By Sophie Yu and Deborah Mary Sophia
(Reuters) -Chinese e-commerce giant JD.com posted its strongest revenue growth in 11 quarters on Thursday, as deep discounts and government subsidies encouraged customers to spend more, driving up strong year-end sales.
U.S.-listed shares of JD.com rose more than 5% in early trading, after the company exceeded market expectations for the fourth quarter.
China’s e-commerce leaders such as JD.com and Alibaba have slashed prices to lure shoppers amid intense competition.
The country’s government has also ramped up fiscal stimulus to bolster domestic consumption, which includes incentives for consumer goods trade-ins, encouraging purchase of updated appliances.
JD.com — a major retailer of home appliances in China — expects healthier consumption trends this year on a rebound in demand and an AI-powered improvement in customer experience, CEO Sandy Xu said on a post-earnings call.
The company reported total revenue of 346.99 billion yuan ($47.91 billion) for the fourth quarter, a 13.4% increase over the year earlier. Analysts estimated 332.35 billion yuan, according to data compiled by LSEG.
M Science analyst Vinci Zhang said it is a strong set of results overall. However, most of the revenue beat was driven by electronics and home appliances which is, in turn, being driven by government subsidies.
“So how much of the overall beat is happening organically, we don’t really know,” he said.
SPDB International raised its fourth-quarter revenue estimate for JD.com in January, owing to the government’s trade-in policy. The securities house expects a “significant improvement” in growth of electrified product categories, it said in a report.
JD.com is also venturing into new business areas. It announced its entry into the food delivery market in February.
“The food delivery business is a nice compliment to its existing business structure because JD owns a lot of warehousing and logistics capabilities, so adding on food delivery just feels like it’s a natural extension of that,” Zhang said.
Net income attributable to JD.com’s ordinary shareholders was 9.9 billion yuan for the October-December quarter, compared with 3.4 billion yuan a year earlier.
($1 = 7.2430 Chinese yuan renminbi)
(Reporting by Deborah Sophia in Bengaluru; Editing by Shilpi Majumdar and Jan Harvey)
