Hua Er Jie Jian Wen·2025-07-12 07:20Group 1 - The new round of "takeaway subsidy war" has reignited, initiated by Alibaba's Taobao Flash Purchase, forcing industry giants Meituan and JD to respond [1] - Alibaba announced a 50 billion RMB investment in subsidies for takeaway and instant retail over the next 12 months, leading to a chain reaction in the market [1] - As of early July, Meituan's daily order volume reached a record high of 120 million, while Alibaba's daily order volume reached 80 million within two months [1] Group 2 - Morgan Stanley believes that the competitive initiative has shifted to Alibaba, which has significant financial resources, including nearly 100 billion RMB in free cash flow and close to 600 billion RMB in cash equivalents by the end of March 2025 [2] - This financial strength positions Alibaba favorably in the ongoing consumption battle, creating significant competitive pressure on Meituan and JD [2] Group 3 - The intense "burning money" competition raises the question of whether such investments are worthwhile, depending on the long-term potential of the instant retail market [3] - Morgan Stanley presented two scenarios: if the instant retail market reaches 4 trillion RMB by 2030, the current investment is justified; if it only reaches half that, the investment appears overly aggressive [3][4] - Alibaba's substantial cash reserves and free cash flow give it a competitive edge, while Meituan and JD face challenges [3] Group 4 - In an optimistic scenario, the instant retail market's GMV is projected to reach 4 trillion RMB by 2030, with industry profits at 81 billion RMB [4] - In a pessimistic scenario, if the market's long-term GMV is only 2 trillion RMB, the terminal value would drop to 338 billion RMB, making the first year's total loss potentially reach 85 billion RMB [5] Group 5 - Prior to the intensified competition, Meituan held approximately 45% market share, with Ele.me (Alibaba's platform) at 21% and JD at 5% [6] - Despite increased competition, Meituan is likely to maintain its market leadership, although its market share may decline [6] - Instant retail growth will be incremental for Meituan, while it will cannibalize traditional e-commerce for Alibaba and JD [6] Group 6 - The investment expansion will directly impact short-term profitability, leading to stock price pressure for all involved companies [7] - Morgan Stanley predicts that Alibaba, Meituan, and JD's stock prices will face downward pressure in the next 3 to 6 months due to lowered profit expectations [7] Group 7 - Morgan Stanley has significantly lowered its adjusted EPS forecasts for Alibaba for fiscal years 2026 and 2027 by 22% and 11%, respectively, and reduced Meituan's operating profit forecast for 2025 by 15% [9] - Target prices for Alibaba have been adjusted downwards, with the US target price reduced from $170 to $140 and the Hong Kong target price from HKD 165 to HKD 135 [9] - Meituan's target price has also been lowered from HKD 160 to HKD 150 while maintaining an "overweight" rating [9]