CMB Securities expects JD.com’s (JD.US) food delivery business losses to narrow quarter-over-quarter last quarter, maintaining a “Buy” rating.

CMB International Securities published a research report indicating that JD.com-SW (09618.HK) (JD.US) is expected to achieve revenue growth in line with expectations in the third quarter of 2025. The group’s revenue is projected to increase by 13% year-on-year, while JD.com Retail’s revenue is anticipated to grow by 10% year-on-year, consistent with current market consensus forecasts. The growth rate has slowed compared to the previous quarter’s 22% and 21%, primarily due to the high base effect in the electronics category (the nationwide trade-in subsidy policy was introduced in August last year). This factor is expected to have a more pronounced negative impact in the fourth quarter of 2025. Revenue from general merchandise and third-party marketing is forecasted to maintain robust year-on-year growth rates of 17% and 21%, respectively.

China Merchants Securities stated that JD.com has maintained a steady pace of development, with an attractive risk-return profile. Amid intensified competition this summer, JD.com exercised restraint in subsidies while benefiting from increased consumer recognition of high-quality delivery services and improved user retention rates, which drove a sequential improvement in daily order volumes. This also led to enhanced unit economic benefits.

The brokerage expects JD.com’s delivery business losses in the third quarter of 2025 to narrow compared to the second quarter. On the other hand, JD.com has ramped up investments in other new businesses, such as Jingxi, to capture customers in lower-tier markets, resulting in wider losses in the second half of 2025 compared to the first half. Overall, China Merchants Securities forecasts losses from new businesses at approximately RMB 14.8 billion in the third quarter of 2025, with projected losses of around RMB 11.6 billion in the fourth quarter (compared to a loss of RMB 14.8 billion in Q2).

China Merchants Securities raised its non-GAAP net profit forecast for JD.com Group’s third and fourth quarters of 2025 to RMB 4.3 billion and RMB 4.4 billion, respectively (market consensus was RMB 3.8 billion and RMB 4.2 billion). The main reasons include better-than-expected profitability margins in JD.com Retail and narrowing losses in the on-demand delivery segment.

Overall, China Merchants Securities slightly raised its non-GAAP net profit forecast for JD.com by approximately 1% to 2% for fiscal years 2025 to 2027, maintaining an “Overweight” rating and an ADR price target of $42, based on an 8x price-to-earnings ratio for JD.com Retail and reasonable valuations for its equity investments, corresponding to forward price-to-earnings ratios of 15x and 11x, respectively.