JD

Alibaba Group and JD.com, Chinese e-commerce giants have lost over a third of their market cap during the last two months. The recent renomination of Xi Jinping for the third term as the Secretary General of the Communist Party of China and his efforts to put his fellow comrades in to  key positions of leadership, has hit the Chinese stock market badly. The third ruling of comrade Xi is seen to be a bad sign for Chinese market developments. Investors are panicking and many are selling off their assets.

But the good news is that nobody wants to rock the economic system of China. The Chinese government is in close cooperation with the U.S. Administration in order to avoid the delisting of Chinese corporation stocks from U.S. exchanges. Walmart is the owner of 13% of JD.com stocks and is likely to put extra efforts into stabilising its stock prices. One of the ways to exercise these efforts could be a buy back of JD.com shares as the company has accumulated more than 35 billion yuan in Free Cash Flow (FCF) during the last twelve months. No U.S. retail corporations are close to such a profitable performance. Nonetheless, the shares of U.S. retail corporations cost more.

JD is estimated to have Price to FCF Ratio above 13 for the Q3 2022. This is twice as low as average U.S. peers. So, this may mean that JD stock prices may be up by 100%. This is not going to happen soon, as the recovery of share prices will require some time. But in the long-term JD.com stocks are seen to be an excellent addition to the investment portfolio.