Courier Company Or Vip.Com'S Acquisition Target

Morgan Stanley, a Wall Street investment bank, has recently been in touch with the management of several large China Internet Corporation, and released a research report on these companies.

The following are Morgan Stanley analyst Philip Wan and his team's analysis of Qihoo 360 (stock exchange of New York Stock Code: QIHU), Jingdong (NASDAQ: JD), vip.com (QIHU): NASDAQ: VIPS, Ctrip (NASDAQ: CTRP) and the reunion era (NASDAQ: YY).

1. Qihoo 360 continues to lag behind Baidu (NASDAQ: BIDU) in the field of PC search business, but has not yet started to earn revenue in the mobile search business.

(Qihoo 360) existing businesses are on the right track. In terms of PC search, the management's goal is to raise its share of search revenue market to 12% to 15% by the end of 2015 (compared to 6% to 7% now). Management estimates that the cost per click (CPC) of PC search business is currently 1/3 of Baidu's total, and its coverage is roughly 2/3 of Baidu's. So overall, Qihoo 360's commercial level per flow is roughly equivalent to 15% to 20% of Baidu's.

For a joint venture recently invested with the cool side, management points out that having a mobile device platform is very important for the company because it can control the entire ecosystem. However, Qihoo 360 expects that competition on the mobile device platform will not bring much subsidy and will significantly reduce profit margins.

With regard to enterprise mobile products, Qihoo 360 will launch a complete set of four or five services, including client + cloud protection service and BYOD (own device) solution. In the third quarter of 2014, Qihoo 360 has conducted a number of mergers and acquisitions related to enterprise safety business. Management pointed out that merger and acquisition activities related to enterprise safety business are now over.

As far as mobile search is concerned, the commercialization process has not yet started.

The pre installation contract between cool and Baidu will expire in March, and management believes Qihoo 360 will get better terms than Baidu contracts.

2. investors want to know when Jingdong will be able to earn revenue through cooperation between the company and Tencent (Hongkong Stock Exchange Stock Code: 0700) WeChat, and when it will be profitable. Jingdong management still looks "empty talk". Morgan Stanley expects the company will not be able to make profits this year:

Jingdong's WeChat channel has made a very encouraging development recently, and its conversion rate has improved. The Jingdong expects the time honored sale business to have a natural fit with this social network based channel because it is more related to impulse buying.

Jingdong's outlook for future profits remains unchanged at -1%. Net profit margins not calculated in accordance with GAAP will be breakeven. In the middle of 2015, Jingdong will focus on competing for market share, infiltrating low-level cities and actively managing the profitability of its leading product categories, such as 3C products, namely computers, telecommunications and consumer electronics. Jingdong will seek to increase its existing product class inventory unit (SKU) instead of expanding to new product categories. Clothing products are growing rapidly (the year-on-year growth rate of 300% in the third quarter of 2014), which is the largest third party product category on the Jingdong platform.

Up to December 2014, the total warehouse area of the Jingdong has reached 2 million 300 thousand square meters. The level of capital expenditure in 2015 is expected to be slightly higher than previously expected because the payment time of the project was delayed.

After the reorganization of internal organizations, the Jingdong once again focused on its time limited sale business in the fourth quarter of 2014, in order to achieve a good balance between the first party product and the third party product category. In the fourth quarter of 2014, it is estimated that the percentage of Jingdong's marketing expenditure in the company's revenue remains stable. In the future, Jingdong will invest more in low tier cities to build its own brand. Supplier oriented warehouse service is still in its early stage.

3. vip.com has a first-class warehouse and logistics management system, and investors want to know more about it. According to Morgan Stanley, vip.com is building more warehouses and may start buying the express company:

Vip.com's site leasing scheme has received good feedback from large suppliers, which helped to reduce the company's warehousing costs and save reverse logistics costs for its suppliers. Vip.com has acquired more land, which can be used to build the company's self built warehouse, and the local government has provided a very favorable land price to it. In addition, 50% of vip.com's orders are performed internally (that is, vip.com and its subsidiary subsidiaries). It is expected that these one hundred points will reach 70% in 2015.

along with Order quantity As the growth and density of orders increase, vip.com may seek to acquire the controlling shares of express company, which currently owns a minority interest of these companies.

Vip.com is still cautious about cross-border e-commerce business, and believes that there are policy uncertainties in the business area.

Just Merger In terms of activities, Vip.com In the mobile commerce vertical industry such as mother and baby product category, we are considering "strengthening mergers and acquisitions" in the mobile commerce vertical industry. In the middle of 2015, vip.com will continue to focus on its core discount limited time sale market, because the company's share in the market is still in the low to middle 1% to 9% interval. The company now covers 80% of the existing garment companies in China and will seek to increase the sales volume per unit / brand.

Vip.com believes that the company occupies a competitive position in the market of its core discount limited time sale business, and believes that the sale of time limited sales by competitors larger than that of the company will not pose a great threat to it because the limited time sale business of clothing products requires highly flexible operation / storage system.

4. in November of last year, Ctrip announced that it would increase investment at the expense of profit margins, which shocked Wall Street. The position of the company's "grab ground" has not changed.

Ctrip reiterated its previous performance outlook, that is, the 25 quarter to fourth percentage points of the operating profit margin not calculated in accordance with the general accounting standards of the United States in the fourth quarter, mainly due to the increase in the cost of hotel coupons (1 to 2 percentage points for the non US GAAP operating margin), and the adoption of larger scale brand promotion activities to improve the penetration of low line cities (4 to 5 percentage points), and the increase in hiring activities of IT and ground service teams (13 percentage points).