中国电子商务：关于生态系统拼多与京东研究

1、COREChina E-CommerceAll About The Ecosystem; Initiating on PDD (OW) and JD (EW)InitiatingCoverageonPDD(OW)andJD(EW):ThestructureofChinaseCommarketINITIATING COVERAGEU.S. Internet POSITIVE UnchangedEquityResearch19 August2019continuestoevolveandisenteringanewthree-kingdomphaseasAlibabarollsout itsNew

2、Retailstrategy,JDrebootsteam-buytostimulateusergrowth,andPDDfights itswayoutofintensiveencirclement,aimingtobecomeamainstreammarketplace.We attributetheindustrydynamicstothesignificantmarketopportunity(backedbyalarge populationandrisingdisposableincomes)andthecomplexconsumptiondemandsof consumersinC

3、hina.WithChinaeCompenetrationat24%(vs.19%intheUS), competitionhasbecomelessaboutuser-traffic,withthefocusnowturningtothe evolutionofecosystems,withvalueaddedserviceslikepayment,logistics,media content,marketingsolutions,andofflineretailintegration.Basedonthis,Alibabaisstill ourpreferrednameinthespac

4、e,givenitstopmarketposition,attractivevaluationand monetizationperspective.JDsrevenuegrowthandmarginexpansionhasclearly rebound,butwethinkthisislargelyfactoredinitscurrentvaluation. WepreferPDDto JD,inadditiontoPDDsbetteruseofsocialnetworkresources,weviewalarger monetizationpotentialduringitsmovetow

5、ardhigh-endmarkets.PDDFromtheE-CommerceFrontierToAMainstreamStory:Breakingthroughthe duopoly (Alibaba + JD) market situation with its unique team-buy social-eCom marketplacemodel,PDDhasaccumulatedasizeableuserbase(443mnannualbuyers) viaTencentsnetworkinthelow-endmarket.Afteritsinitial-stagesuccess,P

6、DDis strivingtobecomeamainstreameComplatform,andwethinkitseffortsinbrand imagingimprovement,SKUexpansionintobrandedproductsandmovinguptolarge- ticketitemshavebeenwellreceivedbyconsumers.WhiletheStreetisconcernedabout PDDsprofitabilityinintensivemarketing,weregardthisinvestmentasnecessaryatthe curren

7、tstage.Inthelongrun,weexpectupsideinitsARPUandtakerateduringits expansionintothehigh-endmarket,alongwithanimprovingmarginprofile.Weexpect PDDtobecomeprofitableinCY20.Our$32PTisbasedon26xCY21EEPS.JDSolidTurnaroundStory,ButLargelyPricedIn:JDsacceleratedrevenuegrowth and the margin expansion outlook of

8、 late are very impressive. Meanwhile, new initiatives,suchaslogisticsandtechservices,provideanotheravenueforgrowth.After experiencingusergrowthdecelerationin2H18,JDisstartingtoembracetheteam-buy modelandprioritizeitonWeixinslevel-1entrytoacquirelong-tailusers,whichshould benefitadsandcommissionreven

9、uegrowthonitsmarketplace.However,wethinkthe abovepositiveshavebeenfairlyreflectedintheconsensusandstockpriceduringthe re-ratingpost2Qearnings.Inaddition,whileJDfocusesontheretailmarket,itmay misssomesignificantopportunitiessuchasinCloudandpayment.WeinitiateJDat EqualWeightwithaPTof$36(28xCY20EEPS).F

10、orafulllistofourratings,pricetargetand earningschangesinthisreport,pleasesee tableonpage2. U.S. Internet Gregory Zhao+1 212 526 2268 HYPERLINK mailto:gregory.x.zhao gregory.x.zhao BCI, USRoss Sandler+1 415 263 4470 HYPERLINK mailto:ross.sandler ross.sandler BCI, USJane Han+1 212 526 9317 HYPERLINK m

11、ailto:yi.han yi.han BCI, USal n rteal n rten I-d e tc itr sReofandtodoAsabethathaveathattheofasaPLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 55.Summary of our Ratings, Price Targets and Earnings Changes in this Report (all changes are shown in bold)CompanyRatingOld

12、NewPrice16-Aug-19OldPrice TargetNew%ChgOldEPS FY1 (E)New%ChgOldEPS FY2 (E)New%ChgU.S. InternetPosPos HYPERLINK /BC/composite/GER_COMPANY?ticker=JD JD.com, Inc. (JD)N/A31.29N/A36.00-N/A6.51-N/A 9.13- HYPERLINK /BC/composite/GER_COMPANY?ticker=PDD Pinduoduo Inc. (PDD)N/A25.01N/A32.00-N/A-4.25-N/A 2.79

