AI insights from China’s Tech giants
Technology
Westlake’s latest reports draw on discussions with AI experts from Tencent, ByteDance and Alibaba, offering fresh perspectives on China’s evolving GPU and ASIC landscape. Tencent’s AI Product Manager detailed the rationale behind increased domestic GPU procurement this year and outlined potential market shifts if B30A and H20 export policies are relaxed. ByteDance’s AI Solution Architect described surging AI compute and token usage and the rapid expansion of AI investments and custom chip development. Alibaba’s AI Project Manager discussed GPU procurement trends, progress in its T-Head ASIC programme and ongoing Qwen model development, including on-device use-cases.
Edition: 222
- 17 October, 2025
How will China monetise AI differently?
China will be a close and capable AI follower, focusing on downstream implementation as the US focuses on upstream. This means the two will not run head-to-head encounters right away, and China can lead in the application of AGI in manufacturing and logistics. Its monetisation path will be more complex but can exist. However, as it stands, China is under-monetising AI vs the US. The Blue Lotus team estimate that consumer (2C) AI applications generated $2.0–3.5bn in the US and $0.3–0.5bn in China (excluding AI-enabled advertising and much of video AI). The US monetises AI globally, with global 2C revenues bringing in ~12x that of China. However, the gap will shorten significantly by 2030, in part by taking a lead on robotics+AGI. The team reiterate their top picks of Alibaba, Hesai, CATL and Kuaishou. Baidu stays as a sell.
Edition: 221
- 03 October, 2025
Tencent (700 HK) & NetEase (NTES US) US
Technology
While China’s e-commerce sector is mired in subsidy fuelled competition, Arete argues this is outweighed by strength in gaming and online entertainment. Record approvals and blockbuster titles underpin upgrades for Tencent and NetEase, while Alibaba shows early signs of a turnaround in quick commerce and cloud. The report also examines mounting cost pressures at Meituan, the lack of near term catalysts at Xiaomi and SEA, and the structural headwinds still facing JD and Baidu.
Edition: 219
- 05 September, 2025
India China Ties Warm Boosting Chinese Firms
India and China are witnessing their most significant thaw in relations since 2020, with border trade, flights and visas reopening. Yet India’s dependence on Chinese imports, especially in pharmaceuticals and electronics, leaves its deficit at record highs. The revived engagement appears to offer greater benefits to Chinese companies for now, with names like Xiaomi, Alibaba, BYD and Tencent best positioned, while Indian groups such as Cipla, Dixon and Adani seek to leverage selective partnerships.
Edition: 219
- 05 September, 2025
Consumer Discretionary
Arete downgrades JD to Sell, slashing their FY25 EPS forecast from $4.00 to $2.30. JD has sharply scaled back food delivery subsidies, with per-order losses narrowing from ~RMB10 to ~RMB6 last month. As a result, daily delivery volumes have fallen from ~25m to ~12-15m. The incremental market created by JD in the food delivery sector will ultimately be divided up by Meituan and Alibaba as JD retreats. Arete estimates ~5% of JD’s GMV is at risk from SKU overlap with fast-delivery “insta-shopping” categories. Meanwhile, JD’s new initiatives show little traction: its travel business lacks scale, stablecoin plans face regulatory hurdles, while a potential €2.6bn Ceconomy deal brings operational risk. Arete also questions the relevance of JD’s micro-drama platform, which trails dominant rival ByteDance.
Edition: 217
- 08 August, 2025
Consumer Discretionary
Stablecoin adoption presents a unique long-term opportunity for BABA. As the US moves to legitimise stablecoins for global transactions and reserves, China must adapt, albeit cautiously. Hong Kong is emerging as a testbed, with Ant Financial well-positioned to play a strategic role. China’s strength in cross-border trade and BABA’s ~29% share in export e-commerce puts the company at the forefront of this transformation. While stablecoins are unlikely to replace domestic payments, they are poised to reshape international transactions and financial influence. BABA’s regulatory track record, global reach and fintech infrastructure give it an edge over peers like PDD, TikTok Shop and Shein. Blue Lotus maintains BABA as a Top Buy, while Futu is also highlighted as a likely long-term winner in the web3.0 world.
