[ET Net News Agency, 21 May 2021] S&P Global Ratings said today that JD.com Inc.'s
(09618) solid 39% growth in revenue captures the credit rating agency's positive outlook
on the China e-commerce company's potential to expand its market share. The slower EBITDA
growth of 9.8% in first quarter 2021 is in line with S&P's expectation and does not affect
its rating (BBB+/Positive/--).
The agency thinks profits will continue to drag in 2021 before reversing in 2022. While
earnings improved in the retail segment in the first quarter, this was not enough to
offset greater operating losses in JD.com's logistics arm and other new business
initiatives to penetrate into lower-tier cities.
S&P expects EBITDA growth to decelerate further in the second half of 2021 post
consolidation of loss-making Dada Nexus Ltd., which JD.com will be consolidating upon
closing of the transaction, as well as the absence of one-off benefits from the relief of
social insurance benefits received in 2020.
It continues to expect JD.com and its subsidiaries to invest in strengthening its market
position and reach. This means active deployment of cash into operating expenses, capital
expenditures, and investments.
Despite higher spending, S&P believes JD.com will maintain a net cash position in the
next 24 months. The agency's positive outlook reflects S&P's view that JD.com's market
share will continue to expand, buttressing its cash strengths. (KL)