Original link: https://www.latepost.com/news/dj_detail?id=1141
Consumption weakens, e-commerce is not immune
Among several Chinese-funded Internet companies with the highest market value, Xu Lei, CEO of JD.com, dares to speak. In the first three months of this year, JD.com’s revenue growth slowed to 17.95%, only half of the same period last year. Gross profit margin also decreased by 0.37 percentage points year-on-year.
Due to the closure of core warehouses and the longer performance cycle, JD.com’s order cancellations have remained high since April. Beijing, Shanghai, Guangzhou and Shenzhen are the core customer source cities for JD.com’s retail. JD.com’s reliance on them is higher than the national average for retail sales. These cities have been more or less affected by the epidemic since the first quarter.
Some commodities are objectively unavailable to consumers, such as clothing. “We have seen a backlog of spring clothing for some apparel brands, and as for summer clothing, many factories are not producing them,” Xu Lei said. There are also some high-customer unit-price products that consumers do not want to buy subjectively. The most direct example is that the unit price of retail customers on the platform continued to decline when the traffic of JD.com increased in April and May.
Regarding all these objective impacts, Xu Lei said that the domestic epidemic situation in the past two years was considered “good” for e-commerce, and offline consumption has obviously shifted to online, but the impact of this epidemic on online and offline enterprises “should be A double kill”.
Buyers are reluctant to buy, and sellers without income can only be more cautious. Some big brands that cooperate with JD.com have lowered their annual budgets for the purpose of maintaining profits. As part of risk hedging, in addition to improving efficiency and reducing cost and expense ratios, JD.com has also continued to communicate with local governments to “become a supply-guarantee enterprise to ensure basic normal performance.”
In terms of financial data, the growth rate of JD.com’s operating costs in the first quarter slowed down, and the sales expense ratio also dropped to 3.63%. After the performance pressure increased significantly, the gross profit margin for the quarter was 13.96%, not as good as the same period last year, but better than the fourth quarter of last year.
Among them, in terms of cost reduction, in addition to being more restrained in attracting new customers, “closing and transferring projects that are unfavorable to short-term commercialization” also plays a key role. Xu Lei said, “In the future, we will focus on business and will continue to do this work.” At the end of March this year, “First Financial” reported that a Jingdong employee had already queued up to more than 1,000 when he left the office.
The “618” promotion is regarded by JD.com as a key node to improve its performance in the second quarter. Xu Lei told analysts that the current sales pressure of brand owners and platform merchants is very high, so the enthusiasm and investment in this year’s “618” event is higher than in previous years. All parties want to make the best use of this sales node as much as possible.
At present, the performance of contracts and the large-scale promotion of stocking in areas other than Shanghai are basically normal. JD.com said that it is “going ahead as originally planned”, but under the circumstances of uncertain epidemic situation and uncertain consumption, they have no KPI for the time being.
From January to April, passenger traffic in 90% of central cities declined
- According to data from the Ministry of Transport, from January to April this year, the total passenger volume in central cities (mainly municipalities and provincial capitals) fell by 19.1% year-on-year. Among the 36 cities, 33 declined year-on-year; cities with a drop of more than 30% include Shanghai, Changchun, Hohhot, Xi’an, Tianjin, Shenzhen, and Lanzhou.
- In terms of road, freight volume fell by 14.3% year-on-year in April, and the cumulative decline from January to April was 3.9%. Passenger traffic fell even more, falling 43.9% year-on-year in April and 30.7% in January-April.
- The data shows that since May 4, the country has not stopped highway toll stations; as of May 11, the road freight index has improved significantly from the previous month, but it is still about 20% lower than the same period last year.
- Port cargo throughput was relatively stable. Overall cargo throughput in April fell 3.7% year-on-year to 1.27 billion tons, with a cumulative increase of 0.2% in January-April. Among them, Shanghai Port handled 1.03 million tons of cargo in April, and 12.88 million tons from January to April, down 36.5% year-on-year; Hangzhou Port handled 28.45 million tons of cargo from January to April, down 35.6% year-on-year.
- In terms of aviation, the passenger throughput of Shanghai Airport, Shenzhen Airport and Guangzhou Baiyun Airport in April decreased by 98.93%, 73.52% and 86.58% respectively year-on-year; Shanghai Airport’s cargo and mail throughput decreased by 70.04% year-on-year, Baiyun Airport decreased by 0.04%, and Shenzhen Airport increased by 3.08% %.
- Shanghai announced today that all 16 districts in the city have achieved social clearance. The railway department announced that from the 18th, the Shanghai area will resume 8 trains, and the number of trains will increase to 20.
Tencent Music issues a quarterly report, users and revenue both decline
- Tencent Music Entertainment Group (TME) released its first quarterly report, with major financial and user data declining to varying degrees.
