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Sub-sector: Technology
Baidu
- Sector: Media and TelecommunicationsTechnology
- Sub Sector: Technology
- Country: China
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Fundamental View
AS OF 04 Mar 2026We maintain our Underperform recommendation on Baidu following its weak 4Q25 results. Revenues fell amid the continued contraction in online ads, while EBITDA margin fell YoY due to an increased revenue mix of the lower-margin AI cloud segment and weak monetization of its search engine; gross leverage further weakened and net cash narrowed. Baidu trades in-line to Asia A corp and 9 bp tighter than Asia A- corp which we view as rich; this is because we expect its debt metrics to remain weak compared to its historical levels over the next 12-24 months given the challenging outlook of its advertising segment and weak margins of its AI cloud segment. In our view, Baidu should be trading closer to A- corps. We also think Baidu is expensive compared to BABA and TENCNT.
Business Description
AS OF 04 Mar 2026- Founded in 2000, Baidu started out as a search engine business and began its development into artificial intelligent (AI) since 2010.
- Baidu general business is the main revenue driver of the company (79% of 4Q25 revenues); this includes its AI-powered businesses (34% of 4Q25 revenues) through AI cloud infrastructure (ie. enterprise cloud), AI applications (Baidu Wenku, Baidu Drive, automonous ride-hailing via Apollo Go), and AI-native marketing services; the remaining core revenues (45% of total) are derived from its legacy business and others which includes traditional advertising services across Search, Feed and other properties.
- iQiyi accounts for the remaining revenues of Baidu; iQIYI is an online video platform with a content library that includes licensed movies, television series, cartoons, and other programs; it generate revenues through online ads and membership subscription fees.
- Baidu launched ERNIE bot in Mar-23, a generative AI chatbot powered by ERNIE, Baidu's in-house foundation model.
- Baidu has a market capitalization of RMB 284.9 bn as of 4 March 2026.
Risk & Catalysts
AS OF 04 Mar 2026Any regulatory clampdowns abroad and domestically (e.g. potential US investment ban, antitrust rules, data security and personal information protection laws) may adversely affect the business of Baidu. The interpretation of Chinese laws and regulations involves some degree of uncertainty.
There are regulatory risks given the corporate structure which uses variable interest entities (VIEs) to circumvent China’s restrictions on foreign ownership of Internet Content Providers (ICPs).
Baidu has made significant investments into long-term AI-related projects, which may take time to turn profitable. A potential escalation of the US chip restriction could have a material negative impact its AI related business (ie. cloud, ernie bot, autonomous driving).
Intense competition in online ads segment may pressure topline and EBITDA margin.
Key Metric
AS OF 04 Mar 2026| RMB bn | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 29.7% | 28.5% | 25.0% | 22.5% | 26.0% |
| Debt/Total Equity | 42.2% | 39.8% | 33.4% | 29.0% | 35.1% |
| Debt/Total Assets | 24.1% | 23.4% | 20.8% | 18.5% | 21.6% |
| Gross Leverage | 3.3x | 2.8x | 2.2x | 2.0x | 3.2x |
| Interest Coverage | 8.2x | 11.4x | 12.1x | 13.8x | 10.9x |
| EBITDA Margin | 22.6% | 26.8% | 29.2% | 29.3% | 23.4% |
CreditSight View Comment
AS OF 27 Feb 2026We maintain our Underperform recommendation on Baidu following its weak 4Q25 results. Revenues fell amid the continued contraction in online ads, while EBITDA margin fell YoY due to an increased revenue mix of the lower-margin AI cloud segment and weak monetization of its search engine; gross leverage further weakened and net cash narrowed. Baidu trades in-line to Asia A corp and 9 bp tighter than Asia A- corp which we view as rich; this is because we expect its debt metrics to remain weak compared to its historical levels over the next 12-24 months given the challenging outlook of its advertising segment and weak margins of its AI cloud segment. In our view, Baidu should be trading closer to A- corps. We also think Baidu is expensive compared to BABA and TENCNT.
