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JD (09618) announced its second quarter and interim results on Wednesday. The second quarter results greatly exceeded market expectations. After the financial report was released, the stock price of JD's US stock market rose sharply overnight, closing 4.25% higher at the end of the session. In the Hong Kong stock market today, JD's stock price also rift more than 6% higher.

Driven by growth in retail and logistics business, JD announced revenue growth for the second quarter, with earnings far exceeding analysts' expectations. In the second quarter, JD Group's revenue reached 291.4 billion yuan, revenue increased by 1.2%, and revenue reached 551.4 billion yuan in the first half of the year.

Net profit attributable to common shareholders was $12.6 billion, compared to $6.6 billion for the same period in 2023. Net profit attributable to common shareholders without US GAAP was $14.5 billion, compared to $8.6 billion for the same period in 2023. JD mentioned that one of the main driving factors for the increase in profit margins was the increase in supply chain efficiency, which led to a sharp improvement in gross margin year over year. In the second quarter, gross margin increased 137 basis points year by year, improving year by year for nine consecutive quarters.

The logistics industry under JD gained significant strength during the period. The net profit of JD Logistics (02618) for the second quarter was 2.026 billion yuan, soaring 4.76 times from year to year, driving a loss to profit in the first half of the year, with a profit of 2.264 billion yuan. Non-IFRS profit for the second quarter was 2.456 billion yuan, an increase of 1.97 times year-on-year, driving a 26-fold increase in the first half of the year.

JD's retail revenue increased from 253.28 billion yuan in the same period last year to 257.07 billion yuan. Logistics revenue increased 7.7%. In contrast, new business declined by 35% due to the “adjustment” of the Jingxi shopping platform. Service revenue rose 6% to $57.4 billion.

CEO Xu Ran said that JD's low price strategy has not changed. The number of users maintained double-digit growth in the second quarter, and the frequency of shopping maintained double-digit growth. It was emphasized that JD still attached importance to the performance of total product transactions (GMV), profit, and cash flow indicators, and was focusing on achieving balance.

JD said that the annual profit target is that the growth rate exceeds the market growth rate, and it is confident that it will achieve the medium- to long-term goal of high single-digit profit margins. After the results were announced, most institutions followed up and were optimistic about JD's stock price prospects. It is expected that the improvement in the momentum of electronic products and home appliances will continue until the second half of the year. In particular, the “trade-in” policy can continue to bring growth to JD.

Even though JD's stock price has fallen by more than 20% from the high level set in May, the cumulative increase since this year has far exceeded the average performance of the industry. Boosted by both positive performance and outlook, JD's stock price directly jumped this morning away from the recent four-month low to the high level since mid-July. Next, HK$112 and HK$120 will be the next key resistance range.