JD
📈 JD.com reported excellent earnings, with double-digit growth in both revenue and net income.
💰 The company has a strong cash position, with nearly $49 billion in total investments and cash, significantly exceeding its debt.
💸 JD.com is actively returning value to shareholders through a substantial share repurchase program (8.1% of outstanding shares in 2024) and an increased dividend.
📊 Based on adjusted valuation metrics, the stock appears significantly undervalued compared to its earnings and free cash flow.
@invertirdesdecasa:
“JD presented an excellent earnings report. And beyond the growth in the market price of the last year, I think that today’s opportunity is much more interesting than it was a year ago. In the last calendar year, the market price grew by 71% in dollars, without counting the dividends that JD paid, which were very interesting the previous year. And in fact, it will increase the dividend this year. We already talked about this, closing at around $230, a fairly solid, fairly strong growth in the market price, and with a total market value, a total market cap of 64,000 million dollars. Solid business growth for JD, both in the last quarter and in recent years. Here you can see the annual and compound growth of what was the total income of the last 5 years: 15%, excellent, double digits. And what was the growth in the last quarter of the Christmas holidays, very important, very strong for retail companies, of 13.4%, again, double digits, quite solid is this growth. All this growth was accompanied by better net profits. In this case, they are non-Gap net profits. The shaded bar is the total profit, and this is the net profit margin versus total sales. As you will see, both are growing, and they are growing quite a bit, especially in the last quarter. JD has many intangible assets that are amortized, which does not necessarily mean an outflow of money. It is a little more complex, but there are a lot of things that fluctuate, market values that change. And taking all that, seeing the core part, the hard part of its business, that was the fairly solid growth that was also accompanied by generation of freely available cash. In the long term, they have to grow hand in hand. You can see it here. A good company generates profits that translate into cash. You can see that it is reflected in Renminbi, the free cash flows in this case, at the exchange rate that is here, these would be about 6,000 million dollars in free cash flows. Look, in the entire S&P 500, there are not many companies that generate so much money, which of course there are, you surely know the names, but believe me, there are a large number of companies that do not manage to cover these excellent numbers that JD has, which also treats the investor very well. In 2024, JD repurchased 8.1% of all its shares in circulation. That is, your share, if you are a long-term investor, more than a year ago, today is worth almost 10% more, or is entitled to 10% more of JD’s income and the entire company, solely because the company repurchases its shares, part of its shares. It declared a dividend last year. It also paid a dividend, if I’m not mistaken, of $0.90 or $0.80. This year the dividend will be $1 per American Deposit Receipt. If you divide 1 by 43, 42.30 that it is trading at today, it is more or less a yield of 2.4% in dividends only. And it also has authorized 5,000 million more in share repurchases. Here is the balance sheet of JD with 33,000 million dollars in the box to repurchase shares and pay dividends. It has plenty of money, also generating 6,000 million dollars in free cash flows, and growing. And with nothing more than 12,000 million dollars in total debt, including operating leases, which is not necessarily financial debt, but including everything that would be debt, it still has an enviable cash position. These are the non-current assets of JD. It has long-term investments in other companies, such as equity investments or long bonds, certificates of bank deposits, long-term, for almost 16,000 or 15,900 million dollars more. This is on its balance sheet, audited by Price Waterhouse Coopers, those big auditors in the United States, of course, at its headquarters in Hong Kong or Beijing. This is audited. This is what JD has in its balances. That is, it has almost 49,000 million dollars in total investments and capitalizes 64,000 million. And if we subtract the debt, it has net cash and investments for 36,900 million dollars. Operating profits quadrupled, quarter like this, quadrupled in the last quarter. And net profits, final after taxes, all these things, almost tripling from quarter to quarter. And the earnings per share, which are not here, grew faster because JD repurchased 8.1% of its shares in the last year. Annual net profits for the last year, profits grew 72% year over year. It has 36,900 million dollars in net stock market investments. That is, if you subtract all the net investments, net debt paid, that JD has, you are paying for its operating businesses, without its stock market investments, 27,100 million dollars. It just presented pre-tax benefits, pre-tax of 7,000 million dollars, 7,100 almost, net profit, as we saw recently in the previous slide, 5,600 million, and free cash flow, as we saw in the video, 6,000 million dollars. That is, if one takes this adjusted price and compares it against these values, it capitalizes at three times its pre-tax profits against the adjusted price, it capitalizes at 4.8 times per against the adjusted price, and it capitalizes at 4.5 times against its free cash flows. Of course, if I had taken the entire number, the full market cap value, the multiples would have been equally low, equally low compared to the industry in general and the United States.”
@invertirdesdecasa shows the exact part of the YouTube video where the stock is discussed:
View the video on YouTube.
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