Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Capital Markets

<p>We hope <a href="https://www.smartkarma.com/entities/dida-inc" target="_blank" data-smartkarma-citation="entities:29701:1" rel="noopener">Dida (DIDA HK)</a> will publish another set of updated financial statements (from Q3 2020) before it lists in Hong Kong later this year. If and when those results are published, investors should study them carefully to detect signs of a resurgent <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (1284375D CH)</a> , the ride-hailing giant that exited the car pool market in late 2018 but quietly re-entered about a year ago.</p>
<p>The two most telling signs of a DiDi ChuXing resurgence in the car pool segment would be: </p>
<ol>
<li>Dida Inc's car pool revenue growing <em>slower</em> than its car pool ride volume or GTV</li>
<li>A sharp rise in Sales &amp; Marketing expenses relative to DiDa Inc's overall revenue</li>
</ol>
<p>Both of the above metrics would be reflected in DiDa Inc's car pool 'take rate': the <em>net</em> revenue it earns on booking car pool rides <em>after</em> deducting any incentives paid to drivers, payments that have likely diminished dramatically in the two years since Didi ChuXing exited the market. </p>
<p>We suspect that in the absence of a large, savvy competitor (like DiDi ChuXing), DiDa Inc's 'take rate' is <em>higher</em> and its spending on Sales &amp; Marketing is <em>lower</em> than it would be otherwise. Signs that DiDi ChuXing is aggressively pushing its way back into this market -- which it used to dominate, and not so long ago -- would be negative for DiDa Inc, in our view.</p>
<p>In fact, the 'free ride' DiDa Inc has enjoyed as the dominant (and quite profitable) player in the growing car pool segment could come to an end. </p>

We hope Dida (DIDA HK) will publish another set of updated financial statements (from Q3 2020) before it lists in Hong Kong later this year. If and when those results are published, investors should study them carefully to detect signs of a resurgent DiDi Chuxing (1284375D CH) , the ride-hailing giant that exited the car pool market in late 2018 but quietly re-entered about a year ago.
The two most telling signs of a DiDi ChuXing resurgence in the car pool segment would be: 

Dida Inc's car pool revenue growing slower than its car pool ride volume or GTV
A sharp rise in Sales &amp; Marketing expenses relative to DiDa Inc's overall revenue

Both of the above metrics would be reflected in DiDa Inc's car pool 'take rate': the net revenue it earns on booking car pool rides after deducting any incentives paid to drivers, payments that have likely diminished dramatically in the two years since Didi ChuXing exited the market. 
We suspect that in the absence of a large, savvy competitor (like DiDi ChuXing), DiDa Inc's 'take rate' is higher and its spending on Sales &amp; Marketing is lower than it would be otherwise. Signs that DiDi ChuXing is aggressively pushing its way back into this market -- which it used to dominate, and not so long ago -- would be negative for DiDa Inc, in our view.
In fact, the 'free ride' DiDa Inc has enjoyed as the dominant (and quite profitable) player in the growing car pool segment could come to an end. 

No More 'Free Ride'? Key DiDa Inc Metrics That Could Reveal a DiDi ChuXing Resurgence

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>We continue to be encouraged by market dynamics that are supportive of an ongoing equity bull market. Additionally, there continues to be an absence of breakdowns on the major global indexes (MSCI ACWI, ACWI ex-US, EM, &amp; EAFE). As a result, our outlook remains bullish.  In this report we show some love to various Sectors that have not been big attention-grabbers for us in recent months, but still have plenty of attractive stocks. The stocks highlighted hail from a variety of countries. Sectors covered include <strong>Services, Communications, Staples, Financials, and Utilities</strong>.</p>

We continue to be encouraged by market dynamics that are supportive of an ongoing equity bull market. Additionally, there continues to be an absence of breakdowns on the major global indexes (MSCI ACWI, ACWI ex-US, EM, &amp; EAFE). As a result, our outlook remains bullish.  In this report we show some love to various Sectors that have not been big attention-grabbers for us in recent months, but still have plenty of attractive stocks. The stocks highlighted hail from a variety of countries. Sectors covered include Services, Communications, Staples, Financials, and Utilities.

Global Equity Strategy: Market Dynamics Remain Positive, And So Are We

Equity Bottom-Up

<p>Maintaining strong revenue growth at the online food delivery companies largely depends on some combination of rising orders, increasing value per order, and higher monetization ('take') rates. </p>
<p>And improvement in gross profitability at these companies depends on getting unit delivery revenues to grow faster than unit delivery costs. </p>
<p>In our view, many of the drivers of recent strong revenue growth <em>and</em> improving gross profitability are beginning to fade for some online food delivery companies, including China's Meituan. </p>
<p>This decline can be obscured by a number of temporary factors. At <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> in 2020 these include a change in segment reporting, a sharp rise in 'other' operating income, and growth of  the company's food delivery advertising revenue. </p>
<p>In this note we take a closer look at H1 2020 food delivery results from Meituan, <a href="https://www.smartkarma.com/entities/delivery-hero-se" target="_blank" data-smartkarma-citation="entities:24416:1" rel="noopener">Delivery Hero SE (DHER GY)</a> and newly merged <a href="https://www.smartkarma.com/entities/takeaway-com-nv" target="_blank" data-smartkarma-citation="entities:28360:1" rel="noopener">Takeaway.com NV (TKWY NA)</a> to see how each company is faring in terms of top-line growth and gross profitability. The numbers are mixed, but in Meituan's case show a waning of momentum and stagnant margins in core food delivery activity.</p>

