When the new quarterly financial report strikes, what light can be seen at the end of the tunnel of China Stocks? [Part I]


In the past two weeks, domestic Internet giants have disclosed their latest quarterly results one after another, and the papers have been handed in. From the perspective of completion quality, several are happy and several are sad. At a time when anti-monopoly and economic downturn are increasing, The performance of Tencent and Ali, the leading Internet giants, is not satisfactory this quarter. The performance of second-tier Internet Meituan, JD.com and NetEase maintained steady growth. Is regarded as a representative of better performance, Pinduoduo Inc. 's performance almost falls behind directly, After the results were disclosed, the stock price also plummeted, Aauto Quicker, a third-tier Internet company, performed relatively well this quarter, while Baidu and Bilibili Inc. performed poorly this quarter, which aggravated investors' worries. After the performance came out, the stock prices of Baidu and Bilibili Inc. also plummeted. Under the sluggish performance of Internet giants, the Hang Seng Technology Index performed poorly and continued to fluctuate and bottom out.

Trend of Hang Seng Science and Technology Index (Daily Chart)

When the new quarterly financial report strikes, what light can be seen at the end of the tunnel of China Stocks?In the second complete quarter when the anti-monopoly of the platform economy is advancing in depth, the operations of Internet giants are facing more or less pressure, and the stock price performance is quite different after the results are announced. Overall, this quarter,The best performance of Chinese stock giants is JD.com, Meituan, NetEase and Aauto Quicker, which will be analyzed in detail in combination with the performance of the new quarter.

Overview of Internet Performance in 2021Q3

(A)In the third quarter of 2021,From the perspective of income growth rate,The income growth rate of Bilibili Inc. and Pinduoduo Inc. exceeded 50%, Bilibili Inc. 's revenue increased by 61% in a single quarter, Pinduoduo Inc. 's revenue increased by 51.34%, followed by Meituan's revenue increased by 37.9%, Aauto Quicker's revenue increased by 33.4%, Ali's revenue increased by 29% in a single quarter (if the consolidated factors of Gaoxin Retail are not considered, the growth rate is 16%), JD.com's revenue increased by 25.54% in a single quarter, while NetEase, Tencent and Baidu's revenue increased by less than 20% in this quarterXiaomi Group's revenue grew by 8.29% in a single quarter, and its revenue was at the bottom of Xiaomi. Although its net profit performance exceeded expectations, the serious slowdown on the revenue side caused Xiaomi's share price to plummet to a new low in the past six months after the results were released.

(2) From the perspective of net profitIn this quarter, the growth rate of net profit of giants is not satisfactory. Under the pressure of anti-monopoly, the operating pressure of the Internet has increased and the competition has intensified, especially in the e-commerce and Internet advertising industries, where the competition is unprecedentedly fierce,Tencent's non-Gaap net profit in a single quarter even experienced negative growth for the first time in recent years. Ali's non-Gaap net profit in this quarter was-39% year-on-year, Baidu's non-Gaap net profit in this quarter was-27% year-on-year, NetEase and JD.com's net profit performance in this quarter was relatively stable. Xiaomi's gross profit margin and net profit rate increased with the increase of Internet revenue and the improvement of mobile phone ASP in this quarter, and its net profit performance exceeded expectations.

(3) From the perspective of user growth rate,The user growth of Meituan and JD.com is the best, while the user growth dividends of Ali, Tencent and Pinduoduo Inc. are coming to an end. At present, the fastest user growth rate of Ali is Taobao Special Edition.

Next, select key companies to analyze with the performance of the new quarter:

Tencent: The single-quarter revenue hit a ten-year low, and the growth rate of financial technology and enterprise services was the fastest in all businesses

$TENCENT(00700)$Tencent (0700. HK): 3Q21 Company achieved operating income of 142.368 billion yuan (+ 13% yoy); The net profit attributable to the mother reached 39.51 billion yuan, up 3% year-on-year, and the net profit attributable to the mother under non-GAAP was 31.751 billion yuan (-2% yoy). Overall, the company's performance slowed down in an all-round way. In terms of business, advertising, games and other businesses were generally affected by the sluggish growth rate of the industry. Financial technology and enterprise services became Tencent's largest source of income, and the growth rate was also the fastest among all businesses.

