Shenwan Hongyuan: Maintains "Buy" Rating on JD Industrial, Driven by KA Customer Growth with Improving Gross Margin

Shenwan Hongyuan released a research report maintaining a “Buy” rating for JD Industrial (07618). The domestic industrial goods market exceeds 11 trillion yuan, with increased coverage of new clients and new categories, strengthening client loyalty and per-unit value; following clients overseas, with long-term localization development and global operations, providing strong growth momentum. Internally, supply chain efficiency continues to improve, and the proportion of high-margin proprietary brands and overseas operations is increasing, driving gross profit margin improvement. The forecasted net profit attributable to shareholders for FY2026-2027 remains at 1.638 billion and 2.210 billion yuan, respectively, with an increased forecast of 2.786 billion yuan for FY2028, representing year-over-year growth of +44.9%, +34.9%, and +26.0%, corresponding to P/E ratios of 20x, 15x, and 12x.

Shenwan Hongyuan’s main points are as follows:

Performance Brief

The company released its FY2025 annual report, with results slightly exceeding expectations. FY2025 revenue was 23.952 billion yuan, up 17.4% year-over-year; H2 FY25 revenue was 13.701 billion yuan, up 16.3%; FY2025 adjusted net profit was 1.131 billion yuan, up 5.3%, slightly better than expected.

Steady growth in merchandise sales driven by rapid expansion of key KA clients

FY2025 merchandise sales revenue reached 22.493 billion yuan, up 17.3%, with a 16.3% increase in H2 FY25. Key KA clients’ GMV in FY2025 hit 16.5 billion yuan, up 26.5%; the number of key KA clients was 13,300, a 26% increase. The company’s coverage across multiple industries and accelerated client expansion are the main growth drivers for FY2025. GMV from small and micro clients reached 17 billion yuan, up 8.3% year-over-year.

High client loyalty among key KA clients, with increasing transaction value per old client

The company’s full-process digital system, Taipu, continues to optimize operations. Through deep integration of systems, data, and processes, customer service experience is continuously improved, enhancing cooperation stickiness. In FY2025, transaction retention rate for key KA clients was 116.6%, up 10.9 percentage points year-over-year, reflecting a continuous increase in transaction value per existing client.

Supply chain cost reduction continues, gross profit margin improves

FY2025 gross profit margin was 17.4%, up 1.2 percentage points year-over-year, maintaining an upward trend. The company continues to reduce supply chain costs by streamlining distribution layers, connecting directly with manufacturers, consolidating procurement, and standardizing products in warehouses. In 2025, the company launched its first industrial large model, JoyIndustrial, and internal management automation to improve efficiency, jointly promoting gross profit margin enhancement.

Expansion of BOM and overseas new businesses, with increased phased expenses

FY2025 adjusted net profit margin was 4.7%, up 0.6 percentage points year-over-year, mainly affected by increased fulfillment costs; fulfillment expense ratio was 7.4%, up 1.8 percentage points, mainly due to expenses related to new BOM categories and overseas business expansion. As new businesses scale, fulfillment costs are expected to decline.

Risk Alerts

Risks include external environment pressures limiting gross margin improvement; intensified industry competition leading to lower-than-expected sales revenue; and slower-than-expected digital transformation in the industrial procurement sector.