This share has the potential to produce significant growth

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This share has the potential to produce significant growth

Published Date: 2019-05-21 | Source: INCE|Community | Author: Bruce Ingram | Comments

This share has the potential to produce significant growth

JD.com a large Chinese e-commerce organisation that is worth researching with the view of investing in for long term growth.

JD's strategy like Amazon's strategy in the past is to invest in growth. The company does not pay out dividends as it re-invests all profits to grow the company.

About JD.COM.
"JD.com is China's largest online retailer and its biggest overall retailer. It offers customers high-quality online shopping experience. The company is a member of the Fortune Global 500."

JD started as a traditional store in 1998. The SARS epidemic in 2004 motivated the company to launch its online service. In 2014 JD listed on the Nasdaq being the largest IPO that year. Today the company is the largest offline and online retailer in China. The company has a strict Zero Tolerance policy to counterfeit goods.

JD is the 3rd largest Internet company globally behind Amazon and Alphabet (Google) with 2018 revenue of $62.2 billion.

JD has partnered with Tencent, Walmart, and Google.

The company has three main divisions:
  1. E-Commerce
  2. JD Logistics
  3. Technology
The company's one-stop E-Commerce division is huge, serving over 300 million active customers with authentic high-quality products. 80% of JD's orders are placed via mobile devices. Their product range covers every major category such as electronics, apparel, and home furnishings, FMCG, fresh food, home appliances, etc.

The company aggressively monitors its suppliers against supplying pirate products and focuses on providing quality products at good prices. JD supplies over 20,000 different brands from many countries.

They have overseas warehouses in Hong Kong, Tokyo, Amsterdam, Bangkok, Incheon, Melbourne, London, and Jakarta. Chinese customers can purchase products from Walmart, P&G, Nestle, Bayer, Asda, etc with deliveries as short as same day or next day two days.

JD started fresh food sales in 2012 Their nationwide cold chain logistics reach enables rapid delivery of tens of thousands of high-quality fresh fruits, vegetables, seafood, meat and frozen products sourced from global partners, sourcing from more than 50 countries and regions. They import more than 110,000 fresh products. In 2018 the company opened a new line of quality offline fresh food stores called 7FRESH.

JD's data-driven logistic division is a world class operation embracing innovation and technology. Their network covers 99% of China's population. They have over 550 warehouses and cold-chain facilities as well as 7,000 delivery stations.

JD began developing their own drones in 2015 and began trials in 2016. Today they have 7 types of last mile delivery drones with more than 100 drone routes in several provinces, which have accumulated over 400,000 minutes of flight. They have agreements in place to build China's largest low-altitude drone logistics network. They have also partnered with China's West Airport Group to build airbases for drones.

JD's technology division employs about 17,000 engineers in China and Silicon Valley in the US. Areas of research include data science, artificial intelligence, virtual and augmented reality, automation, robotics, autonomous vehicle systems, and more.

JD's share price has been impacted by the recent Trump / China wars. In spite of this, the share price has returned nearly 42% year-to-date. On May 10th the company released its latest results for Q1. Net YoY revenue grew 20.9% Net service revenues grew 44% YOY. Logistics and other service revenues grew 99% GM grew from 14.1% to 15% for the same period last year

JD.com has the potential to return significant price appreciation over the next few years. I have purchased this share with the speculative portion of my portfolio as it does not pay dividends.

Disclaimer: Please note that I am not a Registered Financial Planner. The articles I write are based on my own personal research and for my own use and is not to be construed as financial planning advice. At all times readers are urged to exercise caution when investing in any financial instruments, to do their own research



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