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

<ul>
<li>A recent report shows apparent gains by Temu against US "dollar" store chains</li>
<li>In this insight we introduce the "dollar" store concept and share our experiences</li>
<li>We conclude that Temu &amp; SHEIN don't likely view some categories as priorities</li>
</ul>


A recent report shows apparent gains by Temu against US "dollar" store chains
In this insight we introduce the "dollar" store concept and share our experiences
We conclude that Temu &amp; SHEIN don't likely view some categories as priorities


Temu Versus Dollar Tree: More Online & Offline Adventures in Pursuit of Ultra-Cheap Stuff

Equity Bottom-Up

Cainiao Smart Logistics Network / Equity Bottom-Up

<ul>
<li>For certain companies now seeking IPOs, X-border volumes may serve as demand proxy</li>
<li>In 2023, Chinese X-border volume growth has accelerated, up +55% Y/Y through September</li>
<li>In developing X-border express market, lower ASPs are actually a good thing, in our view</li>
</ul>


For certain companies now seeking IPOs, X-border volumes may serve as demand proxy
In 2023, Chinese X-border volume growth has accelerated, up +55% Y/Y through September
In developing X-border express market, lower ASPs are actually a good thing, in our view


Introducing Monthly Tracking of Chinese X-Border Express Parcel Data | YTD Volume up +55%, ASPs -25%

China/Asia TMT

Shawn Yang

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

<ul>
<li>We expect Shopee's competitive landscape deteriorated in 2Q23, due to increased pressure from TikTok/Lazada in ASEAN, Coupang in Taiwan, and Shein in Brazil. Temu is a large swing factor.</li>
<li>Shopee has been pushing live streaming and its full-management (or consignment) mode. In our view, these will drag down its profit margins and may not be effective in gaining share.</li>
<li>We estimate 2Q23 revenue and non-GAAP net income are 2.5% and (24%) vs cons. We have revised down Shopee's growth expectations for the next 3 years.</li>
</ul>


We expect Shopee's competitive landscape deteriorated in 2Q23, due to increased pressure from TikTok/Lazada in ASEAN, Coupang in Taiwan, and Shein in Brazil. Temu is a large swing factor.
Shopee has been pushing live streaming and its full-management (or consignment) mode. In our view, these will drag down its profit margins and may not be effective in gaining share.
We estimate 2Q23 revenue and non-GAAP net income are 2.5% and (24%) vs cons. We have revised down Shopee's growth expectations for the next 3 years.


[Sea (SE US, SELL, TP US$51) TP Change]: Competitive Landscape Intensifying… Cut TP to $51

Thematic (Sector/Industry)

<ul>
<li>Update on the US postage fraud case we reported on earlier: it's far more expansive than previously reported, and last week the judge ordered that the trial begin in August</li>
<li>A new report from the US Congress attacks Temu, SHEIN on two fronts: Xinjiang-made goods and <em>de minimus</em> imports; tighter enforcement or new legislation could soon follow</li>
<li>It's unclear how the postage fraud case and growing Congressional concerns will play out; worst-case, both could dramatically undermine the direct-to-US consumer business model</li>
</ul>


Update on the US postage fraud case we reported on earlier: it's far more expansive than previously reported, and last week the judge ordered that the trial begin in August
A new report from the US Congress attacks Temu, SHEIN on two fronts: Xinjiang-made goods and de minimus imports; tighter enforcement or new legislation could soon follow
It's unclear how the postage fraud case and growing Congressional concerns will play out; worst-case, both could dramatically undermine the direct-to-US consumer business model


New Developments in Postage Fraud Case and US Congress Could Create Big Obstacles for Temu, SHEIN

<ul>
<li>The scale of fraud in a new US federal criminal complaint – US$60M of fake postage – mirrors the recent dramatic growth of Chinese e-commerce platforms that target US consumers</li>
<li>The case also highlights the importance of securing cheap last-mile US distribution for the Chinese e-commerce platforms selling inexpensive goods directly to US consumers</li>
<li>It’s unclear which of the Chinese platforms benefited from the scheme, but the incident should refocus investors’ attention on logistics as a critical piece of their business models </li>
</ul>


The scale of fraud in a new US federal criminal complaint – US$60M of fake postage – mirrors the recent dramatic growth of Chinese e-commerce platforms that target US consumers
The case also highlights the importance of securing cheap last-mile US distribution for the Chinese e-commerce platforms selling inexpensive goods directly to US consumers
It’s unclear which of the Chinese platforms benefited from the scheme, but the incident should refocus investors’ attention on logistics as a critical piece of their business models 


The Curious Case of $60M of Bogus US Postage or 'How Can They Can Make Money Exporting $5 Shirts?!'

Hong Kong

Zoetop Business Co., Limited, doing business as SHEIN, operates as a fashion e-commerce platform. The Company focuses on women's wear, men's apparel, children's clothes, accessories, shoes, bags, and other fashion items. SHEIN serves clients worldwide.

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SHEIN (1895674D HK)

Temu Versus Dollar Tree: More Online & Offline Adventures in Pursuit of Ultra-Cheap Stuff

In this insight, we introduce readers to the US "dollar" store concept, then compare our experiences shopping for cheap stuff at Dollar Tree and...

Tracking Traffic

Introducing Monthly Tracking of Chinese X-Border Express Parcel Data | YTD Volume up +55%, ASPs -25%

Chinese X-border express parcel volume growth has accelerated dramatically in 2023, and unit pricing has fallen sharply. In this note we dissect...

Tracking Traffic

[Sea (SE US, SELL, TP US$51) TP Change]: Competitive Landscape Intensifying… Cut TP to $51

We expect Shopee's competitive landscape further deteriorated in 2Q23, due to increased pressure from TikTok and Lazada in ASEAN, Coupang in...

Blue Lotus Research Institute

New Developments in Postage Fraud Case and US Congress Could Create Big Obstacles for Temu, SHEIN

We offer an update on a fascinating criminal case set to go to trial next month, plus we outline big risks posed by criticisms of Temu and SHEIN by...

Tracking Traffic

The Curious Case of $60M of Bogus US Postage or 'How Can They Can Make Money Exporting $5 Shirts?!'

Thie story of fake US postage being used to distribute Chinese goods to US consumers isn't just a fascinating story -- it could potentially have...

Tracking Traffic

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