"The first rule of fishing is to fish where there are fish. The second rule of fishing is to remember the first rule. "Charlie · Munger's words are well suited to use in the current volatile market.
From the earliest Chinese stock storm, to the sword of Damocles hanging over the stock market with interest rate hikes, to the international situation that suddenly affected the world capital market, Chinese stocks have completely experienced a thrilling roller coaster journey. And when the market gradually shows signs of bottom, in an environment that still can't see the momentum of stabilization, how to find a good place to "fish" is also a big knowledge.
There's a buzzword in the investment world: When the robins call, spring has passed. China stocks are destined to have some targets that will return to spring when ordinary people have not noticed, and seizing them is to seize future opportunities.
Chinese stock depression digging gold
How to judge the current situation of Chinese stocks? A simple market indicator is sufficient to illustrate. For example, the Net Value of the Chinese Internet Index ETF-KraneShares (KWEB) as of the close of march 8 EST was $28.05, just the equivalent of 2016 levels, a rare historically low valuation range. However, the growth of major Chinese stocks in recent years has been obvious, the fundamentals are stable, and it is unlikely to be smoothed by the downward trend of market sentiment.
The factors that cause turmoil in Chinese stocks are mainly external, such as macro interest rate hike pressure and the international situation, which leads to the overall instability of the US stock market. Just on March 8, the three major U.S. stock indexes collectively closed down, the Nasdaq fell 3.62%, the Dow fell 2.38%, and the S&P 500 fell 2.96%, the largest closing decline since October 2020, which shows the turmoil in mr. market sentiment.
Pessimism tends to be amplified when the impact of the environment is greater than the impact of a company's fundamental growth, which is directly reflected in stock prices. The vagaries of the market atmosphere have put Chinese stocks under general pressure, and many good companies on high-quality tracks have been wrongfully killed. For example, cloud computing, instant retail and so on, which are in line with the mainstream trends of society and the industry.
Some top investors have long seen through the fog and have been actively laying out at the bottom. In the fourth quarter of 2021, Institutions such as Qiaoshui, Temasek and Hillhouse have significantly increased their positions in Chinese stocks such as JD.com. Since January this year, international investment banks such as Goldman Sachs and UBS have begun to say that Chinese stocks are about to reach a reversal node. Goldman Sachs strategists led by Kinger Lau wrote in the report: "China's equity cycle may be transitioning from a 'desperate' phase to a 'hopeful' phase. ”
It should be noted that because the macro situation has not yet stabilized, and the optimization of the main line of national economic development, the science and technology Internet industry can no longer simply pursue high growth, but pay more attention to the core value development and long-term layout. At this stage, some tracks and companies already have certainty.
Starting from the ongoing "two sessions", in 2017, 2019, 2020, 2021 and 2022, the "digital economy" was written into the government work report for the fifth time. One of the changes is that the integration of the digital economy and the real economy has become the main theme, and the "14th Five-Year Plan for the Development of the Digital Economy" issued by the State Council also emphasizes this.
How to interpret the significance of the digital economy to "consolidate and strengthen the foundation of the real economy"? Perhaps the law can only be summed up from the actions of some companies. In the trend of symbiosis with the real economy, instant retail has opened a new blue ocean based on consumer demand because of the deep connection of offline merchants to empower the creation of collaborative new increments.
The "model student" of the real-time retail track
Why can real-time retail become a new blue ocean under the fiery development of online and offline business forms? The answer is that "thousands of good things, instant access" is still the unmet needs of consumers, and there is still a lot of value to be tapped between traditional e-commerce and offline retail.
In 2020, under the circumstance that the epidemic runs through the whole year, the ratio of offline retail sales to online retail sales is still as high as 7:3, and the corresponding scale of the real-time logistics industry is about 170 billion, showing the vitality of the retail industry. However, the market structure with small and medium-sized businesses as the main body is difficult to independently build a service system with full coverage of warehouse, distribution and picking. In this regard, the two major advantages of Dada Group, which is deeply engaged in instant retail, are highlighted.
First, Dada Express has relieved the difficulties of merchants' transportation capacity and made up for their "last kilometer" shortcomings. By the end of 2021, Dada Group's pioneering DadaYou Picking Service has covered about 500 supermarket stores, and the number of picking orders in the fourth quarter has increased by more than 8 times year-on-year. In the fourth quarter, Dada Express also achieved the "double hundred" good results of 100% year-on-year increase in the revenue of the instant distribution business provided by chain brand merchants and 100% year-on-year growth in the single volume of small and medium-sized merchants, and merchants increasingly recognized its picking capacity and terminal distribution results. Dada Express Q4 revenue increased by 81% year-on-year to 700 million yuan under comparable caliber.
Second, Jingdong Dajia empowers merchants with the positioning of an open platform, creating a significant increase for offline merchants. At the beginning of December 2021, JD.com, together with about 20 regional leading merchants such as Bu Bee and Aeon, held the first 100 Cities Million Stores Carnival event, and the GMV of participating merchants during the event increased by more than 200% compared with the daily weekend in November, and the conversion rate increased by more than 10 percentage points compared with the daily period. Brands such as Dyson and L'Oréal have accelerated their access to JD.com. According to iResearch data, jd.com's market share in the supermarket O2O industry increased to 27% in 2021, and its Q4 revenue also reached 1.3 billion yuan.
