Dada Nexus Ltd.

Dada Nexus Ltd is a China-based holding company principally involved in the operation of local on-demand retail and delivery platforms. The Company’s main platforms are JD-Daojia (JDDJ) and Dada Now.

Key Financial Updates:

• In the first quarter of 2023, Dada reported total net revenues of RMB2,575.5 million, a 27.2% increase compared to the same period in 2022. The Gross Merchandise Volume (GMV) of JDDJ for the twelve months ended March 31, 2023, was RMB67.3 billion, showing a significant growth of 37.1% year over year.
• The net loss for the quarter was RMB350.4 million, compared to RMB604.2 million in the same period of 2022. The non-GAAP net loss was RMB182.0 million, compared to RMB481.2 million in the first quarter of 2022. The net loss attributable to ordinary shareholders of Dada was RMB350.4 million, while the non-GAAP net loss attributable to ordinary shareholders of Dada was RMB182.0 million. The basic and diluted net loss per share was RMB0.34, and the non-GAAP basic and diluted net loss per share was RMB0.18.
• As of March 31, 2023, Dada had RMB3,722.0 million in cash, cash equivalents, restricted cash, and short-term investments, representing a decrease from RMB4,370.4 million as of December 31, 2022.
• For the second quarter of 2023, Dada expects total revenue to range between RMB2,800 million and RMB3,000 million, indicating a year-over-year growth of 22.7% to 31.5%. This outlook is based on current information and is subject to change due to various uncertainties.

Technical Observation (on the daily chart)

With a past year correction of almost 38.82%, the price has been in a persistent downward trend over the last year, with the medium-term also negative trend evident by 53.82% correction in previous six months. There is currently a decent support in the USD 4.50 to USD 5.00 region, with a support in that zone can provide the further continuation of the upward trend. Also, the momentum indicator RSI (14 period) displays a value of 47.38, indicating some consolidation or an upward momentum. A break above the downward sloping trendline can further give some positive momentum in the stock after such a correction. Price is also below the 200-day SMA and 50-day SMA trend-following indicators, which can serve as dynamic short-term resistances.

As per the above-mentioned price action and technical indicators analysis, a ‘Speculative Buy' rating has been given to Dada Nexus Ltd at the closing price of USD 5.50 as of July 07, 2023. Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is July 07, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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