Recommendation Reviewed: February 27, 2026
Recommendation Changed: August 21, 2025
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Search topics about wealth insights and investments.Meta Platforms
- Sector: TechnologyTechnology Media and Telecommunications
- Sub Sector: Technology
- Country: US
- Bond: META 4.95 33
- Indicative Yield-to-Maturity (YTM): 4.95%
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Fundamental View
AS OF 19 Dec 2025Meta delivered strong revenue growth in its 3Q25 results and 4Q25 guidance, which were both above consensus expectations. However, total expenses are now expected to grow “significantly” faster in 2026 relative to the 22-24% YoY implied growth in 2025. Also, capex will have “notably larger” dollar growth in 2026. We estimate this could imply $115-120 capex or ~50% of sales in 2026. As a result, we expect FCF to be pressured in 2026.
Meta just launched $30 bn IG bonds which is on the heels of the recent $27 bn off balance sheet Meta JV bond deal. Pro forma for $30 bn issuance, gross leverage is 0.5x (0.2x at 3Q25) and lease-adjusted leverage is 0.7x (0.4x at 3Q25). Net cash was $15.6 bn at 3Q25. Meta recently prevailed in the FTC’s monopoly litigation.
Business Description
AS OF 19 Dec 2025- Meta Platforms is the largest social networking company in the world. Meta's advertising revenue is primarily from Facebook and Instagram, although also on Messenger, Whatsapp, Threads, and third-party affiliated websites and apps.
- In 3Q25, Family of Apps was 99% of revenue (97.7% from advertising and 1.3% from other) and Reality Labs was 1% of revenue. Reality Labs generated $18.1 bn in operating losses during LTM 3Q25.
- There are 3.54 bn Family Daily Active People (DAP) as of 3Q25, and the Family Average Revenue per Person (ARPP) was $14.46 quarterly in 3Q25.
- Meta is headquartered in Menlo Park, California. Employee headcount was >78.4k at 3Q25.
Risk & Catalysts
AS OF 19 Dec 2025We continue to expect Meta to be a regular/annual issuer to fund its shareholder returns, operating losses in Reality Labs, and substantial investments in AI.
Meta recently prevailed in the FTC’s monopoly litigation. In December 2020, the FTC filed a lawsuit against Meta seeking to unwind prior acquisitions of Instagram and Whatsapp.
Meta’s business model relies almost entirely on user-generated content, exposing it to customer privacy concerns and regulatory scrutiny in the US and Europe.
Key Metric
AS OF 19 Dec 2025| $ mn | 2021 | 2022 | 2023 | 2024 | LTM 3Q25 |
|---|---|---|---|---|---|
| Revenue YoY % | 37.2% | (1.1%) | 15.7% | 21.9% | 21.3% |
| EBITDA | 63,882 | 49,622 | 71,955 | 101,568 | 118,359 |
| EBITDA Margin | 54.2% | 42.6% | 53.3% | 61.7% | 62.5% |
| CapEx % of Sales | 16.3% | 27.5% | 20.8% | 23.8% | 34.3% |
| Sh. Ret. % of CFO-CapEx | 116% | 152% | 46% | 68% | 74% |
| Net Debt | (47,998) | (30,815) | (47,018) | (48,989) | (15,614) |
| Gross Leverage | 0.0x | 0.2x | 0.3x | 0.3x | 0.2x |
| EV / EBITDA | 14.0x | 5.8x | 12.3x | 14.5x | 15.8x |
CreditSight View Comment
AS OF 25 Feb 2026Meta’s advertising revenue growth has been impressive in recent years. However, the company is spending heavily on both capex for AI infrastructure and operating losses in Reality Labs. In addition, its AI models have lagged US peers. Capex is guided for $115-135 bn in 2026, which is up substantially from $72 bn in 2025. Gross lease-adjusted leverage increased to 0.7x at 4Q25 driven by its $30 bn bond deal. We are concerned that another jumbo bond deal will lead to technical pressure on its bonds and worsening credit metrics. Meta commented it might eventually move into a net debt position, which reflects a change in its financial policy. We recently highlighted this as a potential risk that could lead to ratings downgrades. Meta continues to face legal and regulatory headwinds.
Recommendation Reviewed: February 25, 2026
Recommendation Changed: July 31, 2025
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Search topics about wealth insights and investments.Amazon.com
- Sector: ConsumerTechnology Media and Telecommunications
- Sub Sector: Retail/GrocersTechnology
- Region: US
- Bond: AMZN 4.65 29
- Indicative Yield-to-Maturity (YTM): 3.99%
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Fundamental View
AS OF 19 Dec 2025We continue to have confidence in CEO Andy Jassy and the company’s long-term business for both AWS and Stores. AWS is a $132 bn run-rate business growing at 20% with GAAP operating margins in the 30s%. The 3Q25 results and commentary supports our view that Amazon will be a winner in Generative AI given the breadth of its cloud business, custom silicon (Trainium), and Bedrock service.
