JD.com's 1Q26 post-briefing takeaways: a clearer path to earnings upside

Overview

This report summarizes UBS's main takeaways from its 1Q26 post-earnings NDR with JD.com's senior IR director Sean Zhang. UBS believes JD.com has a relatively clear earnings upside path within China internet: JD Retail margins have structural support, new business losses—especially food delivery—are likely to narrow, and the low valuation plus net cash and shareholder returns provide downside protection.

Core views

Key views include: first, JD Retail's 2Q revenue may come under pressure due to a high base, but growth should recover in the second half, and a higher mix of general merchandise and 3P marketplace will continue to improve the revenue structure. Second, JD Retail margins are supported by category gross margin improvement, better 1P efficiency, and contributions from high-margin apparel and 3P businesses, with management's long-term target at a high-single-digit margin. Third, new business losses are expected to narrow as food delivery shifts from scale expansion to operational efficiency, while subsidy optimization, commission and ad monetization, and improved fulfillment capabilities improve unit economics. Fourth, international business will continue to require heavier investment due to the Europe launch of JoyBuy and warehouse expansion, but management emphasized ROI.

Analysis framework

UBS assessed JD.com's earnings leverage and share-price return potential through post-earnings NDR management discussions, segment margin decomposition, revenue mix trends, loss-making business forecasts, and a valuation framework. The report also references UBS forecasts versus consensus, financial forecast tables, valuation multiples, and forecast return assumptions.

Methodology notes

• Valuation methodsSOTP

  sum-of-the-parts valuation

  UBS says the target price comes from the SOTP method, which values different businesses or assets separately and then sums them to reflect the combined value of JD Retail, new businesses, cash, and other assets.

• return_definitionForecast Stock Return

  forecast stock return

  UBS defines forecast stock return as the sum of expected share price appreciation over the next 12 months and dividend yield. In this report, that corresponds to 42.1% forecast price appreciation, 3.3% forecast dividend yield, and 45.4% forecast stock return.

• rating_definitionMarket Return Assumption

  market return assumption

  UBS defines MRA as the local one-year interest rate plus 5% as a proxy for equity risk premium; in this report, the MRA is 10.9%, and forecast excess return is 34.5%.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• JD.US

  core coverage name, US ADR

  Strengths

  Buy rating, US$48.00 target price, and 45.4% forecast total return; supported by visible EPS upside, net cash, and shareholder returns.

  Weaknesses

  2Q revenue may face pressure from a high base and home appliance/3C weakness; new businesses are still loss-making.

  Comparison

  UBS's 2026E, 2027E, and 2028E EPS forecasts are all above consensus, reflecting a more optimistic earnings view.

  Risks

  Limited visibility on margins, intensifying competition, return on fulfillment infrastructure investment, regulatory changes, and uncertainty around business restructuring.

• 9618.HK

  same company equity mapping for JD.com's Hong Kong listing

  Strengths

  The disclosure table also shows a Buy rating, with a price of HK$130.10.

  Weaknesses

  Affected by the same fundamentals and China internet valuation sentiment.

  Comparison

  Represents the same company as JD.US but in a different listed security, with different valuation and trading currency.

  Risks

  In addition to company fundamentals, it is also exposed to Hong Kong market liquidity, FX, and regional risk appetite.

Key data

• 12-month ratingBuyThe chart shows both JD.com and JD.com-H rated Buy.
• Target priceUS$48.00The report cover lists the 12-month target price.
• Current priceUS$33.77The disclosure table shows JD.US at US$33.77 as of May 13, 2026.
• Forecast total return45.4%Composed of 42.1% forecast price appreciation and 3.3% forecast dividend yield.
• Market return assumption10.9%Forecast excess return is 34.5%.
• 2026E diluted EPSRmb24.01UBS forecasts above consensus of Rmb20.98.
• 2027E diluted EPSRmb32.66UBS forecasts above consensus of Rmb28.66.
• 2028E diluted EPSRmb37.28UBS forecasts above consensus of Rmb34.99.
• JD Retail 1Q margin5.6%Reached a record high, up 0.7 percentage points YoY.
• JD Retail 2026E margin4.6%UBS expects 2Q and 2026E to be stable YoY.
• 2026E new business lossesRmb37bnDown from Rmb47bn in 2025.
• 2026E food delivery operating lossRmb23bnDown from Rmb37bn in 2025; 2Q is expected at Rmb6.5bn.
• 2026E international business operating lossRmb7-8bnUp from Rmb4-5bn in 2025E, reflecting the JoyBuy Europe launch and warehouse investment.
• 2026E P/E9.6xThe financial table shows 2026E diluted P/E of 9.6x; the body text says headline P/E is about 9x.

Impact & implications

The report is constructive on JD.com: if JD Retail margins stay resilient and food delivery losses narrow as expected, the market may upgrade EPS and re-rate its earnings leverage. Net cash, shareholder returns, and the low valuation provide some defensiveness, although international expansion spending and the macro consumption environment will still affect the pace.

Risks

• JD.com's earnings visibility may still come in below market expectations.
• Competition in China e-commerce and local services could intensify, affecting subsidies, revenue growth, and margins.
• Returns on fulfillment infrastructure, warehouse expansion, robotics, and AI investments remain uncertain.
• Regulatory changes may affect the business model and valuation of internet platforms.
• Business restructuring will take time, and investors may remain cautious if financial improvement is not sustained.
• Rising international business investment may offset part of the improvement from lower food delivery losses.

What to watch

• Whether 2Q revenue comes under pressure due to a high base and how much it recovers in the second half.
• Growth trends in general merchandise, supermarkets, apparel, healthcare, and the 3P marketplace.
• Whether JD Retail margins can stay around 4.6% and gradually approach management's long-term high-single-digit target.
• The pace at which food delivery subsidy optimization, commission income, and ad monetization are realized.
• User feedback, warehouse expansion, and ROI after JoyBuy's Europe launch.
• Whether subsequent EPS continues to come in above consensus.