Why is Daily Fresh, not Dingdong Grocery; the recession hasn’t affected Apple

Original link: https://www.latepost.com/news/dj_detail?id=1248

Why is Daily Fresh, instead of Dingdong Grocery?

Novelist Richard Yates said that for many people, failure is shameful, but in fact, failure is the norm. Fresh food e-commerce is such an example.

In June 2021, Daily Youxian and Dingdong Maicai will be listed on the US stock market one after the other. The same is not profitable, has few users, and is not favored by the market. Daily Youxian broke on the first day of listing, but there is still a safety pad for the first listing.

They have almost finished telling the story of the industry, and the 1.7 billion yuan in IPO financing has given them more liquidity. The investor team consisting of Tencent, CICC, Qingdao and Changshu State-owned Assets looks more polished. In order to ensure a successful listing, Dingdong Maicai reduced its financing scale by about 70%, and finally received 600 million yuan.

A year later, it was Daily Youxian that was in big trouble.

Daily Youxian was launched in 2014. It started out as a 2-hour delivery warehouse model in Beijing. Dingdong Maicai launched in 2017. The operation model is similar. They are all rented and equipped with cold storage in places with high residential density in first-tier cities. The warehouses range from 150 square meters to 300 square meters. The site employs sorters, riders, and managers. The specific number of personnel varies with the order quantity. In the past few years, it is generally 5 people for sorting and 15 people for delivery at a site.

This business model has been controversial. The front-end warehouse is a bit like a community store that opens its doors for business or a husband-and-wife store in a vegetable market. There are fixed costs of rent and utilities, and variable costs of personnel wages (bonus, commission, performance), but it has high compliance costs and floating losses. The rate is high (the loss rate of ingredients is generally 18%-20%), which also makes the calculation of breakeven similar to opening a blind box.

The impact of the Internet on fresh food e-commerce has both positive and negative effects. For example, online brand marketing and effect marketing accelerate customer acquisition, but it also enlarges the service radius and increases the uncertainty of inventory, loss and contract performance. Therefore, the industry has thought of an indicator called “loss-removal gross profit”, that is, how much profit is left after commodity sales minus commodity procurement costs without considering the loss.

The categories of goods sold by the vegetable market and the husband-and-wife store are fixed, and the size of the consumer group contacted is usually a given, depending on how many people live within a radius of 500 meters to one kilometer. People move in and out of the community every year, but the number of households will always be that many, the spending power is similar, and the income and cost flow are relatively easier to estimate. Moreover, the market generally has channels to sell products that are not sold out on the day, which is also a way to reduce losses.

The last public financial data of Daily Youxian was the third quarterly report for 2021 released in November last year, when the situation was already very bad. The gross profit margin on sales is only 12%. There are 1.996 billion yuan of unrestricted cash left in the account, and the loan to be repaid within one year and the arrears to suppliers have reached 2.408 billion yuan.

At that time, the gross profit margin of Dingdong grocery shopping was also average, 17%. However, the gross profit margin continued to increase to 27.88% in the fourth quarter of last year and the first quarter of this year.

According to the minutes of industry experts from Jiuqian Zhongtai, Dingdong Maicai relies on a series of measures such as reducing subsidies and promotions, expanding direct mining, self-farming and self-processing, controlling losses, combining front-end warehouses and orders, a large proportion of layoffs, and increasing income and reducing expenditure. Method – basically change the entire operation link of the front warehouse.

In fact, the efficiency of traditional platform e-commerce today is also the result of various extreme transformations.

Daily Youxian’s pre-position in 2021 has not changed much. There is no new entry or exit from existing cities. The focus of development has shifted to “smart vegetable market” and “retail cloud”. The former is a relatively low-cost landlord business: renting vegetable farms from the government and subcontracting them to vegetable farmers to earn the difference in rent. The latter is 2B business, which mainly provides digital retail services for supermarkets in third- and fourth-tier cities, and charges according to the commission.

On the day the news of the disbandment spread, Daily Youxian’s share price fell by more than 40%, and its market value fell to less than $30 million. Dingdong Maicai was affected, the stock price fell 9.68%, and the market value fell to about 1.1 billion US dollars. (Gong Fangyi)

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The recession didn’t affect Apple either

According to Apple’s latest quarterly report released on Thursday (July 28) local time, between April and June this year, they achieved a record quarterly revenue of $83 billion, a year-on-year increase of 1.87%, better than analysts’ expectations.

Sales of the iPhone, Apple’s biggest revenue generator, rose 2.8 percent in the quarter to $40.67 billion. Analysts had expected iPhone sales to fall 2.5%.

  • Cook said he saw signs of weakness in some places, but did not see the impact of macroeconomic recession risks on iPhone sales for now. Revenue growth is expected to accelerate in the third quarter.
  • Morgan Stanley senior analyst Katy Huberty reminded the market that it is still important to pay attention to the impact of exchange rate changes and whether there are signs of slowing demand before the release of the iPhone 14.