Tencent's single quarterly income in recent ten years (100 million yuan)

< p class= "t-img-caPtion "> Growth rate of Tencent's single quarter income in recent ten years (%)

From the perspective of quarterly revenue growth rate, Tencent's revenue growth rate in this quarter is 13.92%, which has reached the lowest revenue growth rate of Tencent in recent ten years, and the growth rate is even lower than the single-quarter growth rate when the version number was banned in the fourth quarter of 2018. Tencent's revenue has obviously slowed down for three consecutive quarters.

Tencent's single quarterly net profit in recent ten years (100 million yuan)

Growth rate of net profit in single quarter of Tencent in recent ten years (%)

Tencent's business income in a single quarter in recent 11 quarters (100 million yuan)

Proportion of Tencent's business income in a single quarter in recent 11 quarters (%)

Growth rate of Tencent's business income in a single quarter in recent 11 quarters (%)

Judging from the performance of each business:

1. In this quarter, value-added services achieved revenue of 75.2 billion, YOY+7. 74%, and the growth rate of single-quarter revenue fell into the single-digit growth range for the first time since Q1 2019,Hit a new low in nearly ten quarters.

Tencent's online game revenue (unit: RMB 100 million)

Among them, the domestic game market realized revenue of 33.6 billion yuan,YOY+5%The overseas game market achieved revenue of 11.3 billion yuan and YOY+28%, and the social network revenue achieved revenue of 30.3 billion yuan and YOY+7%;

Tencent's social network revenue (unit: RMB 100 million)

2. Financial technology and enterprise services achieved revenue of 43.3 billion, YOY+30. 26%, and the revenue growth rate was the highest among all businesses

However, compared with 47.41% and 40.29% in the previous two quarters, the year-on-year growth rate has obviously slowed down. We expect that the growth rate of financial payment has slowed down mainly due to the decline of the real economy and the downturn of consumption data. In the field of enterprise services, Tencent's CRM SaaS solution-Tencent Enterprise Point has served more than 1 million enterprises and is increasingly adopted by large and medium-sized enterprises. Tencent Enterprise provides customers with all-weather and multi-channel artificial intelligence customer service, helping enterprise customers significantly reduce customer service costs. Tencent's database PaaS solution, TDSQL, now serves more than 3,000 customers, spanning multiple vertical fields such as finance, public services and telecommunications. In the vertical field of financial industry, TDSQL serves six of the top ten banks in China, and more and more financial institutions adopt TDSQL in their core systems, reflecting their trust in Tencent's data security, reliability and consistency.

3. Online advertising achieved revenue of 22.5 billion yuan, YOY+5.36%, which hit a new low in the past three years from the perspective of growth rate.

< img src= "https://static.tigerbbs.com/d00bf20178b41724e5f5dae8fd4493b ">Tencent's online advertising revenue (unit: RMB 100 million)

The slowdown in advertising revenue in this quarter is mainly caused by the sluggish advertising demand in education, training, insurance and game industries. Among them, social and other advertising revenue reached 19 billion, YOY+7%, while media advertising revenue reached 35%,-4% year-on-year, mainly due to the decrease in advertising revenue due to Tencent News.

L Tencent Q3 Quarterly Report Summary:

To sum up, Under the pressure of anti-monopoly regulations this quarter, Income growth hit a single-quarter low in recent ten years, The growth rate of Non-Gaap net profit also rarely turned negative, From the perspective of various businesses, The game is trapped in the continuously upgraded game control and the delay of version number, The growth rate slowed down, Advertising revenue has obviously slowed down because the income of large advertisers such as teaching and training, insurance and games has been greatly reduced. Financial technology and enterprise services have once again become the biggest highlights of this quarter's business. Tencent's business is more diversified, and the proportion of financial technology and enterprise services is constantly increasing, which will become the main driving force for major revenue growth in the future.

Proportion of Tencent's major business income (%)

In the development of Tencent, The main business sources of the company are constantly changing, In the PC era, Mainly QQ value-added services and end tours, In the era of mobile Internet, WeChat exerts its strength, Mobile games have gradually become the main source of business increment, In particular, explosive mobile games such as the glory of the king have brought Tencent another leap in revenue volume. After the state's control over game version numbers became stricter in 2018, Tencent's B-side business began to accelerate its development, and cloud computing, WeChat payment, advertising, small programs and other businesses went hand in hand, bringing Tencent's revenue to a new level.