While AMZN’s capex has been ramping, along with other hyperscalers, we are encouraged by its debt reduction over the past few years and zero shareholder returns. There are risks related to its ongoing FTC suit although we view a breakup as unlikely. Pro forma for $15 bn issuance and $1.25 bn upcoming maturity, gross lease-adjusted leverage will increase by one tick to 1.0x.
Business Description
AS OF 19 Dec 2025- Amazon is an e-commerce company which sells a wide range of its own products and those of 3rd party sellers. Amazon offers fulfillment services for 3rd party sellers (FBA) and sells cloud computing services (AWS). In 3Q25, 3rd party units were 62% of total paid units, and FBA units are a majority of 3rd party units.
- In LTM 3Q25, NA segment was 60% of sales, International was 22% of sales, and AWS was 18% of sales.
- Amazon disclosed it surpassed 200 mn Prime members in April 2021. The annual membership was increased in February 2022 from $119 to $139 in the US, although fees vary by country. In mid-2019, Amazon Prime began to transition from 2-day to 1-day shipping. Amazon Prime also offers Prime Video, streaming music, and other benefits.
- In 2006, Amazon launched AWS which remains the leader in cloud computing (IaaS/PaaS). Amazon sells its own devices (e-reader, smart speaker, streaming media player, etc.).
Risk & Catalysts
AS OF 19 Dec 2025We think Amazon has moderate event risk given its large size (~$2.4 tn market cap).
Amazon’s capex has been ramping for AI cloud infrastructure, which could lead to more jumbo bond deals in 2026.
In September 2023, the FTC and a consortium of states filed a lawsuit against Amazon and accused the company of (1) punishing sellers for offering lower prices elsewhere and (2) making Prime eligibility conditional on usage of fulfillment services. Motions for summary judgment are not due until August 2026 with a trial scheduled for February 2027. The biggest risk would be a breakup, although we view that as unlikely.
Amazon’s $14 bn acquisition of Whole Foods has shown its proclivity for large M&A.
Key Metric
AS OF 19 Dec 2025| $ mn | 2020 | 2021 | 2022 | 2023 | 2024 | LTM 3Q25 |
|---|---|---|---|---|---|---|
| Revenue YoY % | 37.6% | 21.7% | 9.4% | 11.8% | 11.0% | 11.5% |
| EBITDA | 57,284 | 71,994 | 74,593 | 110,305 | 144,162 | 161,740 |
| EBITDA Margin | 14.8% | 15.3% | 14.5% | 19.2% | 22.6% | 23.4% |
| CapEx % of Sales | 12.1% | 13.3% | 11.5% | 8.5% | 12.3% | 17.1% |
| Sh. Ret. % of CFO-CapEx | 0% | 0% | n/m | 0% | 0% | 0% |
| Net Debt | (50,497) | (44,453) | 8,516 | (19,451) | (43,051) | (38,880) |
| Gross Leverage | 0.6x | 0.7x | 1.1x | 0.6x | 0.4x | 0.3x |
| EV / EBITDA | 28.3x | 23.3x | 11.7x | 14.4x | 16.1x | 14.5x |
CreditSight View Comment
AS OF 11 Mar 2026Pro forma for ~$49 bn bonds ($37 bn US$ notes and expected €10 bn notes), we estimate lease-adjusted gross leverage will increase by roughly a quarter-turn to 1.2x. Amazon announced a $50 bn investment in OpenAI (including $35 bn contingent) at a $730 bn pre-money valuation. In addition, Amazon unveiled guidance for $200 bn capex in 2026, which was substantially above expectations. However, Amazon has zero shareholder returns, and we continue to have confidence in CEO Andy Jassy and the company’s long-term business for both AWS and Stores. We expect Amazon to be a winner in AI given the breadth of its cloud business, custom silicon, and Bedrock service.
