20160613_APS研报_京东—不要被光鲜的商品交易总额愚弄.pdf

1、|1 JD.com Dont be Fooled by Shiny GMV1 APS Asset Management Contributing APS Analyst:Sid Choraria May 20th,2016 Executive summary:Gross merchandise volume(GMV)is a misleading metric due to its very definition.We would discount it by 35-50%.Using GMV is inappropriate,especially for loss-making compan

2、ies like JD.com consistently raising capital.Incoherent investments in 24 months have led to$1bn impairments.JD CFO on the Bitauto Board from 2010.JD took a 25%stake and since then,Bitauto stock lost 70%.Bitauto stock down-13%and-9%in 2 days after Q1 2016 results.The assumption that JDs model will p

3、roduce adequate profits to justify$30bn price tag is questionable.Core electronics/household business(74%of revenues)is unlikely to make relevant money even if scale doubles due to intense competition.Growing GMV of these businesses do not make sense as cash will have to be burnt.Chinas big three in

4、ternet companies,Baidu,Alibaba and Tencent(BAT)make significant profits from core business and can afford to burn cash in new businesses.We believe JD.com does not have that same luxury.Not a surprise that JD raised$2bn in last 5 months to finance unprofitable businesses.Fitch2 comments JD may have

5、a high yield credit profile,while Moodys/S&P gave it the lowest investment grade rating at Baa3/BBB-.As soon as banks and investors stop funding JD,its operations may be weaker which is a risk investors must be mindful of.Limited tenure of management of 3 years for a 12+year old company.This pales i

6、n comparison with other companies and does not square with the claim that it is the leading online company in China.Reported net selling by insiders(Fortune Rising)and outside large shareholders over the last 12 months.JD has been touted as the Amazon of China but it is not comparable for reasons de

7、lineated in this report.Amazon does not obsess about metrics like GMV,unlike JD a telling sign Except for one analyst,nearly 30 sell-side analysts have a buy rating on the stock which can mean that the stock is over-owned as reported also by the media.Looks like a crowded trade like Valeant?Key Stat

8、istics(as of May 16th 2016)in US$mm unless specified(December FY end)Ticker NASDAQ:JD Share price per ADS US$23 Peak/current market cap US$50bn/$31bn Core GMV(2015)US$70 billion Electronics/house appliances revenue contribution%74.1%2015 Net Loss -US$1.5bn Accumulated deficit-US$3.1bn Operating cash

9、 flow(2015)-US$280mm Founder Voting Rights 81%52 week high/low 38/21.5 Source:CapitalIQ.Company filings,sell-side research,analyst estimates.Each ADS represents 2 class A ordinary shares.Note:$1=RMB 6.5.Source:Company filings,website,press releases,news articles,channel checks,sell-side,industry ana

10、lysts.Read full legal disclaimer on Page 2.1 GMV stands for gross merchandise volume.Please refer to definitions on Appendix A.2 http:/ 15 20 25 30 35 4022/5/201422/8/201422/11/201422/2/201522/5/201522/8/201522/11/201522/2/2016|2 Disclaimer IMPORTANT NOTICE:This APS Company Research(the“Publication”

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16、ge GMV is a misleading metric due to its very definition and we would discount GMV by atleast 35-50%.JDs business model cannot rely on shiny GMV growth 4 JD has taken$1bn in impairments/write-down in a short time due to incoherent equity investments/acquisition binge 13 Management team has limited tenure for a 12-year old company which is rarely a promising sign for a company yet to make money and sporting a$30bn valuation 21 JD.com is a hedge fund darling and has nearly unanimous buy ratings by