13、-Source:BarclaysResearch.SharepricesandtargetpricesareshownintheprimarylistingcurrencyandEPSestimatesareshowninthereportingcurrency. FY1(E):CurrentfiscalyearestimatesbyBarclaysResearch.FY2(E):NextfiscalyearestimatesbyBarclaysResearch.StockRating:OW:Overweight;EW:EqualWeight;UW:Underweight;RS:RatingS

14、uspended IndustryView:Pos:Positive;Neu:Neutral;Neg:NegativeU.S. InternetValuation Methodology and RisksU.S. InternetJD.com, Inc. (JD)JD.com, Inc. (JD)ValuationMethodology:WevalueJDbasedonaP/Emethodology,asthecompanyalreadydeliversstableprofitsandweexpectconsistent postivemarginprofileinthenextcouple

15、ofyears.Ourtargetpriceof$36isderivedfrom28x2020EP/Emultipleon$1.27EPADS(CNY9.13at7.20US$:CNYrate).ThetargetedP/EmultipleweassignedtoJDisaboveChinaeComsectorsaverage2020EP/Emultipleof22x,mainly becauseofitsfasterprofitgrowth,drivenbysteadytoplinegrowthandmarginexpansionoutlook.WemodelJDsEPADStogrowth

16、c.46%y/yin 2021,whichimplies0.6xPEG,generallyinlinewiththeindustryaverage.Weappreciatethecompanysrevenuerecoveryandmarginrebound story,wethinkthestockscurrentpricehasfairlyreflectedthestocksvalue.Asaresult,wegiveJDanEWratingwithapricetargetof$36.Pinduoduo Inc. (PDD)RiskswhichMayImpedetheAchievemento

17、ftheBarclaysResearchValuationandPriceTarget:Thekeyupsiderisksinclude:1)Fasterthan expectedrevenuegrowthonstrongconsumptiondemandinthedomesticmarketandtherapidramping-upofnewbusinessinitiatives,suchas techservicesandlogistics;2)Strongthanexpectedmarginexpansiononoperatingefficiencyimprovementandcontr

18、ibutionfromthehigher- marginadsservices.Thekeydownsiderisksinclude:1)ChinasmacroslowdowntoaffectoverallconsumptiondemandandimpactJDstop-line growth;2)Thepromotionofitsteam-buyservicesinlowtiercitiesmightspikeitsS&Mexpensegrowthandweighonmarginexpansion.Pinduoduo Inc. (PDD)ValuationMethodology:Wevalu

19、ePDDusingaP/Emethodology.Ourpricetargetof$32isbasedona26xP/Emultipleon2021EEPSof$1.21 (CNY8.73,with$US:CNY=7.2).WeexpectPDDsoperatingmargintoturnprofitablein2020,andtostartin2021todeliverarelativelystable marginprofile.CurrentlywemodelPDDsEPSgrowthtobe74%in2022E,implyingonlya0.4xPEGratio.Althoughthe

20、targetedP/Emultipleis higherthantheindustryaveragerange(16x-20 x)in2021E,wethinkPDDdeservesahighermultiplegivenitsstronggrowthoutlook.RiskswhichMayImpedetheAchievementoftheBarclaysResearchValuationandPriceTarget:KeydownsideriskstoourOWratinginclude:Fiercecompetition,asAlibabaandJDbothmoveintotheteam

21、-buymarket,weexpectmorehead-toheadcompetitioninthelessdeveloped market;and2)PDDsS&Mexpenseisstillataquitehighlevelaspercentageofrevenues.Thecompanyhasnotgivenacleartimelinefor profitability.Source: Barclays Research.CONTENTS HYPERLINK l _bookmark0 INVESTMENTSUMMARY4 HYPERLINK l _bookmark3 ChinaeCom:

22、SixKeyThemes HYPERLINK l _bookmark4 #1StrongDomesticConsumptionDemandFuellingGrowthMomentum HYPERLINK l _bookmark5 #2EcosystemBuild-UpBecomingMoreImportant HYPERLINK l _bookmark7 #3LowerTierCitiesBecomingTheNewStrategicFocus10 HYPERLINK l _bookmark8 #4OnlinePlayersContinueExpandingInOfflineRetail11

