BABA(US:BABA)2025-11-05 10:58Summary of Key Points from the Conference Call Industry and Companies Involved - Industry: Internet & New Media - Key Companies: Alibaba (BABA), Tencent (700 HK), Baidu (BIDU), Pinduoduo (PDD), JD (JD US), Trip.com (TCOM), JD Health (JDH), Tencent Music (TME), J&T (1519 HK) Core Insights and Arguments Alibaba (BABA) - Investor Sentiment: Dominated discussions, with US investors generally underweight on BABA while Chinese mutual funds are bullish [1][2] - Ecommerce Concerns: US investors express caution regarding BABA's ecommerce business, citing that customer management revenue (CMR) growth of ~10% year-on-year is driven by increased take-rate rather than improved gross merchandise volume (GMV) [2] - Quick Commerce (QC) Potential: The outlook for BABA's ecommerce is improving due to QC, which is expected to enhance cross-selling opportunities and increase transactions in offline retail [3] - Market Penetration Forecast: Retail quick commerce penetration is projected to rise to 14% from ~10%, potentially reaching nearly CNY2 trillion by 2028, representing about 25% of BABA's ecommerce scale [4] - Losses and Recovery: Estimated losses for the September quarter are CNY36 billion, up from CNY11 billion in the previous quarter, but expected to narrow to CNY21 billion in the December quarter due to improved operational efficiency [5] - Cloud Business Recognition: BABA's cloud business is viewed as a long-term growth driver, with significant interest in its AI capabilities, particularly its self-designed chips and Qwen LLM [6] Tencent (700 HK) - Investor Confidence: Generally favored by investors, with expectations of higher-than-expected earnings growth of +12% year-on-year for 3Q25F [8] - Business Momentum: Strong performance in online gaming and advertising, particularly through its short video service, Video Account [8] - Target Price: Maintained target price of HKD757, implying a 20% upside [8] Baidu (BIDU) - Hedge Fund Interest: Hedge funds are becoming more positive on Baidu due to its Robotaxi and chip-design businesses, with recent chip orders worth over CNY1 billion from China Mobile [9] - Execution Concerns: Despite positive sentiment, there are significant concerns regarding Baidu's execution and the weak state of its advertising business, which is crucial for cash flow [10][11] Pinduoduo (PDD) and JD (JD US) - PDD Favorability: PDD is gaining favor among investors, with expectations of improving profitability from 3Q25 onwards [12] - JD's Investment Strategy: JD's significant investment in quick commerce is viewed skeptically by some investors, although there are signs of narrowing losses [14] - Outlook for JD Retail: Concerns about JD Retail's outlook due to tough comparisons starting from 4Q onwards [14] Trip.com (TCOM) - Investor Loyalty Amid Concerns: Long-only investors remain loyal to TCOM despite growing unease about macroeconomic headwinds and competition risks [16] - Competition Risks: Increased competition from brands like Agoda may require TCOM to invest more in overseas markets, potentially capping margin expansion [17] - Revenue Forecast: Below-Street forecast for TCOM's non-GAAP operating margin and revenue growth due to soft travel demand in China [18] Vertical Leaders - Valuation Concerns: JD Health, Tencent Music, and J&T are viewed positively for their growth potential, but their valuations are a concern as they trade above 20x FY26F P/E [19] Other Important Insights - Market Dynamics: The discussions reflect a divergence in sentiment between US and Chinese investors, particularly regarding Alibaba and Baidu, highlighting the impact of geopolitical tensions and market conditions on investment decisions [6][10]