Daiwa has released a research report noting that JD-SW (09618) second-quarter adjusted net profit exceeded expectations by 12%. The firm maintains a "Hold" rating and has raised its target price from HK$108 to HK$120.

This target is based on a sum-of-the-parts valuation method. In response to improved growth prospects, Daiwa has increased the target valuation multiple for JD Retail from 3.0x to 3.5x and has incorporated the market value of JD Logistics (02618).

The brokerage believes that improvements or declines in consumer spending are the key factors influencing the company's first-party business sales growth. It views new business initiatives as potential long-term growth drivers for the group.

Management indicated that sales momentum improved in June. Daiwa expects revenue growth to see a significant year-on-year improvement starting from the third quarter.

Management also anticipates that investment in Joybuy will increase in a measured manner over the coming quarters, with the potential to fuel long-term growth.