23、HYPERLINK l _bookmark9 #5FurtherIntegrationwithLogisticsServices13 HYPERLINK l _bookmark12 #6SoutheastAsiaMarketBecomingtheNewBattleground15 HYPERLINK l _bookmark14 PDD:THEEMERGINGFORCETOASCENDTOTHEMAINSTREAM18 HYPERLINK l _bookmark15 KeyTopicsfortheDebateonPinDuoDuo18 HYPERLINK l _bookmark16 #1HowP

24、DDRunstheBlockadeofAlibabaandJDtoShapeItsUserBase18 HYPERLINK l _bookmark20 UniqueTeam-BuyandSocialeComModelLeveragesTencentsNetworks19 HYPERLINK l _bookmark22 SpecialPromotionDuringDesignated“ShoppingFestivals”20 HYPERLINK l _bookmark24 SponsorshipofTVShowsHasHelpedtoRaiseBrandProfile21 HYPERLINK l

25、 _bookmark26 Unique“Gamification”ofOnlineShoppingtoIncreaseUserStickiness22 HYPERLINK l _bookmark28 #2UsersStillMainlyConcentratedinRelativelyLower-TierCities23 HYPERLINK l _bookmark35 #3ProductUpgradeistheMajorPathtoMoveUptoHigh-EndMarkets26 HYPERLINK l _bookmark36 #4MonetizationImprovementandS&MEx

26、pensePull-BacktoLiftMargins29 HYPERLINK l _bookmark43 Valuation33 HYPERLINK l _bookmark44 Financials34 HYPERLINK l _bookmark45 Appendix36 HYPERLINK l _bookmark46 JD.COM:SOLIDTURNAROUNDSTORYLARGELYFACTOREDIN37 HYPERLINK l _bookmark47 KeyTopicsforTheDebateonJD37 HYPERLINK l _bookmark48 #1AnotherUsergr

27、owthRevamp,WhatComesNext?37 HYPERLINK l _bookmark53 AimingtoIncubateitsOwneComInfluence39 HYPERLINK l _bookmark54 ThngstoMnto:KUnin;ARPUandMagnPsues 40 HYPERLINK l _bookmark55 #2HowSustainableIstheMarginExpansionTrend?40 HYPERLINK l _bookmark63 #3JDLogistics,fromaDifferentialFactortoaRevenueDriver43

28、 HYPERLINK l _bookmark64 #4HowtheNewInitiativesandInvestmentsCanHelpJDsGrowth45 HYPERLINK l _bookmark65 AdsIsBecominganimportantRevenueandProfitDriver45 HYPERLINK l _bookmark66 SupplyChainTechModernizingeCominChina45 HYPERLINK l _bookmark67 RetailasaServiceStrategytoEmpowerRetailServices46 HYPERLINK

29、 l _bookmark68 JDPlusMembershipToEnhanceUserStickiness47 HYPERLINK l _bookmark69 Valuation48 HYPERLINK l _bookmark70 JDFinancialStatements50INVESTMENT SUMMARYFIGURE1EComisourpreferredverticalindustryamongalltheInternetsectorsinChina.Ourpositive viewismainlyunderpinnedbythelargeTAMofChinasretailmarke

30、tandconsumers insatiabledemandfordigitalconvenience.Therelativelyfragmentedandlessdeveloped offlineretailmarketgivesonlineshoppingmoreopportunitiestotakeshareofwalletin China,leadingtoahighereCompenetrationrateof23.6%vs.19.0%intheUSin2018.We believethattheStreetisoverlyconcernedaboutmacroheadwindsan

31、dthetradewars impacttodomesticconsumption,asChinaonlinephysicalsalesreportedasolidgrowthof 22%y/yin1H19.At its current stage, eCom is no longer a play on user traffic acquisition, but an all- dimensionalecosystemcompetitionforpayment,logistics,media,andmarketingsolution services.Asaresult,ChinaseCom

32、marketisgraduallysplittingintotwolargecamps,ledby AlibabaandTencent,respectively.AsofJune19,Alibabaaccumulated674mnannualactive buyers(AAB),withover60%GMVmarketshare;whileTencentgroupsJDandPDDowned about321mnand443mnAAB,respectively( HYPERLINK l _bookmark1 Figure1and HYPERLINK l _bookmark2 Figure2).

