摩根大通-中国电商：监管终结“制造增长”

AsiaPacificEquityResearch

10September2026

ChinaEcommerce

Regulationendsmanufacturedgrowth

For15years,Chinaecommercegrowthwasgeneratedbythreemainengines:1)platformstooksharefromofflineandfromeachother;2)shoppingfestivalsconcentrateddemand;and3)subsidies–firstplatform-fundedthenstate-funded–pulledconsumptionforward.BetweenApril2025andJune2026,allthreeweakenedatonce.Wesawthattraditionalplatformsharelossslowedtoroughly1pptannuallyfrom3-5pptsin2021-23;ecommerceplatformGMVgrowthfromthe618shoppingfestivalfelltoroughly1%despitea37-dayfestivalperiod;thePriceConductRulesrestrictedplatforms’subsidyandfestivalpromotiontoolkits;andthestatetrade-inprogramwasreducedandredesigned.

•Whilethemarketseesagrowthproblem,weseeastructuralchangeinindustrymargins.Atmaturepenetration,webelievesubsidiesmostlytransferdemandbetweenplatforms,leavingtheindustryinadilemma:everyonebenefitsfromlowerspending,butnoplatformcancutalonewithoutriskingmarketshare.Webelieveregulationhasprovidedanexternalenforcementmechanismthattheplatformscouldnotcreatethemselves,andhasshiftedcompetitiontowardmonetization,serviceandsupplychainefficiency.

•Stockimpacts:wepreferBABAandJD.WebelieveBABAhastheclearestpathtoconvertinglowercompetitivespendingandthetrafficacquiredthroughquickcommerceintohigher-margincustomermanagementrevenue(CMR).JD,inourview,shouldbenefitfromlessdestructive1Pdiscountingandrenewedvalueforitslogisticsandservicemoat,althoughdifficultstatesubsidyyear-on-yearcomparisonshaveobscuredtheimprovementin2Q26,andpartlyinto2H26.PDDisleastexposedtoadeclineinshoppingfestivalimpact,butthenewrulesconstrainseveralmechanicsthatpowereditsdomesticmodelwhileTemufacesawiderangeofoutcomes.Vipshop’soff-priceflashsalemodeldependslessonChina’s618mid-yearshoppingfestivalandDouble11Singles’Dayfestivalthanlargerplatforms,resultinginits2026year-on-yearcomparisonsreflectingitsownoperatingbasemorethangovernmentsupport.Wepreferthetwoincumbents,BABAandJD,whichwebelievethemarketconsidersthemostdisrupted.

•Whyreassessthesectornow?June2026wasthefirst618festivalfallingfullyunderthenewPriceConductRules(durationextended,headlineGMVdatanolongerdisclosed,mechanicssimplified)andcomparableplatformGMVgrewonlyabout1%.TheRmb180-200bnquickcommercecompetitiveplayingfieldhasmovedfromspendingtoassessingtheP&Limpact.Cleanpost-subsidyquartersbeginwiththeSeptember2026reportingseason,whichweexpecttotestwhetheracquiredtrafficremains,monetizesandgeneratesbettermargins.

•Risktoourinvestmentthesisisenforcement.SubsidiesmayshiftformatandactinsteadthroughAIadoption,membershipbenefitsorlogisticsinvestment.IfaggregatesalesandmarketingexpenseacrossBABA,JD,PDDandMeituandoesnotdeclineYoYoverthetwoquartersendingDecember2026,wewouldexpectthistomeantheregulatoryfloorisnotholdingandearningsupwardrevisionwouldbeatrisk.

HeadofChinaEquityResearchandCo-HeadofAsiaTMT

Research

AlexYaoAC

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SACRegistrationNumber:S1730523020001Internet

NancyLiu

(8621)61066343

nancy.liu@

SACRegistrationNumber:S1730524090001J.P.MorganSecurities(China)Company

Limited

Seepage17foranalystcertificationandimportantdisclosures,includingnon.USanalystdisclosures.

m

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10September2026

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2

Investmentsummary

Chinaecommerceismovingfromshare-andsubsidy-ledgrowthtoamargin-led

earningsphase,inourview.Weexpecttraditional-platformsharelosstoslowto

roughly1pptyoyin2026Efrom3-5pptsin2021-23.Comparable618shopping

festivalGMVgrowthfelltoroughly1%yoy,andChina’snewPriceConductRulesrestrictsubsidiesandmerchantmarkdowns.OurthesishasevolvedfromaskinghowfarincumbentGMVcouldfall,towhetherregulationcanturnslowergrowthintobettermargins.Overthenextfourquarters,wepreferBABAandJD,both

Overweight(acrossUSandHKlistings)fortheirmargin-ledearningsrevisions.WeareNeutralonPDD.

Webelievethemarkettreatsweakermerchandisegrowthasadirectnegativefor

revenueandearnings.Wethinkitincreasinglyreflectstheendofuneconomic

demandcreation.The618windowexpandedto37days,2026statetrade-insupportissmaller,andthequickcommercepricewarconsumedRmn180-200bnofprofit

withoutevidencethatitenlargedconsumerspending.Weexpectregulationtoreduceacquisitioncosts,merchantconcessionsandfulfillmentspending.ThisshouldcreatetheclearestupsideforBABA’shigher-margincustomermanagementrevenue,and

JD’sretailandlogisticsmargins,evenifdifficultyear-on-yearsubsidycomparisonsobscuretheimprovementin2Q26and4Q26.

