Summary of the Conference Call on China's E-commerce Sector Industry Overview - The report focuses on the Chinese e-commerce industry, particularly the performance during the Singles' Day shopping festival and overall online retail growth. - September national online retail goods GMV (Gross Merchandise Volume) growth was sustained at +7% year-over-year (YoY), matching August's performance, and concluding 3Q25 at +8% YoY growth, an acceleration from +6% YoY in 2Q25 [1][34][45]. Key Observations from Singles' Day Shopping Festival 1. **Extended Shopping Festival Period**: The Singles' Day shopping festival has been extended, with major platforms like Tmall, JD, and Douyin starting promotions earlier than last year. This is expected to lead to healthy retail data in October, although November may see muted growth due to front-loaded demand and high base effects from last year [2][26]. 2. **AI Tool Proliferation**: There has been a significant rollout of AI tools across platforms. Alibaba introduced six AI tools that improved click-through rates (CTR) by +10% and merchant ROI by +12%. AI customer service has been adopted by 1.58 million merchants, leading to an average daily cost reduction of RMB 20 million [3][7]. 3. **Initial Sales Performance**: Initial sales figures were strong, with Alibaba reporting that 35 brands exceeded RMB 100 million in sales within the first hour of pre-sale. Douyin saw an 800% YoY increase in brands achieving RMB 100 million+ sales on day one [8]. 4. **National Trade-in Subsidies**: A new batch of national trade-in subsidies worth RMB 69 billion was announced, which is lower than the previous year's subsidies. This is expected to moderate online appliance sales in 4Q25, as last year's growth was exceptionally high [9]. 5. **Competition in Quick Commerce**: The competition in quick commerce remains intense, with Alibaba maintaining a healthy average daily order volume of 80 million. Meituan announced a RMB 2 billion investment to support merchants, indicating ongoing competitive dynamics in the sector [10][12]. Additional Insights - **Retail Sales Performance**: Overall retail sales in September grew by 3.0% YoY, with online retail goods sales at +7.3% YoY. The growth in consumer durables and discretionary categories showed mixed results, with home appliances growing at a slower pace [38][39]. - **Parcel Volume Trends**: The average daily parcel volume in October showed a growth rate of approximately 0% YoY, indicating a slowdown compared to previous months. This is attributed to higher average selling prices and reduced order volumes [15][36]. - **E-commerce Engagement**: E-commerce app engagement remained healthy, with JD and Taobao showing strong growth in user engagement, likely driven by food delivery and instant commerce initiatives [15]. Stock Implications - The report recommends focusing on sectors such as games, mobility, and cloud/data centers as top investment opportunities. Specific stock ideas include PDD in e-commerce and major players like Tencent and JD in their respective sectors [14][16]. This summary encapsulates the key points from the conference call regarding the Chinese e-commerce sector, highlighting growth trends, competitive dynamics, and strategic insights for investors.

Investment Rating - The report maintains a persistent deflation baseline into 2026, indicating a cautious outlook on the industry [1]. Core Insights - The renewed supply-side reform in China is characterized as "new wine in an old bottle," suggesting that while the initiative is returning, the current industrial landscape and macro environment are more complex than during the previous reform period from 2015 to 2018 [1][3]. - The "anti-involution" initiative launched in July 2024 aims to address excessive competition and overinvestment, with recent signals from leadership indicating a more systematic approach to these challenges [2][3]. - The report highlights that the current overcapacity challenge is different due to several factors, including a more decentralized industrial landscape dominated by private firms and a weaker economy with constrained fiscal space [8][18]. Summary by Sections Introduction - The concept of "involution" has led to the "anti-involution" initiative aimed at sustainable growth and societal well-being [2]. - The initiative is a response to renewed price wars and entrenched deflation, indicating a need for deeper analysis of overinvestment causes [2]. Supply-Side Reform Comparison - The current supply-side reform (Anti-involution 1.0) differs from the previous reform (Supply-side Reform 1.0) in targeted sectors, firm ownership, and the approach to overcapacity [5]. - The current reform focuses on mid-to-downstream sectors and is more nuanced compared to the administrative orders of the past [5]. Economic Context - The report notes that the economy is starting from a weaker position, necessitating demand-side stimulus to counteract supply reductions [8][18]. - High government debt levels (~100% of GDP) may limit the ability to undertake aggressive fiscal expansion [8]. Implementation Challenges - The complexities of the current industrial landscape, including advanced utilized capacity and the dominance of private firms, complicate the coordination of mergers and capacity closures [8][18]. - The report suggests that while there is rhetoric around anti-involution, clear timelines and actionable plans are still lacking, reflecting the complexities in implementation [15][16]. Conclusion - The report concludes that rapid reflation is contingent on demand improvement, contrasting the previous period's reliance on housing and exports [17]. - The renewed focus on anti-involution is seen as a positive step, but the tools available are softer, and the macro backdrop is weaker compared to 2015-2018 [18].