Edition: 215
- 11 July, 2025
Food delivery winners are Alibaba>Meituan>JD>PDD
Consumer Discretionary
Blue Lotus sees BABA as the likely winner in China’s intensifying O2O war, thanks to its unmatched SKU breadth, vast dormant customer base, Ele.me infrastructure and Alipay ecosystem. O2O provides a strategic opportunity for BABA's new management to refocus its e-commerce business. Meituan and JD face structural limitations: Meituan lacks SKU depth; JD lacks cross-sell leverage. JD may emerge as a secondary winner if it can convert Plus members to food delivery users, though heavy 2025 losses (~RMB12bn) are expected. PDD is most at risk without swift action. Government pressure to cool price wars favours BABA. Meituan’s 618 Instashopping saw explosive growth, but margin challenges remain. JD’s strong start in food delivery may stall amid subsidy rollbacks and financial constraints.
Edition: 213
- 13 June, 2025
China E-commerce: Platform differentiation now taking shape
Consumer Discretionary
E-commerce platform growth in 1Q25 remained broadly stable Q/Q, but strategic divergence is now clearly underway. While overall momentum held steady, platform-specific execution and monetisation efficiency began to separate winners from laggards. All major platforms are pushing algorithm and AI-tool enhancements, with mixed results in conversion and traffic ROI. Stocks discussed include: 1) Alibaba - improved monetisation; subsidy efficiency gains allowed BABA to protect margins while growing share; expect better profitability this quarter as the platform leans into smarter traffic and brand segmentation. 2) Pinduoduo - is doubling down on volume and SKU expansion. Efficiency gains in ad/subsidy tools suggest a scalable ROI model is emerging - though monetisation remains back-end loaded.
Edition: 210
- 02 May, 2025
Xi's Champions: A closer look at fund positioning
Following President Xi’s recent meeting with select private sector leaders, Steven Holden breaks down the percentage of funds invested in each stock, segmented by fund type, from broad-based Global and GEM funds to specialist China strategies (MSCI and A-Shares). As expected, ownership increases as we move from global strategies to China-focused funds. Beyond Tencent, Alibaba, BYD, CATL, Meituan and Xiaomi, representation in non-China funds is limited. Some names, such as Shiyuan and Qi An, are almost entirely absent from all fund groups. Will Semiconductor and Muyuan Foods stand out as the biggest discrepancies - despite decent representation in specialist China funds, they barely register in Global, GEM, or Asia Ex-Japan allocations.
Edition: 207
- 21 March, 2025
China’s recent high-profile meeting with private entrepreneurs signalled Beijing’s strategic priorities, highlighting firms advancing state goals while sidelining others. Key invitees included Alibaba, Tencent and Huawei, while Baidu, ByteDance and JD.com were absent. This distinction suggests Beijing’s support for companies driving innovation in AI, advanced manufacturing and strategic industries like EVs and semiconductors. Xi Jinping reinforced the Party’s control, urging businesses to serve national interests and promote "Common Prosperity". Firms like DeepSeek, Alibaba and BYD align with these objectives. Conversely, Baidu and other omitted firms may face tolerance but lack government backing.
Edition: 206
- 07 March, 2025
Tactical trading will struggle in 2025
According to Paul Krake, the problem is that every trade of a tactical nature is influenced by Trump policy. In his latest report, he sets out his view over the next six months. Expect China to work on AI plays like Alibaba, Baidu and Tencent, as AI remains a leading driver of global beta. Investors can benefit from staying LONG commodities and infrastructure plays, especially electricity. Stick to the world’s best firms, many of which are US-based, whilst fading Germany in light of the inevitable EU recession. Stay away from rates and currencies as long as the Fed isn’t moving. Finally, when it comes to crypto, investors are looking at a clear Trump favourite and should see zero reasons to sell.
