On the evening of April 18th, JD.com announced on the Hong Kong Stock Exchange that as of the first quarter of March 31st this year, it had repurchased 87.5 million Class A common shares (equivalent to 43.8 million American depositary shares), with a total repurchase amount of 1.2 billion US dollars. The total number of shares repurchased by JD.com in the first quarter of this year was about 2.8% of its total outstanding common shares as of December 31, last year.
The announcement also shows that according to the company's previous share repurchase plan, which expired on March 17, 2024, the company has repurchased a total of approximately $2.1 billion as of March 17, 2024. According to the company's new share repurchase plan (valid until March 18, 2027), as of March 31, 2024, the company has repurchased a total of approximately $500 million. As of March 31, 2024, the remaining amount under the company's new share repurchase plan is $2.5 billion.
After JD updated its repurchase plan, UBS released a report stating that JD disclosed a total of $1.2 billion in shares repurchased in the first quarter, which is equivalent to about 2.8% of the total number of common shares issued to the public as of the end of December last year, far exceeding expectations. And it is believed that although JD's repurchase pace may change in the future, with its strong cash situation and free cash flow, it believes in sustainable repurchase.
In addition, despite JD's strong cash situation and consistently exceeding expectations in gross profit over the past few years, the group's valuation multiple has been under pressure. UBS believes that due to previous low shareholder returns, investors have not given too much attention to its cash balance. But yesterday's announcement from the group sent a strong signal and commitment to the market, thereby releasing the value of the shares.
UBS also believes that this year is the execution year of JD.com, and user investment and merchant ecosystem will continue to be the focus. Given the strong free cash flow of the group (the bank predicts to reach $7 billion in fiscal year 2024), there is room for an increase in the pace of buybacks and shareholder returns. The bank has given JD's US stock a "buy" rating, with a target price of $37.
It is understood that on March 6th this year, JD.com released its fourth quarter financial report and annual performance for 2023, with revenue reaching 306.1 billion yuan, a year-on-year increase of 3.6%; The net profit was 3.4 billion yuan, compared to 3 billion yuan in the same period last year. The annual revenue for 2023 was 1084.7 billion yuan, a year-on-year increase of 3.7%. The annual net profit reached 24.2 billion yuan, compared to 10.4 billion yuan in the same period last year, a year-on-year increase of 133%.
On the day of the financial report release, JD Group announced simultaneously that the company's board of directors had approved annual cash dividends, with a total dividend amount of approximately 1.2 billion US dollars, exceeding the 1 billion US dollars in 2023. The board of directors of JD Group has also approved a new share repurchase plan, which, upon the expiration and effectiveness of the existing share repurchase plan, can repurchase shares worth no more than $3 billion within the next 36 months up to March 2027.
After the release of the aforementioned repurchase plan, Macquarie's report stated that JD.com surprised the market by increasing shareholder returns through dividends and repurchases. The management has a positive attitude towards this year's performance, as they have summarized the adjustment of international business and pointed to the recovery stage, maintaining its "neutral" rating. The target price has been raised to HKD 105 to reflect improved shareholder returns.