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
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
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
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
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
Consumer Discretionary
2Q24 results to beat consensus forecasts driven by resilient catering demand and easing competition. Catering is the bright spot under the current weak consumption environment and Blue Lotus expects Meituan’s on-demand orders to increase 15.5% Y/Y in Q2 with average profit per order up 2% Y/Y, following successful marketing campaigns via Shen Qiang Shou and Pin Hao Fan. They also observed two catalysts that positively impacted the OPM of Meituan’s in-store business: 1) The competitive environment further eased as Douyin began to raise commission rates. 2) Integration of its “super membership” started to convert users from low margin food delivery into high margin in-store. Meituan is their top pick in the e-commerce / O2O sector. TP HK$160 (50% upside).
Edition: 191
- 26 July, 2024
Consumer Discretionary
The local services market in China enjoys a large TAM, a fragmented merchant base with few chains, and low online penetration rates. These all support Meituan’s bargaining power, allowing it to triple sales from ’19-’23 to RMB277bn ($38bn). Arete estimate Meituan will retain its #1 market share in its three key markets - food delivery/insta-shopping/in-store services. As competitive pressure in its four business lines eases and subsidies cut, Meituan can deliver revenue and profit growth. Arete initiate coverage of Meituan with a Buy rating and a ‘24E target price of HK$153 (39% implied upside).
Edition: 188
- 14 June, 2024
Consumer Discretionary
Now, is not the time for bottom fishing - Blues Lotus expects Meituan’s operating profit margin to remain under pressure in the medium term due to intensified competition. They lower their 4Q23 non-IFRS NI estimate by 23% and lower 2024/25 non-IFRS NI by 19%/21% to factor in the margin dilution effect from the company’s continued low-price strategy in food delivery and IHT, and slow progress in cost reduction in Meituan Select. Blue Lotus’ earnings estimates for 2024/25 are 20%/25% lower than consensus. The stock trades at 16x PE in 2024, at the high end among peers.
Edition: 179
- 09 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
Blue Lotus reinitiates coverage of the stock with a Sell rating as they expect domestic travel growth to slow down in 2024 and assumptions on Chinese outbound travel demand need to be reassessed. They see rising competition in the domestic travel market from Meituan and Tongcheng Travel in the short haul segment as well as share gains made by economy hotels encroaching TCOM’s commission base. While TCOM was quick in launching Large Language Model (LLM) for travel planning, Blue Lotus believes it lacks sufficient data and the advent of AIGC will simplify travel booking which works to TCOM’s disfavour.
Edition: 176
- 22 December, 2023
Consumer Discretionary
Rongjun Mu (EVP) sells US$28.9m of stock at HKD113.12 reducing his holding by 6%. His record as a seller has been good, making sales at HKD196.05 in Jun 2022 and at HKD163.7 in Jan 2023 and it's concerning to see him continue to sell into weakness. Xing Wang (Chair & CEO) has also sold $360k of stock, whilst very modest relative to his holding, his record as a seller has also been strong. Compounding matters, both sales follow Nanpeng Shen (Non-Exec), who sold $434m of stock on 31st Aug, reducing his holding by 29%. Stock Rank -1 (lowest rating).
Edition: 171
- 13 October, 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
Samsung Electronics (005930 KS)
Technology
Return of the king - after a brief flirt with underweight in late 2022, active Asia Ex-Japan managers have rotated back into Samsung, pushing allocations towards record highs. It captured the largest increase in average holding weight and the largest increase in net overweight over the last 6 months. It also saw the joint 4th largest increase in the percentage of funds with outright ownership (was eclipsed by Meituan, Trip.com and BYD). Samsung has cemented itself as one of the highest conviction holdings in the Asia Ex-Japan region right now.
Edition: 164
- 07 July, 2023
Communications
In Sumeet Singh’s earlier note in 2022, ‘Tencent investee selldown - The US$120bn global overhang’, he had looked at the group's overall investment portfolio. With two of its heavyweight investments having now been spun-out, Sumeet re-looks at Tencent’s shareholdings in various companies to try and gauge which ones it could sell out of and how. In terms of regulatory scrutiny, Pinduoduo is probably very high up on the list, alongside Kuaishou, Futu and PolicyBazaar. Announcements re. the divestments of JD.com and Meituan occurred towards the end of 2021 and 2022, respectively. Thus, some of these names could start to come under pressure by the last quarter.