33、Thetwomega-caps approacheComwithadifferentphilosophyAlibabapreferscontrollingviaconsolidation, whileTencentlikesholdinganequitystakeoflessthan20%,thetwogroupsareboth deeplyinvolvedininvestmentsintheaboveareas.Insucharelativelycrowdedandenormousmarket,westillseeplentyofopportunity.PDDs successisagood

34、exampleillustratingtheblueskyfrontierinlower-tiercities,whichalso allowsAlibabaandJDtofocusmoreontheteam-buybusinessmodel.Also,inChinathere arenolargesophisticatedofflineretailers(suchasWal-Mart,Costco,Target,heUS), whichgiveseComcompaniesopportunitytotakehighermarketsharecomparedtothe West.FIGURE 2

35、Annualactivebuyerscomparison:Alibaba,JDandPDDmnmn0JDSource: Company data, Barclays researchChina online shopping market shareCY2018Others, 13.4%VIPS, 1.5%PDD, 5.2%JD direct sales + party, 18.6%Source:NBS,companydata,BarclaysresearchestimatesTaobao,33.6%Tmall, 27.7%PDD(OW;PT$32):Establishedinlate2015

36、,PDDtook3yearstobecomeChinas#2online eCommarketplacewith443mnAAB.OurpositiveviewonPDDismainlysupportedby:1) itsintelligentwaytoutilizesocialnetworkstopromoteitsteam-buymodeltoestablishits sizeableuserbase,avoidingdirectcompetitionwithAlibabainitsearlystages.PDD successfully leverages shopping festiv

37、als (“6.18”, and “11.11”), activities (team-buy, coupon,etc.)andattractivegameplaystoenhanceuserengagement;2)PDDisworkingto moveuptothehigh-endmarket.ItsannualizedARPUdoubledy/ytoCNY1,200+. Meanwhile,itistryingtobringmorehigh-endbrandedproductsontoitsplatform;3)Webelievethecompanyscurrentlossmakingp

38、rofileismainlyduetoitslargeuseracquisition andmaintenancecostsduringtheexpansionstage.Inthelongrun,weexpectitsmargin profile to normalize on business scale and monetization improvement. Key things to monitorinclude:1)Fiercecompetition,asAlibabaandJDbothmoveintotheteam-buy market;and2)Increasingusera

39、cquisitioncosts,withoutadetailedtimelineonprofitability.JD(EW;PT$36):JDisChinaslargestonlineretailorwithc.19%marketsharein2018.After oneyearofintensiveinvestmentsinlogisticssetupinlow-tiercities,startingfrom1Q19we sawastrongrecoveryofrevenuegrowthandmarginexpansion.SomepositivesonJDare because:1) JD

40、spartnershipwithWeixinonteam-buyislikelytodriveusersaccelerated growthin2H19;2) Enteringamarginexpansiontrendontheharvestingofprior investmentsinlogisticsinlowertiercities,disciplinedspendinginmarketingandoperating leveragefromfulfilment.Specifically,itsthirdpartylogisticsservicesjustreachedbreakeve

41、n in2Q19;3)Ads,techservices,andlogisticsservicesquicklyrampsuptofuelrevenue growth.OurEWratingonJDismainlybecausewethinktheabovepositiveshavebeen largelyfactoredinitscurrentvaluation,andthestocktradesatrelativelyfairvalue.FIGURE 3MktcapP/E (Non-GAAP)EPS-CAGR (Non-GAAP)P/SSales-CAGR EV/EBITDAPEGCompa

42、nyTickerRatingTPLastMktcapP/E (Non-GAAP)EPS-CAGR (Non-GAAP)P/SSales-CAGR EV/EBITDAPEGCompanyTickerRatingTPLastUpside (US$ CY19E CY20E CY21E CY18-19CY19-20 CY20-21 CY19ECY20E CY19-20 CY19E CY20E 19-20E 20-21EBarclays China Internet CoverageAlibabaBABA USOW$225$174.629%$454,58425.4x20.4x16.0 x29%25%27

43、%6.3x4.9x29%18.9x14.8x1.0 x0.8xBaiduBIDU USEW$145$96.750%$33,84623.4x15.2x11.1x-59%54%37%2.2x1.9x14%14.6x9.3x0.4x0.4xCtripCTRP USOW$45$33.534%$18,55924.0 x20.2x15.7x0%19%29%3.6x3.0 x18%22.4x16.4x1.3x0.7xJD.comJD USEW$36$31.315%$45,49537.7x26.5x19.3xnm42%37%0.6x0.5x17%21.3x14.6x0.9x0.7xNetEaseNTES US