Edition: 205
- 21 February, 2025
Big Tech: Asia vs. US - Samsung spoils the chase
Technology
2024 was a banner year for mega-cap US Tech companies, with Apple, Nvidia, Microsoft, Amazon and Meta rising a collective +64%. Were it not for Samsung Electronics crashing -41%, Asia’s mega-cap Tech companies (TSMC, Tencent, Samsung, Alibaba and Meituan) would have almost matched their US peers: +61% collective return (USD) without Samsung but +40% with Samsung. The good news: rolling into 2025, Crystal Shore has a positive risk rating on all 5 Asian Tech companies. Even Samsung.
Edition: 202
- 10 January, 2025
Old e-commerce names are the biggest winners of new stimulus in China
Consumer Discretionary
Blue Lotus expects there will be a string of good retail data in the near-term, driven by an early start to the Double 11 sales festival, increasing consumer participation for home appliances amid the trade-in subsidy, and generally improved consumer confidence following the recent market rally and stimulus announcements. As a result, they have revised their estimates, raising 4Q24 online retail sales growth to +10.1% Y/Y (vs. prior +4.9%) and for 2025 to +9.5% (vs. prior +4.5%). A reversal of the “consumption downgrade” primarily benefits platforms with large exposure to brand and higher-end items. JD.com and Alibaba remain Blue Lotus’ top picks.
Edition: 197
- 18 October, 2024
Consumer Discretionary
BABA’s transformation from China’s eBay to China’s Microsoft continues - the group’s AI strategy involves both the development of its open-source LLM model (Qwen), which has performed well on benchmarks in China, and investment in Chinese AI startups. This strategy has already proven successful with Moonshot and MiniMax developing popular AI applications. BABA provides these start-ups with credits that can be used for training or inference, which has driven growing demand for AI services on AliCloud. Although GPU supply is a constraint, Blue Lotus sees domestic breakthroughs in semiconductor equipment providing BABA with an avenue to expand its supply of AI compute and expects the group (and Tencent) to reinvent China’s software industry.
Edition: 193
- 23 August, 2024
China: eCommerce forecasts for 2024-2028
Highlights from RedTech’s 22-page report include: 1) Online sales growth will range from ~7-10% from 2024 through 2028, based on ~4-7% overall retail sales growth. 2) High penetration implies slower growth for apparel, while lower penetration suggests more opportunity in electronics / appliances and in groceries. 3) These product dynamics do not favour Alibaba, particularly with more competition. 4) Expects the fastest growth from PDD and even more so Douyin. 5) JD should see gains, but it has been overtaken by newcomers outside of its core electronics and appliances. 6) Alibaba has the most to lose and it will continue losing share.
Edition: 184
- 19 April, 2024
A ban on TikTok will have a profound impact on Chinese Internet companies
Blue Lotus believes the optimum strategy of the Chinese government is to facilitate the shutdown of TikTok in the US, make a global mega-app only available on Huawei phones and spur a global “guerrilla war” against US ideology. This leads them to believe that: 1) Alibaba (recently upgraded to Buy) will benefit from TikTok’s US shutdown by gaining momentum in its international ecommerce business; 2) Tencent will benefit from levelling the playfield against TikTok in user and usage bases for AI / LLM applications globally; 3) PDD and Shein might benefit in the short run but less so in the long run, due to their own compliance deficiencies in tax adherence and privacy protection.
Edition: 182
- 22 March, 2024
The narrowing divide between China and India’s weight in the MSCI Indices
The spread between India and China weights in active Asia Ex-Japan funds has narrowed to the lowest levels in Copley’s 13-year history and now stands at 16.17% vs. a peak of 45.3% in Aug 20. China’s decline over this period has been dominated by Consumer Discretionary, Communication Services and Financials. 3 companies standout as key drivers of the move lower: Alibaba, Tencent and Ping An Insurance. Increases in fund weight have been minimal with PDD, BYD and Trip.com seeing moderate upticks. India’s rise has been driven by the Financials sector. Specifically, 3 banks: ICICI Bank, HDFC Bank and Axis Bank.
