UOB Kay Hian
15 August 2025

JD Logistics Delivers Robust 1H25 Results: Revenue Growth Accelerates, New Initiatives Set Stage for Future Upside

Overview: Strong Performance Amid Strategic Investments

JD Logistics (HKEX: 2618) has reported a steady and resilient performance for the first half of 2025, navigating frontloaded costs from aggressive growth initiatives to deliver in-line earnings. The company, a leading technology-driven logistics and supply chain solutions provider in China, continues to demonstrate its dominance in the integrated logistics sector, underpinned by its innovative warehouse-based distribution model and strong ties to JD.com.

Key Highlights

• Share Price: HK\$13.96
• Target Price: HK\$22.00 (Upside: +57.6%)
• Market Capitalization: HK\$92.8 billion (US\$11.8 billion)
• Major Shareholder: JD.com (63.6%)
• Sector: Industrials

Financial Summary: 1H25 Results in Focus

JD Logistics posted a core net profit of RMB 2.90 billion for 1H25, marking a 5.9% year-on-year increase, and achieving 39% of the full-year forecast as the second half is typically stronger. Headline net profit rose 13.9% year-on-year to RMB 2.58 billion. For 2Q25, core net profit and headline net profit rose 6.4% and 5.1% year-on-year, respectively.

Revenue Growth Across the Board

• Total revenue for 1H25 surged 14.1% year-on-year to RMB 98.5 billion.
• 2Q25 revenue growth accelerated to 16.6% year-on-year, up from 11.5% in 1Q25.
• Revenue from supply chain customers jumped 26.3%, with JD.com’s contribution rising 31.2% year-on-year, reflecting strong retail sales momentum.
• External supply chain customers and non-supply chain customers also posted robust growth of 17.8% and 7.6% year-on-year, respectively.

Margins and Cost Dynamics: Short-term Pain for Long-term Gain

• Gross profit margin (GPM) for 1H25 declined by 0.8 percentage points to 9.0%, reflecting proactive investments in operational capacity and expansion.
• Operational staff numbers surged 39% year-to-date, from 476,000 at end-2024 to 662,000 at end-1H25, driven by the recruitment of full-time riders for JD.com’s food delivery expansion.
• Expansion of overseas logistics and warehouse operations contributed to gestation costs, weighing on short-term margins but positioning the company for future growth.

Solid Balance Sheet and Cash Flow

• JD Logistics generated RMB 0.3 billion in free cash flow in 1H25 (compared to RMB 1.4 billion in 1H24).
• Net cash position stood at RMB 38.3 billion as of end-1H25, equivalent to 45% of its market cap.

Management Guidance and Outlook

• 2025 Core PAT Growth: Management maintains guidance for mid-single-digit growth in non-IFRS after-tax profit (core PAT) for 2025.
• Revenue Guidance: Revenue growth guidance has been raised, reflecting the new food delivery business launched in June 2025. 3Q25 revenue is expected to grow approximately 20% year-on-year, driven by both core logistics and food delivery services.
• Profitability: The newly launched food delivery operations are expected to largely break even and will not be accretive to earnings in the near term.
• 3Q25 Outlook: Core net profit may see a slight year-on-year decline due to high base effects and ongoing gestation costs, but management expects a rebound in 4Q25 as utilization rates improve.

International Expansion: Doubling Down on Global Growth

• JD Logistics’ overseas warehouse expansion program is on track, aiming to double capacity by year-end 2025.
• New warehouses have been launched in the US, France, South Korea, and Vietnam in 1H25.
• The JoyExpress brand—JDL’s first self-operated B2C delivery business outside China (launched in Saudi Arabia)—has shown strong growth momentum.
• Plans are underway to establish self-operated B2C logistics in more international markets, with Europe as the next target.

Key Financials: Historical and Forecasted Metrics

Risks and Valuation

• Risks: Potential headwinds include a weaker macroeconomic environment, intensified competition eroding margins, and execution risks in overseas expansion.
• Valuation: JD Logistics is currently trading at 11.7x/10.8x 2025F/26F PE, or 5.7x/5.3x if excluding net cash, making it attractively valued versus its closest peer SF Holding, which trades at a high-teens PE.
• Recommendation: Maintained BUY rating with a DCF-based target price of HK\$22.00. JD Logistics remains the top pick for exposure to China’s logistics sector, offering investors market leadership, a strong proxy for domestic consumption, significant growth potential domestically and internationally, and a compelling valuation.

Conclusion: JD Logistics Positioned for Sustained Long-Term Growth

JD Logistics has successfully balanced strategic investments and cost pressures to deliver resilient results in 1H25. With a strong core business, accelerating revenue growth, a robust cash position, and clear international expansion plans, the company is poised to capitalize on both domestic and global logistics opportunities. Investors can look forward to recovering profitability in the coming quarters and sustained long-term upside as JD Logistics cements its leadership in supply chain and logistics innovation.