1Q25 results in line with our expectations
JD Logistics announced its 1Q25 results: Revenue rose 11% YoY to Rmb46.97bn, non-IFRS net profit rose 13% YoY to Rmb751mn, and non- IFRS net margin stayed flat YoY at 1.6%. The firm's 1Q25 results were in line with our expectations. The firm increased investment to enhance product competitiveness, leading to a short-term rise in costs while driving healthy revenue growth. We are upbeat on the firm's profit growth in the medium and long term.
Revenue: Integrated supply chain business grows steadily. In 1Q25, revenue from customers in the integrated supply chain industry rose 13% YoY to Rmb23.2bn, with revenue from JD.com up 14% YoY to Rmb14.7bn. The firm's close cooperation with JD Retail boosted steady growth in domestic order volume and potential for efficiency improvement.
In 1Q25, revenue from external customers rose 12% YoY to Rmb8.5bn, the number of customers rose 14% YoY to 63,601, and average revenue per customer fell 2% YoY to Rmb133,667. The firm increased investment in service quality, creating new growth drivers for its products. We see upside in revenue per customer in the medium and long term.
Revenue from customers in the express delivery and freight delivery industries rose 10% YoY to Rmb23.8bn, and the proportion of external revenue fell 0.7ppt YoY to 69%, largely staying high at about 70%.
Costs and expenses: Operating costs rose 12% YoY, with employee compensation and welfare expenses, outsourcing costs, rental costs, depreciation of property and equipment, and other operating costs changing +14%, +18%, -9%, flat, and +6% YoY. Gross margin fell 0.5ppt YoY to 7.2%. The firm increased investment in transportation and delivery resources to expand its customer base and enhance service quality, leading to a rise in related operating costs and slight pressure on gross margin. In 1Q25, the firm’s expenses rose 1.3% YoY to Rmb3.18bn, with its proportion in revenue down 0.7ppt to 6.8%.
Trends to watch
We expect the firm to enter a development phase in 2025 marked by both scale expansion and product upgrades, with focus on four key growth drivers.
Channel integration with the Taotian platform brings incremental customers and revenue.
Improvements in the operating efficiency and product service capabilities of the supply chain and express delivery business drive healthy revenue growth in the medium and long term.
Overseas warehouse expansion unlocks new market opportunities for the international business.
Integration with Deppon's network further unleashes economies of scale.
Financials and valuation
Given improving operating efficiency and economies of scale, we raise our 2025 non-IFRS net profit forecast 35% to Rmb8.54bn. We introduce our 2026 non-IFRS net profit forecast of Rmb9.43bn, up 10% YoY. The stock is trading at 8.5x 2025e and 7.6x 2026e non-IFRS P/E. We have switched to the 2025 P/E ratio and taken into account the industry's valuation benchmark, maintaining an OUTPERFORM rating and TP of HK$18.5, implying 13.4x 2025e and 11.9x 2026e target non-IFRS P/E with 57.3% upside.
Risks
Logistics demand disappoints; front-loaded costs weigh on profit margin; geoeconomic risks weigh on overseas business.