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Meituan: Fighting Every War

The current Meituan (MeituanDianping) came from a merger between Meituan and Dianping in December 2015.

Once a company invested by Alibaba, Meituan has become more closer with Tencent after the merger.

At the beginning of 2016, MeituanDianping raised $3.3 billion from Tencent, DST Global and Temasek at a $15 billion pre-money valuation; meanwhile, Alibaba sold its stake for ~$900 million in the same month.

Later that year, in April 2016, Alibaba invested the $900 million in Ele.me and Ant Financial invested $350 million.

The war has already changed from Yelp and Groupon to more comprehensive areas – restaurants and other local services.

[Note – in 2014, Priceline (now Booking.com) agreed to buy restaurant booking service OpenTable for about $2.6 billion in cash. But in China, dining is not exactly scheduled by time but by getting a number into the line, determined by how many people are ahead of you.]

However, US and China are similar in the world of food delivery. Meituan and Ele.me are fighting in China while Uber Eats, DoorDash, GrubHub, PostMates are fighting in the US. The difference – China uses e-bikes and US uses cars.

And for other services like movies, Meituan spun-off Maoyan in 2016. Maoyan is competing with Tao Piaopiao, which raised ¥1.7 billion in 2016.

In the US, the market is led by Fandango and Atom Tickets. But the market is not limited to movies – it’s about all kinds of shows, concerts and exhibitions.

Meituan is also offering hotel & travel bookings, fighting in the war with Ctrip.

Going back to Meituan, it raised $4 billion in October 2017 from Tencent, Sequoia, GIC and Tiger Global.

Meituan Dianping introduced its ride-hailing operation Meituan Dache in February 2018.

In April 2018, Alibaba acquired Ele.me for $9.5 billion.

Same week , Meituan acquired mobike for $2.7 billion.

Later that month, Ant Financials led a round of $700 million for Hellobike.

Meituan went for IPO in Hong Kong in September 2018, raising $4.2 billion.

Another OTA, Tongcheng-Elong, with Tencent and Ctrip as major shareholders, went IPO in Hong Kong in November 2018, raising $180 million.

Summing up the wars Meituan is in:

  • Food delivery: with Alibaba’s Ele.me; same-day delivery: Dada-JD Daojia
  • Movie tickets: with Alibaba’s Tao Piaopiao
  • Ride-hailing: with Didi
  • Bike-sharing: with Hellobike and Didi Bike (Qingju)
  • Hotel and travel booking: with Ctrip
  • Payment & wallet
  • …

SoftBank Group Earnings Presentation: WeWork Impacts, 60% Discount, Best Deal In Alibaba

SoftBank Group’s presentation gives a fairly good illustration of what the group is holding, the loss on book due to WeWork and the turnaround plan for it.

The presentation talks a lot about WeWork, but it’s Alibaba that contributes/matters the most right now. Nearly half of ($123 billion out of the $256 billion) its equity values of holding comes from Alibaba.

And given SoftBank Group’s market cap ~$80 billion now, it is a very good source of Alibaba exposure even without hedge (personally I think other holdings are also okay).

The turnaround plan relies a lot on higher occupancy rates and cost cuttings as WeWork manage the properties longer.

Here is the presentation.

Consumers Now Can Choose 5G Plans in China (2)

In the last post, we look at the city coverage by three carriers.

Here is another comparison of the plans they provide, in terms of price and data.

Before looking at the table, another data point is useful – in September 2019, an average user consumed 8.39GB in data, up ~60% from 5.14GB September 2018, which grew ~2.6x from ~2GB in September 2017.

China Mobile’s plan has two version Personal & Family (the latter includes fixed broadband services).

There is not much difference between carriers, except that –

  • China Unicom & China Telecom trying to make a sales at 40GB level with China Unicom being more aggressive.
  • Consumers can experience higher speed with a smaller data plan for China Unicom & China Telecom
  • Initial discount availability is a little different; all provide discounts between 20-30% for the first 6 month
  • Additional data usage (outside of the plan) is priced at ¥3/GB, with first 3GB priced at ¥5/GB for China Mobile
Data Plan (GB) China Mobile China Unicom China Telecom avg. costs per GB Speed
30 128 129 129 4.3
500 Mbps
40 159 169 4.1
60 198 199 199 3.3
80 239 239 3.0
1 Gbps
100 298 299 299 3.0
150 398 399 399 2.7
300 598 599 599 2.0

Consumers Now Can Choose 5G Plans in China (1)

On the last day of October, three carriers in China unveiled their 5G plans and supported cities to the public.

Each carriers covers 50 cities. And doing a simple coverage overlap check, we could find 44 cities having three operators, 4 cities having two and 10 cities having one.

In total, 57 cities are covered with 5G plan(s).

Here are 45 cities with coverage by three carriers:

  1. 上海
  2. 东莞
  3. 乌鲁木齐
  4. 佛山
  5. 兰州
  6. 北京
  7. 南京
  8. 南宁
  9. 南昌
  10. 厦门
  11. 合肥
  12. 呼和浩特
  13. 哈尔滨
  14. 嘉兴
  15. 大连
  16. 天津
  17. 太原
  18. 宁波
  19. 广州
  20. 成都
  21. 无锡
  22. 昆明
  23. 杭州
  24. 柳州
  25. 武汉
  26. 沈阳
  27. 泉州
  28. 济南
  29. 海口
  30. 深圳
  31. 温州
  32. 石家庄
  33. 福州
  34. 苏州
  35. 西宁
  36. 西安
  37. 贵阳
  38. 郑州
  39. 重庆
  40. 银川
  41. 长春
  42. 长沙
  43. 雄安
  44. 青岛
  45. 鹰潭

3 cities covered by two carriers:

  1. 琼海 China Mobile & China Telecom
  2. 珠海 China Unicom & China Telecom
  3. 芜湖 China Mobile & China Telecom

9 cities covered by one carrier:

  1. 中山 China Unicom
  2. 南通 China Unicom
  3. 南阳 China Mobile
  4. 常州 China Unicom
  5. 晋城 China Mobile
  6. 株洲 China Mobile
  7. 绍兴 China Unicom
  8. 绵阳 China Telecom
  9. 金华 China Telecom

「What’s News In China」

Tencent will lead the development of blockchain-based invoice system in China. The invoices will be created as part of the project named “General Framework of DLT-Based Invoices,” which was approved and supported by countries such as the UK, Switzerland, Sweden and Brazil during an ITU-T international meeting on e-invoice standards. As of August 10, more than 6 million blockchain e-invoices have been issued, and more than 5,300 companies have been registered in China to use blockchain e-invoices since the first…was issued by Tencent on August 10, 2018. // globaltimes | TNW

China has banned online sales of e-cigarettes on Nov 1. All websites and apps selling e-cigarettes should be shut down and all online marketing campaigns halted; online shopping platforms need to remove e-cigarette products from their sites. The measures are aimed at protecting adolescents from vaping. // 烟草专卖局 | Bloomberg

Biotechnology company Amgen (NASDAQ: AMGN) announced on Oct 31 that it is taking a 20.5% stake in BeiGene (NASDAQ: BGNE), one of the largest biotech companies in China for $2.7 billion. The all-cash deal values BeiGene at $174.85 per American depository share, a 25% premium to BeiGene’s closing price on the Nasdaq on Wednesday. BeiGene’s stock jumped 37% the next day. // Amgen

「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.