Apple warned in April that the outbreak and shortages of raw materials could weigh between $4 billion and $8 billion in second-quarter sales, and management said the impact was “slightly smaller” than expected.

  • Apple’s sales in Greater China fell 1% in the second quarter, compared with market expectations for a 7% decline. Goldman Sachs expects iPhone shipments to gradually recover in China.
  • However, the rise in logistics, raw material, and labor costs, combined with a slowdown in sales growth, still dragged down Apple’s second-quarter profit by 11% to $19.4 billion. (Gong Fangyi)

U.S. economy shrinks in second quarter

The U.S. Department of Commerce announced on Thursday (July 28) that U.S. gross domestic product fell at an annualized rate of 0.9% in the second quarter, contracting for the second consecutive quarter and reaching the definition of a “technical recession.”

  • Despite the decline in GDP, U.S. personal consumption rose 1% in the second quarter.
  • Residential investment fell 14%.

The White House does not see a recession, with Treasury Secretary Janet Yellen stressing at a news conference that the economy “remains resilient.”

  • Yellen said most economists and most Americans have a similar definition of a recession: mass unemployment and layoffs, business closures, a sharp slowdown in private-sector activity, and enormous pressure on household budgets, “We are now seeing Not so.”
  • The US has added about 380,000 per month on average over the past 3 months.
  • Unemployment also remained at a historic low of 3.6%.
  • The Federal Reserve raised interest rates by 0.75 percentage points this week in an effort to curb inflation. (Gong Fangyi)

Vietnam attracts US$14 billion in foreign investment in the first half of the year, down 10%

In the first half of this year, foreign investment in Vietnam exceeded US$14 billion, down nearly 9% year-on-year.

  • There were 752 newly approved projects with a total registered capital of nearly 5 billion US dollars, a decrease of nearly half year-on-year.
  • The most important areas of foreign investment are manufacturing and real estate, accounting for 59% and 15% of the total investment respectively.
  • The top 5 countries in terms of investment are Singapore, South Korea, Denmark, China and Japan.
  • Singapore’s investment of US$4.1 billion accounted for 29.5%, a year-on-year decrease of nearly 27%;
  • South Korea’s investment of US$2.66 billion accounted for 19%, an increase of about 30%;
  • Denmark invested more than 1.3 billion US dollars in Lego projects, accounting for 9.4%.

According to the Vietnam Association of Enterprises with Foreign Investment, Vietnam has become one of the hottest destinations for foreign investment due to its stable political environment, cheap land and labor, and geographical proximity to East and Southeast Asian countries. Vietnam’s weak protection of intellectual property rights and cumbersome administrative procedures may hinder the investment interest of Germany, France, the United Kingdom and the United States, which is what they intend to improve in the future.

  • Vietnam’s goal is to transform from the current low- and middle-income country to a middle-income country with modern industries by 2025, and to become a high-income developed country by 2045. Therefore, it is hoped to improve the quality of FDI and domestic enterprises through knowledge and technology sharing innovation, and developing human resources.
  • The European Chamber of Commerce recently released the “Report on FDI in Vietnam in the first half of 2022”, which believes that in the long run, foreign investment from Europe may enjoy Vietnam’s preferential policies for a long time.
  • Of the 21 economic sectors in Vietnam, 18 are invested by the EU. The production and processing industry accounted for the largest share, of which 36.3% was invested in refining and petrochemicals. (Intern Zeng Xing)

Samsung posts second-best quarterly report ever, starts to worry about slowing chip demand

On July 28, Samsung Electronics released its audited second-quarter results, with an operating profit of $10.8 billion, an increase of 12% year-on-year. Sales were $59.2 billion, up 21% year over year and slightly below the record $59.7 billion in the first quarter of this year.

  • 71% of Samsung’s profits come from the chip manufacturing business. Among them, the sales of the chip business in the second quarter were 21.9 billion US dollars, and the net profit was 7.7 billion US dollars.
  • The continued depreciation of the Korean won against the U.S. dollar has been beneficial to Samsung’s exports to a certain extent, and coupled with the stable demand for memory chips in the server industry, it has contributed to the rise in profits.

But Samsung said cooling consumer demand for electronics such as mobile phones would affect its chip business as macroeconomic uncertainty rises. The global semiconductor market is entering a period of weakness, with semiconductor revenue expected to decline by 2.5% in 2023, according to a Gartner analyst.

