Technological Advancement & Human Experience - Technology has significantly improved human lives by enhancing efficiency and effectiveness over time [7] - The evolution of technology has shifted human experience from functional to convenience-max, and is gradually moving towards meaningful and purposeful experiences [11][12] - The rapid pace of technological change contrasts with the relatively unchanged human biology, leading to a natural fear and tendency to take the safe path [16][17] Intentional Actions for the Future - Embracing boredom strategically can foster creativity by allowing the mind to wander and connect seemingly unconnected ideas [20][24] - Adaptability is crucial for navigating change, achieved through leveraging machines and language for efficiency and collaboration [26][27][32] - Fostering real human connections is essential for well-being, as social interactions trigger neurotransmitters and contribute to a longer life [35][38] Man-Machine Interaction - Machines are increasingly handling more work, leading to more available time for humans, but also potentially to chaos if the mind is left empty [14][19][20] - Leveraging machines is important for adaptability and overcoming change [32]

Investment Rating - The report assigns a "Buy" rating to major companies in the China Internet sector, including Alibaba, JD.com, Meituan, and Tencent [28]. Core Insights - The quick commerce sector in China is experiencing rapid growth, with a projected market size of Rmb760 billion by 2025, representing 4-5% of the e-commerce market [3]. - Major players like Alibaba and Meituan are significantly increasing their investments to capture market share, with Alibaba committing Rmb50 billion and Meituan surpassing 120 million daily orders [2][3]. - The competition is described as a "game of chicken," with companies expected to continue heavy investments until at least the Double 11 shopping festival [4]. Summary by Sections Quick Commerce Competition - Competition in quick commerce is intensifying, driven by substantial platform subsidies from major players [2]. - Alibaba's Taobao InstaShopping and Meituan are leading in daily order volumes, with Alibaba achieving 80 million combined daily orders and Meituan surpassing 120 million [2]. Market Size and Growth - The total addressable market (TAM) for quick commerce is expected to grow by 30% by 2025, primarily taking market share from traditional retail rather than e-commerce [3]. - The rapid increase in order volume is attributed to consumer behavior and effective coupon utilization strategies [3]. Financial Implications - Earnings cuts are anticipated across e-commerce giants due to the competitive landscape, with expected annual investments of Rmb25 billion from JD, Rmb25-30 billion from Alibaba, and Rmb25 billion from Meituan [4]. - The report forecasts a market share split of 50% for Meituan, 30% for Alibaba, and 20% for JD in the medium term [4]. Stock Recommendations - The report suggests a cautious approach towards Meituan due to high earnings expectations and valuation concerns, while recommending Alibaba for potential value extraction if executed well [7]. - JD's valuation is considered undemanding, and its performance will be monitored as trade in subsidies fades [7].

Investment Rating - The report assigns a 12-month rating of "Buy" for Alibaba Group with a price target of US$158.00, down from a prior target of US$178.00 [4][29]. Core Insights - The report anticipates a revenue increase of 1% year-over-year to Rmb246 billion for 1QFY26, impacted by the deconsolidation of 1P offline retail assets [2]. - The growth in the Taobao Tmall Group (TTG) and local services is expected to see a GMV increase of 5% year-over-year, with a faster growth in CMR at 11% year-over-year due to structural take rate improvements [2]. - Quick commerce investments are projected to reach Rmb10 billion in the quarter, leading to a significant decline in EBITA for TTG and local services [2]. - Cloud revenue growth is expected to accelerate to 22% year-over-year, driven by increased demand following the launch of DeepSeek [2]. - The international commerce segment is projected to grow by 19% year-over-year, with a narrowing EBITA loss expected [2]. Summary by Sections Revenue and Earnings Forecast - Total revenues for FY1Q26E are estimated at Rmb245.639 billion, reflecting a 1.0% year-over-year increase [10]. - The adjusted EBITA is projected at Rmb38.074 billion, down 15.5% year-over-year [10]. - Non-GAAP diluted EPS is expected to be Rmb15.2, representing a 7.7% decrease year-over-year [10]. Segment Performance - Taobao & Tmall revenues are expected to reach Rmb123.029 billion, an 8.5% increase year-over-year [10]. - Cloud revenue is anticipated to grow to Rmb32.390 billion, a 22% increase year-over-year [10]. - International commerce is expected to generate Rmb34.785 billion, an 18.7% increase year-over-year [10]. Valuation and Market Metrics - The report indicates a valuation of 13x FY26E P/E, suggesting that Alibaba remains one of the cheapest AI stocks globally [9]. - The market capitalization of Alibaba is noted to be US$254 billion, with a free float of 97% [4]. - The average daily trading volume is approximately 2,076,000 shares [4].

Investment Rating - The industry investment rating is Attractive [9] Core Insights - Meituan has established a strong competitive advantage in quick commerce, with expectations for Alibaba's e-commerce and local services to enhance adoption [1][6] - Meituan's Instashopping gross transaction value (GTV) is projected to reach Rmb350 billion in 2025, reflecting a 30% year-over-year growth [5] - The downsizing of Meituan's Select mini program is viewed positively, as it allows for more investment in profitable areas like Instashopping and international expansion [4] Summary by Sections Meituan - Meituan is ramping up its quick commerce business by increasing the number of Instamarts and expanding product categories, with a focus on tier 1 and 2 cities [3] - The closure of Select warehouses, which incurred losses of approximately Rmb7 billion in 2024, is expected to free up resources for more strategic investments [4] - The company has over 30,000 Instamarts and more than 5,000 merchants, achieving break-even in 2024 [5] Alibaba - Alibaba is merging Eleme and Fliggy into its e-commerce group, which is anticipated to create strong synergies across e-commerce, on-demand delivery, and travel segments [12][13] - This strategic move follows JD's entry into quick commerce and food delivery, highlighting the competitive landscape [13] Financial Projections - Meituan's core local commerce operating profit (OP) is forecasted to be Rmb53 billion for 2025, with new initiatives expected to incur losses of Rmb11 billion [7] - The total on-demand retail market in China is projected to reach Rmb2 trillion by 2030, with Meituan's total on-demand retail GMV expected to reach Rmb1 trillion by the same year [18][22]