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2025-04-28 15:33:39 Citi’s research report noted that JD (JD.US)’s food delivery unit doubled its order volume from 5 million to 10 million in 10 days, reflecting an aggressive push in its food delivery business. However, over the past week/ month, JD and MEITUAN-W (03690.HK) share prices slumped 6.3%/ 6.5%, and 22%/ 20.2%, signaling investor concerns over profitability impacts. Citi suggested JD may have planned to counter Meituan Instashopping’s threat to its core retail business as early as 1Q24, when it hired former Meituan senior vice president Guo Qing. Despite uncertainties about the sustainability of JD food delivery’s order growth once subsidies shrink and merchant commission waivers normalize, Citi highlighted JD’s 1P supply chain and logistics strengths. Food delivery and instant retail, as high-frequency transaction businesses, offer cross-selling opportunities and effective new user acquisition, serving as a natural extension for JD. Accounting for revised profit expectations, Citi lowered JD’s U.S. share target price from USD56 to USD51, maintaining a Buy rating. Citi projected JD food delivery's per-transaction losses at RMB4.68, RMB4.17, and RMB3.63 for 2-4Q25, narrowing to RMB1.48 by 4Q26, driven by improved efficiency, upgrades to premium delivery services, and higher average sales from non-food cross-selling. JD food delivery was expected to incur a total loss of RMB13.5 billion in 2025, RMB15 billion in 2026, and RMB5 billion in 2027. ~ AAStocks Financial News Web Site: www.aastocks.com | |