We believe that the B-end business represented by financial technology and enterprise services will make Tencent's revenue from financial technology and enterprise services soon exceed that of online game business, As the next business explosion point of Tencent, we are still optimistic about financial technology and enterprise services. Tencent and Ali compete differently. Around WeChat and enterprise WeChat, Tencent is building its own barriers at the soft level (PAAS level).

Looking ahead, For Tencent, We believe that Tencent's B-side business is entering an accelerated period, The realization of small program ecology has just entered an accelerated period, The small program private domain traffic e-commerce and advertising around WeChat will continue to accelerate development, which will in turn promote the development of payment and cloud computing business. The development of advertising, financial technology and enterprise services is far from the ceiling. In the cloud computing and meta-universe generation, Tencent's business also has great expected difference after pains.

Although Tencent's performance in this quarter is not satisfactory due to various external environmental changes, as the largest platform for social and meta-universe games, Tencent still deserves special attention after its pain.

Meituan: This quarter continued to hit a record high, the take-out and in-store business remained stable, and new businesses were still increasing investment

$MEITUAN-W(03690)$In this quarter, the revenue was 48.8 billion yuan, the highest single-quarter revenue since listing increased by 37.9% year-on-year, exceeding Bloomberg's consensus expectation of 48.573 billion yuan. The net profit of Non-Gaap was-5. 53 billion yuan, and the loss in this quarter expanded. From the perspective of business segments, the proportion of Meituan take-out in the new quarter was 54.2%, the proportion of in-store business was 17.7%, and the proportion of new business was 28.1%.

Quarterly revenue (100 million yuan) and growth rate (%) of Meituan since its listing

L sub-business data analysis:

1. Takeaway business:

This quarter, the US group's take-out achieved revenueRevenue was 26.485 billion, YOY+28%, and GMV was 197.1 billion, YOY+29.5% in this quarter. From the profit side, take-out achieved an operating profit of 880 million in this quarter, because of the increase of user incentives and marketing investment,In this quarter, the operating profit rate of Meituan decreased by 0.4% (3.7% → 3.3%) year-on-year.

From the perspective of user growth, the average annual trading users of Meituan this quarterYOY+40.1%To 670 million, the growth of users is still strong, and the order volume in this quarter is 4.013 billion,YOY+24.9%In this quarter, ARPU increased slightly year-on-year3.6%To 49.1 yuan,The number of transactions of a single user in this quarter was 34.4, which was significantly improved year-on-year and quarter-on-quarter(26.8 times in 2020Q3 and 20.7 times in 21Q2);

From the perspective of GMV, Meituan achieved a take-out GMV of 197.1 billion this quarter,YOY + 29.5%;

Judging from the income composition of take-out business, commission income is still absolutely large,In this quarter, the take-out commission income was 23.22 billion yuan, YOY+27. 2%, accounting for 87.7% of revenue, realizing marketing revenue of 3.26 billion yuan, YOY+35. 2%, accounting for 12.3% of revenue.

2. In-store, hotel and tourism business

In this quarter, Meituan's in-store, hotel and tourism business benefited from the medical, pet, parent-child, fitness and leisure and entertainment categories, which strengthened the coverage of merchants and covered a broader low-line market. This quarterRevenue was 8.621 billion yuan, YOY+33. 1%, and operating profit was 3.784 billion yuan, YOY+35. 8%.The operating profit rate was 43.9%, a slight increase of 0.9% year-on-year.

In this quarter, the number of nights in Meituan Hotel was 119.8 million, YOY+5. 2%. The company continued to increase the platform supply in high-star hotels, while for low-star hotels, it further penetrated the low-line market by accelerating the digitalization process and offline traffic conversion.

From the perspective of business structure, this quarter, Meituan's in-store wine travel business achieved marketing income of 4.48 billion yuan, YOY + 42.4%, and commission income of 4.12 billion yuan, YOY + 24.2%;

3. New business

In this quarter, Meituan achieved new business income of 13.7 billion yuan, YOY+66. 7%, and the loss of new business expanded, with a single business loss of nearly 10.9 billion yuan. Meituan's retail business continued to expand and its investment continued to increase.

