2020 “11.11” Shopping Festival delivered another record with higher-than-expected GMV growth. Alibaba GMV + 26% YoY (from 11.1-11.11), while JD GMV accelerated to +33% YoY (vs. 26%/28% YoY in 2018/2019). As usual, PDD did not release its GMV. We believe market focus of this event lies in: 1) livestreaming to stimulate engagement; 2) prepayment features and festival extension (two periods); 3) lower-tier cities penetration; 4) subsidies; and 5) enhanced logistics. Despite intensified competition, we view the “11.11” performance as solid achievement and higher than market expectations. We reiterate our confidence on ecommerce/lifestyle giants’ secular growth, and suggest to buy on dips after recent pull back on antitrust guideline and Pfizer's vaccine progress.
- Alibaba (BABA US, BUY): At its 12th “11.11” Shopping Festival, Alibaba once again achieved another GMV record at RMB498.2bn (from 11.1-11.11), +26% YoY (vs. +26% in 11 Nov 2019 – Single day). We view this growth as solid performance, especially under more intensified competition from JD and PDD. Compared to past years, BABA’s 11.11 in 2020 extended into two periods (11.1-11.3, 11.11), and emphasized more on livestreaming initiatives and enhanced logistics. On top of that, over 31K international brands participated in this year’s festival, and over 450 brands surpassed RMB100m in GMV. We believe BABA will strengthen its advantage on brands & channels, meanwhile, to benefit from user acquisition from low-tier cities. Valuation at 20x FY22E P/E is attractive in our view, and we suggest to move into its solid 4Q20E and upcoming cloud quarterly breakeven.
- Pinduoduo (PDD US, BUY): Similar to 2019, PDD did not disclose its GMV number in 2020 “11.11”. Based on our crosscheck, we believe PDD will continue to gain share in user time spent, backed by its Duo Duo Mai Cai initiatives and strategic subsidies. Looking ahead, we keep positive on its ARPU upside, ROI-driven S&M strategy, and user expansion momentum.
- JD (JD US): JD GMV reached 271.5bn, accelerated to +33% YoY (vs. +26%/28% YoY in 2018/2019), beating market expectation, mainly due to : 1) warming up from 10.21; 2) C2M momentums and integration of online to offline; and 3) faster growth in low-tier cities backed by Jingxi. E.g., presale order numbers +126% YoY in rural areas (vs. +117% in urban areas). We expect this strong GMV to support its 4Q20E trend, coupled with continuous margin expansion.
