CITIC Construction Investment: Chinese stocks return to the first choice of Hong Kong stocks Internet to welcome valuation repair

Financial Associated Press (Shanghai, editor Zhou Xinyang) news, CITIC Construction Investment Overseas Research Group recently made a judgment on Internet e-commerce and local life industry.

They believe that the storm of delisting of Chinese stocks in the United States that began in March accelerated the bottoming of the current round of bear market in technology stocks, and it is foreseeable that the return of Chinese stocks will accelerate in the future, and Hong Kong stocks are still one of the first choices.

CITIC Construction Investment said that in 2022, the normalization of industry supervision, the acceleration of the return of China, and the valuation of Internet stocks ushered in a valuation repair.

Supervision is conducive to the healthy development of the industry

In the past six months, the secondary market is very keen on the study and judgment of the policy base, CITIC Construction Investment said that the future Internet supervision will be normalized, do not have to overly entangle the so-called policy bottom, regulatory norms will be a long-term trend in the industry, supervision is not requiring enterprises not to develop, but the commercial monopoly based on capital advantages is not advisable, and it is not advisable to take the interests of enterprises as the guide but harm the interests of the people and the country.

Supervision is conducive to the formation of a healthy business model and a benign competitive environment, is conducive to the Return of the Internet to the heart of innovation, innovation is the driving force behind the development of the Internet, new model breakthroughs and technological breakthroughs will dominate the next stage of new growth in the Internet industry.

On the other hand, the storm of Delisting of Chinese stocks in March accelerated the bottoming of the bear market of technology stocks in this round, and it is foreseeable that the return of Chinese stocks will accelerate in the future, and Hong Kong stocks are still one of the first choices.

After experiencing multiple disturbances such as tightening liquidity, tightening industry supervision, weak macroeconomic and consumption, and the risk of delisting of Chinese stocks, the valuation of the current head Internet companies has been significantly lower, the margin of safety is prominent, and the cloud is sometimes the end of the day, the worst time for Internet companies has passed, and the future is expected to usher in a slow valuation repair.

Specific sub-industry point of view:

The e-commerce industry has paid more attention to refined operation in the stock era.

2021 is a particularly difficult year for traditional e-commerce giants, on the one hand, Internet supervision began with e-commerce, Alibaba (09988.HK) anti-monopoly investigation opened the prelude to platform economic supervision, and e-commerce is also one of the tracks involving the most policy supervision;

On the other hand, since the second half of the year, the macro economy, especially consumption, has faced greater downward pressure, and compared with the fields of games and pan-entertainment, e-commerce has been more directly affected by the macroeconomy.

In addition, the competitive landscape of the e-commerce industry has gradually deteriorated, the three-legged situation has been broken, short video platforms such as Douyin and Kuaishou have increased the number of live e-commerce, and local life giants such as Meituan (03690.HK) are also eager to try e-commerce business, and e-commerce is gradually becoming one of the most voluminous tracks on the Internet.

Looking forward to 2022, for traditional e-commerce giants, Ali, Pinduoduo active buyers approaching the 900 million mark, the future user growth will slow down, the stock era, the growth of the e-commerce industry will return more to the direction of retention, repurchase, etc., in the regulatory environment, the monetization rate is not encouraged, before the arrival of new business model breakthroughs or technological breakthroughs, the future growth prospects of traditional e-commerce giants seem to be lackluster.

On the other hand, different from the traditional e-commerce platform, live e-commerce reshapes the industry's human goods yard, continues to maintain a high growth rate, the e-commerce process of content platforms such as Xiaohongshu is further accelerated, and under the background of the exhaustion of the domestic Internet dividend and the tightening of policy supervision, cross-border e-commerce relies on the advantages of China's supply chain and overseas Internet dividends to become a high-profile star track.

For takeaway & store-to-store Internet companies, the industry competition pattern is solid, and investors are advised to downplay the short-term epidemic disturbance and pay attention to the long-term growth center.

Since the second half of 2021, the cancellation of regulatory measures such as two choices, rider social security, algorithm neutralization, and service industry bailout has made investors worried about Meituan's takeaway basic plan and the realization of long-term business goals in 2025.

From the perspective of the competition pattern, the platform anti-monopoly will not affect the leading edge of Meituan Takeaway, and the change of the takeaway competition pattern and the user's mentality is not simply determined by the supply side of the merchant.

From the perspective of volume, the growth rate of meituan takeaway has declined significantly since the fourth quarter, but it is more due to the impact of the short-term epidemic.

From the perspective of price, the background of the service industry bailout is also related to the epidemic, after all, it is a short-term impact or price for volume, and social security is a variable that takes several years to digest, and the impact on long-term UE is limited.

Unless such a serious epidemic occurs every year in the next three years similar to 2020/2022, the business situation of Meituan takeaway will eventually return to normal, maintaining the long-term business goal of 1 yuan per single profit in 2025 and 100 million orders per day (85% takeaway, 15% flash delivery, and 25% compound annual growth rate of takeaway orders).

The in-store wine and travel industry is relatively less affected by policy regulation, but the strong entry of Douyin into local life in 2021 has also made investors worry about whether it will have a significant impact on the leading edge of Meituan's hotel and tourism.

According to the research of CITIC Construction Investment, Douyin still faces many problems in the current store, such as limited actual available traffic, unsustainable ultra-low-price group buying, lack of formal offline push team, lack of authoritative evaluation systems such as public reviews or word-of-mouth, and so on.

Therefore, the short-term impact of Douyin on the basic plate of Meituan's hotel is very limited, and the long-term depends on the investment progress.

In addition, the research report also said that community e-commerce shows a booming multi-format, and more attention will be paid to UE (user experience) improvement in 2022.

China's community e-commerce is mainly divided into two models (1P/3P) and four seed operating models (to the store + home, front warehouse, platform + home, community group purchase), although the advantages and disadvantages of different models are very obvious, but the current Chinese community e-commerce is still in the mode exploration and rapid development period, the market pattern is still uncertain, there has not yet been a fresh e-commerce model can be a systematic replacement for other model solutions, so a variety of community e-commerce models are currently booming.

For the front warehouse track, Dingdong buy vegetables' leading edge further expanded, in the second half of 2021, Dingdong to buy vegetables to achieve a strategic change from scale priority to efficiency priority and take into account the scale, the fourth quarter of Shanghai to achieve UE positive, it is expected that the company's profit side is expected to turn positive in 2023-2024, and the profit schedule is more optimistic than previously expected.

The essence of the platform + home model is an extension of the takeaway business model, all things to the home era, Meituan flash sale, hungry, Jingdong to home three-legged, although the migration of takeaway business ability endowments so that the Meituan flash sale and Ele.me in the single volume significantly ahead of Jingdong home, but Jingdong home in the field of supermarkets has obvious advantages, the instant retail industry know-how understanding is more profound, at the same time as a neutral platform, can better obtain the trust of merchants.

For the community group buying track, in 2021, under the influence of policy supervision, insufficient summer cold chain construction and other factors, the industry growth is lower than expected, but the competition pattern tends to be clear, after the entry of Internet giants, the industry's new and old forces alternate, the market clearance accelerates, Meituan and Pinduoduo maintain an absolute leading edge, Taocai vegetables surpass Xingsheng Preferred among the top three in the industry, looking forward to 2022, UE loss reduction will be the focus of attention of existing players.