Edition: 180
- 23 February, 2024
1Q24 eCommerce Consumer Survey
Consumer Discretionary
While consumers are more pessimistic in RedTech’s latest quarterly survey, last order trends and grocery preferences highlight continued disruption under the surface of eCommerce. Short video continues to make clear gains with Douyin leading the way, while CGB and local service are again advancing. The gains for short video are almost exclusively driven by Douyin, with Kuaishou making no progress in recent surveys. PDD and Meituan are also making gains in their corners of the eCommerce landscape while Alibaba, the biggest incumbent, continues its inexorable decline.
Edition: 179
- 09 February, 2024
Consumer Discretionary
Downgrades the stock to Sell as BABA backpedals on plans to spin off its cloud business. The malaise today is an aftermath of overexpansion since the group’s IPO in 2014. The resulting conglomerate not only draws ire from the CPC and runs afoul with trustbusters, but also piles up deteriorating assets. So, what needs to occur for Blue Lotus to turn bullish? 1) Taobao / Tmall need capable management to defend against ByteDance, PDD and JD. 2) Needs to resolve its issues with the government on businesses which pose security uncertainties and invite antitrust actions. 3) BABA must be managed by people with high aspiration for success and corresponding incentives.
Edition: 174
- 24 November, 2023
eCommerce
RedTech’s 3Q23 merchant survey takes a closer look at longer-term growth prospects for Douyin, which is again the most promising destination for online advertising and eCommerce in China. RedTech also asked their merchants several more detailed questions about the strategies they are pursuing on Douyin, as well as how they see things changing and playing out on the big eCommerce incumbents. Douyin is expected to nearly double its share of merchant sales by 2026 to ~19% with Douyin Mall a key driver. While the response to date from Alibaba's Tmall and JD has been lacklustre, opinions on how they should respond are divergent.
Edition: 170
- 29 September, 2023
Meituan manages the Douyin threat
Communications
Every time Douyin enters a new sector, the incumbents suffer - RedTech’s 2Q23 local services survey is more evidence of that trend but with a slight twist. After more than a year of making inroads in local services, Douyin is winning share but so is the top player, Meituan. The biggest loser is Alibaba. RedTech’s survey includes responses from 1,000 online consumers in tier 1-6 cities. The sample city tier weightings are 20%/20%/30%/30% for tiers 1/2/3/4-6.
Edition: 165
- 21 July, 2023
Consumer Discretionary
With its positioning in the low-end and lower tier geographies, PDD has more opportunities to expand in eCommerce than Alibaba and JD.com, and the lowest risk of having somebody encroach on its turf. Douyin and Kuaishou only have niche eCommerce operations and will not focus on the average guy in some rural township. Modest improvements in trust among China’s middle class suggest PDD can steal some growth from its upmarket rivals, but no one believes it will enjoy the kind of success in the mid- and upper-tiers of the market that it does now in low-tier markets, and with ~900m customers that will continue to find value in that for the foreseeable future, that’s just fine.
Edition: 161
- 26 May, 2023
China eCommerce primary research report
Consumer Discretionary
Based on a variety of data and feedback from 27 eCommerce professionals, Westlake observed 1Q apparel sales recovered the strongest among online discretionary categories, cosmetics rebounded modestly but appliances sales softened slightly. Mar & Apr saw a marked acceleration in online discretionary category sales growth (except for skincare), likely due to further consumption recovery and a low base last Mar & Apr. Alibaba, JD.com, Pinduoduo, Vipshop and Kuaishou eComm can likely at least meet 1Q China-related eComm sales or marketing revenue expectation. JD Retail had relatively weaker 1Q given the restructuring and soft appliance & general merchandise sales.
Edition: 160
- 12 May, 2023
Consumer Discretionary
The empire breaks up - shareholder value has little to do with Alibaba’s decision to reorganise and much more to do with providing the state with better visibility and control over the large range of its activities. This is a very different environment from the one that the group enjoyed during its glory years, and it now must adapt to ensure that it can still operate to its full capacity. On a SOTP analysis, it is easy to get to HKD140 per share but Richard Windsor suspects that Alibaba’s return to the good books of the state and an economic bounce could push it much higher.
