中国互联网- 外卖竞争触底的又一信号-China Internet and Other Services-Another Sign of Bottoming Out in Food Delivery Competition

Summary of Conference Call Notes Industry Overview - Industry: China Internet and Other Services, specifically focusing on food delivery competition - Key Players: Alibaba Group Holding (BABA), Meituan, PDD Holdings Inc (PDD), JD.com (JD) Core Insights and Arguments - Competition Dynamics: The State Administration for Market Regulation (SAMR) has introduced new standards for food delivery platforms, which are expected to stabilize competition that peaked in Q3 2025. Both Alibaba and Meituan are committed to enforcing these standards to promote rational competition and industry orderliness [2][3] - Management Statements: Meituan's founder emphasized that price wars are unsustainable and do not create real value for the industry, supporting the notion of anti-involution during their Q3 results call [2] - Future Expectations: The expectation is that competition will gradually subside from Q4 2025 onwards, following the peak observed in Q3 2025 [3] Company-Specific Insights - Alibaba (BABA): - Anticipated operational loss from quick commerce is expected to narrow to RMB 25 billion in F3Q26, compared to an estimated loss of RMB 35 billion in F2Q26 [4] - The company is favored due to its strong position in AI and attractive valuation metrics (18x F26 or 15x F27) following recent corrections [4] - Meituan: - Projected on-demand loss is expected to narrow to RMB 15.6 billion in Q4 2025 from RMB 19 billion in Q3 2025 [4] - Early signs of bottoming out are noted, but competitive pressures from in-store services (especially from Douyin) and increasing overseas investments may continue to impact near-term margins [4] - PDD Holdings (PDD): - The company is also viewed positively, with a base case derived from discounted cash flow valuation, assuming a WACC of 14% and a terminal growth rate of 3% [14] - JD.com (JD): - The company is currently rated as underweight, with a base case scenario value derived from a discounted cash flow valuation, applying a WACC of 13% and a terminal growth rate of 3% [10] Risks and Considerations - Upside Risks: - Potential for improved market share in food delivery and margin enhancement, further monetization of merchant ARPU, and successful investments in new initiatives [12] - Downside Risks: - Risks include intensified competition, low visibility on loss-making initiatives, weaker macroeconomic conditions, and regulatory scrutiny [12][16] Additional Important Points - Valuation Methodology: The analysis employs discounted cash flow models for valuation, with key assumptions varying by company [8][9][14] - Analyst Ratings: The report indicates a preference ranking of BABA > PDD > Meituan > JD, reflecting the analysts' views on the relative performance of these companies [4][6] This summary encapsulates the key points from the conference call, highlighting the competitive landscape, company-specific insights, and associated risks within the China Internet and Other Services sector.