If we need one figure this week to tell how the US economy is going – then the Walmart US store comparable sales is the one: 3.2% yoy.
WSJ – Walmart’s Sales Growth Streak Hits Five Years
Dots to connect: inflation, Walmart’s online sales growth, international sales growth, tariff impacts, etc.
One year after the legalization of recreational use of cannabis in Canada, and following up on the previous discussion of those public companies gathering partners/supports, ramping up production and declines in ASP, here is an another snapshot as of 2019 Q3.
The number of kilograms sold is soaring.
But ASP keep falling.
And here is the graph for aggregated market cap of cannabis companies as of 11/15.
Paying to become a member of a video platform has gradually become mainstream in China, at least for the younger generations.
Consumer behaviors have been changing from searching for free sources (as there are fewer of them now than before) to paying for high quality and hassle-free subscriptions.
The leading platforms, iQiYi and Tencent Videos, have paying members exceeding 100 million in 2019 Q2 and 2019 Q3 respectively. The paying percentage is around 20% for a 500 million MAU (iQiYi 2018 Q4 MAU 454.5 million).
Alibaba’s Youku is only little behind (numbers are not disclosed).
Similar trends are found in Tencent Music and NetEase Music. While paying percentage is ~4-5%, it is picking up. Tencent Music’s online music paying users grew 42.2% yoy to 35.4 million (5.36% of 661 million MAU).
Emerging platforms like Bilibili are also seeing more paying users percentage.
As Direct-to-Consumer (DTC) businesses are booming and going public as companies, their earnings report gave us some insights into their gross margins and what those products cost the companies to produce (cost of goods sold is the flip side of gross margin).
Canada Goose, in their Second Quarter Fiscal 2019 results, said that DTC gross margin is 75.6%, a 40 bps increase from last year.
cost of goods sold: 24.4%
Moncler similarly has a gross margin of 76.6% for 2019 H1.
cost of goods sold: 23.4%
Tiffany in the most recent quarter has a gross margin of 62.7%, decreasing from 64% the year before. LVMH recent announced its attempt to acquire Tiffany.
cost of goods sold: 37.3%
Even the giant consumer staples company Procter & Gamble’s gross margin stays at 47.7%.
cost of goods sold: 52.3%
Beyond the transaction fees charged by AliPay and WeChatPay, CB Insights outlined five major growth opportunities.
See full report here.
On this annual shopping festival, we could see how Chinese consumers are growing their spending.
Alibaba’s Tmall reached 10 billion yuan in less than two minutes (00:01:36)
With updated info: Alibaba singles day sales GMV stood at 268.4 billion yuan (~$38 billion), growing 26% from last year.
Dots to connect: competitions from JD and Pinduoduo?, growth okay, houses being sold on platforms, live steaming as a new type of sales & marketing but costs?
It is an interesting story to watch as LVMH became the second-most valuable company in Europe
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:
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.
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 –
| 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 |