Recommendation Reviewed: March 11, 2026
Recommendation Changed: May 01, 2024
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Search topics about wealth insights and investments.Tencent
- Sector: Technology Media and Telecommunications
- Sub Sector: Technology
- Country: China
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Fundamental View
AS OF 28 Nov 2025We maintain our O/P recommendation on Tencent. In 3Q25, revenues accelerated and were ahead of expectations, EBITDA margin expanded on an improved revenue mix, FOCF remained robust, debt metrics improved. We view Tencent as a core holding in China and Asia IG credits, and it is our preferred duration play. While valuations of Tencent is less compelling compared to YE24, its longer duration bonds still offer ~20 bp of spread pick up against Chinese SOEs of similar tenors. We like Tencent’s strong and improving credit outlook compared to its Chinese tech peers, rock solid balance sheet and robust free operating cash flow. We prefer its 2041 bond which offer the highest 20-35 bp spread pick up against Asia A corporate and Chinese SOEs
Business Description
AS OF 28 Nov 2025- Founded in November 1998, Tencent is a leading provider of Internet value added services in China. Since its establishment, Tencent has ventured into instant messaging, social networking, online payments, digital entertainment, and PC and smartphone gaming. Most recently, it has also forayed into high-tech areas such as artificial intelligence, and cloud computing.
- Tencent's leading Internet platforms in China include Weixin/WeChat (online messaging), QQ Instant Messenger (online messaging), Tencent Games (gaming), Tencent Video/Weixin Video Accounts (video platforms), WeChat Pay (payments), and Tencent Cloud. The combined monthly average users (MAU) of Weixin and Wechat reached 1.40 bn as of 31 March 2025.
- In 3Q25, 50% of revenues came from Value Added Services (which consist of Domestic Games, International Games, and Social Networks), 30% came from FinTech and Business Services (e.g. commercial payments and cloud), and 19% from Online Advertising.
- Tencent is currently primarily listed on the Hong Kong Stock Exchange, with a market capitalization of HKD 5.6 tn as of 27 November 2025.
Risk & Catalysts
AS OF 28 Nov 2025While Chinese regulators have adopted a more friendly stance towards tech companies, any regulatory clampdowns abroad and domestically (e.g. antitrust rules, data security, personal information protection laws) may affect Tencent’s business. Tencent’s gaming, music streaming, and online payment units are among those that have come under regulatory scrutiny in the past.
Tencent uses variable interest entities (VIEs) to circumvent China’s restrictions on foreign ownership of Internet Content Providers, which poses regulatory risks. Specifically, VIE transactions involving “change in control” will be subject to antitrust regulatory processes.
US-China tension may escalate under the new Trump Administration, including additional chip sanctions, which may result in higher volatility. Failing to secure a stable supply of advanced AI chips and/(or) find domestic alternatives could weigh on the long-term AI development of Tencent against international peers.
Key Metric
AS OF 28 Nov 2025| RMB bn | FY21 | FY22 | FY23 | FY24 | LTM 3Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 27.0% | 31.4% | 29.8% | 25.4% | 24.5% |
| Net Debt to Book Cap | 6.0% | 8.5% | 1.0% | 2.3% | 1.4% |
| Debt/Total Equity | 36.9% | 45.9% | 42.5% | 34.0% | 32.5% |
| Debt/Total Assets | 20.1% | 22.8% | 23.5% | 20.1% | 19.7% |
| Gross Leverage | 1.7x | 1.9x | 1.6x | 1.3x | 1.2x |
| Net Leverage | 0.4x | 0.5x | 0.1x | 0.1x | 0.1x |
| Interest Coverage | 24.7x | 19.0x | 19.9x | 22.5x | 24.4x |
| EBITDA Margin | 34.9% | 34.3% | 38.9% | 42.4% | 45.0% |
CreditSight View Comment
AS OF 14 Nov 2025We maintain our O/P recommendation on Tencent. In 3Q25, revenues accelerated and were ahead of expectations, EBITDA margin expanded on an improved revenue mix, FOCF remained robust, debt metrics improved. We view Tencent as a core holding in China and Asia IG credits, and it is our preferred duration play. While valuations of Tencent is less compelling compared to YE24, its longer duration bonds still offer ~20 bp of spread pick up against Chinese SOEs of similar tenors. We like Tencent’s strong and improving credit outlook compared to its Chinese tech peers, rock solid balance sheet and robust free operating cash flow. We prefer its 2041 bond which offer the highest 20-35 bp spread pick up against Asia A corporate and Chinese SOEs
Recommendation Reviewed: November 14, 2025
Recommendation Changed: August 18, 2022
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Search topics about wealth insights and investments.Netflix Inc
- Sector: Media
- Sub Sector: Technology
- Region: US
- Bond: NFLX 4.875 30
- Indicative Yield-to-Maturity (YTM): 4.30%
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Fundamental View
AS OF 28 Oct 2025- Netflix is one of the few clear winners in the industry’s transition to streaming, and we believe the group’s leading position will be bolstered in 2025/2026 as legacy media companies continue to rein in spending and international ambitions.
