2019 “11.11” Shopping Festival delivered another record with higher-than-expected GMV growth. Alibaba GMV + 26% YoY (vs. market expectation of 20%~25%), while JD GMV accelerated to +28% YoY (vs. 26% YoY in 2018). PDD did not release its GMV, but shared more color on its orders trend. We believe market focus of this event lies in: 1) user engagement; 2) lower-tier cities penetration; and 3) subsidies. Despite intensified competition, we view the “11.11” performance as solid achievement and better than market expectation.
- Alibaba (BABA US, BUY): At its 11th “11.11” Shopping Festival, Alibaba once again achieved another GMV record at RMB268.4bn, + 26% YoY (vs. 27% in 2018), slightly higher than market expectation of 20%~25%. Compared with NBS growth, we believe Alibaba still continues to gain shares. We view this growth as solid performance, especially under more intensified competition from JD and PDD. Such strong momentum was mainly attributable to: 1) Live-streaming promotion; 2) better targeting and cross-selling; 3) deeper low-tier cities penetration; and 4) subsidies for instalment payment services (花呗分期补贴). We believe BABA will strengthen its advantage on brands, meanwhile, to benefit from user acquisition from low-tier cities. Moreover, we think BABA’s subsidies focus on instalment payment (vs. traditional red envelope campaign in 2017&2018) could effectively boost users’ purchase size and engagement. We view BABA as our top pick, backed by solid earnings growth and reasonable valuation. Further potential catalysts: 1) dual listing in HK; and 2) ecosystem synergies. Maintain BUY.
- Pinduoduo (PDD US, BUY): Similar to 2018, PDD did not disclose its GMV number in 2019 “11.11”. PDD shared more color on its delivery orders, agricultural products performance and category sales highlights. It took only 9.5 hrs to exceed the GMV number of the whole day in 2018 “11.11”. Its delivery orders surged 300% YoY, in which agricultural goods orders surpassed 40mn. Looking ahead, we keep positive on its ARPU upside from top-tier cities user penetration, ROI-driven S&M strategy, and user expansion momentum.
- JD (JD US): JD GMV reached 20.4bn, accelerated to +28% YoY (vs. 26% YoY in 2018), beat market expectation, mainly on: 1) the advantage as the first one to start warming up for “11.11”; 2) well performance of 3C products, especially with eye-catching sales of iPhone; and 3) user acquisition from Jingxi platform. We expect this strong GMV to support its 4Q19E trend, coupled with continuous margin expansion.
