Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>In our view, China growth equity faces high geopolitical uncertainty in C3Q24 ahead of the US election, but can experience a relief rally in C1Q24.</li>
<li>We prepared high beta and low risk recommendations for 2024</li>
<li>For low-risk, we recommend JD/JDL/JDH, Tencent and Luckin. For high beta, we recommend BEKE, LI Auto and Kuaishou.</li>
</ul>


In our view, China growth equity faces high geopolitical uncertainty in C3Q24 ahead of the US election, but can experience a relief rally in C1Q24.
We prepared high beta and low risk recommendations for 2024
For low-risk, we recommend JD/JDL/JDH, Tencent and Luckin. For high beta, we recommend BEKE, LI Auto and Kuaishou.


[Blue Lotus Sector Update]: 2024 High Conviction Idea: Two Scenarios Towards Year End

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

<ul>
<li>JD.com reported in-line revenue and a non-GAAP net profit beat of 12% vs. consensus, mainly due to the 145% beat by subsidiary JD Logistics (JDL).</li>
<li>3Q GMV grew low-single digit and growth could remain similar in 4Q given the high-COVID related FMCG base. JDs GMV may reaccelerate in 2024 as smartphone and FMCG growth returns.</li>
<li>Meanwhile, JD lowered the minimum spend required for free shipping, which we expect to lead to accelerate parcel volume growth for JD Logistic. </li>
</ul>


JD.com reported in-line revenue and a non-GAAP net profit beat of 12% vs. consensus, mainly due to the 145% beat by subsidiary JD Logistics (JDL).
3Q GMV grew low-single digit and growth could remain similar in 4Q given the high-COVID related FMCG base. JDs GMV may reaccelerate in 2024 as smartphone and FMCG growth returns.
Meanwhile, JD lowered the minimum spend required for free shipping, which we expect to lead to accelerate parcel volume growth for JD Logistic. 


[Blue Lotus Multi-Platform Sector Update]: Key JD Categories Will Grow Again in 2024

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

<ul>
<li>After a spike higher in fund ownership in 2021, active Asia Ex-Japan funds are beginning to close out positions.</li>
<li>Funds including T.Rowe Price, LO Funds and Nikko AM have closed out exposure this year.</li>
<li>JD.com remains a very well owned stock among institutional investors, at a time when performance is anything but stellar so far this year.</li>
</ul>


After a spike higher in fund ownership in 2021, active Asia Ex-Japan funds are beginning to close out positions.
Funds including T.Rowe Price, LO Funds and Nikko AM have closed out exposure this year.
JD.com remains a very well owned stock among institutional investors, at a time when performance is anything but stellar so far this year.


Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>Early 6/18 pulled June sales into May, leading to disappointing June NBS data. Combined, online retail grew 5.1% yoy in May/June, and 6.4% yoy in 2Q24. </li>
<li>PDD remained the top shelf-ecommerce platform with GMV growing ~20%, followed by Taobao/Tmall (TTG) at ~6-7%, and JD and VIPS at ~2-3% yoy. </li>
<li>We expect JD and BABA to report slight earnings beats and guide upbeat on continued profitability improvement in 2H24. </li>
</ul>


Early 6/18 pulled June sales into May, leading to disappointing June NBS data. Combined, online retail grew 5.1% yoy in May/June, and 6.4% yoy in 2Q24. 
PDD remained the top shelf-ecommerce platform with GMV growing ~20%, followed by Taobao/Tmall (TTG) at ~6-7%, and JD and VIPS at ~2-3% yoy. 
We expect JD and BABA to report slight earnings beats and guide upbeat on continued profitability improvement in 2H24. 


