Nomura expects JD LOGISTICS to achieve profit growth in the fourth quarter and maintains a "Buy" rating

Nomura published a research report indicating that JD Logistics (02618.HK) saw a 24% year-on-year revenue growth last quarter, which was 4% higher than market and the bank's forecasts, believed to be driven by internal revenue growth offsetting external revenue slowdown. During the period, the non-International Financial Reporting Standards operating profit fell 39% year-on-year, which was 11% lower than the bank's expectations. Nomura believes this was due to intensified market competition and internal business adjustments affecting Deppon’s performance.

The bank noted that JD Logistics' non-International Financial Reporting Standards net profit fell 22% year-on-year last quarter, which was 6% higher than market and the bank's expectations. It predicts that the strong growth trend in internal revenue will be sustainable in the fourth quarter, with organic growth along with service revenue related to JD (09618.HK) delivery business pushing JD Logistics' internal revenue to grow by 33% in the fourth quarter, driving total revenue expectations to grow by 13% year-on-year.

Nomura expects that with improved utilization of prior investments, JD's adjusted operating profit in the fourth quarter could record positive growth, with an expected increase of 41%. The adjusted net profit is expected to grow by 31% year-on-year to 2.9 billion yuan, maintaining a "Buy" rating with a target price of 17 yuan