  • At the same time, major buyers in the chip market, such as Apple, Amazon and Microsoft, are controlling their budgets for next year, which will further limit the capacity of chip makers.
  • SK Hynix expressed similar sentiments, announcing in its July 27 earnings call that it has lowered its forecast for chip shipment growth in the second half of the year, and will sharply adjust capital spending next year due to high inventory across the market. (Intern Zeng Xing)

Nestle’s first half net profit fell 12%

Nestle, one of the world’s largest food and beverage companies, announced its semi-annual report. Revenue in the first half of the year increased to CHF 45.58 billion (approximately RMB 319.9 billion), a year-on-year increase of 9.15%.

  • Profits underperformed. Net profit fell 12% year-on-year, and the figure of 5.25 billion Swiss francs (about 36.8 billion yuan) was lower than market expectations. The main drags were foreign exchange losses and tax increases.
  • Inflationary pressures reduced Nestlé’s underlying trading margin to 16.9% from 17.4% a year earlier.
  • The underlying trading profit margin, namely “underlying trading operating profits”, refers to the trading operating profit margin after deducting the effects of other transaction fees and transaction costs.
  • Similar to the practices of several major peers , Nestlé raised prices by 6.5% in the first half of the year to resist inflationary pressures. Company CEO Mark Schneider said the team implemented the price increase “in a responsible manner.”
  • Nestlé mentioned that the price increase has not yet affected sales. For example, Nestlé’s pet care products and coffee prices rose 7.7%, and underlying sales growth accelerated from 7.6% in the first quarter to 8.7% in the second quarter.
  • During the price hike in the first half of last year, Nestlé products rose by an average of 1.3%, and dairy products rose by more than 3%.

Nestlé expects an underlying transactional operating margin for the full year of this year to be around 17.0%, down from a previous forecast of between 17% and 17.5%. Bernstein analyst Bruno Monteyne believes that while the new margin guidance is lower than previously expected, the margin decline is much smaller than that of many European peers. (intern Xue Yujie)

OTHER NEWS

In the first half of the year, the revenue of Internet enterprises above designated size increased by 0.1% year-on-year.

According to the Ministry of Industry and Information Technology, in the first half of 2022, Chinese Internet companies above designated size (with annual sales of more than 20 million yuan) completed Internet business revenue of 717 billion yuan, a year-on-year increase of 0.1%. The year-on-year growth rate of Internet business revenue of Internet companies above designated size last year was 21.2%.

Xiao Yaqing, Secretary of the Party Leadership Group and Minister of the Ministry of Industry and Information Technology, was examined and investigated.

The website of the State Supervision Commission of the Central Commission for Discipline Inspection announced on July 28 that Comrade Xiao Yaqing, Secretary of the Party Leadership Group and Minister of the Ministry of Industry and Information Technology, was suspected of violating discipline and law, and is currently under review and investigation by the State Supervision Commission of the Central Commission for Discipline Inspection.

Qualcomm’s second-quarter net profit increased by 84% year-on-year.

On July 27, Qualcomm released its second-quarter financial report, with quarterly revenue of $10.93 billion, a year-on-year increase of 37%, slightly higher than market expectations. Net profit was US$3.73 billion, up 84% year-on-year. Qualcomm expects its chip business to be affected by a drop in smartphone demand in the second half of the year.

Meta’s revenue fell for the first time, and its net profit hit a new low in nearly two years.

Meta’s revenue in the second quarter was US$28.822 billion, a year-on-year decrease of 0.88%, the first year-on-year revenue decline in history. The double-digit net profit fell to US$6.687 billion, with the growth rate hitting a new low in the past two years. Core advertising revenue fell 1.5% year over year. Another digital advertising giant Google’s second-quarter advertising revenue rose more than 10%. Meta said the lower-than-expected performance was mainly affected by macroeconomic uncertainty and competition from TikTok.

Twitter will reduce office space around the world and shift to remote work.

Twitter announced it would cut office space in several global markets, including San Francisco, New York and Sydney, to support remote work. Its chief human resources officer, Dalana Brand, said that the closure of some offline offices is to reduce costs and does not intend to lay off workers.

Toyota’s vehicle sales in the first half of the year fell 6.0% year-on-year.

According to Toyota data, chip shortages and the epidemic led to global sales of 5.13 million vehicles in the first half of this year, a year-on-year decrease of 6.0%. Among them, sales in North America and Japan fell by more than 15%.

Shell posted record profits for two consecutive quarters.

Energy company Shell released a financial report saying that its net profit in the second quarter was US$11.47 billion, surpassing the highest profit of US$9.13 billion in the first quarter, and its performance reached a new high. French energy giant Total also benefited from higher oil and gas prices, with second-quarter profit up 158% year-on-year.

Panasonic’s second-quarter sales rose, while profits fell 39%.

On July 28, Panasonic released a financial report saying that sales in the second quarter increased by 10%, mainly due to the increase in car battery sales. Profits fell 39% to $470 million. Parts shortages and rising raw material prices were the main reasons for the decline in profits.

On the 27th, the local “86+435” was added, involving 12 provinces, autonomous regions and municipalities.

