JD.com (HKEX: 9618) reports its third-quarter 2024 results.
For JD Logistics, as seen in an earlier post, there was an interesting collaboration between JD Logistics and Alibaba. The parties have completed the system integration. A large number of merchants on Taobao and Tmall can select JD Logistics as the service provider for their purchase. This could increase the business for JD Logistics in terms of revenue. JD Logistics is a trusted service provider for its superior and efficient services. Users can track JD Logistics shipments on the Taobao and Tmall apps.
JD’s operating business grew decently during the quarter:
- Total revenue grew 5.1% year-on-year compared to the third quarter of 2023 (a sequential acceleration from the 1.2% in the previous quarter) to RMB 260b, with double-digit y/y growth in users, supermarket business (with better profitability from enhanced supply chain) & apparel businesses.
- On profitability, its operating margin was 4.6% for the third quarter of 2024, compared to 3.8% for the third quarter of 2023.
- Meanwhile, JD Logistics’s OPM improved y/y, from 0.7% to 4.7%, due to improve efficiency and operating leverage;
- This drove an improvement in overall GAAP OPM (excluding gain on sale of development properties), from 3.8% to 4.6% y/y;
- With growing revenue and OPM, its EBIT grew well y/y, by 29% (to RMB 12b).
CEO of JD.com Sandy Xu mentioned that they benefited from China’s trade-in program, the supply chain capabilities and fulfill infrastructures allow them to capture more market share. They have launched a new US$5 billion share repurchase program through the end of August 2027. They have repurchased a total of 31 million Class A ordinary shares for a total of US$390 million during the three months ended September 2024 and repurchased a total of 255.3 million Class A ordinary shares for US$3.6 billion during the nine months ended September 2024. The total number of ordinary shares repurchased amounted to 1.1% of ordinary shares outstanding as of June 2024 and amounted to 8.1% of its ordinary shares outstanding as of December 2023.
Net cash used in operating activities was RMB 6.2 billion for the third quarter which was a drop of RMB 21.2 billion compared to the third quarter of 2023. This was due to cross-quarter payments resulting from the delay of payments on non-working days for accounts payable in the end of the third quarter of 2023 and second quarter of 2024, as well as payments made to lock in supplies for the trade-in program. It is good to have cash to deploy when opportunities are available.
Overall, it’s good to see JD continue to return excess capital to shareholders (instead of hoarding them, like in the past), which it intends to continue doing so (through both buybacks and dividends).
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