From the perspective of business structure, the new business achieved commission income of 2.21 billion, YOY + 42.1%, and other services and sales income of 11.23 billion, YOY + 70.9%;

Summary of Meituan Q3 Quarterly Report:

Judging from the performance of Meituan this quarter, This quarter, the growth of Meituan is still steady. Compared with Youshang (Ali is hungry, other communities buy), Meituan's performance is obviously better. From the perspective of newly added annual active users, the penetration rate of Meituan is still improving, the average number of transactions is still increasing substantially, and the borderless expansion of local living giants continues.Users have not yet reached the ceiling, and new businesses such as Meituan taxi and community group purchase are also accelerating.We are still optimistic about the future development of Meituan, and we can bargain after pains.

Judging from the number of take-out orders, the number of take-out orders in Q3 reached a new high in a single quarter, indicating that the expansion of Meituan continues and sinks in low-tier cities, which comprehensively pushes up the take-out scale of Meituan.

In the third quarter, the operating profit rate of Meituan's food and beverage take-out dropped significantly to 3.31% from 10.58% in the second quarter, Mainly, the operating profit of the food and beverage take-out segment decreased from RMB 2.4 billion in the second quarter of 2021 to RMB 876 million in the third quarter of 2021, and the operating profit rate of this segment decreased from 10.6% to 3.3% month-on-month. The decrease in amount and percentage of revenue was mainly due to seasonal distribution subsidies(Extreme weather such as high temperature, typhoon and rainstorm were more in the third quarter).

The annual active trading users in this quarter were 667.5 million, an increase of 39.1 million from the previous quarter, an increase of 191 million compared with Q3 last year, and an increase of 156.9 million compared with the beginning of the year. The growth of the number of users in this year is the largest among all large platform companies, continue to exceed market expectations.

The stickiness on the platform continues to increase, reflecting that the average annual number of transactions per transaction user has increased from 26.80 in 2020Q3 to 34.40.

Therefore, from the above key data, we can see that the borderless expansion of Meituan continues, users have not yet reached the ceiling, and new businesses such as Meituan taxi and community group purchase are also accelerating.

Alibaba: The basic disk of e-commerce has been seriously slowed down, and cloud computing and new retail are still the biggest highlights in the future

This quarter$Alibaba(09988)$The revenue was 200.69 billion yuan, a year-on-year increase of 29%. If the consolidation of Gaoxin Retail is not considered, the revenue will increase by 16% year-on-year to 180.438 billion yuan.

In this quarter, the operating profit was 15.006 billion yuan, up 10% year-on-year, mainly due to the decrease of 15.69 billion yuan in equity incentive fees related to Ant Group Co., Ltd. equity incentive and granted to employees of the company. Equity incentive fees are not included in non-GAAP financial indicators. After adjustment, EBITDA decreased by 27% year-on-year to 34.84 billion yuan. After adjustment, EBITA decreased by 32% year-on-year to 28.033 billion yuan, which was mainly due to Alibaba's increased investment in key strategic areas that are showing steady business growth and its measures to support businesses. In this quarter, the company's investment in key strategic areas within the commercial segment, such as Amoy, local life services, community business platform and Lazada, increased by RMB 12.575 billion year-on-year. The net profit of Non-Gaap was 28.524 billion yuan, down 39% year-on-year, showing poor performance.

By business situation:

(1) Commercial revenue mainly comes from China retail market, Gaoxin Retail, Box Horse, 1688.com, Lazada, AliExpress, Alibaba.com, Rookie Logistics Service and Local Life Service.

(2) Cloud computing revenue is mainly generated by providing flexible computing, database, storage, network virtualization services, large-scale computing, security, management and application services, big data analysis, machine learning platform and Internet of Things.

(3) Digital media and entertainment revenue mainly comes from Youku, Alibaba Pictures and other entertainment businesses.

(4) Innovative business and other income mainly come from Gaode, Tmall Elf and other innovative businesses. Other income also includes annual SME loan fees collected from Ant Group Co., Ltd. and its related parties.

(5) Since April 1, 2021, Alibaba has reclassified the performance of nailing business from innovation business and other segments to cloud computing segment.

