Citigroup has issued a research report indicating that JD LOGISTICS's first-quarter results slightly exceeded market expectations. While rising fuel costs have introduced additional expenses, improvements in gross profit margin have offset the related impact. Considering factors such as the share buyback plan and the appreciation of the Renminbi, Citigroup has raised the target price for JD LOGISTICS from HK$17 to HK$18, maintaining a "Buy" rating, and made minor adjustments to its profit forecasts for 2026 to 2028.
The firm believes that despite challenges related to oil prices and non-operating income, JD LOGISTICS's valuation is not high and its efficiency continues to improve, leading to a positive outlook on its prospects. Citigroup expects organic revenue growth for JD LOGISTICS to persist into the second quarter and accelerate in the second half of the year, benefiting from the normalization of the comparative base for Deppon Logistics business.
Management noted that the additional costs from the surge in oil prices in the second quarter account for approximately 1% of total revenue. However, the firm believes efficiency improvements can largely offset this impact.
The report highlighted that JD LOGISTICS's first-quarter revenue increased by 29% year-over-year to RMB 60.6 billion, surpassing market expectations. Revenue from self-operated integrated supply chain clients (1P ISC), third-party integrated supply chain clients (3P ISC), and other clients grew by 32%, 15.5%, and 32%, respectively. The gross profit margin improved from 7.2% in the same period last year to 8%. The adjusted operating profit margin also improved from 0.5% in the first quarter of this year to 1.8%, primarily benefiting from a lower base and effective control of operating expenses.
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