Research Reports

BABA will report FY1Q20 results on August 15th before the markets open with a 7:30am EST conference call. We are positive into BABA’s FY1Q20 performance. In 2Q19, BABA needed to compete on at least two fronts: with Pinduoduo (PDD, $22.30, Not Rated) in lower tier city commerce and also competing with Meituan (3690.HK, HK$63.65, Not Rated) on food delivery. From our observation, BABA applied smart ways of competing without irrational spending. Based on our data and model, we believe BABA is likely to deliver better FY1Q20E results on both top line and bottom line. We maintain our Buy rating. ……

VIPS will report 2Q19 results on August 14th after the markets close followed by a conference call the next day at 8am EST. Based on our data and calculations, we believe VIPS’s 2Q19 revenue is likely to be slightly above consensus at RMB21.58B (4.1% Y/Y growth) and the high-end of its guidance range of RMB20.7B – 21.7B, or 0% - 5% Y/Y growth. However, the Company’s focus is its profitability. We did not see abnormal spending in sales and marketing. Therefore, we also expect better margins in 2Q19.……

BIDU will report 2Q19 results on August 19th after the markets close followed by a 9:15pm EST conference call. Based on our data and calculations, we believe BIDU is likely to deliver 2Q19 net revenue in line with consensus but with better margin. Looking beyond quarterly earnings, we believe 2019 is a changing as well as a challenging year for BIDU.……

JD will report 2Q19 results on August 13th before the markets open with a 7:30am EST conference call. We are positive on JD’s 2Q19 performance. The company is concentrating on its new business initiatives, particularly during its annual 6.18 promotions. JD released many initiatives, including Pinggou for lower tier city users, cash incentives for higher value purchase, and expanding its logistic services. As a result, the growth of both GMV and revenue accelerated in 2Q19E from the 1Q19 level. ……

HUYA will report 2Q19 results on August 13th after the markets close with an 8pm EST conference call. We are positive on HUYA into its 2Q19 earnings. Based on our data and model, we believe Huya’s revenue is likely to be above the high-end of the guidance range of RMB1,730M – RMB1,790M and our estimate. The main drivers for the healthy growth are the number of audience/users, which we believe is attributable to the rising popularity of e-Sports in China in general as well as the high number of e-sports tournaments in 2Q19.……

YY will report 2Q19 results on August 13th after the markets close followed by a 9pm EST conference call. 2019 is an investment year for YY. While the company maintains healthy growth of its core live broadcasting business, it is investing in overseas expansion hoping the successful experience of live business in China can be transferred to the overseas market. ……

ZTO will report 2Q19 results on August 16th after the markets close followed by a 9pm EST conference call. As e-commerce has become extremely popular among Chinese consumers, not only can one be a buyer, one can also be a seller at the same time enabled by social networking including WeChat, Little Red Book, Yun Ji and may other platforms. ……

TME will report 2Q19 earnings on August 12th after the markets close followed by an 8pm EST conference call. Short term wise, we believe TME is going to deliver an in line quarter. Long term wise, we are cautious on active users to paying conversion ratio. Based on our data and model, we believe revenue is likely to be in line with consensus at RMB 5,983M.……

ATHM will report 2Q19 results on August 7th before the markets open with an 8am EST conference call. ATHM’s fundamentals are likely to be impacted by the weaker consumer spending in the auto sector as well as the new National Emission Standard (Guo 6). The number of paying dealers did not bounce back in 2Q19 like it used to in previous years. ……

For the online media sector including online video in China, 2019 is a tough year. On the one hand, as 2019 is a political sensitive year, media control from the government is stricter than before; therefore, IQ as well as other online video vendors do not have the liberty to air whatever they planned to air. ……

TAL will report FY1Q20 earnings on July 25th before the markets open with an 8am EST conference call. We are positive on TAL into FY1Q20. Based on our data and analysis, we believe TAL’s FY1Q20 revenue is likely to be better than consensus driven by the growth in enrollments as a result of its online efforts. TAL’s online efforts are on two fronts: dual-teacher and online for its core Peiyou courses and xueersi.com, a new start up within TAL. ……

EDU will report FY4Q19 results on July 23rd before the markets open with an 8am EST conference call. We are positive on EDU into FY4Q19 earnings. Based on our data and analysis, we believe EDU’s revenue in FY4Q19 is likely to be higher than consensus at $836.9M (exchange rate adjusted) and the high end of guidance range of $807.1M to $826.8M (exchange rate adjusted). ……

China’s economy is continuing its weaker trend with PMI below 50 in May 2019 following the same situation in April 2019. Such weakness in the underlying economy continues to put pressure on the job front. It has been the fourth consecutive quarter that the number of new jobs added nationwide was lower than the same time last year. ……

We are positive on MOMO’s performance in 2Q19 driven by its live broadcasting business as Tantan was under the government’s reviews. One way to push for monetization is via hosting events and adding new features to its APPs. MOMO hosted several events including Golden Melody, Music Live, and hosted its Annual Gala in June; these events are positive for the growth of its MAUs and paying members. ……

We are positive on NTES’s 2Q19 performance. Based on our data and model, NTES’s 2Q19 revenue is likely to be slightly higher than the Street consensus at RMB19,128M. In 1Q19, the company took measures to streamline its business lines and organization structure, which included divesting some non-performing assets, cutting back the number of employees and refocusing on its core business. ……

We are positive on YY’s 2Q19 performance. Each business segment of YY grew on its own pace and had its own growth driver: YY live was mainly driven by the growth of hosts; Huya by users; and Bigo by hosts. Bigo, as a newly combined entity, is going to make a full quarter contribution. Based on our data and model, we believe YY’s 2Q19 revenue is likely to be higher than the high end of the company’s guidance range of RMB6,000M – RMB6,200M and consensus and our model at RMB6,110M.……

We are positive on JD’s 2Q19 performance. While there is a fight between PDD and BABA, JD is not part of it and actually benefits from being left out of the fight, as JD can concentrate on its new business initiatives and its annual promotions. The company is well prepared for its 6.18 annual promotion event with many initiatives: Pinggou for lower tier city users, cash incentives for higher value purchase, and expanding its logistic services. As a result, the growth of both GMV and revenue accelerated in 2Q19E from the 1Q19 level. ……

In general, the food delivery market growth in 2Q19 was at about 23.8% Y/Y, slower than 32.9% Y/Y in 1Q19. The “5.17” (May 17th) promotion was a positive factor for the growth in May 2019. Total GTV growth of the food delivery sector (Meituan Waimai and Ele.me) accelerated to 25.1% in May 2019 from 22.5% in April 2019.  ……