- The number of monthly active users of online music mobile terminals fell 1.8% year-on-year to 604 million.
- The number of monthly active users of social entertainment mobile terminal fell 27.7% year-on-year to 162 million.
- Revenue was RMB 6.64 billion, down 15.1% year-on-year;
- Gross profit decreased by 24.6%, gross profit margin decreased by 3.5 percentage points to 28%;
- Net profit was RMB 649 million, down 34% YoY.
- Divided into two business segments, online music revenue decreased by 4.8%, mainly due to the decrease in advertising and licensing fees; social entertainment revenue decreased by 20.6%, mainly due to the loss of users due to intensified competition in industries such as live broadcasting, and the number of paying users decreased by 26.5%.
- For future growth plans, the management mentioned the cooperation with the WeChat ecosystem, especially the video account.
- The music ecology of the video account is jointly participated by TME and the WeChat team. Both TME and the video account are exploring to obtain traffic and income through online concerts, but the continuity of the effect needs to be observed.
- TME management believes that only with a large user scale will there be better business opportunities.
- What other applications are there that have more users than WeChat?
Dada Group has high expectations for the second quarter
- Dada Group released data for the first quarter, revenue increased by 74% to 2 billion yuan on a comparable basis, net loss narrowed from 710 million yuan in the same period last year to 604 million yuan, and marketing expenses accounted for 56%.
- Management expects revenue growth of 59%-66% in the second quarter.
- Dada Group has two businesses, Jingdong Daojia (local retailer super O2O) and Dada Express (intra-city delivery), which are very sensitive to the epidemic. Dada management views the impact of the epidemic on business and the online supermarket industry:
- Shanghai is the most extraordinary situation in the past three years. Except for Shanghai, even if it is affected by some epidemics, as long as the local supply chain is not interrupted, the company’s business is basically normal. For example, business in Beijing is growing.
- In the foreseeable future, such a special situation as Shanghai will not occur again, and other cities will conduct large-scale nucleic acid testing or other methods in advance to avoid large-scale lockdowns. These are the basis for developing second-quarter revenue guidance.
- The epidemic may have helped educate customers, making most city residents familiar with online supermarket shopping and used to cooking at home. This change in living habits will have a positive impact on supermarkets, fast-moving consumer goods and fresh food categories.
- Sales expectations for the 618 are conservative. Because the slowdown in the macro environment may have some impact on customers’ willingness to spend. However, customers have been blocked for a long time and want to spend money. Therefore, the company takes a “positive and conservative” attitude.
Big institutional position changes: Hillhouse, Tiger Global, Berkshire Hathaway
In recent days, a number of large funds have submitted 13F reports to the US Securities and Exchange Commission, disclosing the position changes in the first quarter:
- Hillhouse HHLR Advisors added 12 U.S. stocks in the first quarter, 8 of which are Chinese stocks, including Didi, Vipshop, JD.com, Shell, Manbang, Futu, Daxin Energy, and ACM (Shengmei Semiconductor).
- Didi, Manbang, and Shell are all companies that Hillhouse has invested in in the primary market. The entry into the shareholding list this time should be the conversion of ordinary shares invested in the primary market into tradable ADSs in the secondary market.
- BeiGene and JD.com became the top two heavyweight stocks. The Chinese concept stocks that have been cleared include Pinduoduo, Weilai, Xiaopeng, etc. Ideally, their holdings have been reduced.
- We also reported yesterday that BlackRock, Bridgewater, Jinglin and other funds have increased their holdings of Chinese stocks.
- Buffett’s Berkshire Hathaway’s top five buying targets are Chevron, Occidental Petroleum, Activision Blizzard, Hewlett-Packard, and Citigroup.
- Apple, Bank of America, and American Express are still the top three heavyweight stocks; among them, Apple accounts for 42.11% of the disclosed holdings, with a market value of $155.56 billion. Chevron overtook Coca-Cola as the fourth-largest holding; Occidental jumped to the sixth-largest holding.
- Buffett sold Wells Fargo, which he had invested in 30 years ago, and turned to Citibank and Ally Financial Inc., an auto loan company. It said it remains bullish on U.S. retail banking.
- Tiger Global significantly reduced its holdings of technology stocks in the first quarter, with its public stock position dropping from $46 billion at the end of last year to $26 billion, and the number of positions being reduced from 169 to 88.
- In the first quarter, 8 stocks in the top 10 positions were reduced.
- We have previously reported that Tiger Global, which holds a heavy position in technology stocks, suffered heavy losses in this year’s sharp decline in U.S. stock technology stocks, which was one of the largest declines in the history of hedge funds.
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OTHER NEWS
The National Committee of the Chinese People’s Political Consultative Conference held a special consultation meeting on “Promoting the Sustainable and Healthy Development of the Digital Economy”.
