How popular is JD com in China

Top growth companies from China lead US rally - We take a closer look at this highflyer

Dear traders,
Thanks to the fast-growing Chinese middle and upper classes and the above-average economic growth in the Middle Kingdom, Chinese companies can boast above-average growth rates in sales and profits, which makes these stocks particularly popular with growth investors. The China stocks listed on the US technology exchange NASDAQ performed correspondingly strongly and left their US counterparts well behind.

At this point we would like to introduce you to an interesting figure from the Middle Kingdom:



Online retail boom in China
The eCommerce sector is one of the strongest growth markets in the Middle Kingdom: More and more Chinese people are doing their shopping online, as electronic items, clothing and other consumer goods are usually much cheaper to buy in the Internet than in the often overcrowded shopping centers in the Chinese metropolises. However, Chinese customers are very picky when it comes to choosing their Internet shops and prefer domestic providers over western competitors, with the world's leading eCommerce group Amazon in China having a market share of just 1 percent. High regulatory barriers to market entry also shield the billion-dollar Chinese market from Western competition, so that local players virtually divide the market among themselves.

JD.Com - The Chinese Amazon
JD.Com is undoubtedly one of the major players in the Chinese online retail sector. The group, based in the Chinese capital Beijing, has worked its way up to the second largest eCommerce provider in China after Ali Baba since it was founded in 1998. Via the online shopping portal of the same name and numerous other group-owned shopping websites, JD.com offers its users a wide range of products that leaves little to be desired in terms of consumer goods, electronics, clothing and everyday items. Most of the items ordered are delivered via an extensive, in-house logistics network that is designed to ensure that goods are dispatched to the customer quickly. The wide range of products and the speedy delivery of the products make JD.Com one of the most popular online retailers in China, with JD.Com currently handling 54.3 percent of the online turnover in China.

Explosive growth rates in sales and user numbers
In the second quarter just ended, JD.com was again able to come up with strong figures and build on the growth path of the past few years. Revenue improved a full 64 percent year-on-year to $ 4.6 billion. The group was able to benefit from the exponential growth in the number of registered users, with the customer base increasing by 94 percent year-on-year to 38.1 million. With heavy investment in expanding its core business activities, the net loss increased to $ 93.9 million, or 94 cents per share, from a loss of $ 4.6 million, or 9 cents per share, in the same period last year. Adjusted for one-off effects, break-even earnings per share were reported. This meant that the analysts' estimates were exceeded in terms of both sales and earnings.

Partnership with Tencent offers growth opportunities
In addition to the continued high growth rates in online retail, JD.Com should also benefit from its partnership with the Chinese Internet company Tencent. Tencent had increased its stake in the course of the IPO of JD.Com in May of this year from 15 to 17.6 percent. Together, JD.Com and Tencent want to stand up to the Chinese eCommerce giant Ali Baba, who will soon venture onto the trading floor. The chances that this project will succeed are not bad. Tencent is considered the leading Chinese provider of social media services and also operates its own eCommerce platforms and the Tenpay online payment system. The partnership with Tencent opens up interesting prospects for JD.Com, especially since Tencent has more than 600 million registered users. JD.Com should also benefit from this gigantic user reservoir in the medium term, especially since the eCommerce offer is also advertised on Tencent's partner websites. This should allow JD.Com to continue its growth course in terms of user numbers and retail sales.

JD.Com - trend continuation after a short consolidation
JD.Com's stock has been in an intact overall uptrend since going public in May of this year. After the share suffered from profit-taking in the course of the business figures for the second quarter, the share recovered significantly in the past few weeks and climbed to a new all-time high at USD 33: After a brief consolidation, the value stabilized, which is bullish . If the brief consolidation breaks out, we see a good chance of a continuation of the overall upward trend.

Responsible editor: Martin Springmann, reference to possible conflicts of interest. The author of this article currently has no positions in the stock presented!