1. Accredited Investors (Singapore: Priority Banking). - Standard

1. Accredited Investors (Singapore: Priority Banking). - Standard

FOR EXTERNAL DISTRIBUTION TO THE FOLLOWING GROUP OF CUSTOMERS ONLY: 1. Accredited Investors (Singapore: Priority Banking). Further distribution of th...

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FOR EXTERNAL DISTRIBUTION TO THE FOLLOWING GROUP OF CUSTOMERS ONLY: 1. Accredited Investors (Singapore: Priority Banking).

Further distribution of this publication to other group(s) is STRICTLY PROHIBITED.

equity trade note equities | 25 May 2015

This reflects the views of the Wealth Management Group

We expect the stock to resume its long term bullish trend JD.com’s stock price

JD.com Inc (JD US) BUY at USD 34.89

38 36 34

TRADE IDEA: Rationale: We believe the market is under-appreciating JD.com’s franchise and has failed to price in the significant growth prospects of the company. JD.com has been busy ramping up its product offerings through various JVs (i.e. travel with Tuniu, cloud ERP with Kingdee, cars with Bitauto, online prescription drugs with Shanghai Pharma) and we expect this increasing scale will help the company drive larger customer and vendor revenues. Recent 1Q earnings release also suggested that key metric such as gross merchandise volume remains robust.

USD

·

32 30 28.5

28 26 24 22 20 May-14

Jul-14 Sep-14 JD US Equity

Nov-14 200 dma

Jan-15 100 Dm a

Mar-15

May-15 50 dma

Source: Bloomberg, Standard Chartered

Following Alibaba’s 1Q positive earnings and its bullish trend reversal, we believe JD.com, as the 2nd largest player in the industry, will also benefit from the recovery in investors sentiment. Therefore, we suggest investors to buy the stock at current levels to participate in re-rating story. We would place a stop loss at USD 28.5, based on technicals. ·

Valuations: Trading at FY 2015 EV/Sales of 1.5x, JD is priced at a discount to Amazon’s 1.9x despite growing FY15 sales at a more robust 54% compared to Amazon’s 16%.

·

Technicals: JD.com Inc (JD US) – The stock is currently consolidating after surpassing its previous peak of USD 33 (August 2014). If the nearest support at USD 32 is defended, then the stock is likely to resume the broader uptrend, which is a continuation of a longer term bullish rounding pattern. If USD 32 is breached, the next crucial support will be at 28.50.

·

Risks: Timing of profitability may be delayed as they continue to invest aggressively in new business initiatives. Alibaba dominates China’s online marketplace business and this could limit JD’s long term growth potential.

·

Description: JD.com Inc is an online direct sales company in China. The Company offers a wide selection of products through its website and mobile applications. JD.com sells appliances, computers, digital products, communication products, garments, books and household items to consumers and vendors. (Source: Bloomberg).

Counter

Sector

Ticker

Currency

Last Price

Rationale

Time Horizon

Stop Loss

JD.Com

Consumer Discretionary

JD US

USD

USD 34.89 (as of 22 May 2015)

Fundamentals/ Technicals

1-3 months

USD 28.5

This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures Appendix.

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equity trade note | 25 May 2015

TECHNICAL COMMENTARY ·

JD.com Inc (JD US) – The stock is currently consolidating after surpassing its previous peak of USD 33 (August 2014). If the nearest support at USD 32 is defended, then the stock is likely to resume the broader uptrend, which is a continuation of a longer term bullish rounding pattern. If USD 32 is breached, the next crucial support will be at 28.50.

.

Daily Chart

Source: Metastock, Standard Chartered Prices as of 22 May 2015

This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. This is not a research report and has not been produced by a research unit. Important disclosures can be found in the Disclosures Appendix.

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equity trade note | 25 May 2015

Disclosure Appendix This document is not research material and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. This document does not necessarily represent the views of every function within the Standard Chartered Bank, particularly those of the Global Research function. Standard Chartered Bank is incorporated in England with limited liability by Royal Charter 1853 Reference Number ZC18. The Principal Office of the Company is situated in England at 1 Basinghall Avenue, London, EC2V 5DD Standard Chartered Bank is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. In Dubai International Financial Centre (“DIFC”), the attached material is circulated by Standard Chartered Bank DIFC on behalf of the product and/or Issuer. 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