Daiwa: Raises JD Group-SW target price to HKD 205, reiterates "Buy" rating

According to Zhitong Finance APP, Daiwa released a research report stating that JD Group-SW (09618, JD.US) is expected to have more rational food delivery (FD) investments in the third quarter of this year after the peak in the second quarter, and is optimistic about the upward space for JD Retail and JD Group's operating profit margin in the third quarter of this year. Daiwa reiterated its "Buy" rating for JD Group and raised the 12-month target price from HKD 191 to HKD 205.

Daiwa expects JD Retail's operating profit margin to further improve in the third quarter of this year, while its revenue growth remains on track. Daiwa also anticipates that JD Retail's revenue will grow by 10% year-on-year in the third quarter of this year. Specifically, it is expected that the growth of general merchandise categories will outpace that of home appliances and electronics, as the latter faces a high base effect from the national subsidy program from July to September. Daiwa believes that the year-on-year growth of general merchandise category revenue will accelerate from 16% in the second quarter of this year to a high teens level in the third quarter; and expects JD Group's revenue growth to be approximately 12% year-on-year in the third quarter of this year, slightly better than JD Retail.

Daiwa expects JD Retail's operating profit to increase by 17% year-on-year to RMB 13.6 billion in the third quarter of this year, continuing to exceed its revenue growth rate. Driven by the improvement in JD Retail's operating profit margin (OPM), the group's net profit for the third quarter of this year is adjusted to RMB 4.2 billion