JD.com is on a roll

Investors have high hopes that JD.com will bounce back from a dreadful stock performance since mid-2015, when its shares traded 45% higher at $38, and its latest trading update is encouraging.

Fourth-quarter and full-year results, which were released on March 1, point to a business that is still growing at a fast clip in a market where competition leaves management with very little room for error.

Growth is a very important detail because its equity is valued at a multiple of 80x forward adjusted operating cash flow, and even more so because JD.com is getting closer to break-even. However, it is unlikely to be in the black for another year as market consensus estimates indicate that positive earnings per share will likely be achieved only at the end of 2017.

JD.com’s key metrics, such as gross merchandise volume (GMV), for the fourth quarter continue to indicate the strength of its business model. GMV rose 69%, and the increase was even more pronounced on an annual basis, at 78%.

Meanwhile, net revenues for the fourth quarter stood at $8.2bn which was up 57% over the fourth quarter of 2014. Quarterly net revenues from services and others, mainly the group’s e-commerce platform business, stood at $723m, an increase of 101% from the prior year.

Net revenues for the full year totalled $28bn, up 58% year-on-year. Meanwhile, net revenues from services and others increased by 110% in 2015.

The net loss attributable to shareholders for the fourth quarter read $1.2bn however, that was primarily due to the impairment of Paipai.com and certain investments recognised in the fourth quarter.

In fact, the non-GAAP net loss attributable to shareholders for the fourth quarter was roughly $100m while the full-year non-GAAP loss stood at $131.3m.

Annual active customer accounts from the core business increased 71% to 155m in the 12 months ended 31 December while annual active customer accounts from JD Mall, excluding unique customers from JD Finance and O2O, increased by 70% to 153.6 during the period.

FInally, fulfilled orders from the core business in the fourth quarter were 417.8m which was up 100% from the 208.7m it fulfilled in the same period in 2014; core fulfilled orders placed through mobile accounted for approximately 61.4% of the total on a quarterly basis, a rise of more than 230% year-on-year.

Source: Transport Intelligence, 9th March 2016

Author: Alessando Pasetti