JD.com’s first profitable quarter sees share price up 51% year-to-date!
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JD.com’s first profitable quarter sees share price up 51% year-to-date!

JD.com has just made big news in the investment world by posting its first profitable quarter since going public two-years ago. JD is China’s answer to Amazon, and its business has been bolstered by a prevalence of smartphone-enabled shopping in the country. As a result, the share price has surged, bringing JD’s performance, year-to-date, to an amazing 51%!

JD.com’s share price is performing incredibly this year

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SOURCE: Yahoo Finance

The company’s earnings absolutely smashed analysts’ expectations. Last year, JD.com made a loss of Rmb910 million. Last quarter, it was widely expected to do slightly better, and post a loss of ‘only’ Rmb851 million. So the actual result – a net profit of Rmb239 million – is staggeringly positive. This is down to more orders generally (up 39% from the year-ago quarter), and particularly to more orders being placed via smartphone. The number of orders made by smartphone rose by more than 50%, and represents 81% of JD.com’s total orders.

Although it is a standout in regards to the strength of its mobile business, JD isn’t bucking any trends here: China is easily the world’s biggest mobile payment market, with more than 50 times more payments than its U.S. equivalent.

Revenues rose by 41.2% from the first quarter of 2016, to Rmb76.2 billion, sending the company’s share price up by 7.5% after the announcement.

JD is China’s second-largest business to consumer ecommerce platform (after Alibaba’s Tmall), and bought Walmart’s local ecommerce operation last year. It’s benefiting from wealthy Chinese moving away from smaller, consumer-to-consumer platforms and embracing its well-known brands. JD’s CEO referenced this shift directly, saying: “The strong results across the board reflect that the Chinese market is embracing our model of a high-quality online shopping experience.”

However, the company plans to spend significantly more on marketing and investment in the coming months. The key investment will be “talent” according to the company’s chief financial officer, Sidney Huang. But other areas that JD plans to pump money include a drone delivery service with 150 operation sites throughout the country.

Disclosure

Dominion holds JD.com in its Global Trends Ecommerce Fund.


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