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No. of Recommendations: 3
Ant:

I believe it was you from over Singapore way that expressed confidence in the above 3-4 companies.

I am sure you saw Tom Gardner's post at Saul's board suggesting (through Bill Mann) that JD.com may be fertile investment ground.

TCEHY market cap $575 Billion with forward PE of N/A
BABA market cap $484 Billion with forward PE of 28
BIDU market cap $85 Billion with forward PE of 25
JD market cap $64 Billion with forward PE of 50.

So care to discuss these latter two and why one would consider owning them? I didn't get the feeling you were too fond of BIDU? But JD?

The market caps of the first two are massive already.....just not seeing the huge upside. But the latter two may have some room to go assuming the business model is sound.

Why JD vs others?
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No. of Recommendations: 2
Here is a great article comparing BABA to JD:

https://seekingalpha.com/article/4132604-jd-com-vs-alibaba-c...

JD has gone after partnerships with large players from Walmart to TCEHY both who have ownership in the company as well as Bank of China and others.
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No. of Recommendations: 14
Hi Duma

Yep I saw Tom's post about JD. I do intend to comment on it when I get the time between running my business, dealing with crypto mania, managing my portfolio, dealing with some land transactions and everything else going on...

Anyhow my immediate thoughts are:
1) BABA is THE one. It has a real shot to be THE #1 global ecommerce player above Amazon. It has global ambitions - and global execution, perhaps more so than AMAZON. It is undervalued compared to AMAZON and has EBAY, PayPal, YouTube, AWS, Android and God knows what thrown in as well. It is killing it in emerging markets thanks to some very simple basics like AliPay and also accepting Cash on Delivery as well as its regional acquisitions and partnerships (e.g. Lazarda in SEAsia). China is a much bigger and better home base than the US with 1.3Bn people all mad about ecommerce with very little in the way of bricks and mortar alternatives let alone over-saturation. They are also pushing the boundaries of O2O (online to offline) more than Amazon. Their numbers look great and they execute well. JD.com is outstanding at ecommerce but has a different model. Ali Baba is a little more like eBay (acting as a market place for buyers without owning inventory etc) whilst JD.com is a little more like Amazon. I have heard the observation that China is moving from a seller to a buyer market. That could be a rationale to own Ali Baba over Amazon and perhaps over JD.com even though Ali Baba is already 6x of JD (I think both have plenty to go as does Amazon but these guys so much more).

2) I don't see this as an either/or which one question. I might end up owning all of them. I am already in BABA and Tencent (via HK not US). I never got into BIDU partly as I missed the boat and partly they ran out of growth and got hit by the healthcare advertising ban. That disappointed me. They seem to be coming back. I like their CEO and BIDU could be a dark horse in the AI race. Whenever I speak to the BAT triumvirate in China I always get the impression that BIDU is considered lagging behind. JD I have always liked but they were always expensive and never profitable. Now they have pulled back and about to hit profits I like them more. What I really like about them though is how professional their business is, their partnerships e.g. with Tencent and NOW their intentions to move on Europe and look beyond just China. Suddenly to me they are an exciting proposition. JD.Com is actually next on my buy list. To a degree though I have exposure to them via Tencent which owns a stake and is partnered with them. Tencent is right now the biggest and is growing very fast. Their prime asset - WeChat has total dominance in China and Chinese Asia. WeChat Pay is becoming more accepted for payment across Asia although not as fast as AliPay. They are also into gaming and eSports which could be monster franchises in the future - all Chinese guys seem to want to sit in dark rooms playing eSports and online gaming. WeChat is both their greatest opportunity as well as greatest risk. If the Chinese government wanted to do to WeChat what they have done to WhatsApp or Google then they are stuffed.

3) Tencent and AliBaba stand a great chance of becoming global titans. I was disappointed in the protectionist non-free market decision by the US to block the Ant Financial pursuit of Moneygram. The US could have allowed it and even gotten some leverage from it - such as US access to China or increasing regulation and oversight over Sino monetary cross border transaction markets and AliBaba even. Ali Baba did not represent a monopolistic threat nor a security threat and is completely decoupled from the China government (unlike Huawei for example bidding for US IT assets). Had Europe taken that approach to block US business from Standard Oil to Ford/GM to IBM/GE during the 20th century the US would look very different. To me it is another example of the US failing to accept a world with China and accelerate driving the rest of the world into the arms of China, but I digress. I believe Ali Baba will become the largest company in the world with or without this kind of road block (just as British then American then Japanese corporations became global titans as their countries developed - why should China be any different).

In short...
BABA is my second largest holding at 5.5% of my US port
Tencent is my second largest holding in my HK port and one of my top 10 holdings world wide
JD.Com will probably go straight into a top 15 holding for me in the US when I purchase it (likely in Q1)
BIDU I am tracking how its growth recovers and continues and where it gets to with AI

Cheers
Ant
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One advantage that JD seems to have over Alibaba (I own JD) is that they own their own goods. Evidently, they are more trusted in China than Alibaba when it comes to pirated goods, etc.

What interests me about this is the Blockchain partnership they are starting w Walmart to track their food supply chain and secure. I think this could be a huge opportunity (I feel like I may have posted this already. Oh well. Still applies).

