financial report. In fact, there is also some unexpected change in the data of Jingdong under the spread of the new crown pneumonia epidemic. Jingdong expects its revenues to rise by at least 10% in the first quarter of 2020, which is significantly higher than the 5% expected by Wall Street.

"During the epidemic period, we can see some phenomena, such as the acceleration of the reflux of the old users of Jingdong, and the rapid growth of the sleepy users who have been aroused. From the traffic structure, we can see that new users' active access and active shopping are also upgrading. Jingdong retail group CEO Xu Lei said, "in the future, we will enhance and improve their user experience through the meticulous operation of these users, and turn them into our long-term loyal users."

Vote by foot

Users are the foundation of consumption, and Jingdong's latest fiscal season is quite impressive.

According to the financial report, the number of active users increased to 362 million at the end of 2019 in. The number of active users increased by 27 million 600 thousand over the end of the third quarter, and the number of new active users increased year by year. By contrast, the number of active users in the Alibaba increased by 18 million in the quarter.

The Jingdong's active users grew by more than 70% from three to six tier cities. In October last year, Jingdong bought and sold it as "Jingxi" and launched the Beijing hi APP and small programs independently. At the same time, WeChat shopping portal was further launched. At that time, Jingdong made clear to the outside world that the product is a new mode of Jingdong targeting WeChat ecosystem, especially women and low line market.

The latest financial results further verified the original layout. "Through a few months of development, before the outbreak of the Spring Festival, (Jing Xi) the average daily volume has exceeded 1 million." Xu Lei disclosed that "Beijing Xi business brings new customers to us, there are more users from low level cities, they prefer social networking attributes, impulse buying is more, conversion rate is relatively high."

Yan Yicheng, a white-collar worker in the second tier city, used to be a loyal user of Taobao. In the past, except for electronic products, all other electronic commerce shopping basically used Taobao, but in the epidemic, she made a total of 14 orders on Jingdong platform. The reason for choosing Jingdong is because logistics is efficient. "The snail powder that can't be bought everywhere is sent to the Jingdong every other day." Yan Yicheng told the twenty-first Century economic news reporter.

User Xie Xie Yao said that the epidemic initially bought only disinfectant, books and dairy products on the Jingdong platform, and the rest of the products were still consumed on other electronic business platforms. But after the new year's return to the old home, only Jingdong can deliver goods, thus increasing consumption on Jingdong platform. "It used to be used once in two months, and now it has been placed 5 times in a month."

JP Morgan analysts pointed out that Jingdong during the epidemic showed a unique user experience and logistics efficiency. If this effect continues to win word of mouth among consumers and encourage more businesses to use their logistics services, Jingdong will become more valuable for long-term investors. "In our view, strong expectations in the first quarter made Jingdong the best performing e-commerce platform during the epidemic."

Logistics and supply chain support

In 2015, Ma Yun, the former chairman of Alibaba's board of directors, inadvertently circulated internal comments on Jingdong logistics. At that time, Ma asserted that Jingdong had to support tens of thousands of people to build its own logistics. There were huge problems in the business mode, and the future must be a tragedy.

Over the past five years, the global spread of the new crown virus epidemic is proving business models in real terms.

"Despite the impact of the new crown pneumonia epidemic in the short term, Jingdong has continued to expand its share of the market through nurturing user spending habits and stickiness." Goldman Sachs analysts said.

Behind the "foot" vote, the Jingdong derived from the basic skills of the Jingdong. "From the overall performance, Jingdong's proprietary mode is relatively good in this epidemic situation. In addition, we increased the support of businesses last year, especially in 2020, and we gave corresponding support to resources." Xu Lei said bluntly, "during the epidemic period, we saw that merchants in warehouses were much better than those without warehouses."

Unlike the promotion of the SARS epidemic on the consumption pattern of electric business in 2003, the domestic authorities adopted strong measures to control the spread of the new crown virus epidemic, which directly led to the disruption of large supply chains and logistics. During the Spring Festival, the logistics manpower is tight, so the super supply chain and logistics capabilities become the absolute elements to ensure the electricity supplier shopping experience.

"We expect that in the first quarter, the core business of Alibaba will lose 150-200 billion yuan because of logistics restrictions." Zhu Liuxiang, an analyst with dolphin think tanks, thinks that self isolation and high-speed road closure all over the country directly lead to logistics disruption. "In addition to the Jingdong's own delivery and warehousing of third party businesses, other companies basically have no way to deliver the goods unless they use SF. At the same time, Shun Feng is also a priority medical supplies distribution, general electricity distribution price is very expensive.

In fact, from January 25th to February 10th, in the most stringent half month of epidemic prevention and control, most of the electronic business platform was "closed down", even if there were orders, it was difficult to perform.

"During the epidemic, there were other electric providers, but they were all not urgent. Some businesses would send SF, and the speed could be good, but I didn't deliver them for a month after sending the ordinary express." Yan Yicheng spoke to reporters.

For Jingdong, logistics restrictions under epidemic prevention and control are undoubtedly an opportunity, but in the future, how to keep users repurchasing after the relief of the epidemic situation and the restoration of domestic logistics are still to be observed.

"After the outbreak, the Jingdong will not necessarily continue to use the high frequency. In fact, I haven't been promoted by the Jingdong for brand loyalty," Xie Dan told reporters. "Jingdong is really the most convenient for me, but after the epidemic, I think the key point is definitely not the inconvenience of the parties, but the platform I want to buy."

At the same time, Xie said that the service experience of Jingdong has not declined during the special period. This is worth noting, but in the long run, it will be inevitable to hesitate to pay high distribution fees. (Editor: Lin Hong)

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