According to CCTV news, the National Committee of the Chinese People’s Political Consultative Conference held a special consultation meeting on “Promoting the Sustainable and Healthy Development of the Digital Economy” on the 17th. Nearly 100 members of the National Committee of the Chinese People’s Political Consultative Conference attended the meeting. The meeting mentioned that it is necessary to promote the integration of the digital economy and the real economy, and guide the digital transformation and development of small and medium-sized enterprises. Industrial Internet and more. Vice Premier Liu He of the State Council pointed out that efforts should be made to adapt to the transformation of the digital economy, support the sustainable and healthy development of the platform economy and the private economy, properly handle the relationship between the government and the market, support digital companies in the listing of domestic and foreign capital markets, and promote competition through openness and innovation through competition. .
Alibaba’s holdings remained unchanged in the first quarter, and its market value shrank by 35%.
According to the latest disclosure document, Alibaba’s stock position remained unchanged in the first quarter, but its market value fell sharply from $1.15 billion to $707 million. Among them, the market value of Bilibili, the largest holding stock, decreased from $464 million to $256 million; Weibo decreased from $279 million to $221 million; Xiaopeng decreased from $335 million to $183 million; other holdings included Best, Momo Mo, etc. fell between 25%-60%.
Douyin and TikTok’s revenue increased by 90% year-on-year in April.
According to Sensor Tower, in April this year, the global revenue of Douyin and the overseas version of TikTok was 296 million US dollars, a year-on-year increase of 90% (the growth rate of last month was 110%); 48.1% of which came from Douyin and 19.4% from the United States. YouTube came in second with $111 million, up 23% year-over-year. The last three are Google One, Disney+, and Tinder.
Users’ willingness to pay declined, and Huya’s live broadcast revenue fell by 10% in the first quarter.
Huya’s revenue in the first quarter was 2.46 billion yuan, down 5.3% year-on-year, and its adjusted net profit was 46.6 million yuan, down 82.5% year-on-year. Among them, live broadcast revenue decreased by 10% year-on-year to 2.15 billion yuan, and advertising and other income increased by 47% year-on-year to 310 million yuan. Management said that due to the impact of the macro environment, users’ willingness to pay has declined; in addition, revenue sharing fees and content costs have also increased, reflecting the likely intensification of industry competition.
In the first quarter, the “small Tencent in Southeast Asia” Sea decreased by 20% from the previous quarter.
Sea’s revenue in the first quarter was US$2.9 billion, a year-on-year increase of 64%, the lowest growth rate since its listing (the previous lowest was 99%), and its net loss widened to US$580 million. Among the three major businesses, games are the only source of profit, but in the first quarter, active users decreased by 5% month-on-month and paying users decreased by 20%; EBITDA profit was US$430 million, down 28% month-on-month and 40% year-on-year. In terms of e-commerce, the growth rate is slightly behind expectations. In the first quarter, the revenue was 1.5 billion US dollars (YoY + 64%), and the order volume was 1.9 billion (YoY + 71%). Digital financial services continued to grow rapidly, with revenue increasing 360% year-on-year to $240 million.
France’s Renault sells its Russian operations for 2 rubles, but retains a six-year buyback option.
The French Renault Group plans to sell all its business in Russia to the Russian government and state-owned institutions, but enjoys a 6-year buyback option, which can buy back the business at a price of 1 ruble per share in the next 6 years (currently 1 US dollar can be converted into 64 ruble). Renault made its first investment in Russia in 2007, backed by the Russian president at the time. About 10% of sales currently come from Russia.
In 2024, the domestic production capacity of new energy vehicles may exceed 15 million.
According to media reports, as of the end of last year, the annual production capacity of new energy vehicles in China was 5.69 million, and with the capacity under construction, it is expected to exceed 15 million by 2024. The report said that in order to speed up the construction of factories, some local governments have simplified the project approval procedures that used to take one month to just one day. Rapid expansion also faces the risk of overcapacity. In 2021, the national sales of passenger vehicles will be 21.48 million, of which 3.52 million will be new energy vehicles; 310,000 new energy vehicles will be exported.
There are currently more than 180 global companies that mention China’s impact in their first-quarter results.
According to media reports, as of now, more than 180 global companies have mentioned in their first-quarter performance reports that they were affected by the epidemic in China, compared with less than 50 in the previous quarter. From automotive and healthcare, to food, consumer electronics, apparel and cosmetics, multiple industries are facing production, logistics impacts, or declining sales.
Most foreign investors do not plan to leave China for the time being.
A survey at the end of April showed that 77% of 372 EU companies said they had no plans to transfer Chinese investment for the time being. The researchers said that companies are hesitating, but they cannot find an alternative for the time being. China has a complete and large-scale supply chain, and digitalization also provides support for new business models. According to official data, from January to April this year, foreign direct investment in China increased by 26.1% year-on-year to US$74.5 billion; Vietnam’s investment in the same period was only US$3.7 billion, down 56% year-on-year.