It is worth mentioning that Dada Express also actively responds to the policy call and continues to implement the protection of the rights and interests of riders. From tens of thousands of warm winter care materials such as knee pads and insulated cups in winter to the commendation activities of nearly 1,000 knights in 2021. Dada Group was awarded the 10th Shanghai "Charity Star", and is also the only Internet and online new economy enterprise selected, which is at the forefront of the industry in fulfilling its social responsibilities.
On the whole, Dada Group is undoubtedly a "model student" on the instant retail track. Its total revenue in the fourth quarter was RMB2 billion, an increase of 80% year-on-year under comparable calibers, and its total revenue in 2021 was RMB6.9 billion, an increase of 78% year-on-year under comparable calibers. Southwest Securities estimates that the order volume of the instant delivery industry will increase from 27.76 billion in 2020 to 93.07 billion in 2025 with a CAGR of 27.4%. This also means that the growth opportunities for players are still very abundant.
To increase to greater efficiency
At the earnings call, Pu Jiaqi, founder, chairman of the board and CEO of Dada Group, said that JD.com's increase in Dada's shareholding in Dada was completed in February 2022 and looked forward to further deepening strategic cooperation with JD.com. The completion of the increase in holdings reflects the firm belief of both sides and indirectly boosts market confidence. This is a milestone for both parties to comprehensively lay out instant retail, and the synergy advantage will be further amplified.
In October last year, JD.com and Dada Group jointly launched the "hourly purchase" business, corresponding to the sales model of "online ordering, store delivery, hourly and even minute-level delivery", with the goal of penetrating 50% of Jingdong users. This is of greater significance to empowering retail entities, after all, improving consumers' direct shopping experience is the best means to enhance their willingness to spend. Q4 hourly purchase transaction volume maintained a rapid growth trend of several times year-on-year, and by the end of 2021, more than 70% of JD.com's online stores had been launched on the hourly purchase line.
With the current downward pressure on the global economy increasing, it is more and more important to promote consumption and activate demand. Dada Group and JD.com have deeply empowered the retail industry, making the foundation for the company's strategic development in the next stage more solid, and market confidence has been effectively boosted. Empowerment comes from tools and digital capabilities, and they all point to greater efficiency.
As of the end of January this year, the Haibo system developed by Dada Group has covered about 6,000 stores of chain revenue merchants, and it is worth noting that in 2021, the expiration renewal rate of Haibo merchants will exceed 98%. The attraction of digitalization to merchants is that through the process control of picking and fulfilling contracts, the overall service efficiency improvement is accompanied by a decline in labor costs. For example, Haibo upgraded the zonal convergence fulfillment module, so that the picking time of stores can be reduced by an average of 40%.
In addition, since its release in July 2021, the Dada unmanned delivery open platform has supported the delivery of more than 30,000 supermarket delivery orders. The unmanned vehicles of JD Logistics and White Rhino have been connected to the Dada unmanned distribution open platform to jointly serve offline consumption scenarios such as Sam's Club Store and Qixian Supermarket. Unmanned distribution can also be efficiently connected with the knight, the average cost of the whole process continues to decline, and improve the level of performance under special circumstances such as big promotions and bad weather.
Starting from the three warehousing stage solutions of "full picking warehouse", "semi-picking warehouse + store" and hypermarket, to the efficient picking combination of Haibo system + warehouse sea system, Haibo picking assistant + Dada you picking, and then to saaS-level comprehensive distribution services, Dada Group has significantly improved its own operating efficiency while improving the quality and efficiency of merchants. Among them, the non-GAAP net loss ratio of Dada Group 21Q4 and 20Q4 was -23.9% and -37.2%, respectively, achieving a significant narrowing. It should be noted that since the upgrade of the landing distribution business in Q2 2021, the revenue caliber of Dada Group and Dada Express has been changed to net, and the focus on business lines is clearer.
On these basis, deepening cooperation with JD.com omni-channel is bound to accelerate the process of Dada Group's penetration into JD.com users, improve its customer acquisition efficiency, and form a more large-scale growth effect among the retailers that Dada Group has reached. In addition, Zhongtai Securities pointed out in the comments that the premium acquisition of shares reflects the important strategic position of Dada Group in the JD Group, and there is more room and stability for cooperation between the two sides.
Looking ahead to the first quarter of fiscal 2022, Dada Group expects its total revenue to be between $2,000 million and $2,050 million, representing a year-over-year increase of 72% to 76% on a comparable basis.
From a longer-term perspective, the potential of the instant retail market will be tapped at an accelerated pace. In the fourth quarter of last year, UBS group covered Dada Group for the first time and gave a buy rating. UBS believes that as Dada Group further expands its categories and geographical coverage, its user base and GMV will continue to grow strongly. Previously, Daiwa also expressed a similar view, pointing out that the expansion of the urban market will bring more increments.
Therefore, while Dada Group continues to open up the imagination space of the instant retail market, its value will also be more valued by the outside world. Although the general trend of the downturn in Chinese stocks is not over, a new evaluation has begun. There are more opportunities in the blue ocean, as Munger said: "It is the skill to find a good place to hunt." Whoever goes to a good place to hunt can hit more things. ”
Source: U.S. Stock Research Agency