Forensic Analyst

Jason Yap, CFA

Forensic Accounting

In Q1 2021, <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> reported strong topline growth (+39% yoy) that exceeded consensus expectations mainly due to strong user growth (+29% yoy), with more than 500 million reported Annual Active Users (AAU).  Out of which, 80% new active users came from lower tier cities, which reflects JD's strategy shift to target the fast growing lower tier markets (下沉市场) through its newly formed Jingxi business group. 
As JD continues its transition from the largest retail company in China (by revenue) to a supply chain-based technology and service provider, we can likely expect a moderated revenue growth for its core JD Retail business and incremental investments in New Initiatives and its logistics and fulfillment capabilities, with a key focus on Jingxi.
In Q1 2021, JD announced that Jingxi related businesses, will be carved out from JD Retail and reported under the New Businesses segment.  Having grown to a certain size, the change in reporting segment is not a jingxi or surprise. Instead, JD has been telegraphing the growing role of Jingxi and, more broadly, the moderating pace of growth of its core businesses in mature markets during recent quarter-end earnings calls and in related disclosures.   
This article discusses how to analyse earnings calls and disclosures using a forensic approach, with a view to gain relevant insights on JD's future prospects.

In Q1 2021, JD.com Inc (ADR) (JD US) reported strong topline growth (+39% yoy) that exceeded consensus expectations mainly due to strong user growth (+29% yoy), with more than 500 million reported Annual Active Users (AAU).  Out of which, 80% new active users came from lower tier cities, which reflects JD's strategy shift to target the fast growing lower tier markets (下沉市场) through its newly formed Jingxi business group. 
As JD continues its transition from the largest retail company in China (by revenue) to a supply chain-based technology and service provider, we can likely expect a moderated revenue growth for its core JD Retail business and incremental investments in New Initiatives and its logistics and fulfillment capabilities, with a key focus on Jingxi.
In Q1 2021, JD announced that Jingxi related businesses, will be carved out from JD Retail and reported under the New Businesses segment.  Having grown to a certain size, the change in reporting segment is not a jingxi or surprise. Instead, JD has been telegraphing the growing role of Jingxi and, more broadly, the moderating pace of growth of its core businesses in mature markets during recent quarter-end earnings calls and in related disclosures.   
This article discusses how to analyse earnings calls and disclosures using a forensic approach, with a view to gain relevant insights on JD's future prospects. 

JD - Analysing Earnings Calls and Disclosures Using a Forensic Approach

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Bottom-Up

<ul>
<li>Stellantis invested in Leapmotor and their joint venture will sell electric cars in Europe.</li>
<li>Two vehicle producers, GAC and Li Auto, are dismissing employees.</li>
<li>Tencent Music’s music revenue grew by 43% YoY in 1Q24.</li>
</ul>


Stellantis invested in Leapmotor and their joint venture will sell electric cars in Europe.
Two vehicle producers, GAC and Li Auto, are dismissing employees.
Tencent Music’s music revenue grew by 43% YoY in 1Q24.


China Consumption (20 May 2024): Leapmotor, Stellantis, GAC, Honda, Li Auto, ZTO, Tencent Music

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Equity Capital Markets

HD Hyundai Heavy Industries  / Equity Capital Markets

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>On the IPO front, Indian IPOs continued to do well, we also looked at two upcoming deals in Hong Kong.</li>
<li>On the placement front, last week ended up being one of the busiest ones so far this year with five deals live just on Thursday night alone. </li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, Indian IPOs continued to do well, we also looked at two upcoming deals in Hong Kong.
On the placement front, last week ended up being one of the busiest ones so far this year with five deals live just on Thursday night alone. 


ECM Weekly (20th May 2024) -Lalatech, Go Digit, Aadhar, TBO Tek, Ecopro, Nexus, Modec, Hyundai Heavy

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>We expect JD.com (JD) to deliver in-line-with-consensus revenue growth with better-than-expected earnings in 4Q23, aided by better-than-expected cost control.</li><li>For 2024, we expect user experience improvement and GMV share gain, as well as new user acquisition in an efficient way to remain priorities of JD.</li><li>To account for the additional investment for the Spring Festival Gala, as well as earnings impact from potential moves to drive user and GMV growth in 2024E, we cut our DCF-based target price to US$52.0 (was US$57.5).</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We expect JD.com (JD) to deliver in-line-with-consensus revenue growth with better-than-expected earnings in 4Q23, aided by better-than-expected cost control.For 2024, we expect user experience improvement and GMV share gain, as well as new user acquisition in an efficient way to remain priorities of JD.To account for the additional investment for the Spring Festival Gala, as well as earnings impact from potential moves to drive user and GMV growth in 2024E, we cut our DCF-based target price to US$52.0 (was US$57.5).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

JD.com (JD US) - Driving User Growth and User Experience Improvement

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

<ul>
<li>EM Fund ownership in JD.com continues to fall. Average weights slip to 4-year low as managers close out in large numbers.</li>
<li>Between February 2023 and October 2023, there were 56 closures versus 6 openings in JD.com, led by managers at the growth end of the spectrum.</li>
<li>Despite this, JD.com is still the 16th most widely held stock globally, with combined AUM among the funds in this analysis of $1.27bn.</li>
</ul>


EM Fund ownership in JD.com continues to fall. Average weights slip to 4-year low as managers close out in large numbers.
Between February 2023 and October 2023, there were 56 closures versus 6 openings in JD.com, led by managers at the growth end of the spectrum.
Despite this, JD.com is still the 16th most widely held stock globally, with combined AUM among the funds in this analysis of $1.27bn.


JD.com: Test of Investor Resolve as Selling Continues

China

JD.com Inc is an online direct sales company in China.  The Company offers a wide selection of products through its website and mobile applications.  JD.com sells appliances, computers, digital products, communication products, garments, books, and household items to consumers and vendors.

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JD.com Inc (ADR) (JD US)

JD - Analysing Earnings Calls and Disclosures Using a Forensic Approach

JD has at times revised disclosures possibly to conceal growth or margin weakness. We discuss how to analyse earnings calls and disclosures using a...

Jason Yap, CFA

China Consumption (20 May 2024): Leapmotor, Stellantis, GAC, Honda, Li Auto, ZTO, Tencent Music

Stellantis and Leapmotor's joint venture will sell electric cars in Europe. GAC and Li Auto, are dismissing employees. Tencent Music’s music...

Ming Lu

ECM Weekly (20th May 2024) -Lalatech, Go Digit, Aadhar, TBO Tek, Ecopro, Nexus, Modec, Hyundai Heavy

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

JD.com (JD US) - Driving User Growth and User Experience Improvement

We expect JD.com (JD) to deliver in-line-with-consensus revenue growth with better-than-expected earnings in 4Q23, aided by better-than-expected...

CMB International

JD.com: Test of Investor Resolve as Selling Continues

A reminder that JD.com is still a very well owned stock among institutional investors. Recent price action will only add pressure to existing...

Steven Holden

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