Maintaining strong revenue growth at the online food delivery companies largely depends on some combination of rising orders, increasing value per order, and higher monetization ('take') rates. 
And improvement in gross profitability at these companies depends on getting unit delivery revenues to grow faster than unit delivery costs. 
In our view, many of the drivers of recent strong revenue growth and improving gross profitability are beginning to fade for some online food delivery companies, including China's Meituan. 
This decline can be obscured by a number of temporary factors. At Meituan (3690 HK) in 2020 these include a change in segment reporting, a sharp rise in 'other' operating income, and growth of  the company's food delivery advertising revenue. 
In this note we take a closer look at H1 2020 food delivery results from Meituan, Delivery Hero SE (DHER GY) and newly merged Takeaway.com NV (TKWY NA) to see how each company is faring in terms of top-line growth and gross profitability. The numbers are mixed, but in Meituan's case show a waning of momentum and stagnant margins in core food delivery activity.

Meituan: Key Drivers of Top-Line Growth &  Margin Lift Receding, Obscured By Growth of 'Other' Items

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>This week in StubWorld ...</p>
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<p><a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a>'s discount to NAV has narrowed since its low in late March; yet <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> is around its widest NAV discount subsequent to the Prosus spin-off in September last year.  Naspers' look-thru discount into Tencent is currently 54%, vs. 34% at the time of the spin-off. </p>
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<p>Preceding my comments on Naspers/Prosus/Tencent <em>and </em><a href="https://www.smartkarma.com/entities/hang-lung-group-ltd" target="_blank" data-smartkarma-citation="entities:50:1" rel="noopener">Hang Lung (10 HK)</a> / <a href="https://www.smartkarma.com/entities/hang-lung-properties-ltd" target="_blank" data-smartkarma-citation="entities:49:1" rel="noopener">Hang Lung Properties (101 HK)</a>, are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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<p>As always, more below the fold.</p>
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This week in StubWorld ...

Prosus (PRX NA)'s discount to NAV has narrowed since its low in late March; yet Naspers (NPN SJ) is around its widest NAV discount subsequent to the Prosus spin-off in September last year.  Naspers' look-thru discount into Tencent is currently 54%, vs. 34% at the time of the spin-off. 





Preceding my comments on Naspers/Prosus/Tencent and Hang Lung (10 HK) / Hang Lung Properties (101 HK), are the weekly setup/unwind tables for Asia-Pacific Holdcos.

These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.





As always, more below the fold.


StubWorld: Naspers Is Cheap To Prosus & Look-Thru

European Event-Driven Analyst

Patryk Basiewicz

PGB Research

<p>The way Prosus let Just Eat go during the bidding war seemed like a strategic retreat. This move led to speculation that Prosus was pulling back so it could make a bolder move for the combined Just Eat Takeaway (JET LN) at a later stage. Fall in the share price of the combined group would have been a good opportunity to acquire JET. The COVID-19 crisis put paid those plans. During the lockdown, British people ate a lot of delivered food. Just Eat business flourished. </p>
<p>Now with a bid on <a href="https://www.smartkarma.com/entities/grubhub-inc" target="_blank" data-smartkarma-citation="entities:5881:1" rel="noopener">Grubhub Inc (GRUB US)</a> on the tape, if Prosus wants JET it has to make its move very soon. Below I analyse the financial ability of Prosus to bid on JET.</p>

The way Prosus let Just Eat go during the bidding war seemed like a strategic retreat. This move led to speculation that Prosus was pulling back so it could make a bolder move for the combined Just Eat Takeaway (JET LN) at a later stage. Fall in the share price of the combined group would have been a good opportunity to acquire JET. The COVID-19 crisis put paid those plans. During the lockdown, British people ate a lot of delivered food. Just Eat business flourished. 
Now with a bid on Grubhub Inc (GRUB US) on the tape, if Prosus wants JET it has to make its move very soon. Below I analyse the financial ability of Prosus to bid on JET.

Just Eat Takeaway / GrubHub (JET LN / GRUB US): Will Prosus (PRX NA) Spoil the Dinner Party?

United Kingdom

Just Eat Takeaway.com N.V. is an online food ordering company. The Company offers mobile application for ordering and delivering of food and beverages. Just Eat Takeaway.com serves customers worldwide.

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Just Eat Takeaway.com NV (TKWY NA)

No More 'Free Ride'? Key DiDa Inc Metrics That Could Reveal a DiDi ChuXing Resurgence

DiDa Inc has carved out a niche for itself in China's growing car pool segment. But should ride-hailing giant DiDi ChuXing re-emerge as a player,...

Tracking Traffic

Global Equity Strategy: Market Dynamics Remain Positive, And So Are We

We show some love to various Sectors that have not been big attention-grabbers for us in recent months, including Services, Communications,...

Vermilion Research

Meituan: Key Drivers of Top-Line Growth & Margin Lift Receding, Obscured By Growth of 'Other' Items

New name Rider costs - $3690 Advertising Summary

Tracking Traffic

StubWorld: Naspers Is Cheap To Prosus & Look-Thru

This week in StubWorld ... Prosus (PRX NA)'s discount to NAV has narrowed since its low in late March; yet Naspers (NPN SJ) is around its widest...

David Blennerhassett

Just Eat Takeaway / GrubHub (JET LN / GRUB US): Will Prosus (PRX NA) Spoil the Dinner Party?

The way Prosus let Just Eat go during the bidding war seemed like a strategic retreat. This move led to speculation that Prosus was pulling back so...

Patryk Basiewicz

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