- From a financial perspective, we expect Netflix will deliver ~25% EBITDA growth in 2025 driven by a mix of subscriber growth, price hikes and margin expansion.
- Netflix’s financial policy is relatively conservative. While the company no longer targets $10-15 billion of gross debt, we view Netflix’s new financial policy as an evolution rather than a revolution and expect credit metrics to remain best in class.
Business Description
AS OF 28 Oct 2025- NFLX is the world's leading subscription streaming entertainment service with ~300+ mn paid streaming subs in 190+ countries around the world. NFLX's programming includes original & acquired TV series, documentaries and feature films.
- NFLX began expanding internationally with the launch of services in Canada (Sep 2010), followed by LatAm (Sep 2011), and the UK and Ireland (Jan 2012). NFLX launched services in 17 more markets at a measured pace through the end of 2015 before launching in the rest of the world in Jan 2016 (ex-China, N Korea, Syria, Crimea).
- As of FY24, Netflix's regional subscriber breakdown was as follows: (1) EMEA - 101.1 mn; (2) UCAN - 89.6 mn; (3) APAC - 57.5 mn and (4) LATAM - 53.3 mn.
- Ted Sarandos and Greg Peters are Co-CEOs, with Mr. Sarandos appointed to the position in July 2020 and Mr. Peters in January 2023. Co-founder Reed Hastings was appointed as executive chairman of the Board in January 2023.
Risk & Catalysts
AS OF 28 Oct 2025- M&A Risk: Warner Bros. Discovery is actively considering asset sales. We believe Netflix has no interest in linear TV assets, but could be open to a studio purchase under the right circumstances. Additionally, Netflix is in the early stages of an expansion into video games and has already acquired several studios.
- Increased Competition: Several large competitors including Amazon and Apple are increasingly leaning into DTC video offerings on a global basis. Heightened competition may result in rising churn & declining gross additions for NFLX.
- Market Saturation: Netflix is highly penetrated in the US market, so future growth will become increasingly dependent on price increases, uptake of the ad tier and success on the password sharing crackdown. The recent WWE and NFL deals also opens the door to higher-priced sports programming.
Key Metric
AS OF 28 Oct 2025| $ mn | FY21 | FY22 | FY23 | FY24 | LTM 3Q25 |
|---|---|---|---|---|---|
| Revenue | 29,698 | 31,616 | 33,723 | 39,001 | 43,379 |
| Revenue YoY % | 18.8% | 6.5% | 6.7% | 15.6% | 15.4% |
| EBITDA | 6,806 | 6,695 | 7,650 | 11,019 | 13,265 |
| EBITDA Growth | 33% | (2%) | 14% | 44% | 29% |
| Cash Content Expense | 17,469 | 16,660 | 13,140 | 17,003 | 17,209 |
| CFO - CapEx | (132) | 1,619 | 6,926 | 6,922 | 8,967 |
| Dividends/CFO-Capex | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| LTM CFO-CapEx to Debt | (0.9%) | 11.3% | 47.6% | 44.4% | 62.0% |
CreditSight View Comment
AS OF 27 Feb 2026Netflix is one of the few clear winners in the industry’s transition to streaming, and we believe the group is well positioned to maintain its double-digit top line and profit growth in 2026. Netflix surprised us in early December 2025 with the announcement of an $83 billion deal to acquire Warner Bros. Although the deal marked a major change in strategy, we viewed the transaction as strategically sound and were pleased to see the company walk away after Paramount raised the price to a level that was “no longer financially attractive”. We think that Netflix may kick the tires on a similar transaction with NBCUniversal, although it is unclear if they are comfortable owning a broadcast network or if Brian Roberts is willing to sell.
