Shopping Spree: The Case for JD

by deah12

Comparisons between Chinese E-commerce companies and Amazon are often inept. While BABA has B2C e-commerce and undisputably leads in the cloud, it is a huge conglomerate that stretches into financial services, media, and travel. It’s crown jewel is in fact, Ant Financial, the world’s largest unicorn. JD, on the other hand, is almost a pure e-commerce play whose core business has always been selling products rather than just just providing a platform, and is tied to the heart of the consumer rather then enterprise. The stock has been soaring of recent, with YTD 67% gains.

What are the key benefits that JD provides to the consumer?

  1. Its self-owned logistics is industry-leading and is often better than Shunfeng (which is THE high-end logistics company in China), JD is one of the only places outside of food delivery, where products can be delivered within the same day, or even within hours. This is due to it having hundreds of huge warehouses across all the population centers of China, and a workforce that takes advantage of it.
  2. Better customer service, think about it, would you rather buy from Amazon Prime or some random dude on eBay if there isn’t a significant price difference, JD provides peace of mind for expensive products like electronics and luxury goods.
  3. Guarantee from fakes (which has always been a huge problem in China) and second-hand products, as well as easy returns, replacements, and repairs.

What are the recent catalysts in the stock price, which is already at ATHs?

  1. JD had a stellar quarter, with a 20% growth in revenue, and was steady on the path of increasing profit margins as it started making a profit starting this year. Like Amazon, JD has been in growth mode for almost the past decade, and the fruits of labor are starting to show as Coronavirus has stimulated the demand for e-commerce even further. ir.jd.com/quarterly-results “We are proud that JD.com has been able to remain fully operational throughout the COVID-19 outbreak, and our employees are proud of the contributions JD continues to make towards building a more productive and sustainable society,” said Richard Liu, Chairman and Chief Executive Officer of JD.com. “Strong user growth during the first quarter reflects consumers’ increasing reliance on JD.com to support every aspect of their lives, and confidence in our commitment to providing a broad selection of quality products and best-in-class services.”
  2. HK listings are good, BABA led the way for Chinese tech companies to break into not only the Hong Kong Market but also the Hang Seng index, which has allowed for the companies that dual list to be included: which opens the floodgates for billions in index money. This will be around August, and a successful listing could be topped with this. www.bloomberg.com/news/articles/2020-05-18/hang-seng-revamps-benchmark-index-to-open-door-for-alibaba
  3. 6/18 is one of the largest shopping holidays in China with JD being its originator, the stock almost always has a spike during this time.
  4. While its founder Liu stepped down in an official capacity, word is that he has not let go, with him controlling over 70% of the voting power through a voting block that includes giants Tencent and Walmart.
  5. While JD lost money on some of their early investments, recently their investments into Dada Group, Yonghui Supermarkets, and another e-commerce company Vip.com have made billions. This is in addition to increasing success from JD Logistics, which has plans for being spun off, and JD Finance which is deeply tied with their e-commerce business. www.sohu.com/a/390703512_343156

JD immediately catapulted after earnings, with multiple upgrades into the 60s, which are already on the verge of being reached as of this instance. I’ve made decent percentage gains off that, but that was affected greatly by Trade War news as of a few weeks ago. imgur.com/uOAxa2e

Now that the focus is off, and the date for the HK listing and the news of the Shopping Festival are in sight (6/18), I am looking to add (at least 5x) to my position and will be updating accordingly.imgur.com/JYkujbp

Note: Fuck PDD cause most people I know don’t use it and overall reputation is cheap. JD has a much better reputation and splits the high end with Tmall, which still has worse customer service. Also, I’ve had a good shopping experience with JD for the better part of the last decade.

TL;DR JD is Chinese Amazon without AWS, has Black Friday next next week and is listing in HK, JD retard positions 65C 6/19 reasonable positions ATM Calls 6/19 65C 7/17

Edit: 10K 65C 7/17 at average 1.58, guess I bought a little early, gonna average down further if we drop significantly.

Technically, 6/18 began 6/1 with deals and coupons, but I am looking at the announcement for the totality of the event.

 

Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.