On the topic of esports, I have owned TTWO for awhile. Very intrigued by this vertical. I see it as a less frowned upon “sin” industry. It is huge. Have looked at TCEHY. Keep getting turned off by mkt cap. But, may dive in.
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Hi Treepak

Right now having trust and ownership control is a benefit to JD. Personally tho and I like the example you bring up, block chain presumably takes risk of provenance out of the equation so effectively destroys the benefit of being a trusted owner / purveyer. I think the food chain could be the single biggest beneficiary of block chain. Guaranteeing nutrition info on origins, organic soil conditions, ripeness at harvesting, processing interventions, time and conditions in supply chain etc. That should mean you don’t need to pay JD.com or whole foods a premium for being the trusted intermediary. All buyers are empowered no more caveat emptor. In which case the advantage swings back to Ali Baba.
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Have looked at TCEHY. Keep getting turned off by mkt cap. But, may dive in.

Lol - in the sameway Europeans found it hard getting their heads round US market caps. Just get used to the next big thing. China is 4-5x the size of the US. US is not the largest beast in the jungle anymore. Get ready to move over, let the big Monster truck in the mirror overtake and expand your mind.

Ant
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One advantage that JD seems to have over Alibaba (I own JD) is that they own their own goods.

This may be beneficial from a consumer perspective, but isn't it worse concerning cash flow?

On the retail side, Amazon is paid when a customer orders and pays the vendor later creating a negative cash conversion cycle (pretty sweet). Alibaba's model seems to have this where JD's wouldn't assuming their vendors aren't providing inventory on consignment.

A.J.
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Thanks Ant
I do not see how investors can ignore BABA. It is bringing improved shopping experience , better prices, better selection, more ease of use, just like Amazon did in the US. Except in a vastly bigger market and in places where B&M is less efficient than in the US.

I believe Ali Baba will become the largest company in the world it certainly has a good shot at it.

Not quite as sure about JD. All those partnerships with what might seem to be potential rivals. Wal -Mart? As long as they are spending big time on fulfillment centers and inventory they will be big on revenue but low on profits. Plus they are more exposed to recession risk. OTOH, markets don't mind that Amazon has many of the same potential problems.

I do not own either AMZN or JD. I used to own the former but sold to buy BABA. I may buy back Amazon in the next Bear market. What do I know about Amazon that hundreds of of millions of investors do not know? Where is the investing edge?

If indeed BABA is more like eBay and JD is more like Amazon, we know who is the big winner in the US. So like Ant I am looking closely at JD.com. Buying it would violate my rule of owning no more than one Chinese company .
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Ali Baba did not represent a monopolistic threat nor a security threat and is completely decoupled from the China government (unlike Huawei for example bidding for US IT assets

Hey Ant:

perhaps the bigger question is to what degree that the Chinese government will allow BABA to gain such power over their economy.

We have seen in past that the Chinese government can intervene in a company's competitiveness.......maybe even taking their oppportunity down a bit.

Why would China allow BABA to take over their world let alone the entire world??

I could see them wanting alternatives companies like JD, etc. but it just seems that Chinese companies run the additional risk of governmental influence.
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Why would China allow BABA to take over their world let alone the entire world??

I could see them wanting alternatives companies like JD, etc. but it just seems that Chinese companies run the additional risk of governmental influence.


Duma - the Chinese want international respect and economic domination. Baba could give them both - so I’m sure if the Chinese Govt saw that they would be delighted. It’s not like they are the hooked up over a competitive market place. But of course this a monster market so I think there’s room for both Baba and JD to win frankly.

Ant
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Buying it would violate my rule of owning no more than one Chinese company .

So why don’t you buy Altaba which is a US listed investment vehicle that just happens to have a very large direct non VIE stake in Ali Baba and then JD?

Ant
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Why would China allow BABA to take over their world let alone the entire world??
well the Chinese government might not want Alibaba to take over China but probably would not object to them taking over the rest of the world. Maybe especially the US
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Ant
Interesting idea, Altbaba.

In terms of JD and Blockchain, I guess I had a bit of a different take. I didn’t see Blockchain brought to the food chain as something that would be obiquitous in China in the short or medium term. I figure if JD owns its goods and is teaming w a premier US name in Walmart, JD would have an advantage for a period of time. Maybe not. I mean, how does BABA impose a Blockchain protocol on food it does not control? I guess could start.

Concerning BABA, I am conflicted. I pay for a service at Seekingalpha. The guy who runs it cut his teeth at a hedge fund shorting Chinese stocks (Has little to do w the service I subscribe to). He is in the Jim Chanos camp. He thinks BABA is a fraud (to a large extent). He much prefers JD (which he figures probably only overstates its numbers by 30% or less-nice). But, BABA is China’s darling. Will it ever matter if most of their numbers are bogus? I don’t know. I don’t love investing in Chinese stocks. But, I have a little JD.
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It will matter if their books are fraud when there is a recession. Recessions bring all weaknesses to the forefront.

People who lose money want a scapegoat and cooked books are a good target.

This said I have no info if the books are cooked. But like any pyramid scheme, it lasts only as long as times are good.

I remember telling a girlfriend the same thing. You only know who your friends are and who you are during crisis. The same happens to companies. Sadly, sometimes you fneed nd the truth.

Tinker
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This would be a positive catalyst for BIDU, JD, etc :

"China’s biggest overseas-traded technology companies from search giant Baidu Inc. to Sogou Inc. are investigating ways to float shares on the country’s exchanges, as Beijing encourages its largest corporations to bring their listings home."

https://www.bloomberg.com/news/articles/2018-03-05/top-china...
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BIDU crushes earnings - EPS $2.60, beats by 0.96c :

http://ir.baidu.com/phoenix.zhtml?c=188488&p=irol-newsAr...
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