Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

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Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Equity Bottom-Up

Recently, discount online retail platform <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a> made two moves that indicate it plans to develop its own logistics ecosystem, 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> and <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> have both done previously. 
In this note we will outline the two moves Pinduoduo has made and attempt to explain their significance for Pinduoduo itself, for rival Alibaba, and for the five listed express companies that form the backbone of Alibaba's fulfillment network. We believe Pinduoduo's initiatives reveal important risks for all of these players.
In our view, Pinduoduo has made these moves to address the growing risk of relying upon a logistics network built for and by its largest rival (Alibaba).
For Alibaba, the moves reveal the risks of creating a loose network via multiple alliances (rather than direct control) and of allowing its fulfillment partners to open up to rival retail platforms.
For most of the incumbent Chinese express companies, Pinduoduo's moves highlight additional competition at the low-end of the domestic express market. This is a reminder that barriers to entering China's domestic express market, in which most players rely heavily on franchisees and capacity supplied by third parties, remain surprisingly low. Competition is intensifying as a result. 
China's express market remains in flux. We retain our 'Buy' rating on <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a>, which has limited exposure to Pinduoduo's and Alibaba's parcel volumes.

Recently, discount online retail platform Pinduoduo (PDD US) made two moves that indicate it plans to develop its own logistics ecosystem, as Alibaba Group (BABA US) and JD.com Inc (ADR) (JD US) have both done previously. 
In this note we will outline the two moves Pinduoduo has made and attempt to explain their significance for Pinduoduo itself, for rival Alibaba, and for the five listed express companies that form the backbone of Alibaba's fulfillment network. We believe Pinduoduo's initiatives reveal important risks for all of these players.
In our view, Pinduoduo has made these moves to address the growing risk of relying upon a logistics network built for and by its largest rival (Alibaba).
For Alibaba, the moves reveal the risks of creating a loose network via multiple alliances (rather than direct control) and of allowing its fulfillment partners to open up to rival retail platforms.
For most of the incumbent Chinese express companies, Pinduoduo's moves highlight additional competition at the low-end of the domestic express market. This is a reminder that barriers to entering China's domestic express market, in which most players rely heavily on franchisees and capacity supplied by third parties, remain surprisingly low. Competition is intensifying as a result. 
China's express market remains in flux. We retain our 'Buy' rating on S.F. Holding (002352 CH), which has limited exposure to Pinduoduo's and Alibaba's parcel volumes. 

ピンドゥオドゥオの最近の動きは、独自の物流エコシステムを開発したいという意欲を示している

PDD Holdings

ピンドゥオドゥオの最近の動きは、独自の物流エコシステムを開発したいという意欲を示している