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JD Earnings Top Estimates, Company Eyes Hong Kong Listing

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JD.com’s (NASDAQ:JD) earnings report for the first quarter of 2020 looks great. The earnings report landed just as the company plan to list its shares in Hong Kong seems to be in the home stretch. JD.com is China’s second-largest e-commerce company after Alibaba (NYSE:BABA). Notably, the company has forged strong investment and commercial ties with Google (NASDAQ:GOOGL), Walmart (NYSE:WMT), and Tencent. Tencent’s first-quarter results smashed the consensus estimates.

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Key takeaways from JD’s earnings report

JD delivered first-quarter revenue of $20.6 billion, which represents an increase of 20.7% YoY (year-over-year). The earnings outlook forecasts revenue growth of about $19.8 billion. Wall Street expected revenue of $19.3 billion. The company posted an adjusted EPS of $0.28, which beat the consensus estimate at $0.09.

JD’s business benefited from a spike in online shopping across China amid the coronavirus outbreak. The Chinese government locked down parts of the country to curb the spread of the virus. With physical stores closed and people trying to avoid contracting or spreading the virus, families shopped online, which boosted JD’s sales. The company expects its growth to continue. For the current quarter, JD’s earnings outlook projects revenue growth of up to 30% YoY.

JD’s earnings report shows that it wrapped up the quarter with a cash balance of $10.6 billion. The cash jumped from $9.3 billion at the end of the previous quarter. The company plans to repurchase up to $2.0 billion of its stock in the next two years. Therefore, the swelling cash reserve should enable JD to execute on its stock repurchase program.

Hong Kong listing on the horizon

JD will likely follow Alibaba with a secondary listing of its shares in Hong Kong. Alibaba’s Hong Kong listing took place in November 2019. The listing helped the company raise $13 billion in cash. JD’s Hong Kong listing, which is expected as soon as next month, could raise $3.0 billion. The money would boost the company’s liquidity position.

Lately, investors have been flocking to JD stock in anticipation of strong first-quarter results and the Hong Kong listing. The stock jumped 2.41% on Thursday and closed at $48.96. At this price, the stock has risen 39% YTD (year-to-date). In contrast, Alibaba stock has fallen more than 5.0% YTD, while Baidu (NASDAQ:BIDU) stock has fallen 24% YTD.

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