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
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
Pinduoduo (PDD US) & Dada Nexus (DADA US) US
Consumer Discretionary
Revenue growth has been the driver for both stocks, but they are facing tough top line growth comps in 2H23. For PDD, the slowing growth may not be temporary, as F&B delivery is likely to become a smaller part of the business with people out of quarantine, user saturation may be reaching its limit and merchants / consumers may be switching to JD.com’s offer. Felix Wang is also flipping DADA from long to short, as near-term catalysts are shifting. A critical part of his long pitch stemmed from support from short video disruptor, Douyin. However, Douyin surprisingly encountered major obstacles in local life services, including food delivery, in Q2. Competition for DADA is also heating up.
Edition: 166
- 04 August, 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
Consumer Discretionary
Once one of the fastest growing segments within Chinese e-commerce, community group buying is starting to face multiple headwinds from funding shortages to excessive price competition. Oshadhi Kumarasiri points to PDD's competitors who have been announcing job cuts and rapidly scaling back operations over the last few months, and argues that the operating environment shouldn’t be much different for PDD. With QoQ revenue growth pretty much at a standstill and sales and marketing cost cutting almost fully exhausted, current consensus expectations are too optimistic and bound for a significant correction.
Edition: 141
- 05 August, 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