Edition: 157
- 31 March, 2023
China: Trade, not own
The breakup of Alibaba Group marks the grasp of Xi Jinping’s common prosperity agenda. Investors can be rich, but not too rich. Companies can innovate but with Beijing first. The government is taking it too far, sapping the culture of innovation that was a driver of China’s technology rise since 2012. Its tech influence is now restricted within Asia. Its geopolitical realm is diminished greatly – the Belt and Road Initiative is now barely mentioned outside of debt renegotiations. To structurally invest in this market is to believe an intervention can support equity multiples. Paul Krake notes this can be true in some cases, such as climate infrastructure, but there is a big difference between government support and interference. Chinese equities remain a trade and nothing more.
Edition: 157
- 31 March, 2023
Consumer Discretionary
Price performance following the 2Q23 beat remains unwarranted - the shares are up over 60% from near-all-time lows, but Oshadhi Kumarasiri argues that management's cost-cutting is turning BABA into a slow-growth business. Almost all of the company's operating profit is generated from its two cash cows, Taobao and Tmall, however, they are both losing market share. Furthermore, rapidly rising Covid infections create new headwinds that could affect business performance for at least two more quarters. Oshadhi is short the stock as he expects earnings to miss consensus estimates.
Edition: 151
- 06 January, 2023
Communications
Galliano's Financials Research
The tough market environment for publicly listed and unlisted tech companies remains, and yet SoftBank’s share price has held up since the end of Sept. In part, this is due to the share buybacks in place, and its reduced exposure to Alibaba through its derivative contracts. Nonetheless, Victor Galliano shows that SoftBank’s share price strength is unlikely to last, given the declining valuations of its listed holdings and the recent down rounds relating to its unlisted holdings which will be at least partially captured in 2Q22 results.
Edition: 148
- 11 November, 2022
China eCommerce primary research report
Consumer Discretionary
Westlake observed online discretionary spending (except for cosmetics) recovered gradually in Jul & Aug, but softened slightly in Sept & Oct given rising community lockdowns. They expect Alibaba, JD, Pinduoduo, Vipshop and Kuaishou will meet 3Q Street expectations. Given modest improvements in business and consumer confidence, they anticipate further 4Q sales recovery for leading Chinese eComm players driven by 11.11 promotions and likely continued government consumption coupons. If Covid restrictions gradually ease after the 20th party congress, a broad-based recovery will help boost consumer spending.
Edition: 146
- 14 October, 2022
Alibaba Group Holding Ltd (BABA US) US
Technology
Signs look good for near-term earnings for Alibaba. Following a contraction between March and May this year, China’s retail sales growth has returned since June, continuing through July and accelerating in August. Alibaba’s next reported quarter’s annualised growth will be on an extremely depressed base. Propitious' earnings monitor shows the company has turned the corner following a prolonged downgrade cycle between March '21 and July '22. With $25bn and a further $39bn in short term investments means Alibaba currently trades on 8.5x NTM PE, an extremely low level.
Edition: 145
- 30 September, 2022
Douyin eCommerce: From strength to strength
Against a background of widespread pessimism about the macro-environment for 2022/23, merchants in RedTech’s 2Q22 eCommerce survey highlighted Douyin, and to a lesser extent Pinduoduo and JD.com as winners, while Alibaba underperformed. Merchants liked Douyin’s eye-catching content, which delivers excellent performance on ad KPIs, resulting in rising sales and an even greater chunk of merchants’ ad spending. They also noted Douyin’s strong potential for sales in lower tier cities. Alibaba on the other hand has hit its peak, user growth is stalling, costs for merchants on the platform are high, and competitors in both the high and low end loom large.
Edition: 140
- 22 July, 2022
Technology
Investment blacklist will further pressurise the upcoming US$18bn lock-up release - a limited free float likely explains why shares in this AI software provider have performed so strongly since listing despite sentiment surrounding its IPO being so weak. However, this will change drastically when the lock-up expires later this month. Even if one assumes that SoftBank, Alibaba and Cornerstone's won’t sell, there is still 45% of the company, worth US$11bn coming free. Furthermore, due to it being on the US investment blacklist, which bars US companies from investing in it, some shareholders will have to sell.