44、OW$320$258.524%$33,07522.1x20.0 x18.0 x16%11%11%3.0 x2.6x14%13.6x12.3x2.1x1.8xPinduoduoPDD USOW$32$25.028%$29,071nm56.3x22.6xnmnm149%7.2x4.3x65%nanana0.4xTencentTCEHY USOW$54$41.630%$402,52129.7x24.4x20.2x14%22%21%7.4x5.9x25%21.2x17.6x1.4x1.2xWeiboWB USOW$60$37.162%$8,34413.9x11.9x10.2x-2%17%17%4.5x

45、3.9x14%11.4x9.7x0.8x0.7xAverage25.2x24.4x16.7x0%27%41%4.3x3.4x25%17.6x13.5x1.1x0.8xSocialTencentTCEHY USOW$54$41.630%$402,52129.7x24.4x20.2x14%22%21%7.4x5.9x25%21.2x17.6x1.4x1.2xWeiboWB USOW$60$37.162%$8,34413.9x11.9x10.2x-2%17%17%4.5x3.9x14%11.4x9.7x0.8x0.7xMomoMOMO USNRNA$33.1NA$6,86112.8x10.9x9.5

46、x30%17%15%3.0 x2.5x16%10.3x7.6x0.8x0.7xAverage18.8x15.7x13.3x14%18%18%4.9x4.1x18%14.3x11.6x1.0 x0.9xGaming & EntertainmentNetEaseNTESUSOW$320$258.524%$33,07522.1x20.0 x18.0 x16%11%11%3.0 x2.6x14%13.6x12.3x2.1x1.8xBilibiliBILIUSNRNA$14.5NA$4,735nmnmnmnmnmnm5.1x3.5x45%21.2x61.0 xnanaChangyouCYOUUSNRNA

47、$6.0NA$3202.9x3.1x3.1x41%-5%-1%0.7x0.7x-3%0.8x0.7xnmnmCheetahCMCMUSNRNA$3.2NA$4603.4x15.6x7.1xna-78%119%0.7x0.7x4%nm-2.3xnm0.1xHuyaHUYAUSNRNA$24.3NA$5,29666.2x34.0 x22.7xnmnmnm4.7x3.5x36%84.5x30.4xnanaiQiyiIQUSNRNA$17.1NA$12,418nmnmnmnmnmnm2.9x2.3x24%9.9x6.5xnanaTencent Mu TME USNRNA$14.0NA$22,85936

48、.8x27.1x19.5xna36%39%6.3x4.8x33%31.8x21.8x1.0 x0.7xYYYYUSNRNA$54.6NA$4,41512.6x9.3x6.7x-42%36%39%1.3x1.0 x26%5.5x3.9x0.3x0.2xAverage24.0 x18.2x12.8x5%0%42%3.1x2.4x22%23.9x16.8x1.2x0.7xeCommerce & LocalserviceAlibabaBABAUSOW$225$174.629%$454,58425.4x20.4x16.0 x29%25%27%6.3x4.9x29%18.9x14.8x1.0 x0.8xC

49、tripCTRPUSOW$45$33.534%$18,55924.0 x20.2x15.7x0%19%29%3.6x3.0 x18%22.4x16.4x1.3x0.7xJD.comJDUSEW$36$31.315%$45,49537.7x26.5x19.3xnm42%37%0.6x0.5x17%21.3x14.6x0.9x0.7xMaoyan1896HKNRNAHKD 11.5NA$1,64616.4x10.5x8.1xnmnmnm0.3x0.3x18%nanananaMeituan Dia 3690 HKNRNAHKD 66.2NA$48,853nmnm33.9xnmnmnm3.8x2.8x

50、33%na-2.1xnanaPinduoduo PDD USOW$32$25.028%$29,071nm56.3x22.6xnmnm149%7.2x4.3x65%nanana0.4xTongcheng 780 HKNRNAHKD 12.3NA$3,31514.8x11.5x10.0 xnmnmnm3.0 x2.4x25%nanananaVipshopVIPSUSNRNA$7.9NA$5,26410.5x8.7x8.0 x71%21%9%0.4x0.4x6%6.2x5.1x0.5x1.0 xAverage21.5x22.0 x16.7x33%27%50%3.1x2.3x26%17.2x9.8x0

