Home Stock Ranjan Roy’s bullish case for JD.com

Ranjan Roy’s bullish case for JD.com


As the Chinese government cracked down on its U.S. listed tech giants, JD.com Inc (NASDAQ: JD) was trading about 40% below its mid-February high last month. The stock has since recovered more than 25%, and Margins’ Ranjan Roy says it might not be out of juice yet.

Highlights from Roy’s interview with CNBC’s “TechCheck”

Much of the recovery in JD.com was related to its Q2 results that Roy says were “very good”. On CNBC’s “TechCheck”, he said:

Their retail sales were up 27%, logistics sales were up 50%, and more importantly, the average total order volume per user was also up. So, more people bought more things on average, which is every eCommerce company’s dream.

Roy acknowledged the 1.0% decline in net profit margin but said it wasn’t alarming because the company was investing to expand its eCommerce infrastructure into “lesser developed regions and lower-tier cities”. He added:

JD.com operates in this unique space amidst the entire crackdown because it’s building the retail infrastructure; the automation, the innovation, the grocery warehousing, and cloud chain logistics to bring economic activity into a more widespread region, which is in line with the goals of the Chinese government.

Roy acknowledges the risk over the next few weeks

Roy agreed that the Evergrande situation poses a significant risk over the next few weeks but reiterated that JD.com was positioned fairly well to power through.

The news comes weeks after JD.com named Lei Xu its new President after founder Richard Liu stepped back from day-to-day operations. Liu, however, will continue to formulate the company’s long-term strategies.

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