  jdcom’s adjusted net profit jumped 64 jump last year as it launched a final dividend that is relatively rare among chinese tech stocks   the ecommerce company’s revenue growth may decline in the first quarter of this year and consumer sentiment may not pick up significantly until the second half after promising to boost its thirdparty merchant partners through a 10 billion yuan 145 billion subsidy program last month no 2 ecommerce firm jdcom inc jd began “showing them the money” with the program’s launch on march 6 it certainly has the cash to spare after announcing betterthanexpected results last week that showed its revenue rose 10 last year to just crack the 1 trillion yuan mark its nongaap net profit jumped by an even higher 64 for the year to 282 billion yuan but all was not peaches and cream for the ecommerce giant as ceo xu lei said that despite china ending most of its strict covid restrictions a broader recovery for the country’s battered retail sector hinges on consumer confidence that is still quite weak with time still needed for a number of government stimulus measures to take effect he added the market might remain weak in the first half of this year and not improve notably until second half xu’s comments at the company’s results briefing combined with concerns over the massive subsidy program announced just weeks earlier cast a chill over the otherwisepositive results with jd’s share diving 115 the following trading day xu took pains to stress the new subsidies would have only a small impact on its profit margins and that he hoped to change consumer habits by creating a “daily low price” environment but the big selloff said more about investor concerns over the company’s prospects as the shares continued to fall and were down about 16 from preannouncement levels by wednesday’s close despite china’s widespread covid control measures last october and november including lockdowns and frequent store closures jd was less affected due to its online model that largely insulated it from such disruptions its revenue rose 71 yearoveryear in the fourth quarter while its adjusted net profit more than doubled to 766 billion yuan another highlight for investors was the company’s declaration of a final dividend of 031 per share that together with a special dividend of 063 last may means jdcom paid total dividends of 094 for the year the generous payout is more like a gift to shareholders for their longterm support especially as the company’s revenue and profit growth slow in china’s internet industry netease ntes and tencent 0700hk are among the few companies that also pay regular cash dividends alibaba baba pinduoduo pdd xiaomi 1810hk meituan 3690hk and baidu bidu all have yet to pay such dividends since going public the declaration of an annual dividend policy by jd’s cfo sandy xu suggests the dividend payment could become an annual fixture leading many to speculate over whether some of the other big tech names could follow suit unlike previous 10 billion yuan subsidy programs launched by jd in the past often aimed at pinduoduo jd stressed the latest subsidy plan is not so specific or a onetime promotion instead it is aimed at attracting more customers to its platform as it works to improve its overall online shopping experience jd has always had an edge over many of its rivals due to tight control of its entire ecommerce ecosystem which includes its own logistics warehousing and industry chain capabilities but it may need to relax some of that control if it wants to snatch market share from pinduoduo’s home turf in ultra costsensitive smaller cities that may get investors worrying that the latest program could mark the start of a prolonged battle with pinduoduo which could turn into a moneyburning machine for jdcom jd’s latest report shows it had 2262 billion yuan in cash and cash equivalents at the end of last year coupled with 578 billion yuan in net cash inflow from operating activities last year the ecommerce giant definitely has the requisite deep pockets to fund a prolonged subsidy war but such a plan could be illtimed if consumer sentiment remains weak china’s economy has already shown some early signs of recovery since beijing scrapped its “zero covid” policy early last december still xu lei said he expects travel services to be among the first to recover while a rebound for other consumer sectors could depend on whether national disposable income increases xu’s comments underscore that china’s labor market is currently in a wobbly state unemployment for the nation’s youth – some of the most enthusiastic ecommerce buyers – is now pushing 20 that could well improve with the end of zero covid but small and medium enterprises that employ many of those youth will need time to resume hiring in the meantime the risk of more layoffs is still high due to declining factory orders from europe and the us all that shows consumer demand could remain unpredictable no matter how much jd spends to stimulate consumption hsbc global research said jd management revealed that gross merchandise volume gmv on the company’s platform fell yearonyear in the first two months of the 2023 with a small improvement in early march so it expects that revenue will not pick up significantly until the second half of the year when consumer sentiment improves the bank lowered its earnings forecast for jd by 09 and 24 for this year and next respectively and lowered its target price from hk320 to hk273 while maintaining its “buy” rating hsbc believes that jd will suffer a singledigit decline in retail revenue in this year’s first quarter due to strategic adjustments in lowprofit categories and a slightly weakerthanexpected macro recovery the postearnings selloff coupled with the final dividend may attract some investors back to jd’s stock when markets settle after recent turbulence following the declines the company’s shares now trade at a pricetoearnings pe ratio of just 158 times well below pinduoduo’s 203 times jd’s operating costs have been running high for many years giving it an operating profit margin of just 175 a fraction of pinduoduo’s 239 that lower operating efficiency may explain why the smaller pinduoduo is valued more highly despite jd’s larger size and longer operating history