JD.com, Inc. (NASDAQ:JD) to Spend $100 Million to Back Appliance Store Operator Gome Retail Holdings
JD.com will pay $100 million to back appliance store operator Gome Retail Holdings, a move which will expand the brick-and-mortar presence of China’s second-largest etailer.
The recently announced strategic tie-up has JD.com purchasing convertible bonds that could translate to a 2.8% stake in Gome. The date of the transfer has yet to be set.
Gome, one of the China’s largest appliance chains, will apply the proceeds toward debts and gains access to JD.com’s online shopping platform.
The agreement is predicted to allow customers to examine items at Gome’s roughly 2,600 stores and later purchase the products through JD.com. The two sides will collaborate on procurement and logistics.
JD.com has been making inroads into the physical retail area. In April last year, the tech giant spent 1.27 billion yuan ($177 million) to accumulate a 46% stake in electronics seller Jiangsu five Star Appliance. In January, JD.com completed the acquisition of a 9% stake in cellphone store chain operator Beijing Digital Telecom for nearly 214 million Hong Kong dollars ($27.6 million).
The partnership with Gome splits the Chinese appliance market into roughly two camps, with the other overseen by Alibaba group Holding. The domestic e-commerce leader recently acquired a 19.9% stake in Suning.com.
Suning.com commanded a 25% share of Chinese appliance sales in the first quarter, with JD.com coming in next at 19%, according to industry data. Alibaba’s Tmall platform had an 11% share, while Midea group had 5%.
Appliance sales fell 36% on the year to 117.2 billion yuan. because of the novel coronavirus epidemic disrupting shopping habits, the drop in sales this year is projected to exceed the decline in 2019.
Price Performance
Relative Valuation
Technical Indicators
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 45.92.
The projected upper bound is: 59.06.
The projected lower bound is: 50.26.
The projected closing price is: 54.66.
Candlesticks
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 20 white candles and 29 black candles for a net of 9 black candles.
Momentum Indicators
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
Stochastic Oscillator
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 56.9038. This is not an overbought or oversold reading. The last signal was a sell 5 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 64.16. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 5 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 62. This is not a topping or bottoming area. The last signal was a sell 5 period(s) ago.
MACD
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 1 period(s) ago.
Rex Takasugi – TD Profile
JD.COM INC ADR closed up 3.310 at 54.330. Volume was 5% below average (neutral) and Bollinger Bands were 120% wider than normal.
Open High Low Close Volume 51.350 54.330 51.060 54.330 16,945,700
Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 52.75 45.02 37.18 Volatility: 85 59 55 Volume: 22,724,664 17,682,404 14,230,556
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
Summary
JD.COM INC ADR is currently 46.1% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods.
Our volume indicators reflect moderate flows of volume into JD.O (mildly bullish). Our trend forecasting oscillators are currently bullish on JD.O and have had this outlook for the last 36 periods.
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