[Blue Lotus E-Commerce Sector Update]: Tax Reform a Light at the End of the Tunnel for Ecommerce

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

<ul><li>JD.com Inc. managed to surpass the revenue and earnings expectations of Wall Street.</li><li>Service revenues grew, of which marketing and marketplace revenues were up.</li><li>During the quarter, JD.com noticed strong user engagement trends, including higher purchase rates and ARPU on its app.</li></ul>

JD.com Inc. managed to surpass the revenue and earnings expectations of Wall Street.Service revenues grew, of which marketing and marketplace revenues were up.During the quarter, JD.com noticed strong user engagement trends, including higher purchase rates and ARPU on its app.

JD.com Inc ADR: Collaboration With Gucci & Other Drivers

China

Hainan Island Construction Co Ltd.  is a property development company. The Company also operates regional malls and hotels.

Guangzhou Friendship Group Co., Ltd operates supermarkets and department stores in Guangzhou, China.  The Company sells a variety of consumer products, including apparel, food and beverages, electronics, jewelry, cosmetics, and electric appliances.  Guangzhou Friendship also leases real estate properties.

Guangzhou Friendship Group Co, Ltd. (000987 CH)

Wangfujing Group Co., Ltd. owns and operates department stores in Beijing, Guangzhou, Chengdu, Wuhan, and other cities in China.  The Company also develops residential real estate.

Golden Eagle Retail Group Limited operates department stores in China. The Company's stores target mid-range and high-end market segments in China, and contain various functions and amenities such as dining, entertainment, beauty and personal care, cinemas, and preschool education in addition to their core function as an international department store.

Tianjin Quanye Bazaar (Group) Co., Ltd. owns and operates department stores and supermarkets, as well as sells general merchandise on a wholesale basis. Tianjin Quanye also provides storage and cargo delivery services, and invests in real estate and interior decoration businesses.

Xian International Medical Investment Co Ltd is principally engaged in the medical services industry.

Xian International Medical Invest (000516 CH)

Nanjing Xinjiekou Department Store Co. Ltd. operates department stores in Nanjing, Jiangsu.  Through its subsidiaries, the Company also develops real estate and manufactures pharmaceuticals.

Nanjing Xinjiekou Department S (600682 CH)

Beijing Urban-Rural Trade Centre Co. Ltd. operates department stores and supermarkets. The Company also provides food and entertainment services, as well as develops real estate.

Beijing Urban Rural Trade Centre Co. (600861 CH)

Chengdu Hongqi Chain Company Limited operates convenience stores chain. The Company's main products are food, alcoholic drinks and tobacco, and other daily necessities.

Chongqing Department Store Co., Ltd. operates retail stores in Chongqing.  The Company also operates a wholesale business.

Chongqing Department Store Co. (600729 CH)

Dollar General Corporation operates a chain of discount retail stores located primarily in the southern, southwestern, midwestern, and eastern United States. The Company offer a broad selection of merchandise, including consumable products such as food, paper and cleaning products, health, beauty, pet supplies, and non-consumables such as seasonal merchandise.

Trent Limited operates a chain of retail stores that sell fashion apparel, cosmetics, perfumery products and toiletry items. The Company sells apparel for men, women and children. Trent sells its cosmetics products under the "Westside" and "Trent" brand names.

Dollar Tree, Inc. operates a discount variety store chain in the United States. The Company sells an assortment of everyday general merchandise at the $1.00 price point.

Pan Pacific International Holdings Corporation operates discount stores which sell consumer electronics, daily necessities, groceries, watches, and sporting goods. The Company mostly operates small scale stores based in Tokyo.

Pan Pacific International Holdings (7532 JP)

Target Corporation operates general merchandise discount stores. The Company focuses on merchandising operations which includes general merchandise and food discount stores and a fully integrated online business. Target also offers credit to qualified applicants through its branded proprietary credit cards.

Naspers Limited operates in the technology industry. The Company invests in global internet companies across the world.

Next Plc conducts retailing, home shopping, and customer services management operations.  The Company's retail stores sell ladies wear, mens wear, childrens wear, and housewares.