Edition: 138
- 24 June, 2022
China: e-commerce grassroots surveys
Community group buying e-commerce competition landscape further optimised - JD.com shrinks, while Meituan Select, DuoDuo Grocery and Tao CaiCai’s market shares improve. Meituan Select and DuoDuo Grocery are clearly better positioned in terms of order volume, with a combined market share of c.80%. More details on traditional e-commerce business, live streaming e-commerce competition between Kuaishou and Douyin, and express industry dynamics are available in Horizon Insight's quarterly survey report.
Edition: 137
- 10 June, 2022
The China Rotation: Allocations hit 4-year lows
Allocations in China & HK equities among active EM investors have plummeted 10%+ in the space of 18-months (India, Taiwan and Mexico have been the biggest beneficiaries) - on a sector level, China Industrials and Consumer Staples are the overweights, with managers rotating into Financials and away from Consumer Discretionary. On a stock level, Alibaba remains a core holding; out-of-benchmark AIA Group and Midea Group are popular, and for Value managers, China Mobile and CNOOC are key overweights. Active managers have stayed away from both NIO and Xiaomi, so pressure to invest on the grounds of benchmark tolerance should be disregarded.
Edition: 136
- 27 May, 2022
Dufry (DUFN SW) Switzerland
Consumer Discretionary
Brian McGough believes we are nearing the “someone will take it private” price - while this would be a massive catalyst for the stock, Brian thinks the better play for shareholders is to realise the upside in the model over a TAIL duration in the public markets. He continues to see a leisure-led travel recovery, new peak operating margins, the Hainan JV with Alibaba, and significant financial de-levering as the cash flow story accelerates materially. Sentiment on the name is troughing and institutional interest is picking up. DUFN is the poster child for a company that will emerge from the pandemic stronger than it went in.
Edition: 135
- 13 May, 2022
China’s Online Healthcare Market: Prescriptions for success
Healthcare
With both the government and China’s largest internet companies driving change, there is enormous potential for disruption and opportunity in the country’s RMB8.3 trillion consumer healthcare sector. The two leading players in the online market, JD Health and Alibaba Health, are down ~60-75% from their peak, but with opportunities still 18-24 months out it is now a question of whether to get in before the regulatory catalysts, or to try to catch the momentum after the fact.
Edition: 126
- 07 January, 2022
China E-commerce Q3 Local Surveys: Industry Competition Has Intensified
Horizon Insights' quarterly surveys pointed out that traditional e-commerce lost share due to increased competition.
Live-stream e-commerce continues to evolve. Douyin and Kuaishou have different business models, both have high GMV growth. More brands are establishing relationships with different hosts, using livestreaming as an online ”distribution channel” to gain sales volume. Kuaishou predominantly focused on influencer live-stream; this model has strong stickiness and high conversion. Horizon Insights believes Kuaishou's model will generate larger sales volume in the future.
In the community group buying space, top three players have emerged: PDD, Meituan & Alibaba.
Edition: 124
- 26 November, 2021
Technology
Still needs a whole lot of hope to justify valuation - Sumeet Singh runs the rule over India’s biggest IPO which is backed by the likes of Alibaba, Softbank and Berkshire Hathaway. Paytm looks very expensive when compared to some of the superapps (SEA / MercadoLibre), which have all grown much faster. The declining take rate in its payment services segment is also a concern, while a drop in marketing and promotion costs could impact customer acquisition and growth. Paytm will have to keep a very tight lid on expenses to make a profit even in FY24. One to avoid.
Edition: 123
- 12 November, 2021
Power struggles set China up for a fall: Sell US-listed Chinese stocks
Constant flow of negative news on US-listed Chinese names - regulatory pressure from Beijing, delisting pressure from Washington and energy / power shortages pressure Chinese stocks. Higher tensions over Taiwan raise the risk of an accidental escalation. ETF favourites like Alibaba and Baidu would get hurt the most.