Edition: 162
- 09 June, 2023
Communications
US$20bn overhang for Meituan as China's social media giant slashes its stake in the food delivery firm from 17% to just 1.6% - the share distribution follows the template of the US$16bn worth of JD.com shares that Tencent paid out after its dividend announcement at the end of 2021. In this note, Sumeet Singh discusses the implications of the deal and thinks next on the list for stake divestment is likely to be Pinduoduo, but that will have to be via a placement as it trades in the US.
Edition: 149
- 25 November, 2022
Communications
An in-depth look at China’s online grocery market through the prism of Meituan and the multiple online grocery business models it operates. Part 1 looked at the broad outlook and took a closer look at the CGB model that dominated Meituan’s growth in 2020-2021. Part 2 looked at 3P on-demand models such as Meituan Instashopping and took the view that the market will gravitate toward that model in the long run. Part 3 takes a last look at Meituan Grocery and competing 1P on-demand grocery services and considers the challenges they face.
Edition: 148
- 11 November, 2022
Communications
The shares reacted positively to quarterly results, but Shifara Samsudeen has questions over the sudden increase in losses booked under unallocated items (c.RMB2.0bn in 2Q22 vs. RMB381m in 2Q21) as well as the company not disclosing the key operating matrices for core businesses. Going forward, Shifara also expects Meituan to face severe competition from Ele.me as the latter has formed a partnership with ByteDance’s Douyin to create a take-out mini-app on the video sharing platform. Shifara is also keen to emphasise the fact that the regulatory probe on Meituan is still far from over.
Edition: 143
- 02 September, 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
Communications
The time has come to simplify its confusing sprawl of assets with a series of spin-outs - Tencent Games could replace Activision as the largest global game content stock, worth $150bn, and this excludes its vast portfolio of studios, IP and private stakes. While Tencent will likely be obliged to put Fintech into a standalone Holdco., this creates an opportunity to spin out Cloud & Business Services; potential to be a $10bn business by FY26. Major stakes in Tesla, Meituan, Sea and Kuaishou are not required / should be unwound. Importantly, by taking decisive action, it would make it less threatening to the government and limit the impact of regulation across the group.
Edition: 133
- 14 April, 2022
A reversal for China CGB
RedTech’s latest eCommerce survey finds consumers switching back to traditional eCommerce platforms - the underlying rise of groceries in eCommerce remains in place, though, and this may be a temporary reversal of the trend toward community group buying. The low prices that drew consumers to CGB and local service platforms are now rising, taking away some of the appeal, and smaller platforms without a deep-pocketed parent company are pulling back from underperforming markets, while larger platforms like Pinduoduo and Meituan have lost market share.
Edition: 131
- 18 March, 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
eCommerce Consumer Survey: Meituan & Pinduoduo surge in China Community Group Buy
Not only are online groceries one of the largest categories in eCommerce, reaching RMB3.7tn in GMV for 2021, but they are also the most tumultuous. Community Group Buy (CGB) and local service models are upending the industry and incumbent eCommerce platforms, with Meituan and PDD coming out ahead. However, more than 50% are likely to switch in the next year, mostly to local service or CGB, and an early lead does not guarantee long-term success.
Edition: 122
- 29 October, 2021
China Fall: Gap to US largest in history
Global Funds Positioning Analysis - allocations in China & HK among Global active managers have fallen to below pre-2017 levels. This allocation drop is in stark contrast to what is occurring in the US, with allocations powering to all-time highs. If Global managers are to increase weights in China, Steven Copley believes they will have to broaden their investment horizons. He compares Global stock holdings in China with their GEM peers - the rapid rise in investment by GEM Funds in Ping An Insurance, Meituan and JD.com suggests they can take a greater share in Global Fund portfolios in the future.
Edition: 118
- 03 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
Didi (DIDI)
Communications
Didi’s IPO comes fast on the heels of RedTech's May ride-hailing survey which found Didi to still be very dominant, but losing share, while ride-hailing usage was also in decline. Didi has been losing out to a rise in taxi usage and small gains for Meituan and other competitors since 2017. Since expansion in ride-hailing may be difficult due to the antitrust atmosphere in China, RedTech has also been looking at the potential of Didi’s grocery delivery business...
Edition: 113
- 25 June, 2021