UBS: JD Industrials (7618.HK) — Riding Industrial Supply Chain Digitalization; Initiate at Buy
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
UBS initiates coverage on JD Industrials with a Buy rating and a target price of HKD 23.50, based on 26 times 2027 estimated earnings. As a leading technology and service provider for industrial supply chains in China, the company specializes in the online procurement of maintenance, repair, and operations products. UBS believes JD Industrials is fundamentally positioned to benefit from the ongoing digitalization of China's industrial supply chain market.
The digital MRO procurement market is projected to grow at a 10.6% CAGR through 2029. JD Industrials held the top market share by GMV at 4.1% in 2024, and UBS expects this to expand to 7.4% by 2029, driven by its asset-light digital model, AI-enabled infrastructure, and synergies with the broader JD ecosystem.
Financially, revenue is projected to grow at a 25% CAGR from 2025 to 2027. Operating leverage and improved efficiency should lift net profit margins from 3.7% in 2024 to 5.7% in 2027, resulting in a 48% earnings CAGR. The stock currently trades at 15 times 2027 estimated earnings, representing a 42% discount to global peers. UBS sees meaningful upside as the market prices in this robust earnings trajectory.