Edition: 122
- 29 October, 2021
Consumer Discretionary
Given antitrust rules, BABA has offered more free traffic resources to younger & medium sized brands and encouraged merchants to participate in Taobao Live streaming by giving more weights to promotional streaming / short video content for this year’s 11.11. Weaker consumption in China lowered sell-side consensus estimates, but expect BABA to likely deliver inline with Q3 China retail revenue, driven by strong appliance, home food and healthy FMCG.
Edition: 121
- 15 October, 2021
Alibaba (BABA US) vs. Tencent (700 HK)
Alibaba is now in a much better position than Tencent when it comes to regulatory matters - Alibaba's activities have very little bearing on societal issues that the Chinese government is so keen to address and Jack Ma has already been severely punished for his indiscretions. In contrast, the problems that Tencent faces are only just beginning. Richard Windsor believes it is only a matter of time before its financial services business is decimated by the state in the same way that Ant Group has been. Buy Alibaba, Sell Tencent.
Edition: 119
- 17 September, 2021
Risky Business: China’s Tech Crackdown & How to Navigate it
While the official ban on the most lucrative activities in the after-school tutoring sector marks a new low in the regulatory crackdown, RedTech maintain that China is not trying to strangle the golden goose. A handful of big losers will be offset by a majority of companies that are well positioned for growth in a tighter regulatory environment. The less risky (Tencent) are being dragged down with the more risky (Didi), creating lucrative, long-term investing opportunities. Other companies mentioned include Alibaba, Ant Group, ByteDance, Douyu, Huya, JD, Meituan, Pinduoduo, Sogou and TAL.
Edition: 116
- 06 August, 2021
Ceridian (CDAY)
Technology
Underappreciated opportunity - CDAY’s Dayforce Wallet is the company’s first foray into a very different segment of the fintech ecosystem: digital wallets and earned wage access solutions. In this industry primer, Veritas assess the competitive landscape and compare CDAY's offering to products launched by Apple, Alphabet, PayPal, Square, Mastercard, Visa, Tencent and Alibaba. Veritas think the long-term gains of developing a fintech ecosystem are incredibly attractive and CDAY’s unique distribution advantage will help carve itself a piece of the market. Estimates that the module can generate ~US$220m of annual net earnings and be worth US$19 per share.
Edition: 114
- 09 July, 2021
Alibaba (BABA)
Consumer Discretionary
Have consensus forecasts finally bottomed? Rickin Thakrar has previously written extensively about how the biggest hindrance to the BABA investment case has been the continually flawed forecasts. However, with BABA’s 2022 EPS expectations dropping by c.30% in the past six months, his EBIT/EPS estimates are no longer dramatically lower than consensus. Trading on a 20x forward PER and given Rickin is predicting 17% EPS CAGR over the next five years the shares now offer a compelling buying opportunity.
Edition: 114
- 09 July, 2021
Tencent (700 HK)
Communications
Pursuit of global gaming domination; acquisition strategy to continue - Tencent has already closed 50+ video game related deals YTD (vs. 31 in the whole of 2020 and over 5x more than in 2019). Niko Partners discuss how the company's investment strategy has evolved over the last few years and the reasons behind its more aggressive approach in 2021. Topics covered include international expansion (esp. Europe); targeting of high growth areas such as fans of anime content and female gamers; as well as the challenge posed by the likes of Alibaba and Bytedance.
Edition: 111
- 28 May, 2021
JD.com (9618 HK)
Consumer Discretionary
With lingering concerns around short-term margin expansion as JD invests more aggressively in group purchasing aimed at the fresh food segment, Wium Malan examines the potential for long-term margin expansion and what that implies for current valuation levels for China’s largest direct retailer. As a base case, he argues that JD could sustainably generate ~4% NOPAT margins (vs. just 1.5% in 2020) and calculates fair value to be HK$405/share (50% upside). Other companies mentioned in the report include Amazon, Alibaba and Walmart.
Edition: 110
- 14 May, 2021