NEW YORK (TheStreet) -- JD.com (JD) - Get Report stock is sliding 3.10% to $31.57 in late-morning trading on Monday following a sixth straight month of declines in China's industrial profits in November and concern regarding a new system for listing initial public offerings (IPOs).
Investors worry that upcoming changes to China's system for IPOs could reduce demand for existing stocks, Bloomberg reports.
The new system could result in China moving toward a registration system and away from an approval-based system, according to Reuters. The changes could go into effect as soon as March.
JD.com is an online direct sales company based in Beijing.
The Shanghai Composite Index closed down 2.6% to 3,533.78 today, as China shares closed out their biggest decline in a month.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate JD.COM INC -ADR as a Hold with a ratings score of C-. COM INC -ADR (JD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and poor profit margins.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- JD's revenue growth has slightly outpaced the industry average of 38.3%. Since the same quarter one year prior, revenues rose by 46.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- JD's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- Compared to other companies in the Internet & Catalog Retail industry and the overall market, JD.COM INC -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for JD.COM INC -ADR is currently extremely low, coming in at 7.44%. Regardless of JD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.20% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 211.9% when compared to the same quarter one year ago, falling from -$26.78 million to -$83.52 million.
- You can view the full analysis from the report here: JD