Forensic Analyst

Jason Yap, CFA

Forensic Accounting

In Q1 2021, <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> reported strong topline growth (+39% yoy) that exceeded consensus expectations mainly due to strong user growth (+29% yoy), with more than 500 million reported Annual Active Users (AAU).  Out of which, 80% new active users came from lower tier cities, which reflects JD's strategy shift to target the fast growing lower tier markets (下沉市场) through its newly formed Jingxi business group. 
As JD continues its transition from the largest retail company in China (by revenue) to a supply chain-based technology and service provider, we can likely expect a moderated revenue growth for its core JD Retail business and incremental investments in New Initiatives and its logistics and fulfillment capabilities, with a key focus on Jingxi.
In Q1 2021, JD announced that Jingxi related businesses, will be carved out from JD Retail and reported under the New Businesses segment.  Having grown to a certain size, the change in reporting segment is not a jingxi or surprise. Instead, JD has been telegraphing the growing role of Jingxi and, more broadly, the moderating pace of growth of its core businesses in mature markets during recent quarter-end earnings calls and in related disclosures.   
This article discusses how to analyse earnings calls and disclosures using a forensic approach, with a view to gain relevant insights on JD's future prospects.

In Q1 2021, JD.com Inc (ADR) (JD US) reported strong topline growth (+39% yoy) that exceeded consensus expectations mainly due to strong user growth (+29% yoy), with more than 500 million reported Annual Active Users (AAU).  Out of which, 80% new active users came from lower tier cities, which reflects JD's strategy shift to target the fast growing lower tier markets (下沉市场) through its newly formed Jingxi business group. 
As JD continues its transition from the largest retail company in China (by revenue) to a supply chain-based technology and service provider, we can likely expect a moderated revenue growth for its core JD Retail business and incremental investments in New Initiatives and its logistics and fulfillment capabilities, with a key focus on Jingxi.
In Q1 2021, JD announced that Jingxi related businesses, will be carved out from JD Retail and reported under the New Businesses segment.  Having grown to a certain size, the change in reporting segment is not a jingxi or surprise. Instead, JD has been telegraphing the growing role of Jingxi and, more broadly, the moderating pace of growth of its core businesses in mature markets during recent quarter-end earnings calls and in related disclosures.   
This article discusses how to analyse earnings calls and disclosures using a forensic approach, with a view to gain relevant insights on JD's future prospects. 

JD - Analysing Earnings Calls and Disclosures Using a Forensic Approach

Kuaishou Technology / Forensic Accounting

<a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> is a video creation and streaming mobile application that has a huge userbase in Mainland China.  For the 3 months ended 31 March 2021, its Monthly Active Users (MAU), Daily Active Users (DAU) and Average Daily Time Spent per User totalled 520 million, 295 million and 99.3 minutes respectively, mainly derived from Mainland China. 
While its valuation has retreated to more reasonable levels in recent months, there are still considerable uncertainties about its revenue and profitability prospects, particularly in the wake of tightening regulations in Mainland China and execution difficulties in overseas expansion.
Further, Kuaishou's catchup story to Bytedance is not playing out as expected due to user growth underperformance and average user time spent peaking in Q1 2021.  We discuss some of the underlying issues in the following sections and highlight key factors to watch in its upcoming Q2 2021 results release (expected on 23 August 2021).

Kuaishou Technology (1024 HK) is a video creation and streaming mobile application that has a huge userbase in Mainland China.  For the 3 months ended 31 March 2021, its Monthly Active Users (MAU), Daily Active Users (DAU) and Average Daily Time Spent per User totalled 520 million, 295 million and 99.3 minutes respectively, mainly derived from Mainland China. 
While its valuation has retreated to more reasonable levels in recent months, there are still considerable uncertainties about its revenue and profitability prospects, particularly in the wake of tightening regulations in Mainland China and execution difficulties in overseas expansion.
Further, Kuaishou's catchup story to Bytedance is not playing out as expected due to user growth underperformance and average user time spent peaking in Q1 2021.  We discuss some of the underlying issues in the following sections and highlight key factors to watch in its upcoming Q2 2021 results release (expected on 23 August 2021). 

Kuaishou - Q2 2021 Preview Through a Forensic Lens

In the wake of Alibaba’s below consensus earnings, PDD’s upcoming Q2 2021 results would be informative for investors to ascertain whether there is a sector wide slowdown or PDD benefits as Alibaba relinquishes market share in response to anti-monopoly pressures.
While PDD reported a respectable Q1 2021 performance, there are early signs of a financial and operational performance slowdown if we examine the sequential quarter on quarter financial and operating metrics and operating cashflows, and Q2 2021 results can confirm (or debunk) these preliminarily observed trends.  Further, Q2 2021 results will provide insight as to whether PDD’s asset-heavy strategy for Duo Duo Grocery (DDG) and logistics and fulfilment infrastructure yields any tangible results or instead, becomes a longer term drag on earnings.
We examine these issues and highlight key factors to watch in PDD's upcoming Q2 2021 results.