Recommendation Reviewed: February 27, 2026
Recommendation Changed: December 04, 2025
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Search topics about wealth insights and investments.Alibaba
- Sector: Technology Media and Telecommunications
- Sub Sector: Technology
- Country: China
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Fundamental View
AS OF 15 Sep 2025We maintain our O/P recommendation on BABA post its decent F1Q26 results; topline growth missed expectations, EBITDA margin fell 1 ppt, and FOCF turned negative; that said, gross leverage remained modest, with a strong net cash position intact. We view BABA as a core holding in China/Asia IG credits, and it is our preferred duration play. Its longer duration bonds trade ~40 bp wider than Chinese SOEs of similar tenors. In particular, we like BABA 2035. Within China tech credits, we prefer BABA over BIDU/JD, which are rated 1-2 notches lower but trade only marginally wider. We also view BABA to be more defensive compared to high beta BBB China tech credits while offering value.
Business Description
AS OF 15 Sep 2025- Founded in 1999, Alibaba is the largest retail commerce company in the world based on gross merchandise volume (GMV) as of 31 March 2023.
- The company's business segments comprise Taobao & Tmall Group (39% of F4Q25 revenue; China e-commerce incl. Taobao, Tmall, Taobao Deals, Taocaicai, 1688.com), International Digital Commerce (13%; incl. Lazada, AliExpress, Trendyol and Daraz), Cloud Intelligence Group (11%; incl. AliCloud, AI), logistic provider Cainiao (8%), Local Consumer Services (6%; incl. Ele.me, Amap), and Digital Media and Entertainment (2%, incl. Youku & Alibaba Pictures) and Others (21%; incl. Freshippo, Fliggy, Alibaba Health, Intelligent Information Platform, SunArt, DingTalk).
- Taobao/Tmall is Alibaba's core business and the main EBITA & cash generation unit of the group. Alibaba's annual active consumer exceeded 1 bn in June-2022.
- Alibaba had a market capitalization of RMB 2.7 tn as of 15 September 2025.
Risk & Catalysts
AS OF 15 Sep 2025While Chinese policymakers have adopted an increasingly friendly stance towards tech platforms, regulatory clampdown (e.g. anti-monopoly guidelines, data security laws, personal information protection laws) may still affect Alibaba as it increases compliance cost. There are regulatory risks given the corporate structure which uses variable interest entities (VIEs) to circumvent China’s restrictions on foreign ownership of Internet Content Providers (ICPs).
Intensifying competition amongst eCommerce platforms may result in slower topline growth and weaker EBITDA margins.
Alibaba does not control Alipay but relies on Alipay to conduct substantially all the payment processing and escrow services on its marketplaces.
US-China tension may escalate under the new Trump Administration, including additional chip sanctions, which may result in higher volatility. Failing to secure a stable supply of advanced AI chips and/(or) find domestic alternatives could weigh on the long-term AI development of Alibaba against international peers.
Key Metric
AS OF 15 Sep 2025| CNY BN | FY22 | FY23 | FY24 | FY25 | LTM F1Q26 |
|---|---|---|---|---|---|
| Debt to Book Cap | 11.6% | 12.6% | 13.3% | 17.5% | 17.5% |
| Debt/Total Equity | 13.1% | 14.4% | 15.3% | 21.2% | 21.2% |
| Debt/Total Assets | 8.3% | 9.2% | 9.7% | 12.8% | 12.6% |
| Gross Leverage | 0.9x | 0.9x | 0.9x | 1.2x | 1.2x |
| Interest Coverage | 32.2x | 29.6x | 24.0x | 20.7x | 19.9x |
| EBITDA Margin | 18.5% | 20.2% | 20.3% | 19.9% | 19.6% |
CreditSight View Comment
AS OF 26 Nov 2025We maintain our O/P recc on Alibaba post its F2Q26 results; topline growth accelerated and was ahead of expectations; but EBITDA margin weakened due to hefty spending to expand its quick commerce segment; FOCF turned negative due to elevated capex for cloud and quick commerce; gross leverage weakened and net cash shrunk; that said, we still expect the company to maintain its net cash position over the next 6 months, and we project for its debt metrics to recover in FY27. We view Alibaba as a core holding in China and Asia IG credits, and it is our preferred duration play. Alibaba now trades on average 10 bp wider than Asia A corporate and 30 bp wider than Chinese SOEs which we view as attractive. We like BABA 5.25% 2035 for 30 bp of spread pick up against Chinese SOEs of similar tenors.
