中国互联网与媒体展望：超越激烈的收购竞争

1、22November2019Greater ChinaEQUITIESTP and recommendation summaryCompanyRatingTarget priceAlibaba*OPUS$23127%Alibaba HealthOPHK$9.314%AutohomeOP$9434%Baidu*N$13417%China FilmOP1835%HuaceOP7.33%IMAX ChinaOPHK$25.654%JD*N$3614%KingdeeOPHK$9.514%Wise TalentOPHK$24.736%NetEase*OP$36326%Pinduoduo*OP$6297%

2、Ping An HealthcareOPHK$6511%Tencent*OPHK$41022%Tencent MusicOP$16.233%VIPS*OP$1630%Wanda FilmN14.0-2%YonyouOP36.621%Source: Bloomberg, Macquarie Research, November 2019* New initiationsInside HYPERLINK l _TOC_250013 ExecutiveSummary3 HYPERLINK l _TOC_250012 StockOutlook6 HYPERLINK l _TOC_250011 Indu

3、stryOutlook9 HYPERLINK l _TOC_250010 e-Commerce11 HYPERLINK l _TOC_250009 Online Advertising&Publishers14 HYPERLINK l _TOC_250008 OnlineGaming17 HYPERLINK l _TOC_250007 Online Mediaand Entertainment19 HYPERLINK l _TOC_250006 Alibaba Group Holding(BABAUS)21 HYPERLINK l _TOC_250005 Baidu (BIDUUS)31 HY

4、PERLINK l _TOC_250004 JD.com (JD US)40 HYPERLINK l _TOC_250003 NetEase Inc(NTES US)48 HYPERLINK l _TOC_250002 Pinduoduo(PDD US)58 HYPERLINK l _TOC_250001 Tencent(700 HK)68 HYPERLINK l _TOC_250000 Vipshop Holdings (VIPS US)83AnalystsMacquarie Capital LimitedHan Joon Kim +852 3922 5926 HYPERLINK mailt

5、o:hanjoon.kim hanjoon.kimJohn Wang +852 3922 3578 HYPERLINK mailto:john.wang john.wangEllie Jiang +852 3922 4110 HYPERLINK mailto:ellie.jiang ellie.jiangFrank Chen +852 3922 1433 HYPERLINK mailto:frank.chen frank.chenChina Internet & Media2020 Outlook: Beyond the acquisition rat raceKey pointsKey po

6、ints InitiationsonAlibaba,Baidu,JD.com,NetEase,Pinduoduo,Tencent,and Vipshop. User retention has become an increasingly important strategic initiative inconsumer internet, with implications for long-term margins. Marginstabilityin2019couldtranslateintoareboundin2020;consumer internet sector trades b

7、elow historical averageP/E.Positive on 2020 outlook as sector primed for operating leverageIn the upcoming year of the Golden Rat, we expect the Chinese internet industry to embody the animal it represents, with cautious and thrifty behaviour, and predict a net positive outcome as a result. After ye

8、ars of sometimes prodigal investments that were condoned due to rapid growth, we see capital discipline moving to the core of corporate strategy for many companies, a phenomenon that was significantly less apparent in late 2018. 2019 has already delivered proof of margin stabilization for the sector

9、 after years of decline, and we see companies primed for operating leverage in 2020, should underlying bottlenecks to growth ease. We initiate coverage of Alibaba (Outperform), Baidu (Neutral), JD (Neutral), NetEase (Outperform), Pinduoduo (PDD; Outperform), Tencent (Outperform), VIPShop (Outperform

10、).Seeking sustainable growth beyond the acquisition rat raceWe recommend investors focus on two important stock selection barometers for the sector in 2020: 1) operating leverage potential; and 2) user retention and activation moats instead of an overt focus on rapid user acquisition-led growth. Top

11、-line growth-oriented themes such as rising lower-tier city penetration or the growth of middle-class consumers and local/personalized services remain important, but we feel the narrative around sustainable profit growth will become a greater focal point as the industry matures.2020 stock outlook an

