Jingdong teleconference record: we will try our best to reduce the price rise caused by the shortage of raw materials

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On November 18, JD group (JD. O; 9618. HK) released the results of the third quarter of 2021. Jingdong’s net income in the third quarter was 218.7 billion yuan, a year-on-year increase of 25.5%. In the third quarter of 2021, the net profit attributable to common shareholders under non GAAP was RMB 5 billion (US $800 million), compared with RMB 5.6 billion in the same period last year. [JD’s revenue in the third quarter was 218.7 billion yuan, a year-on-year increase of 25.5% and an increase of more than 3% before trading]
After the release of the financial report, senior executives such as Xu Lei, CEO of JD retail and Xu ran, chief financial officer of JD group attended the financial report teleconference and answered analysts’ questions on the spot.
The following is the record of the earnings conference call:
Analyst: the performance of categories and gross profit in the third quarter is very good. What are the trends and main drivers of gross profit in the future?
Xu ran: we are constantly experimenting with various business models, such as “shop now”, which will inevitably have an impact on financial performance. For example, our offline business needs to cooperate with many local warehousing partners and share gross profit. Our gross profit will be reduced, but the performance cost will also be reduced.
Our gross profit growth will also be affected by category changes. The growth of 3p business offsets the inclination of its contribution to the revenue of supermarket commodity categories to a certain extent. Generally, the performance gross profit of this part of business is relatively low. Therefore, JD’s performance gross profit in the third quarter has not changed much compared with the same period last year. In the future, we believe that the future gross profit outlook target will remain unchanged. In the short term, it will Under the influence of category changes and business model changes, we have been optimizing inventory management technology to improve business efficiency and improve the supply chain. In addition, the purchase prices of some categories are still higher than offline. When our scale continues to expand, we can achieve scale effect. In a word, the expectation of gross profit growth in the future remains unchanged.
Analyst: How have the recent macro policies, such as the real estate policy and the blockade of the epidemic, affected the performance of the category?
Xu Lei: indeed, the overall macro environment is full of challenges, especially in the second half of the year, the overall macro consumption is relatively weak, the upstream supply chain is also relatively tight, and the prices of raw materials begin to rise one after another. At the same time, the epidemic in many places in China, including extreme weather, will pose a variety of challenges to the whole retail market, including chips of some specific categories and the tension of the whole supply chain, It may continue until the first half of next year. Because JD has always been the core competence of supply chain, we are more capable of maintaining business stability than our competitors in the industry in this environment.
With regard to weak consumption, I would like to explain whether the main consumer groups in JD are still characterized by urbanization, family consumption, purpose, certainty and planning. This kind of consumer group accounts for a higher proportion of the overall consumer group. Therefore, JD is relatively less affected by weak consumption. We do not rule out the impact of some random shopping under the trend of weak consumption The company has a greater impact.
For example, due to the shortage of some raw materials and the expected price increase in the future, we estimate that the consumption concept will be gradually transmitted from Q4 to Q1 next year. Since JD has always been centered on the supply chain, we will communicate more closely with our partners in the near future. Our partners also hope to cooperate with them through JD’s advantages to reduce costs and increase efficiency as much as possible. Of course, we will do our best Our power to quell this price volatility.
The impact of real estate on home appliances is not just some news about real estate that we have seen recently, but in fact, we can observe that the growth of home appliances is much higher than that of the industry. The main reasons are as follows.
First of all, in our B2C business, we are constantly improving the product structure and the needs of users are also improving in the direction of quality. Therefore, including old for new and worry free return, these services are actually helping our consumers realize the upgrading, the growth of online B2C and the continuous growth of sales share.
In addition, we attached great importance to the sinking offline market a few years ago. Up to now, we have also gained something offline in the sinking market, which accounts for a certain proportion of our whole household appliance sales and improves the user and market space we didn’t obtain before. Finally, we attach great importance to c2m and differentiated products and form differentiated competitive advantages for the development of brands. I think the above The three points can explain why we have achieved growth in the case of stock competition in China’s household appliance industry.
(ongoing update)