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<Research>G Sachs: Mkt Underestimates Duration of Competition in CN Food Delivery Sector & BABA-W's Investment Scale
Recommend 35 Positive 58 Negative 22 |
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BABA-W (09988.HK) caved under pressure today (30th). It opened 2.5% lower and once hit an intraday low of HKD112.8 with a slump of nearly 4.5%. It last slipped 3.8% to HKD113.6 HKD, falling below the 100-day moving average of HKD113.71, on a turnover of HKD10.15 billion. Goldman Sachs has published a report on the Chinese internet industry discussing the competition in the food delivery sector, its future development, and its ultimate form. In the broker's estimates, the incremental subsidies from JD-SW (09618.HK), MEITUAN-W (03690.HK), and BABA-W's Ele.me have pushed the order volume growth in the food delivery industry from mid-single digits to over 30% YoY, enhancing service consumption (alongside the government's trade-in program aimed at boosting commodity consumption) and creating hundreds of thousands of new daily rider job opportunities. Overall, Goldman Sachs forecasted BABA-W's 2Q group EBIT to rise by 5%, Pinduoduo's 2Q EBIT to fall by 38%, MEITUAN-W's 2Q EBIT to slide by 51%, and JD-SW's 2Q group EBIT to decline by 56% YoY. The broker also stressed that the market may have underestimated JD-SW's determination to use food delivery as a new source of traffic acquisition (relative to its annual marketing budget of RMB50 billion, most of which is used for customer acquisition, as the daily active user scale and frequency on JD-SW's app are relatively disadvantaged compared to those of its peers), as well as BABA-W's investment scale in this business. Accordingly, the market has underestimated the potential duration of competition in China's food delivery industry. Over the next three to six months, Goldman Sachs projected more launches of models and AI agents, which should maintain investor interest in this theme, especially around AI applications. The broker considered TENCENT (00700.HK) and KUAISHOU-W (01024.HK) as the main beneficiaries of AI applications. AAStocks Financial News |
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