FNI - Investors Should Discount JD.com's Operating Cash Flow Because Of JD Digits' Receivables Securitization

Summary:

My analysis concludes that JD Digit’s spin-off boosted JD.com's (JD) operating cash flow, but the risk of receivables securitization might still remain in JD.com. The report analyzes transactions between JD.com and the 'spin-off' JD Digits. JD Digits provides accounts receivable securitization business for JD.com which, in turn, is controlled by JD.com’s CEO Richard Liu. JD.com provides limited information about JD Digits and the transactions between the two entities. It is extremely difficult for investors to determine the nature of the connections and the potential risks. As a result, the balance sheets