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In the evening of November 19, Sina Technologies News Beijing Time, Beijing East Group (NASDAQ: JD) released unaudited financial statements for the third quarter of fiscal year 2018 as of September 30. According to the financial report, Jingdong group's net revenue in the third quarter was 104 billion 800 million yuan, an increase of 25.1% over the same period last year. The net profit of Jingdong Group in the third quarter was RMB 1.2 billion, which was 2.2 billion yuan in the same period last year, down 45.45% from the same period last year.
After the financial report was released, the chairman and CEO of Jingdong Group, Liu Qiangdong, CFO Huang Xuande, Chief Strategic Officer Liao Jianwen and Director of Investor Relations Li Ruiyu attended the analyst's telephone conference, interpreted the financial report and answered the analyst's questions.
The following is the main content of this conference call Q & a session.
Eddie Leung, Bank of America Merrill Lynch analyst: First, can management talk about the impact of the macroeconomic environment, especially retail, on Beijing-East commercialization strategy and logistics network expansion plan? The second question is about increasing R&D investment in Jingdong. Can you share the obstacles faced by these projects in promoting the company's business in the past few quarters?
Huang Xuande: the macroeconomic does bring some effects to durable goods. But in the latest promotion season, according to the information we confirm to our brand partners, we do see that Jingdong continues to lead the industry growth. Of course, some categories have also been hit by the slowdown in macroeconomic growth, but commodities are still growing healthily and continuously. As a mass market retailer, the scale gives Jingdong a unique price competitive advantage. Even when economic growth slows down, we still believe that Jingdong's value proposition of providing high-quality goods, low prices and better services will continue to win our customers'favor. We do not see that the overall profit margin trend will be seriously affected next year.
As for Jingdong's investment in logistics, the user experience that this kind of service can provide clearly shows that Jingdong not only has unique advantages in its own business, but also, as I said before, its third-party market business grows faster, and part of the growth comes from the logistics service of Jingdong, our company. Head businesses are increasingly making use of these services.
Liao Jianwen: Speaking of technology investment, of course, Jingdong will continue to develop retail innovation in social products and e-commerce. I think this will be the next frontier for promoting the potential growth of Jingdong. In addition, we mainly focus on building a retail supplier logistics system to promote cost efficiency and user experience.
Alicia Yap, Citibank analyst: My question is about the retail as a service strategy and the overall positioning of Beijing East. What are the differences between the services provided by Jingdong and the main competitors? Will Jingdong continue to sign contracts with international brands to allow them to enter Jingdong platform? Jingdong seems to be away from local brands and has invested more and more efforts in serving overseas brands. Has Jingdong's vision as a retailer changed? Or is Jingdong focused on becoming a service provider?
Liao Jianwen: let me first explain the concept of "retail as a service". As we said before, the retail industry will be fragmented and more dispersed than ever before. In this case, Jingdong is changing from vertical mode to overall mode. In other words, the reason why Jingdong has been so successful in the past is that we have provided the final solution for retailers, such as Jingdong Mall and Jingdong Logistics.
In the future, we must build some retail infrastructure for the two value chain. That is to say, we also want to provide logistics services to other retailers. If you are familiar with retail innovation in social business, then it is important for understanding creativity. In this case, Jingdong should build retail infrastructure in an all-round way to support and empower genuine retail innovation. So, according to our definition of retail as a service, it basically consists of two parts. First, we will continue to focus on innovation as the main focus of Jingdong. Second, we will open up the latest infrastructure such as logistics technology to connect and support retail innovation.
(to be continued...)
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