China Quarterly Report Three Quarterly Review: Giant Growth Slowed Down In Full, New Consumption Into A New Force

In the earnings season, the fact is that the growth rate of the Internet is slowing down.

In November 7th, Baidu released its unaudited results in the third quarter of fiscal year 2019 as of September 30th. The total revenue in the quarter was about $3 billion 930 million, an increase of 7% compared with the previous quarter. If not in accordance with GAAP, the net profit in the quarter was 4 billion 400 million yuan and the net profit margin was 16%.

After the first quarter of the transformation pains, Baidu's performance has gradually recovered, and growth is still slowing down. In addition, Alibaba also released the latest quarterly report, its revenue grew 40% over the same period last year, and net profit was about $4 billion 582 million, an increase of 40% over the same period last year. Under such a large volume, this increase is not easy, but its revenue has slowed down compared with 54% in the same period last year.

From the vertical industry, the slowdown is also difficult to reverse. Iqiyi's third quarter earnings report released in 2019 showed that revenue in the quarter was 7 billion 400 million yuan, up 7% over the same period last year. Net loss was 3 billion 700 million yuan, an increase of 19.4% over the same period last year, and a net loss of 3 billion 100 million yuan in the same period in 2018. This result is not brilliant. There has been a marked decline in the growth of membership, advertising and content distribution.

Throughout the Internet industry, both the earnings and recent stock prices show that the consumption related industries are stimulated by the year-end peak season, and are continuing to climb up. Consumption has become a stimulant for stimulating performance. Such as Alibaba, many spells, vip.com, the US group reviews and so on all counter trend growth, far surpassed other industries in the same period.

Consumer stocks attract much attention

Under the worry of economic downturn, consumer stocks are still on the dust. From the development trajectory of the shopping guide platform, we can see that the strong national consumption power has nurtured this unknown platform and supported it to the capital market. What is worth buying the first earnings report of listed companies? The results show that in the first half of 2019, the company's revenue was 273 million yuan, an increase of 37.96% over the same period last year. The net profit attributable to shareholders of listed companies was 46 million 800 thousand yuan, up 15.09% from the 40 million 670 thousand yuan in the same period last year.

The main source of revenue that is worth buying is dependent on the Commission and advertising of Alibaba, Jingdong, Amazon and other e-commerce giants. Alibaba in the strong base of the background, its core business electricity providers and cloud computing continues to exert power in Q2: the second quarter revenue of e-commerce platform was 75 billion 786 million yuan, an increase of 40% over the same period, and cloud computing Q2 revenue reached 9 billion 291 million yuan, an increase of 64% over the same period last year. In addition, the local life service has grown significantly, with revenue reaching 6 billion 835 million yuan, an increase of 36% over last year.

In addition, Alibaba disclosed in its earnings report that it became the 33% holder of ant gold clothing in September 23rd. The income from Alibaba's one-time ownership of the ant's gold suit was 69 billion 200 million yuan (about 9 billion 700 million US dollars), which also brought about a rapid increase in income. Although Alibaba has defined the "business operation system" as a development strategy, it can be seen that the growth of consumption stimulated by the new retail business is still a boost for Alibaba's performance.

At this stage, despite the numerous spells, Jingdong and vip.com haven't released the latest quarterly earnings report. However, by the "double 11" stimulus, the three electricity supplier share prices continued to rise in recent days, the S&P Global Market Intelligence data show that a lot of shares rose 26.9% in October. Since late August, its stock has maintained a positive momentum.

Goldman recently reiterated its buying rating for Jingdong and raised its target price to $46. In November 4th, Jingdong shares rose to $33.14, setting a new high in the company's share price. Goldman Sachs said that thanks to the development of global e-commerce, Jingdong, Amazon and Alibaba are in the matrix of "best investment opportunities".

Snowball Business Analyst Li Yan told the twenty-first Century economic news reporter that the scale of China's consumer goods market reached 30 trillion yuan, which is also a large number of Internet giants invested in the field. The penetration of online e-commerce in the retail market is still rising. Whether it is electricity supplier, O2O, new retail or fast hand shaking, it is all in a different way to divide the huge cake of temptation. "The electricity supplier connects the seller and the buyer through the platform, and its service scope is also very extensive. Once the ecological effect is formed, the scale effect can be very strong, so the competition threshold is also very high. The next competition is whether the moat is high enough based on ecology. " She said.

Giant "identity" switch

It is also benefiting from the strong national consumption power, which helped to boost the performance of the US group in the first quarter, replacing Baidu with Baidu and Tencent. By the end of November 7th, the company's closing price was HK $98.5 and its market value was HK $571 billion 734 million.

The company's earnings report showed that the US group's revenue in the third quarter was 19 billion 100 million yuan, up 97.2% from the same period last year, and gross profit amounted to 4 billion 600 million yuan, an increase of 33.2% over the same period in 2017. As the main business of catering takeaway, store and liquor brigade continued to improve operational efficiency, the adjusted net profit of the company was 1 billion 500 million yuan, the first time to achieve overall profitability. Two

In 2018, the US group's comment also made a net loss of about 115 billion 500 million yuan and was banter as "loss king" by the public. In the view of the investment industry, the US group, as a comprehensive consumer service provider, covers a range of necessities such as eating, watching movies, beauty, fitness, booking hotels, taxi and shopping. The total market size is over 20 trillion, which is the same level as the electricity supplier. The comprehensive service of consumer necessities is the golden track of the two tier market. The penetration of its future online market still has great room for improvement.

Another group of Internet Co in transition is not having a good time. After the release of the earnings report, Baidu founder, chairman and CEO Robin Li said in his internal letter that the macro environment is still full of challenges, and that the performance of Q3 is achieved under the influence of many uncertain factors, which is more valuable. "This also shows that the positive changes we have made in the past few years have begun to show results."

At present, Baidu's core revenue source is still search service and transaction service, which has a revenue of 21 billion yuan, accounting for 74.7% of total revenue. In the field of AI, Baidu business is mainly concentrated in three major sectors: small assistant, Apollo and cloud computing. R & D expenditure in the quarter was 4 billion 700 million yuan, an increase of 20% over the same period last year, mainly due to the increase in R & D related costs. However, AI business has little contribution to revenue. Robin Li also mentioned in the analyst conference call that the growth of AI market is not as good as expected. The company still needs to invest more continuously, develop new projects, promote market maturity, and profit from it.

In an interview with the economic news reporters in twenty-first Century, tiger related securities believe that the overall performance of the stock market in the first half of this year is poor, mainly due to internal and external influences. On the one hand, it needs to face the challenges of competition and profitability, and on the other hand, it has a huge association with the market sentiment of the US stock market, and there is also uncertainty from policy. However, in the second half of the year, due to the arrival of the peak season of consumption, the electricity consumption related companies began to break through. With the rational return of the market, some outstanding stocks will eventually come to the fore.