In many places, fiscal revenue fell sharply in April, mainly due to tax refunds.
The Ministry of Finance said today that the national value-added tax refund in April was about 800 billion yuan, which is equivalent to about 37.5% of the fiscal revenue in April of the previous year. There has been a sharp decline, especially in the eastern region where manufacturing is developed. If deducting the tax refund factor, the national fiscal revenue increased by 5% from January to April, which was a drop from the increase of 8.6% from January to March. Tax cuts and tax deferred measures have also had a partial impact.
Hangzhou, Nanjing and other places allow families with multiple children to purchase one more suite.
Hangzhou released the new housing market policy today, mentioning that eligible three-child families can purchase one more set of restricted housing. Previously, Nanjing, Dongguan, and Wuxi all allowed families with two or more children to buy one more house. Dazhou, Leshan, and Mianyang in Sichuan also offered preferential interest rates or direct cash subsidies to families with multiple children.
China already has 240 million people with higher education.
The Ministry of Education said today that China’s population with higher education has reached 240 million (equivalent to 17% of the total population), and the average number of years of education for the new labor force is 13.8 years; 30% in 2020 to 57.8% in 2021; the workforce quality structure has been significantly improved. However, the increase in higher education has also brought about structural unemployment; data shows that this year’s graduates reached a new high of 10.76 million.
In Hong Kong, China, entertainment venues such as bars will reopen on Thursday.
The government of Hong Kong, China said today that it will further ease social distancing restrictions as scheduled on Thursday. Including the reopening of bars, nightclubs, karaoke, cruises and other entertainment venues, the restaurant business has been extended to zero, the maximum occupancy rate of cinemas has been raised to 85%, and so on. Since May, primary and secondary schools and kindergartens have also resumed offline teaching. The government said the daily confirmed cases in Hong Kong have remained at a reasonable level of 200-300 over the past week, but vaccination rates still need to be increased.
Singapore expects a continued recovery in air travel, with Changi Airport restarting expansion plans.
Singapore’s Transport Minister said today that Changi Airport’s passenger traffic doubled in May compared with March, returning to 40% of the pre-epidemic level; as air travel continues to recover, Changi Airport will restart the expansion plan, and the new terminal will be Start construction in 2-3 years to keep up with demand. Singapore Changi Airport is a popular tourist attraction, handling 68 million passengers in 2019.
As food, fuel and labor costs rose, Walmart’s operating profit fell 23% year-on-year in the first quarter.
In the three months ended April 29, Walmart’s revenue was $141.6 billion, up 2.4% year-on-year; operating profit was $5.3 billion, down 23% year-on-year. Profits are under pressure as fuel, labor, and food costs are rising, management said; some customers are also cutting back, and sales of more affordable private-label foods have surged. Analysts believe that retail giant Walmart has scale and cost advantages, and other retailers may be in a tougher situation.
After Amazon and Google, Microsoft will also raise wages.
Microsoft announced on Monday that it will nearly double its performance-based salary budget and increase annual stock awards for junior and mid-level employees by at least 25 percent, given the tightening talent market and rising cost of living, though details of the pay increase were not disclosed. Google also launched a new performance system this month, which is expected to raise wages for most employees, while Amazon has pledged to double the base salary cap for lower-level workers.
Musk says at least 20% of Twitter accounts are fake.
Musk’s acquisition of Twitter continues to go back and forth. Musk said on Monday that at least 20 percent of Twitter accounts were fake, and that the real percentage could be higher, and said the deal could not go ahead unless Twitter could prove that the percentage was less than the 5 percent it claimed. Twitter announced today that it is “committed to closing the transaction as quickly as possible and on the agreed price and terms.” According to the acquisition agreement, if Twitter does underreport the number of fake accounts, Musk may terminate the deal without paying a $1 billion breakup fee.
Nomura Securities, Japan’s largest brokerage, plans to set up an encrypted business subsidiary.
According to media reports, Nomura Securities plans to establish a new wholly-owned subsidiary specializing in cryptocurrency, NFT, decentralized finance and other businesses. It will have about 15 employees at the beginning, and it is expected that the number of employees will reach 100 in two years. The plan is said to have been under discussion for 4 years, at a time when the crypto market has fallen sharply and confidence is shaken. Nomura executives said that while there are still problems with digital assets, failing to do so will make it harder to remain competitive in the future. Large global financial institutions such as Goldman Sachs and Citi have entered the field of encryption.
Text | Gong Fangyi Lin Guangying Intern Wang Yuqing
Editor | Gong Fangyi
Title image: Jingdong Group. Taken in Wuhan, 2020.
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