12、d top picksWhile China internet & media has outperformed MSCI China and EM year-to- date, the sector is still trading below historical average valuations. This is in contrast to US peers trading above. With margins stabilizing, we think even gentle improvements in underlying demand factors could sup

13、port faster-than- expected earnings recovery. For 2020, we see the most upside for PDD. We also see Tencent outperforming in 2020. While the primary focus of this report is on consumer internet, we also highlight Kingdee, covered by John Wang, as our top pick in enterprisesolutions.Valuation and key

14、 risksWe value stocks on P/E, PEG, EV/EBITDA and SoTP, and largely cross- reference historical and peer valuation. Competition, FX, and geopolitical factors are key risks for the industry.Please refer to page 90 for important disclosures and analyst certification, or on our website HYPERLINK /resear

15、ch/disclosures /research/disclosures.Fig 1 Summary of valuation methodSource: Bloomberg, Macquarie Research, November 2019* New initiations through this reportExecutive SummarySector primed for operating leverage in 2020In the upcoming Chinese Zodiac year of the Golden Rat, we expect the Chinese int

16、ernet industry to embody the animal it represents, with cautious and thrifty behaviour, and predict a net positive outcome as a result. After years of sometimes prodigal investment that was condoned due to rapid growth, we see capital discipline moving to the core of corporate strategy for many comp

17、anies, a phenomenon that was significantly less apparent in late 2018. For example, we can only remember two companies discussing cost optimization at the beginning of 2019. In contrast, the topic has been front and center in almost all earnings calls we listened to for 3Q19 inNovember.We believe th

18、e focus on capital and cost discipline is a positive and encourage investors to look beyond the bemoaning testimonies of slowing growth during meetings with corporates. We would note that consumer internet companies largely can generate significant operating leverage on incremental revenue growth, a

19、s variable cost tends to be low, so a recovery in profit could be rapid should underlying growth bottlenecks ease.Valuation and recommendationsWe initiate coverage of seven stocks in consumer internet: Alibaba (Outperform), Baidu (Neutral), JD (Neutral), NetEase (Outperform), Pinduoduo (PDD; Outperf

20、orm), Tencent (Outperform), VIPShop (Outperform). In general, we have a greater bias for higher-beta names in 2020 but also see Tencent performing better in 2020 than in 2019 as a leading mega cap in the sector. While the focus of this report is on consumer internet trends in China, we also highligh

21、t Kingdee as our preferred stock in enterprise software in 2020. Our target prices mostly reflect upside to current share price, even for Neutral-rated stocks, as we view the overall sector positively.% diffFY2020MQeCons% diffFY2019MQeCons% diffFY2020MQeCons% diffFY2019MQeConsCurrencyRevenueRmb m525

22、,146518,7631%658,954669,175-2%Alibaba*OPRmb m102,06097,1335%139,364127,5419%Non-GAAP EPSRmb51.151.20%64.061.54%Non-GAAP EPSRmb0.010.00297%0.040.03Non-GAAP EPSRmb0.010.00297%0.040.0363%RevenueRmb m8,4138,4070%9,8109,2836%AutohomeNon-GAAP OPRmb m3,1743,0384%3,9593,36218%Non-GAAP EPSRmb27.126.91%33.329

23、.612%RevenueRmb m106,286106,4030%112,876117,984-4%BaiduOPRmb m3,6014,761-24%6,25610,639-41%Non-GAAP EPSRmb38.336.84%50.047.16%RevenueRmb m9,5969,819-2%10,80610,7580%China FilmOPRmb m1,4041,744-19%1,7901,924-7%Non-GAAP EPSRmb0.60.7-3%0.80.812%RevenueRmb m2,1544,748-55%2,5285,774-56%HuaceOPRmb m151252

24、-40%152598-75%Non-GAAP EPSRmb0.170.2-22%0.060.3-81%RevenueUSD m1361305%1491406%IMAX ChinaOPUSD m62604%70657%Non-GAAP EPSUSD0.150.148%0.160.156%RevenueRmb m571,903567,9251%674,694670,7301%JDOPRmb m8,4735,86145%9,6539,4882%Non-GAAP EPSRmb7.46.98%8.49.4-10%RevenueRmb m3,3083,3050%3,9903,9760%KingdeeOPR

