JD.com rallies 15% after Q4 results

US-listed shares of JD.com (JD.US), Chinese e-commerce company, are rallying around-15% today. Company reported Q4 2023 earnings today ahead of the Wall Street session open, which turned out to be better than expected. However, it was capital distribution announcements that stole the show.

Q4 2023 earnings

• Revenue: 306.08 billion CNY vs 299.9 billion CNY expected (+3.6% YoY)
  • Net product revenue: 246.5 billion CNY vs 237.19 billion CNY expected (+3.8% YoY)
    • Electronics & Home Appliances: 150.35 billion CNY vs 142.97 billion CNY expected (+6.1% YoY)
    • General Merchandise & Other: 96.15 billion CNY vs 94.82 billion CNY expected (+0.2% YoY)
  • Net service revenue: 59.58 billion CNY vs 62.51 billion CNY expected (+3.0% Yoy)
    • Marketplace & Advertising: 23.63 billion CNY vs 24.96 billion CNY expected (-4.0% YoY)
    • Logistics & Other Services: 35.95 billion CNY (+8.1% YoY)
• Fulfillment expense: 17.3 billion CNY vs 17.66 billion CNY expected (+2.4% YoY)
• Adjusted EBITDA: 9.66 billion CNY vs 9.46 billion CNY expected (+8.6% YoY)
• Adjusted EBITDA margin: 3.2% vs 3.17% expected (3.0% a year ago)
• Adjusted operating margin: 2.5% vs 2.5% expected (2.5% a year ago)
• Adjusted net income: 8.42 billion CNY vs 7.24 billion CNY expected (+9.9% YoY)
• Adjusted EPS: 5.30 CNY vs 4.57 CNY expected (4.81 CNY a year ago)

JD.com reported a higher than expected revenue as well as higher adjusted EBITDA and net income for the final three months of 2023. Revenue growth was driven by much better than expected product revenue, with sales of electronics and home appliances beating expectations significantly. Company was expected to report drop in net income, but instead reported a strong almost-10% year-over-year increase in adjusted net result.

However, what seems to be driving today's share price surge are decisions on capital distributions. JD.com announced that it will boost annual dividend payout by 23%, with aggregate amount of dividend increasing to about $1.2 billion. On top of that, the company approved a new buyback program that authorizes company to repurchases up to $3 billion worth of its own shares over the next 3 years (through March 2027).

Taking a look at JD.com chart (JD.US) at D1 interval, we can see that the stock launched today's Wall Street session with a big bullish price gap. Stock opened not only above 50-session moving average (green line) but also above the $24.25 resistance zone, that acted as the upper limit of the recent trading range. A textbook target of the upside breakout from this range suggests a possibility of a move as high as to $27.00 area. However, stock is giving back gains made since the start of Wall Street cash trading and is now testing the aforementioned $24.25 area as a support zone.

Source: xStation5