On October 14th, UBS Group released a report stating that $JD-SW (09618.HK)$ The company has short- to medium-term growth potential, with relatively low valuation. They reiterated a "buy" rating and raised the earnings forecast per share for 2025-26 by 3%. The target PE ratio increased from 5 times to 10 times, with the Hong Kong stock target price raised from 168 Hong Kong dollars to 250 Hong Kong dollars, and the U.S. stock target price also increased from 43 US dollars to 64 US dollars.
The report states that with more macro stimulus measures being introduced, investors are believed to shift their focus from the company's third-quarter performance to management's outlook, including the recovery of transaction volume for 3C electronics and white appliances, changes in the competitive landscape before the november 11 shopping festival, the speed and extent of margin improvement, and updates on the share buyback plan following the recent sharp rise in stock price. With a comprehensive set of macroeconomic stimulus policies, the demand in the real estate market is on the rise and the company's profit visibility will improve.
Ubs Group believes that JD.com is the biggest beneficiary of short-term macro policy opportunities, including the appliance trade-in scheme, measures stimulating the real estate market (boosting demand for white appliances), and consumer vouchers. In fact, there are preliminary signs of market improvement. In the medium term, JD.com will also benefit from continued profit margin expansion, including a more favorable product structure and scale improvement, increased procurement efficiency, and improved order fulfillment efficiency. JD.com's $5 billion share buyback plan will also provide downward support for the stock price. With the current price equivalent to a forecasted pe ratio of 9 times in 2025, the valuation is relatively cheap, and it is believed that the company has greater profit surprises and revaluation potential.