Recommendation Reviewed: November 26, 2025
Recommendation Changed: August 05, 2022
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Search topics about wealth insights and investments.JD.com
- Sector: Media and TelecommunicationsTechnology
- Sub Sector: Technology
- Country: China
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Fundamental View
AS OF 21 Aug 2025We maintain our M/P recommendation on JD post its weak 2Q25 results; topline growth was a strong beat, but EBITDA margin materially narrowed due to hefty spending for its food delivery business; FOCF also contracted and gross debt metrics weakened, but JD still retained a strong net cash position. JD trades largely in-line to Asia A- corp which we view as fair; while we expect JD’s gross debt metrics to temporarily weaken over 2H25 due to its hefty investments into food delivery, we do not expect downgrade risk for the credit given the strong performance of its core retail and logistic segments, and we expect JD to still maintain a strong net cash position over the 12 months. Amongst the A-rated China tech credits, we continue to prefer Alibaba and Tencent.
Business Description
AS OF 21 Aug 2025- JD is one of China's leading e-commerce and retail infrastructure service providers.
- JD has a large fulfillment infrastructure which includes over 1,600 warehouses operated by the company, and 2,000 cloud warehouses operated by third-party warehouse owner-operators under JD Logistics Open Warehouse Platform. Its warehouse network had an aggregate gross floor area of approximately over 32 mn square meters, as of 31 December 2024.
- JD has 3 operating segments, namely (1) JD Retail (82% of 2Q25 revenues), which includes JD Health and JD Industrials, and the segment mainly engages in online retail, online marketplace and marketing services in China; (2) JD Logistics (14%) which includes both internal and external logistic businesses; and (3) New businesses (4%) which consist of food delivery, Dada, JD Property, Jingxi and overseas businesses.
- JD had a market capitalization of RMB 325.1 bn as of 21 Aug 2025.
Risk & Catalysts
AS OF 21 Aug 2025While Chinese regulators have adopted a friendlier stance towards tech companies, any regulatory clampdowns may still adversely affect the business of JD (e.g. antitrust rules, data security & personal data protection laws).
Intensifying competition amongst Chinese eCommerce platforms with the entrance of new live-streaming/short-form video platforms and group buying discount platforms may result in slower topline growth and weaker EBITDA margin for JD as its increase its user/merchant incentives and promotional activities to defend its market share.
There are regulatory risks involving the use of variable interest entities (VIEs) to circumvent China’s restrictions on foreign ownership of Internet Content Providers (ICPs). Specifically, VIE transactions involving “change in control” will be subject to antitrust regulatory processes.
Key Metric
AS OF 21 Aug 2025| RMB mn | FY21 | FY22 | FY23 | FY24 | LTM 2Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 12.2% | 19.2% | 18.8% | 22.3% | 25.3% |
| Debt/Total Equity | 13.8% | 23.7% | 23.1% | 28.7% | 33.9% |
| Debt/Total Assets | 6.9% | 10.9% | 10.9% | 12.9% | 14.3% |
| Gross Leverage | 1.8x | 1.9x | 1.5x | 1.7x | 2.2x |
| Interest Coverage | 16.1x | 16.3x | 15.5x | 18.5x | 16.2x |
| EBITDA Margin | 2.0% | 3.3% | 4.1% | 4.6% | 3.6% |
CreditSight View Comment
AS OF 06 Mar 2026We maintain our Underperform recommendation on JD following its poor 4Q25 results. Topline growth decelerated on a high base for its home appliance/electronics segment, EBITDA turned negative due to hefty new business losses; FOCF fell YoY and debt metrics materially weakened. We expect JD’s debt metrics to improve in FY26 from a low base, but it remains weak compared to historical levels. JD trades 3/8 bp tighter than Asia A/A- corporates, ~10 bp tighter than Alibaba, and it is only 4 bp wider than Tencent; this is much tighter than average spread differential of 21 bp for A3 and A1 Asia $ bonds. We think JD’s spreads should be trading closer to Asia A- corporates; in addition, we see reduced rating headroom for JD with potential negative outlook revision by S&P and Moody’s
Recommendation Reviewed: March 06, 2026
Recommendation Changed: September 05, 2025
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