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Equity Analyst, LightStream Research

Supun Walpola

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<p>Chinese government data for 3Q 2020 suggests that the strong demand for online shopping that was witnessed in the last quarter has somewhat declined with offline shopping taking precedence in the post-lockdown environment. However, we do not view this as particularly negative, rather, growth seems to have only normalised to the pre-pandemic level. Moreover, a YoY improvement in online retail penetration suggests that the Chinese e-commerce landscape is still fairly attractive, despite decelerating growth.</p><p>Nevertheless, revenue growth of top e-commerce players such as <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a>, and <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a> are expected to decline in 3Q 2020 compared to the strong last quarter. However, the market may have already accounted for this, as consensus revenue estimates are not very different to our revenue estimates based on government e-commerce data. </p>

Chinese government data for 3Q 2020 suggests that the strong demand for online shopping that was witnessed in the last quarter has somewhat declined with offline shopping taking precedence in the post-lockdown environment. However, we do not view this as particularly negative, rather, growth seems to have only normalised to the pre-pandemic level. Moreover, a YoY improvement in online retail penetration suggests that the Chinese e-commerce landscape is still fairly attractive, despite decelerating growth.Nevertheless, revenue growth of top e-commerce players such as Alibaba Group (BABA US), JD.com Inc (ADR) (JD US), and Pinduoduo (PDD US) are expected to decline in 3Q 2020 compared to the strong last quarter. However, the market may have already accounted for this, as consensus revenue estimates are not very different to our revenue estimates based on government e-commerce data. 

China E-Commerce [Alt Data]: Alibaba/JD/PDD’s Strong 2Q Growth to Decline in 3Q, But Expected