In the wake of Alibaba’s below consensus earnings, PDD’s upcoming Q2 2021 results would be informative for investors to ascertain whether there is a sector wide slowdown or PDD benefits as Alibaba relinquishes market share in response to anti-monopoly pressures.
While PDD reported a respectable Q1 2021 performance, there are early signs of a financial and operational performance slowdown if we examine the sequential quarter on quarter financial and operating metrics and operating cashflows, and Q2 2021 results can confirm (or debunk) these preliminarily observed trends.  Further, Q2 2021 results will provide insight as to whether PDD’s asset-heavy strategy for Duo Duo Grocery (DDG) and logistics and fulfilment infrastructure yields any tangible results or instead, becomes a longer term drag on earnings.
We examine these issues and highlight key factors to watch in PDD's upcoming Q2 2021 results.  

Pinduoduo - Q2 2021 Preview Through a Forensic Lens

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Competitor Sees 73% Upside:  A bulge bracket competitor recently published a table pounding note on the shares of Tencent Holdings (700.HK) [Tencent], which states that the shares are undervalued to the tune of 73%; and  *We Beg To Differ: Mainland China's crackdown on capital markets has rapidly expanded under the broad narrative of "financial stability". We have witnessed fines at Tencent, new user WeChat suspensions. Tencent may have to give up its exclusive music rights and possibly dispose of Kuwo and Kugou, and likely form of a financial holding company. The big table pounding report and a massive need for equity; this has all of the markings of the usual near-term gigantic capital raise.

*Competitor Sees 73% Upside:  A bulge bracket competitor recently published a table pounding note on the shares of Tencent Holdings (700.HK) [Tencent], which states that the shares are undervalued to the tune of 73%; and  *We Beg To Differ: Mainland China's crackdown on capital markets has rapidly expanded under the broad narrative of "financial stability". We have witnessed fines at Tencent, new user WeChat suspensions. Tencent may have to give up its exclusive music rights and possibly dispose of Kuwo and Kugou, and likely form of a financial holding company. The big table pounding report and a massive need for equity; this has all of the markings of the usual near-term gigantic capital raise.      

APAC IPOs & Placements

Zhen Zhou, Toh

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Bukalapak.com PT Tbk / Equity Capital Markets

<div>
<a href="https://www.smartkarma.com/entities/bukalapak" target="_blank" data-smartkarma-citation="entities:33575:1" rel="noopener">Bukalapak (BUKA IJ)</a> raised US$1.5bn at IDR850 per share, the top end of its IPO price range.
</div>
<div>
Bukalapak (BUKA) is an Indonesian e-commerce company. The company operates an online consumer-to-consumer (C2C) marketplace that connects buyers and sellers. The company also operates Mitra Bukalapak (Mitra) which provides online-to-offline (O2O) services to micro, small and medium enterprises (MSMEs).
We covered the IPO earlier in:
<ul>
<li>
<a href="https://www.smartkarma.com/insights/bukalapak-ipo-structural-tailwinds-with-a-noble-cause" target="_blank" data-smartkarma-citation="insights:54284" rel="noopener">Bukalapak IPO - Structural Tailwinds with a Noble Cause</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/bukalapak-ipo-peers-valuation-betting-on-its-potential" target="_blank" data-smartkarma-citation="insights:54369" rel="noopener">Bukalapak IPO - Peers &amp; Valuation - Betting on Its Potential</a> </li>
</ul>
</div>


Bukalapak (BUKA IJ) raised US$1.5bn at IDR850 per share, the top end of its IPO price range.


Bukalapak (BUKA) is an Indonesian e-commerce company. The company operates an online consumer-to-consumer (C2C) marketplace that connects buyers and sellers. The company also operates Mitra Bukalapak (Mitra) which provides online-to-offline (O2O) services to micro, small and medium enterprises (MSMEs).
We covered the IPO earlier in:


Bukalapak IPO - Structural Tailwinds with a Noble Cause 

Bukalapak IPO - Peers &amp; Valuation - Betting on Its Potential 



Bukalapak IPO Trading - Largest Indo IPO, Big Pop Could Get It into FTSE

China

PDD Holdings Inc. is a multinational commerce group that owns and operates a portfolio of businesses. The Company focuses on digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities. PDD Holdings has built a network of sourcing, logistics, and fulfillment capabilities for its underlying businesses.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

PDD Holdings (PDD US)

JD - Analysing Earnings Calls and Disclosures Using a Forensic Approach

JD has at times revised disclosures possibly to conceal growth or margin weakness. We discuss how to analyse earnings calls and disclosures using a...

Jason Yap, CFA

Kuaishou - Q2 2021 Preview Through a Forensic Lens

Kuaishou's revenue and profitability prospects remain uncertain, particularly in the wake of stricter regulations and overseas expansion hurdles....

Jason Yap, CFA

Pinduoduo - Q2 2021 Preview Through a Forensic Lens

PDD’s upcoming Q2 2021 results could help investors better understand e-commerce sector and company trends, such as GMV and revenue growth. We...

Jason Yap, CFA

Tencent Holdings - Bulge Bracket Bull

TENCENT HOLDINGS: A competitor recently suggested the shares of Tencent have 73% upside. We beg to differ, further pain in these shares is expected...

Thomas J. Monaco

Bukalapak IPO Trading - Largest Indo IPO, Big Pop Could Get It into FTSE

Bukalapak (BUKA IJ) raised US$1.5bn at IDR850 per share, the top end of its IPO price range. Bukalapak (BUKA) is an Indonesian e-commerce company.

Zhen Zhou, Toh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)