51、.9x0.7xAd & VerticalsAutohome ATHM USNRNA$80.9NA$9,55420.0 x17.0 x14.8x4%17%15%7.8x6.8x15%16.1x13.5x1.2x1.1xBaozunBZUNUSNRNA$46.8NA$2,70934.5x22.5x16.9x55%53%33%2.6x2.0 x31%26.2x16.8x0.6x0.7xBitautoBITAUSNRNA$11.6NA$8138.5x6.8x6.0 x2%24%14%0.5x0.5x10%23.1x18.5x0.3x0.5xQutoutiaoQTTUSNRNA$4.2NA$1,214n

52、mnm14.6xnmnmnm1.3x0.9x55%nmnmnanaSinaUSNRNA$37.7NA$2,61215.0 x12.7x9.6x-18%18%33%1.2x1.1x12%2.9x2.3x0.8x0.4xSogouSOGOUSNRNA$4.1NA$1,62421.1x16.4x14.9x-33%28%10%1.4x1.2x11%4.2x3.1x0.7x1.6xSohuSOHUUSNRNA$11.0NA$430nmnmnmnmnmnm0.2x0.2x5%nmnmnanaSoufunSFUNUSNRNA$1.9NA$178na1.8xnanmnmna0.7x0.6x17%19.6x6.

53、9xnanaTuniuTOURUSNRNA$3.2NA$420nmnmnmnmnmnm1.3x1.2x5%nananana51JobJOBSUSNRNA$69.3NA$4,29022.5x19.0 x16.1x-3%18%18%7.0 x5.8x22%WUBAUSNRNA$52.7NA$7,83019.3x15.4x13.1x-1%25%18%3.5x3.0 x17%14.8x11.6x0.8x0.9xAverage20.1x14.0 x13.2x1%27%20%2.5x2.1x18%15.3x10.4x0.8x0.9xSource: Barclays Research estimates,

54、Bloomberg consensus estimates for non-rated stocks. Notes: Priced at close of trading on Aug 16, 2019.NR=notrated;OW=Overweight;EW=EqualWeight;UW=Underweight.U.S.Internetindustryview:Positive.AllnumbersforCY18/CY19/CY20areestimates.For full disclosures on each covered company, including details of o

55、ur company-specific valuation methodology and risks, please refer to: http/.China eCom: Six Key Themes#1StrongDomesticConsumptionDemandFuellingGrowthMomentum EComcompaniessolidrevenuegrowthandstrongindustrydatapointsbothpointto strongconsumptiondemandinChinasdomesticmarket,ratherthantheStreetsexpect

56、ed growthsoftnessonmacroslowdownandtrade-warimpacts.In1H19,Chinaonlineretail recorded18%y/ysalesgrowth,specifically,onlinephysicalproductsalesincreased22%toCNY3.8tn($550bn),translatingintoa24%Internetpenetrationrate,muchaheadofthe 19%eCompenetrationrateintheUS.Whilethegrowthofverticalcategories,such

57、asauto andhomeappliancesisstillweak,themajordaily-liferelatedproducts,suchasFMCG, apparels,andfreshproductsremainsolid.WeexpectgrowthinChinaseCompenetrationtocontinuethenextcoupleofyears reaching30%in2020,mainlydueto:1)Relativelyinferiorofflineretailinfrastructuregiving onlinemoreopportunity.Intheab

58、senceofWalmart,Costco,Target,etc.inChina,itseasier forAlibabaandJDtotaketheroleofshoppingdestinations;2)Well-setuplogisticsnetwork andcheapdeliveryfees,thelogisticsplayers,suchasZTO,YTO,STO,etc.givestrong supportstoonlinesales;3)Onlineplayersstrongedgeintechnologysubstantiallyimproves theiradvantage

59、sinoperatingefficiencyandpricingstrategies.FIGURE 4Chinaonlineretailmarketsizeandy/ygrowthtrendbnbn00%FIGURE 5eCompenetration:Chinavs.theUS23.6%19.0%20162017totaly/ygrowth2009 2010 2011 2012 2013 2014 2015 2016 2017 2018theSource: NBS,BarclaysresearchSource:NBS,Barclaysresearch#2 Ecosystem Build-Up

60、Becoming More ImportantWeviewthedirectcomparisonbetweenAlibabaandJD/PDDasaone-sidedgame,tosome extentnomatterwhetherconsideringthebusinessscale(basedontransactionGMV)or theecosystemlandscape,whichisalsoreflectedintheirmarketcap(Alibabas$450+bn,vs. JDs$45bn+andPDDs$29bn).BothJDandPDDarebackedbyinvest