Nomura: Chinese e-commerce stocks may outperform the market in the short term, with a preference for JD.com, PDD, etc
Nomura expects Chinese e-commerce stocks to outperform the market in the short term, with a preference for JD.com, Pinduoduo, and Alibaba, all rated as "Buy". The target price for JD.com has been raised from $38 to $53, with an expected 5% year-on-year growth in the third quarter and adjusted earnings per share growth of 14%. JD.com's retail revenue is expected to grow by 4.7%, with operating profit margin expanding to 3.9%
According to the information from Zhitong Finance APP, Nomura stated that China's series of stimulus policies launched at the end of September focus on stabilizing the real estate market and revitalizing consumer demand. If consumer sentiment can improve, it is expected that the Chinese e-commerce sector has the potential to outperform the broader market in the short term. The top picks for the short term by the bank are JD.com (JD.US), Pinduoduo (PDD.US), and Alibaba (BABA.US), all rated as "Buy".
Nomura has raised the target price of JD.com's US stock (JD.US) from $38 to $53, an increase of 39.5%, mainly due to the latest stimulus plan in China potentially improving the overall retail environment, along with the expectation of JD.com's third-quarter earnings exceeding expectations, and an upward revision of JD.com's full-year profit forecast for this year. Nomura expects JD.com's third-quarter revenue to meet expectations, with a year-on-year growth of 5%, but profits are expected to exceed expectations. The bank expects adjusted earnings per share to increase by 14%, 3% higher than market expectations.
Nomura forecasts that JD.com's retail revenue in the third quarter will increase by 5% year-on-year, with the adjusted operating profit margin remaining at around 5.2%. In particular, the electronics category may grow by 3%, reversing the 5% decline in the second quarter. This is mainly due to various provinces in China implementing subsidies for trading in old electronics for new ones, mainly targeting home appliances. JD.com, as one of the largest sales channels for electronic products, is expected to continue to benefit from this.
Nomura has raised JD.com's net profit for the current fiscal year by 2%, mainly due to the higher expected income from JD.com's logistics, and estimates that JD.com's retail revenue for the full year will increase by 4.7%, with the operating profit margin expanding to 3.9%