25、mb m331365-9%47441614%Non-GAAP EPSRmb0.090.10-12%0.120.118%RevenueRmb m1,5091,4901%1,9251,8822%Wise TalentOPRmb m18311954%38827342%Non-GAAP EPSRmb0.40.326%0.70.520%RevenueRmb m67,80274,027-8%67,00775,938-12%NetEaseOPRmb m13,86112,9007%14,94814,8321%Non-GAAP EPSRmb115.295.221%118.4103.514%RevenueRmb

26、m29,76030,370-2%53,11849,6387%PinduoduoNon-GAAP OPRmb m-8,008-7,249-10%-7,687-601-1179%Non-GAAP EPSRmb-5.4-2.9-86%-4.63.2-246%RevenueRmb m5,3365,1154%7,9327,5565%Ping An HealthcareOPRmb m-988-1,23120%-754-98323%Non-GAAP EPSRmb-0.6-0.931%-0.3-0.550%RevenueRmb m380,818377,4791%482,482467,0823%TencentN

27、on-GAAP OPRmb m117,261117,865-1%140,443136,1173%Non-GAAP EPSRmb10.09.91%11.911.90%RevenueRmb m25,26725,3390%32,32432,514-1%Tencent MusicNon-GAAP OPRmb m4,2714,316-1%5,7235,4984%Non-GAAP EPSRmb2.82.8-2%3.43.40%RevenueRmb m91,39791,1110%97,07597,774-1%VipshopNon-GAAP OPRmb m5,5835,1668%6,6596,4254%Non

28、-GAAP EPSRmb7.06.67%8.27.93%RevenueRmb m15,37515,759-2%16,46817,927-8%Wanda FilmOPRmb m1,3941,722-19%1,6802,215-24%Non-GAAP EPSRmb0.630.7-12%0.770.9-12%RevenueRmb m8,8009,094-3%10,42111,029-6%YonyouOPRmb m2851,258-77%6301,602-61%Non-GAAP EPSRmb0.30.4-7%0.40.4-15%Source: Company data, Macquarie Resea

29、rch, November 2019 Note: consensus as of Nov 18, 2019* Alibaba is using FY2020 and FY 2021 number for FY2019 and FY2020, respectivelyOur estimates are broadly in-line with consensus on most stocks. Given our propensity to err more on the side of conservatism than consensus in the past, we believe ou

30、r estimates being in line with consensus actually suggests that consensus is more realistic than optimistic. Any incrementally faster revenue growth could thus yield upside to overall consensus, in our view.That said, note that while we have a strongly positive view on PDD, we have downside against

31、consensus forecast for profits in 2020. As we argue in this report, we are more optimistic above the potential operating leverage and the land-grab that PDD is achieving on the top line than a focus on immediacy of earnings turnaround in 2020. However, we do see weaker-than-consensus earnings for PD

32、D as a meaningful source of downside risk for thestock.Macquarie ResearchChina Internet & Media5Macquarie ResearchChina Internet & Media522 November 2019Fig 3 Coverage universe comp table22 November 2019Company NameBloomberg CodePriceRatingTarget PriceMkt Cap (US$mn)2018PE (x) 2019E2020EEV/EBITDA (x

33、)20182019E2020E2018ROE (%) 2019E2019E2018EV/Sales 2019E2020Ee-CommerceAlibabaBABA US$182.35Outperform$23127%476,08836.025.020.024.318.014.522%23%22%JDJD US$31.68Neural$3614%46,06294.730.126.448.519.815.25%13%14%PinduoduoPDD US$31.40Outperform$6297%23,607nmfnmfnmfnmfnmfnmfnmfnmfnmfVipshopVIPS US$12.2

34、7Outperform$1630%8,20922.012.310.517%24%22%Gaming & appTencent700 HKHK$335.6OutperformHK$41022%402,94828.023.221.627%26%24%NetEaseNTES US$287.81Outperform$36326%36,82830.217.611.919%30%25%MediaTMETME US$12.14Outperform$16.233%19,8536.532.524.36%9%10%7.05.24.0BaiduBIDU US$114.80Neutral$134.017%39,778