Alibaba this quarterSegment revenue (millions) and growth rate (%)

Alibaba's business income in a single quarter in recent 10 quarters (100 million yuan)

Proportion of Alibaba's business income in a single quarter in recent 10 quarters (%)

Growth rate of business income in Alibaba in recent 10 quarters (%)

In terms of business, the growth rate of core business slowed down seriously, especially the revenue of customer management only increased year-on-year3%Local services, digital media and entertainment, rookie logistics and innovative business also performed poorly. Cloud computing was the highlight of Ali's quarter, with a year-on-year increase of 34.28% and a quarter-on-quarter increase of 4.26%.

Core business: Excluding consolidated factors, the slowdown was serious, and customer management revenue only increased by 3% year-on-year, setting the lowest growth rate in recent years

In this quarter, Alibaba's revenue from Chinese retail business was RMB 126.827 billion.Compared with 95.47 billion yuan in the same period of 2020, it increased by 33%, but customer management revenue only increased by 3% year-on-year,Continuous slowdownThe main reason is that GMV of physical goods recorded a year-on-year increase in unit numbers due to the slowdown of market conditions and the increase of participants in China's e-commerce market, which also shows that the competition of e-commerce is getting hotter and hotter, and Ali's growth is inevitably slowing down sharply while the growth rate of social retail sales remains sluggish.

The "other" income under China's retail business was RMB 55.132 billion, an increase of 111% compared with RMB 26.1 billion in the same period of 2020. The growth was mainly driven by the merger of Gaoxin Retail and the contribution of direct business such as Tmall Supermarket and Box Horse.

China wholesale business

In this quarter, China's wholesale business revenue was RMB 4.174 billion (US $648 million), an increase of 15% compared with RMB 3.637 billion in the same period of 2020. The main reason for the growth is the rising consumption of value-added services from paying members of 1688.com platform.

Cross-border and global retail business

In this quarter, cross-border and global retail business revenue was RMB 10.375 billion, up 33% year-on-year. The main reason for the growth is the revenue growth from Lazada and AliExpress; Cross-border and global wholesale business revenue was RMB 4.717 billion, up 34% year-on-year. The increase was mainly due to the increase in the number of paid members from Alibaba.com and the average income of paid members, as well as the increase in value-added service revenue related to cross-border business.

Rookie logistics service

In this quarter, rookie's network logistics service revenue mainly comes from its domestic and international one-stop logistics service and supply chain solutions, After offsetting the impact of internal transactions, the total amount was RMB 9.846 billion, up 20% year-on-year, and the overall performance was average. The main reason for the growth was the growth of fulfilled orders brought about by the rapid development of cross-border and global retail business.

Local life service

In this quarter, the income from local living services mainly came from hungry platform commissions, service fees charged for providing distribution services and other service fees. After offsetting the impact of internal transactions including providing services for new retail business, the total amount was 9.513 billion yuan, which only increased year-on-year8%,Compared with the income growth rate of Meituan, the performance is poor. It is confirmed by the side that on the track of local life, hungry people continue to be seized by Meituan for market share, and the gap with Meituan is getting bigger and bigger.

Cloud computing

In this quarter, the performance of Alibaba Cloud Computing Division was relatively good among Ali's many businesses, achieving revenue of 20 billion yuan in a single quarter, breaking through the 20 billion revenue mark for the first time, with good growth year-on-year, mainly driven by strong growth in customer revenue in the Internet, financial services and retail sectors.

< img src= "https://static.tigerbbs.cOm/505518a10153ba7ee0d38d483c012065 ">

In this quarter, the cloud computing division achieved profit, and the adjusted EBITA of cloud computing in this quarter was RMB 396 million, while the loss in the same period of 2020 was RMB 567 million, mainly due to the realization of economies of scale.

Looking ahead, we believe that cloud computing is still the biggest attraction of Ali. With the gradual increase of cloud computing revenue, the revenue in this quarter is still less than 10%. With the increase of scale, Alibaba Cloud's profit release will accelerate, and Ali's valuation level is expected to be gradually repaired.

Digital media and entertainment: little growth year-on-year

In this quarter, the revenue from the digital media and entertainment segment was RMB 8.081 billion, compared with RMB 8,066 million in the same period of 2020, with almost no year-on-year increase

Innovative business and others

In this quarter, the revenue from innovative business and other segments was RMB 1.432 billion, an increase of 37% compared with RMB 1.042 billion in the same period of 2020. We expect that the revenue of Gaode Map and Tmall Elf will accelerate mainly.

