Citi issued a research report stating that JD LOGISTICS's (02618) first-quarter results slightly exceeded market expectations. Although rising fuel costs incurred additional expenses, improved gross margins offset the related impact. Considering factors such as the share buyback plan and the appreciation of the Renminbi, Citi raised its target price for JD LOGISTICS from HK$17 to HK$18, maintaining a "Buy" rating and slightly adjusting profit forecasts for 2026 to 2028. The firm believes that despite challenges from oil prices and non-operating income, JD LOGISTICS's valuation is not high and its efficiency continues to improve, hence it is optimistic about its prospects. The firm expects JD LOGISTICS's organic revenue growth to continue into the second quarter and accelerate in the second half of the year, benefiting from the normalization of the comparative base for Deppon's business. Management mentioned that the additional costs from the surge in oil prices in the second quarter account for about 1% of total revenue, but the firm believes that efficiency improvements can largely offset the related impact. The report noted that JD LOGISTICS's first-quarter revenue increased by 29% year-over-year to RMB 60.6 billion, exceeding market expectations. Revenue from self-operated integrated supply chain customers (1P ISC), third-party integrated supply chain customers (3P ISC), and other customers grew by 32%, 15.5%, and 32%, respectively. The gross margin improved from 7.2% in the same period last year to 8%, while the adjusted operating margin increased from 0.5% in the first quarter of this year to 1.8%, primarily benefiting from a lower base and control over operating expenses.
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