CICC: Maintain JD LOGISTICS (02618) outperform industry rating with a target price of HKD 19.40.

CICC released a research report stating that it maintains an outperform industry rating and a target price of HKD 19.40 for JD LOGISTICS (02618) due to expectations of profit improvement in 2026, corresponding to 12.6 times and 10.8 times the non-IFRS price-to-earnings ratios for 2026 and 2027, representing a 36.9% upside from the current price. The current price corresponds to 9.2 times/7.9 times the non-IFRS price-to-earnings ratios for 2026/2027. The main points from CICC are as follows: 2Q26 performance meets the bank's expectations The company announced its 2Q26 performance: revenue of RMB 64.1 billion (up 24.3% year-on-year), slightly exceeding market consensus expectations, primarily due to both quality and quantity growth from external clients, as well as rapid growth in overseas and express delivery business volumes; net profit attributable to the parent company was RMB 2.41 billion (up 13.3% year-on-year), with non-IFRS net profit at RMB 2.64 billion (up 2.2% year-on-year), with overall earnings in the second quarter in line with the bank's expectations. AI + automation deepens the integrated supply chain moat, with quality and quantity growth from external clients In 1H26, the company increased investment in logistics technology and its application, continuously upgrading relevant equipment through self-research across the entire operational process, including warehousing, sorting, and distribution, thus enhancing operational efficiency and competitive service quality, leading to quality and quantity growth of clients: in 2Q26, the company had 70,000 external integrated supply chain clients (+7.0%), with average revenue per client at RMB 146,000 (+5.2%). Demand for overseas warehousing and distribution remains robust, and the company's overseas network layout is strengthening The company fully utilizes the synergy of its own express delivery service JoyExpress and Joybuys commercial flow, rapidly establishing its overseas business; as of 1H26, it operates over 200 overseas warehouses in 26 countries globally. Considering the EU's compliance tax reform for small e-commerce packages starting in July, it may accelerate the cross-border e-commerce industrys shift towards stocking in overseas warehouses and local fulfillment. The bank anticipates that as the company's overseas fulfillment capabilities continue to deepen, the overseas business is expected to expand significantly, becoming a new growth driver for the company. Multi-brand collaboration is progressing, and the integration of networks is currently in a deep-water phase in 1H, with optimism for improved profitability in the medium to long term The integration of Debons dual networks is still in a deep-water phase; the bank estimates that with product structure integration and internal management optimization, there is significant room for profit recovery in this segment. The immediate delivery business will expand its service coverage to external clients starting in 2026, contributing a more stable revenue stream.