  • On July 27, there were 86 new confirmed cases in China, 32 in Guangxi and 23 in Gansu; 435 new asymptomatic infections were reported in China, including 131 in Guangxi and 207 in Gansu.
  • Guangxi added “32+131”, and the confirmed cases were all in Beihai City.
  • “23+207” was added in Gansu, and 1 case was found in Lanzhou’s social screening.
  • Sichuan added “17+13”, and 11 cases were found in the screening of risk areas.
  • There were 49 new cases of asymptomatic infections in Heze, Shandong, with a cumulative increase of “4+107” cases, and the local epidemic is still developing.

Zhejiang Suichang buys a new house with a maximum subsidy of 45,000 yuan per set, and there is no limit to the number of household registration sets.

Recently, Suichang County, Zhejiang Province announced that from July 1 to December 31 this year, the maximum subsidy for each new house purchase is 45,000 yuan, and the subsidy is only one time per house, but there is no limit to the household registration and the number of houses. In addition, some purchases can also fully subsidize the deed tax.

Boeing cut its 737 MAX production forecast due to a shortage of raw materials.

Boeing lowered its forecast for 737 MAX deliveries this year, and Chief Financial Officer Brian West said that despite high demand, shortages of engines, raw materials and other supplies have limited aircraft production. In addition, Airbus has also cut its annual jet production forecast due to parts shortages and will slow plans to increase production of its best-selling A320 family.

The Fed has raised interest rates by 75 basis points, and has raised rates by 225 basis points this year.

On July 27, local time, the Federal Reserve announced that it would raise the federal funds rate by 75 basis points to a range of 2.25% to 2.50%, in line with market expectations. This is the second time the Fed has raised interest rates by 75 basis points after June, and it is the largest consecutive rate hike since former Fed Chairman Paul Volcker in the early 1980s. Since the beginning of this year, the Fed has raised interest rates 4 times, accumulatively raising interest rates by 225 basis points.

Gartner expects the global semiconductor industry revenue growth rate to be only 7.4% this year.

Gartner released a report pointing out that the most prosperous cycle of the global semiconductor industry is about to end. It is expected that the global semiconductor industry revenue this year will be about 639.2 billion US dollars, with a growth rate of 7.4%, compared with 26% in the same period last year. Gartner believes that the global semiconductor market will fall into recession next year due to weak sales of mobile phones and personal computers, and semiconductor demand in the automotive semiconductor and 5G fields is likely to keep growing.

Volkswagen’s second-quarter adjusted operating profit fell 28 percent from a year earlier.

Volkswagen’s adjusted operating profit in the second quarter was 4.74 billion euros (about 32.6 billion yuan), a year-on-year decrease of 28%, which was better than expected, and the second-quarter deliveries also fell by more than 20%. Volkswagen previously said it had assembled its compact electric SUV ID.4 at its plant in Chattanooga, Tennessee, with deliveries scheduled for as early as October, and will boost production to 7,000 a month by the end of 2022.

Kingsoft Cloud submitted an application for dual primary listing of Hong Kong stocks.

Kingsoft Cloud, a cloud computing company under Kingsoft Software, went public in the U.S. in May 2020, with a stock price of up to $74.67. As of the close of trading on July 27, Kingsoft Cloud’s U.S. stock has shrunk by more than 90% from its peak. After the listing, Kingsoft Cloud’s losses have not narrowed. From 2019 to 2021, the total loss will exceed 2.5 billion yuan. The joint sponsors of the listing are CICC, JPMorgan and UBS.

Huawei officially launched the taxi service “Petal Travel”.

Huawei announced the official launch of its self-developed car-hailing service “Petal Travel” in Harmony OS 3. Petal Travel has aggregated service providers such as Shouqi Car-hailing, Shenzhou Chuxing, and T3 Travel. Currently, it only supports Beijing, Shenzhen, Nanjing, Hangzhou and other cities. The map used for Petal travel is Petal Maps (petal map) owned by Huawei. AITO car brands Wenjie M5 and Wenjie M7 are equipped with petal maps. The industry believes that the launch of Petal travel is to enrich the use of petal maps.

TikTok’s internal leaked documents said it would downplay its parent company, ByteDance.

According to media reports, an internal TikTok public relations document named “TikTok Master Messaging” was leaked, which mentioned the need to “downplay the parent company ByteDance and downplay artificial intelligence.” In the document, standard answers are given to questions that employees may be asked. When asked “What is the relationship between ByteDance and products such as TikTok and Toutiao?”, the public relations answer was: ” ByteDance is the holding company of TikTok, and employees do not comment on ByteDance.”

Text | Gong Fangyi, intern Zeng Xing, and intern Xue Yujie

Editor | Gong Fangyi

The title picture comes from the movie “Home at One Point”

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