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<Research>JPM: Newest Investment Strategy at PDD Expected to Have Few Impacts on BABA's Short-term GMV & Monetisation
Recommend 33 Positive 48 Negative 13 |
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JPMorgan issued a report, stating that its research team recently spoke with experts in China's e-commerce industry to discuss the latest investment strategy of PDD (PDD.US) and its potential impact on BABA-W (09988.HK). After research, it is believed that the impact on BABA's short-term GMV and monetisation progress will not be significant. JPM explained that PDD's new investment direction mainly focuses on the merchant ecosystem. Considering that the main reason for the current retail market slump in China is the lack of demand, it is believed that PDD's new measures to provide more profitability support to high-quality merchants will not be able to directly stimulate consumption growth. It is believed that PDD's main objective is to improve its platform ecosystem for long-term sustainable growth rather than to expand its market share. The broker currently estimated Tmall and Taobao's realisation rates to be 6% and 2% respectively, compared with more than 5% for PDD. In contrast, even if Taobao charges merchants more commissions and advertising fees, which would raise the realisation rate from 2% to 3%, it would still be the lowest-cost sales channel for merchants. JPMorgan maintained its Overweight rating on BABA, with an H-share target price of $106. AAStocks Financial News |
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