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Shares of Chinese e-commerce giant JD.com
9618,
were higher in Hong Kong trade, with analysts unfazed by a management change and welcoming a positive outlook in the wake of first-quarter earnings.
Shares were up 6.9% at HK$144.30 in Friday morning trade, paring year-to-date losses to 34%. The gain comes after the company posted a 1.4% on-year rise in first-quarter revenue, along with a net profit of 6.26 billion yuan (US$900.9 million), reversing from a net loss of CNY2.99 billion a year ago.
JD surprised many with news that its chief executive will retire next month and will be replaced by Sandy Ran Xu, the companyโs chief financial officer, but analysts said the move was unlikely to change operations.
Citi analysts said that based on Xuโs โlong association as auditor and recent experience as CFO, we are confidentโ she will lead the company through an adjustment period. Nomura analysts said JDโs founder and chairman, Richard Liu, โremains as having the most significant influence on JD strategies and operations, in our view.โ
Regarding earnings, Citi analysts in a research note highlighted JDโs mention of a recovery in demand for large appliances in April and its expectation of faster growth in gross merchandise value in the second quarter.
They retreated a buy rating on an โundemanding valuation,โ with JD trading around 12x and 9x Citiโs estimated 2023 and 2024 earnings, respectively, as well as expectations of a turnaround in operations. The analysts forecast revenue to rise 4.2% on year in the second quarter, and kept a target price of $68.00 on U.S.-traded ADRs, which last closed up 7.2% at $37.63.
Nomura analysts Jialong Shi and Thomas Shen in a research note kept a buy rating and target price of $59.00, citing first-quarter results and margins above expectations.
They also noted that the company is considering returning capital to shareholder through dividends and buybacks, adding that โwe think these moves are likely to enhance the appeal of JD shares to long-term investors.โ
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