Author: admin

「News of the Week」Apple Launched TV+

WSJ – A Stream of Choices
Several new video services are launching to challenge Netflix. How they compare:
Service Monthly Cost Launch date Shows
NETFLIX $12.99 Running The Crown, Stranger Things
HULU $5.99 (with ads);
$11.99 (ad-free)		 Running ER, The Handmaid’s Tale
AMAZON PRIME VIDEO $8.99 Running Marvelous Mrs. Maisel, Fleabag
APPLE TV+ $4.99 Nov. 1 The Morning Show, For All Mankind
DISNEY+ $6.99 Nov. 12 The Simpsons, The Mandalorian
HBO MAX $14.99 May 2020 Friends, The Flight Attendant
PEACOCK TBD Spring Battlestar Galactica, Rutherford Falls
Source: the companies
Dots to connect: services to facilitate sales?, streaming war, content war, lower costs in cloud, future ads, etc.

New Rankings For Chinese Internet Companies (Nov 1, 2019)

The word BAT seems to be the past, as AT (Alibaba & Tencent) have evolved into bigger ecosystems and entered into the league of $400 billion market cap club.

  • Alibaba market cap $459.43 billion
    • CYQ2 – Revenue was RMB114,924 million, an increase of 42% year-over-year (just reported CYQ3 revenue RMB119,017 million)
  • Tencent market cap $396.57 billion
    • CYQ2 – Total revenues were RMB88,821 million, an increase of 21% year-over-year.

Other internet companies, including Baidu, are in another league. Ranked by market cap:

  • Meituan market cap HK$543.24 billion, ~$69 billion
    • CYQ2 – Total revenues increased by 50.6% year-over-year to RMB22.7 billion (Total Gross Transaction Volume (GTV) on our platform grew by 28.7% to RMB 159.2 billion)
  • Pinduoduo market cap $48.23 billion
    • CYQ2 – Total revenues in the quarter were RMB7,290.0 million, an increase of 169%
  • JD.com market cap $45.78 billion
    • Net revenues for the second quarter of 2019 were RMB150.3 billion, an increase of 22.9% from the second quarter of 2018 (JD uses traditional retail model that takes inventory, so revenue includes value of goods sold)
  • Baidu market cap $36.47 billion
    • CYQ2 – Total revenues reached RMB 26.3 billion, increasing 1% year over year, or 6% year over year, excluding the impact of announced divestures

Also, private companies such as ByteDance is also in this league.

New Uber Credit Card… Not Sexy

In another post weeks before, I wrote how Uber Card can beat Chase Sapphire Reserve (CSR) in many ways.

But things change fast.

Two of my favorite perks are removed/reduced in this new Uber Credit Card – $50 annul credit in subscription is removed (a huge drop in NPV when comparing with other cards), and 4% dining is changed to 3% (a 25% reduction!)

Uber is definitely trying to save some costs and increase cardholder’s usage of Uber here. There will be no cash back – rewards are redeemed in the form of Uber Cash.

After the changes, Uber Credit Card will earn 5% on Uber related purchases (like Amazon Prime Rewards Visa Signature Card has 5% on amazon purchases). So when comparing costs of Lyft and Uber, technically you need to do a 5% adjustment to see which is better (too much of a hassle!).

The changes are coming for February 2020 billing period according to the email I received.

The new card design looks better tho.

Uber Credit Card
Source: cards.barclaycardus.com

Twitter Banned Political Ads

Years ago, we have entered into a world where communication with one another is instant and nearly cost-free. For broadcasters, this is the golden age that they could spread their messages easier than ever.

But that time seems to the last, as tech firms supporting those platforms are taking or required to take more actions in limiting messages/ads allowed to broadcast.

The underlying thesis – people realized that the nature of information will change depending on the number of audience.

Twitter’s recent action is to ban political ad purchases – to reach a large audience just by spending money. We could easily see that in a world such thing is allowed, it would just become a competition for war-chest, candidates bidding higher prices to reach the audience.

Some actions are for general accounts/messages – a Facebook account or post for example. Most are justified actions now. But this is a slippery slope. More messages could have been banned for the sake of overall well-being.

On the other hand, tech firms don’t want to spend too much on screening messages/ads. After all, they are not speaking those languages. But the challenges they are facing are more real than ever, while implementing more rules will also draw more critics.

There is a balance and trade-off here.

Tech firms need to balance between the percentage of communications allowed and the overall “healthiness” of the platform. The latter would impact long-term ads sales, users growth/engagement and political pressure/costs.

Tesla Shanghai Version Started To Receive Reservation!

Tesla announced on Weibo that customers can now book their Model 3 China version online or in store.

Source: Tesla Weibo

Prices start at ¥355,800. The first delivery will be in 2020 Q1. Before the Shanghai version, Tesla Model 3 was sold in China for more than ¥439,900.

Customers need to put a deposit of ¥20,000, which can be paid in AliPay or WeChat.

Source: tesla.cn

The pickup availability is shown below.

Source: tesla.cn

Three models of Model 3 will be sold in China.

「What’s News In China」

President Xi said the country needs to “seize the opportunity” afforded by blockchain technology. His speech also called for the creation of “Blockchain+,” a platform alluding to personal development such as education, employment and food and medicinal safety, among other basic needs. Since a 2017 decision by the People’s Bank of China, cryptocurrencies are banned in the country, although a digital renminbi is being developed by the central bank and likely to launch soon. // coindesk | TechCrunch

NetEase (NASDAQ: NTES)’s e-learning unit, Youdao (有道) made its debut on NYSE on Friday Oct 25, listed under the symbol “DAO”. Youdao priced its IPO shares at $17 per ADS, raising ~$95.2 million. The company is also raising another $125 million through the private placement of 7.35 million ordinary shares, to funds managed by Orbis Investment Management Ltd., for a total raise of $220.2 million. Founded in 2006, Youdao provides online dictionaries, online classrooms and language courses, with 100 million monthly average users in China in the first half of 2019. // marketwatch | 21jingji

Starbucks announced the new addition of Bar Mixato to its Starbucks Reserve Roastery in Shanghai. It features a full bar menu, which includes the global debut of 11 innovative coffee- and tea-based cocktails specially created and available only at the Shanghai Roastery. // Starbucks

Beijing-Shanghai High Speed Railway Co.,Ltd. IPO Filing

The most lucrative segment of China’s high speed railway system filed it IPO application with CSRC.

It announced its preparation of IPO back in February.

The 1,318km railway began construction in April 2008 and started operation in June 2011.

2019 (Jan – Sep) 2018 2017 2016
Passenger Revenue (‘0000 ¥) 1,204,204.99 1,579,069.55 1,556,737.53 1,418,926.44
PassengerMiles (billion km) 25.86 34.46 34.24 31.83
Unit Price (¥ per km) 0.466 0.458 0.455 0.446
Occupancy % 79.91% 81.64% 80.18% 73.38%

Unit price is consistent with experiences, e.g. Nanjing South to Shanghai Hongqiao is ~295km and costs ¥134.5, which translates to ¥0.456 per km in unit price.

For occupancy rate, there is some seasonality fluctuation (Jan – Sep vs. Oct – Dec).

Total revenue breakdown:

Income Statement:

Profitability is insane.

Total Revenue (‘0000) 2,500,191.65 3,115,842.16 2,955,540.94 2,625,761.72
COGS (‘0000) 1,185,571.50 1,629,918.30 1,593,526.42 1,514,366.73
Gross Margin 53% 48% 46% 42%
Net Income (‘0000) 1,269,335.26 1,366,419.72 1,207,143.13 902,434.75
NI Margin 51% 44% 41% 34%