35、12.320.916.28.714.312.016%8%10%Wanda Film002739 CH14.35Neutral14-2%4,19024.624.97.811%8%8%China Film600977 CH13.37Outperform1835%3,54917.724.517.019.118.714.814%9%13%Zhejiang Huace300133 CH7.1Outperform7.33%1,76757.431.425.018.327.716.83%5%7%IMAX China1970 HKHK$16.64OutperformHK$25.654%74118.915.614

36、.317%18%17%Online verticalsAutohomeATHM US$70.00Outperform$9434%8,26419.518.615.218.717.313.433%26%25%Liepin6100 HKHK$18.22OutperformHK$24.736%1,20681.750.027.2995.160.026.06%7%11%Ping An GoodDoctor1833 HKHK$58.75OutperformHK$6511%7,615nmfnmfnmfnmfnmfnmfnmfnmfnmfAlibaba Health241 HKHK$8.19Outperform

37、HK$9.314%12,520nmf885.3187.2nmf747.8153.2nmf3%14%SoftwareYonyou600588 CH30.33Outperform36.621%10,49392.486.877.958.673.242.89%11%12%Kingdee268 HKHK$8.31OutperformHK$9.514%3,46973.182.558.663.155.944.69%5%7%Sector average42.832.225.526.525.018.114.1%15.0%15.3%7.04.83.6*Bloomberg pricing as of Nov 21,

38、 2019.Source: Bloomberg, Macquarie Research, November 2019Resilience in and expectedearningsoutlook led divergence in stock performance inStock OutlookWhat worked in2019Webelieveretrospectionon2019stockperformanceoffersaguideposttoimportantthemesfor stock selection in 2020. Year to date, enterprise

39、solution providers have generated the best returns, followed by e-commerce players. Online advertising-related media and publishers have been the worstperformers.A breakdown analysis of the underlying stock performance variables suggests that relativity in growth rate and resilience in earnings have

40、 been the two key factors contributing to better performance for consumer internet names. For example, stocks such as Alibaba, Meituan and JD have generated higher-than-peer growth rate in earnings but have also seen less substantial decline in consensus earnings adjustment. In contrast, a stock lik

41、e Baidu had seen its consensus continue to reduce in September 2019 while most peers began to see upward revision by the end of June.For enterprise solutions, the migration from on-premise to cloud software has been negatively impacting profit margins, but investors had been shifting focus to revenu

42、e over earnings growth as a better proxy to improving working capital, and thereby cashflow, helping the sector outperform in 2019 even though profit growth was not strong.Fig 4 YTD stock performancein ChinaFig 5 Consensus net profit yoy revisiontrendIT e-CommerceOnline TravelAgency50%56%49%56%49%26

43、%40%35%China Internet24%China Internet24%Online Media and Entertainment22%MSCI China8%Online Gaming8%MSCI EM6%Fintech0%Media0%25%20%15%10%47%40%39%40%39%37%32%33%33%27%25%25%21%21%Online Publishing -10%Source: Bloomberg, Macquarie Research, November 2019 Note: based on 120 China internet and media c

44、ompanies2019E2020ESource: Bloomberg, Macquarie Research, November 2019 Note: based on 120 China internet and media companiesDespite outperforming MSCI China and EM indices thanks to cost discipline while sustaining growth, the consumer internet sector has largely seen a derating in valuation while e

45、nterprise solutions have been re-rating on an earnings basis. As shown in Figure 6 below, the aggregate forward consensus P/E of 120 leading stocks in the sector shows the sector average is still trading in the lower half of the historic standard deviation chart. In contrast, the US comparative data

46、 shows continued trading at elevated levels even as other developed markets in Asia also show internet stocks trading below historic average levels.Fig 6 China consumer internet 12 monthsforwardPEFig 7 US consumer internet 12 months forwardPE(x) 40(x) 403534.4x35303027.9x252521.5x2020151530.2x24.7x1

47、9.2x101052004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201952005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019P/E (12mofwdconsen)+1 s.d.Average-1s.d. P/E (12mofwdconsen)+1 s.d.Average-1 s.d.Source: Bloomberg, Macquarie Research,November2019Source:

48、 Bloomberg, Macquarie Research, November2019Fig 8 Japan consumer internet 12 monthsforwardPEFig 9 Korea consumer internet 12 months forwardPE(x) 45(x) 7540653534.7x553027.1x4525352019.5x251510155542.0 x28.8xx2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20192004 2005 200

49、6 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019P/E (12mofwd consen)+1 s.d.Average-1 s.d.P/E (12mofwdconsen)+1s.d.Average-1 s.d.Source: Bloomberg, Macquarie Research,November2019Source: Bloomberg, Macquarie Research, November2019and implications for the 2020 stock outlookThus, we e

50、xit 2019 thinking about 2020 within the context of what could support a rebound in valuation back above its historic rate. To us, being able to meet and beat earnings and drive margin expansion could be a critical factor for driving up ROE and thereby valuations for consumer internet. Given a persis

51、tent drop in margins over the past few years due to rapid investments, we would normally be reticent about believing in a margin recovery story for China internet. However, 2019 has been helping build hope for a recovery in 2020, given that we are seeing 1) more and more companies discuss cost manag

52、ement as a key management priority, and 2) YTD data shows signs of stabilizing margin trend in 2019.As shown below, our analysis of weighted and simple average consensus outlook for margins indicates that gross margin has fallen over the past three years but has started to stabilize in 2019. Meanwhi

53、le, operating margin has improved on operating leverage on SG&A expenses. Given that weighted average data skews the average towards the mega caps such as Alibaba and Tencent, we have also looked at the simple average data. The simple average data also shows a similar operating profit margin improve

54、ment in 2019 and supports our view that overall profit margins have been stabilizing in 2019 as companies become more cost-conscious.in 2019 after years ofChina internet weighted avg2016201720182019E2020E2021EdeclineAs % of salesin 2019 after years ofChina internet weighted avg2016201720182019E2020E

55、2021EdeclineAs % of salesGross margin42.1%40.2%36.4%36.3%37.1%37.8%S&M10.5%10.0%10.9%10.3%10.1%9.7%R&D6.4%5.7%6.4%6.3%6.1%5.8%G&A6.2%5.9%6.3%5.6%5.3%5.1%Operating income16.6%17.9%11.4%12.9%14.2%15.8%Fig 10 Consensus trend (China internet weighted average)Source: Visible Alpha, Company data, Macquari

56、e Research, November 2019Fig 11 Consensus trend (China internet simple average)China internet simple avg2016201720182019E2020E2021EAs % of salesGross margin49.7%54.1%53.2%52.2%53.5%54.4%S&M23.5%23.1%25.4%24.0%21.9%20.6%R&D13.4%11.6%12.2%12.8%12.2%11.7%G&A8.2%6.9%10.3%6.6%5.8%5.5%Operating income7.2%

57、14.3%7.4%10.8%15.3%18.3%Source: Visible Alpha, Company data, Macquarie Research, November 2019From a growth perspective by sub-sector, consensus shows an expectation for e-commerce, OTA, online media (particularly led by anticipation of margin recovery in the likes of iQiyi) and online publishing fa

58、ster than the blended average in 2020. We believe this trend makes sense, as e- commerce and online media such as long-form video have been spending the most aggressively in the past few years to acquire new users but have yet to convert them to high-enough spenders to generate returns on. Downstrea

59、m, the enterprise solution industry has also been investing more into cloud solutions and converting customers new services at discounted rates, which is starting to turn around in 2019 and2020.We prefer sectors with operating leverage potential in 2020Fig 12 Consensus revenue and adj. net income tr

60、endRevenue YoYRevenue YoY2020E2019E2018201720162015ITSolution18%24%23%17%20%22%e-Commerce53%49%49%39%29%24%OnlineTravelAgency80%63%-1%22%19%17%Onlinegaming45%45%50%28%20%20%Online mediaand entertainment145%117%81%48%34%25%Media30%30%15%11%17%19%Fintech152%136%46%30%25%Onlinepublishing39%14%36%22%10%