Overall industry trends in Q1: Consumption recovery supported results, domestic consumption of goods and services continued to pick up, headline companies (Tencent, Ali, Jingdong) reported healthy earnings results and have optimistic Q2 outlooks.
Internet giants' AI capex is the focus of attention. both Tencent and Ali's spending in Q1 was not as aggressive as the market expected.Considering the uncertainty of high-end chip supply, the market consensus expects Ali and Tencent's capex in the March quarter to be around $35-40bn, and capex expectations for the full year of 2025 are not high, especially as Q2 also has short-term supply uncertainty.On the AI adoption front, growing AI inference demand will drive acceleration in Ali Cloud revenues (+17%); Tencent's progress in ad tech upgrades, AI shopping/local service agents within the WeChat ecosystem, and renewed AI inference demand for C-end/B-end applications.
The competitive landscape for takeaway/instant retail will be reshaped.Given Jingdong's recent entry into the takeaway market (with daily orders exceeding 10 million), we need to keep an eye on the potential impact of Taobao's "instant retail" and HungryMall's counter-attack strategies, as well as Meituan's further response, on the profit outlook for its core local commerce (CLC).The impact of HungryMall/Meituan will depend on the sustainability of Jingdong's order intake, especially after subsidies and average unit losses gradually return to normal.
Geopolitical dynamics and impact on cross-border business models.Attention needs to be paid to coping strategies for rising tariff costs for small parcels (e.g., Poundland Temu's recent over-expected shift to a semi-custodial/third-party platform model), as well as corporate responses to the risk of ADR delisting and the U.S. investment ban.
Specific Focus
$TENCENT(00700)$ (May 14) $Tencent Holdings ADR (TCEHY)$
Advertising and gaming driven.Advertising revenue is expected to be +18% YoY (upgraded WeChat eco-advertising) and gaming revenue +15% (Valorant Handicraft launched);
AI applications focus on the progress of AI agents (e.g., shopping, local services) within the WeChat ecosystem and the impact of domestic chip substitution on capex.
$Alibaba(BABA)$ (May 15) $BABA-W(09988)$
E-commerce and cloud business: Taobao Tmall customer management revenue (CMR) expected to be +9%, cloud business growth accelerated (driven by AI inference demand).
Competition and investment balance: need to focus on the trade-off between reinvestment in Taotian Group (e.g., instant retail) and shareholder returns (buybacks slowing to $600 million).
$JD.com(JD)$ (May 13) $JD-SW(09618)$
Retail profit beats expectations: retail EBIT is expected to be +28% y/y, but takeaway new business losses may drag down group profit (10-14 billion yuan loss expected in 2025).
Takeaway daily order volume exceeds 10m, but subsidy sustainability is key.
$PDD Holdings Inc(PDD)$ (mid-to-late May)
Temu strategy adjustment: shift to semi-custodial model due to U.S. tariff policy, ad spending cuts or reduced losses, but GMV estimates lowered.
Domestic competition: jittery low-priced goods and commission free policy threaten Pinduoduo's market share.
$MEITUAN-W(03690)$ (Late May)
Takeaway and instant retail: core local commerce profit expected to be +26%, subject to subsidized competition from Jingdong's entry into takeaway and HungryMall's joining forces with Taobao.
Overseas expansion: progress in the Middle East, Hong Kong and potentially Latin America.
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