Summary of Alibaba Q3 Quarterly Report:

On the whole, Alibaba's data in the third quarter is relatively general, In addition to cloud computing business and new retail business, GMV, the core business of the company, has slowed down seriously. With the fierce competition of domestic e-commerce, Ali's core e-commerce business is still under great pressure, And at the macro level, Domestic consumption continues to be sluggish, It is also an objective environment that Ali must face. Therefore, we expect that in the next few quarters, Ali's core business is still facing a great impact, and its growth rate may still slow down or even negative growth. In the competition of local life, Ali is getting weaker and weaker compared with Meituan. When hungry this quarter, the income growth rate is only single-digit growth, which is far from Meituan. This will lead to the market's continuous pessimism about Ali and need to wait for the inflection point of e-commerce business.

From the macro data, in the third quarter of 2021, although China's GDP and consumption rose steadily, the growth rate slowed down compared with previous quarters,The total retail sales of social goods increased by 5% year-on-year, and the growth rate of online retail sales of physical goods was 8% year-on-year, compared with 17% in the third quarter of last yearThe absolute value of offline consumption has just recovered to the level of two years ago. Facing the uncertain macro environment and increasingly fierce market competition, Alibaba has also been affected in the scale growth rate of domestic consumer business. The annual year-on-year growth rate of physical goods GMV has declined in single digits, mainly due to the slowdown in the growth rate of clothing and daily necessities, which is basically consistent with the market performance of these categories in Chinese retail sales. The growth rate of consumer electronics and home furnishing industry remained stable this quarter.

Amoy is a big attraction of the company in the future:Under the challenge of the big environment, the company did not slow down its continuous efforts in opening up new users, especially Amoy made rapid progress in the sinking market. As of September 2020, the AAC of Alibaba Group's global annual active buyers reached 1.24 billion, a net increase of 62 million over the previous quarter and a year-on-year increase of 20%. Among them, AAC in China's domestic market increased from 912 million to 953 million at the end of last quarter, and AAC in overseas market increased from 265 million to 285 million at the end of last quarter. We still take serving 2 billion consumers worldwide as our long-term strategic goal, and are confident to achieve the goal of reaching 1 billion active consumers in China by the end of this fiscal year. In China's sinking market, Amoy brings incremental users and activity to Ali's domestic consumer ecology.Amoy's AAC exceeded 240 million this quarterCompared with Hand Amoy APP, the proportion of DAU, the exclusive member of Amoy, is close to 50%, and Amoy's cost-effective products and differentiated user experience are loved by consumers. On the other hand, Amoy is committed to developing the M to C model. Through one-stop operation and logistics solutions, help manufacturers from producing areas reach consumers directly. This quarter, orders for this part increased by nearly 400% year-on-year. In the field of community group buying, Amoy Caicai is committed to building a healthy and sustainable digital community business model.At present, Taocai has been operated in nearly 200 cities. In this quarter, GMV increased by more than 150% month-on-month. The company is committed to giving full play to the capabilities of goods, supply chain, logistics, network, user operation and channel expansion accumulated by Alibaba family for many years, establishing a new digital-driven community business infrastructure, and providing users with cost-effective goods and services based on quality. The development of Amoy Caicai has also brought more purchase frequency to the company's e-commerce users, and more than 50% of Amoy Caicai users are buying fresh products on Amoy platform for the first time. The company believes that the ultimate value of this community commercial infrastructure lies in providing better daily services for community consumers, ensuring people's livelihood, helping farmers increase their income and supporting employment. We will adhere to the concept of value creation and serve the community consumers in a down-to-earth manner.

Looking ahead, EBITA of Alibaba Cloud Computing is improving quarter by quarter after it turned positive in Q4 2020, And the investment in new retail business is gradually entering the result period, We believe that Ali's new retail and cloud computing are gradually developing into the second growth curve of Ali's income, opening up new growth outside e-commerce. Therefore, for Ali, there is no need to be overly pessimistic about the market outlook after oversold. At present, Ali's valuation level is relatively underestimated, and it is expected to gradually usher in a repair rebound after the concentrated release of emotions.

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