Avenue Supermarts Ltd. (ASL) owns and operates hypermarkets and supermarkets. The Company offers products such as garments, footwears, toys and games, bed and bath linen, stationery, grocery, household, and electronic products. ASL operates throughout India.

Canadian Tire Corporation Limited is a family of businesses that includes a retail segment, a financial services division and CT REIT. The Company's retail business provides Canadians with products for life in Canada across its living, playing, fixing, automotive and seasonal categories. Canadian Tire Corporation's  retail products include casual, industrial and active wear.

Dollarama Inc. operates as an online marketplace. The Company offers cleaning, school, office, home, kitchen, food, health, beauty, hardware, electronics, toys, and pets products, as well as provides delivery services. Dollarama serves customers in Canada.

JD.com, Inc. is an online direct sales company in China. The Company offers a wide selection of products through its website and mobile applications. JD.com sells appliances, computers, digital products, communication products, garments, books, and household items to consumers and vendors.

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JD.com (9618 HK)

[Blue Lotus Sector Update]: 2024 High Conviction Idea: Two Scenarios Towards Year End

China growth equity faces geopolitical uncertainty in C3Q24 due to the US election, but a relief rally is expected in C1Q24. Blue Lotus prepared...

Blue Lotus Research Institute

[Blue Lotus Multi-Platform Sector Update]: Key JD Categories Will Grow Again in 2024

JD reported strong revenue and profit, with subsidiary JDL performing well. Growth in GMV is expected to remain steady, but may pick up in 2024....

Blue Lotus Research Institute

JD.Com: Losing Its Appeal?

JD.com remains a very well owned stock among institutional investors, at a time when performance is anything but stellar so far this year.

Steven Holden

[Blue Lotus E-Commerce Sector Update]: Tax Reform a Light at the End of the Tunnel for Ecommerce

June sales pulled into May led to disappointing June NBS data. Online retail grew 5.1% yoy in May/June and 6.4% yoy in 2Q24. PDD led in GMV...

Blue Lotus Research Institute

JD.com Inc ADR: Collaboration With Gucci & Other Drivers

JD.com Inc. managed to surpass the revenue and earnings expectations of Wall Street. Service revenues grew, of which marketing and marketplace...

Baptista Research

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[Blue Lotus Sector Update]: 2024 High Conviction Idea: Two Scenarios Towards Year End

​China growth equity faces geopolitical uncertainty in C3Q24 due to the US election, but a relief rally is expected in C1Q24. Blue Lotus prepared...

Blue Lotus Research Institute

[Blue Lotus Multi-Platform Sector Update]: Key JD Categories Will Grow Again in 2024

​JD reported strong revenue and profit, with subsidiary JDL performing well. Growth in GMV is expected to remain steady, but may pick up in 2024....

Blue Lotus Research Institute

JD.Com: Losing Its Appeal?

JD.com remains a very well owned stock among institutional investors, at a time when performance is anything but stellar so far this year.

Steven Holden

[Blue Lotus E-Commerce Sector Update]: Tax Reform a Light at the End of the Tunnel for Ecommerce

​June sales pulled into May led to disappointing June NBS data. Online retail grew 5.1% yoy in May/June and 6.4% yoy in 2Q24. PDD led in GMV...

Blue Lotus Research Institute

JD.com Inc ADR: Collaboration With Gucci & Other Drivers

JD.com Inc. managed to surpass the revenue and earnings expectations of Wall Street. Service revenues grew, of which marketing and marketplace...

Baptista Research

China growth equity faces geopolitical uncertainty in C3Q24 due to the US election, but a relief rally is expected in C1Q24. Blue Lotus prepared...

JD reported strong revenue and profit, with subsidiary JDL performing well. Growth in GMV is expected to remain steady, but may pick up in 2024....

June sales pulled into May led to disappointing June NBS data. Online retail grew 5.1% yoy in May/June and 6.4% yoy in 2Q24. PDD led in GMV...