Ourcentralassumptionisthatregulationchangesbehaviorratherthanindustry

designations.WeexpectaggregatesalesandmarketingexpenseacrossBABA,JD,

PDDandMeituantodeclineyearonyearoverthetwoquartersendingDecember

2026.ThiswouldlowercompetitivespendingandtherebyliftearningsestimatesandvaluationsforBABAandJD,inourview.PDD’sdomestictoolsremainmore

constrained,whileoutcomesforTemucouldvary.Thesupportingconditionis

slowershareloss.Traditionalplatformsarelosingabout1pptannually,vs.3-5pptsin2021-23(Table1).Thisreducesthecostofdefendingtrafficandshouldimprovethepathtopositiveearningsrevisions,inourview.

Onthehorizon,September2026resultsshouldtestBABA’strafficmonetizationandJD’sunderlyingmargins.WewouldbemorecircumspectonourimprovingmarginthesisifaggregatemarketingexpensedoesnotdeclinebyDecember2026–orif

Douyin’ssharegainsreaccelerate,orsubsidiesreappearundernewdesignationsinadifferentform.TheintroductionofEuropeanorLatinAmericanmeasuresthat

restrictTemu’sbusinesswouldreinforceourNeutralviewonPDD.

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10September2026

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Regulationchangescompetitiveincentives

Whysubsidiesbecamevalue-destructive

Subsidieswererationalwhenecommercepenetrationwasrising.Platformsused

themtoeducateconsumers,attractmerchantsandbuildliquidityonbothsidesofthemarketplace.Theincrementaluserwasoftengenuinelynewtoonlineshopping,sonear-termspendingcouldcreatelong-termvalue.

Inamarketwherepenetrationhasmatured,theincrementaluserisusuallya

consumermovingbetweenTaobao,JD,PDD,Douyinandquickcommerceapps.Subsidiestransferdemand,pullitforwardorrewardcouponarbitrage,soindustryspendingrisesfasterthanthedemandpool.

Everyplatformwouldearnmoreifallreducedsubsidies–butunilateralrestraint

risksmarketshareloss,andself-disciplinemaybeconsideredindividuallyirrationalevenwhencollectivelydesirable.Thequickcommercepricewarshowedthecost:weestimatetheindustryconsumedroughlyRMB180-200bnduring2Q25to1Q26withoutcomparableevidenceofwalletexpansion.

Regulationcanenforcelowerspending

TheInternetPlatformPriceConductRuleswereissuedon20December2025and

tookeffecton10April2026.TheissuingbodiesweretheNationalDevelopmentandReformCommission(NDRC),StateAdministrationforMarketRegulation(SAMR)andCyberspaceAdministrationofChina(CAC).Therulestargetthreepracticesthatsustainedthepriorcompetitiveequilibrium:

1.Article5prohibitsforcingmerchantsintomarkdowns,participation,cross-

channelpriceparityorautomaticprice-trackingsystems,includingenforcementthroughtrafficthrottling,searchdemotionordelisting.

2.Article11requiressubsidytransparencyandprohibitsfalseorexaggeratedsubsidyclaims.

3.Article14prohibitscompellingmerchantstosellbelowcostexceptinlegitimateclearancesituations.

The25May2026Beijingregulatorymeetingusheredthechangesintopractice.Nineagenciessummoned17platformsbeforethe618peak.Theyinstructedtheplatformstoeliminateirrationallarge-scalesubsidiesandcorrectinvolution-stylecompetition.Itisnotablethatregulatorssetlimitsbeforetheeventinsteadofreactingafterthe

pricecampaign.

Ournon-consensusviewisthatanti-involutioncanbealong-termprofitpositive,

despitethenear-termrevenueheadwind.Whilelowersubsidiesmayslowreported

GMVandrevenue,theyshouldalsoreducecustomeracquisitioncosts,merchant

concessionsandfulfillmentspending.Wewouldexpectcompetitiontoshifttowardservicequality,merchanttoolsandsupply-chainefficiency,wherescaledincumbentsretainadvantages.

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10September2026

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Howenforcementcouldweaken

Wecautionthatenforcementisuncertainbecausespendingpracticescanevolve

fasterthanregulatorydefinitions.Forexample,inearly2026,Alibabadistributed

roughlyRMB3bnoffreemilkteaordersthroughitsQwenassistantinoneday.ThecampaignwasframedasAI-agentadoptionratherthanaconventionalsubsidy.Weanticipatethatspendingofthissortcouldberelabeledasmembershipbenefits,

logisticsinvestment,orecosystemincentives,amongothers.

Wewillmonitorthreeareas:

•:subsidiesthatarepresentedasAIadoption,membershiporinfrastructurespending.

•Venueshifting:competitionmovingintoaverticalnotyetcoveredbytherules.

•Unevenenforcement:differenttreatmentacrossprovincesoragencies.

Thetestissimple:aggregatesalesandmarketingexpenseacrossBABA,JD,PDDandMeituanshoulddeclineyearonyearoverthetwoquartersendingDecember2026.Ifitdoesnot,wewouldinferthattherulesarefailingtochangecompetitivebehavior.Untilsuchevidencearrives,however,ourmarginimprovementthesis

remainsthebasecase–albeitwithmeaningfulexecutionrisk.

5

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AsiaPacificEquityResearch

10September2026

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Theoldgrowthdriversareweakening

Traditional-platformsharelossisslowing

Ourmarginthesisdependsontraditionalplatformslosingsharemoreslowlythanin2021-23.Wethinkthatconditionisnowmet.Taobao/Tmall,JD,PDDandVipshopshouldaccountforroughly71%ofChinaonlineretailGMVin2026,onour

estimates.Thatrepresentsadeclineofabout1pptyearonyear,comparedwith

annuallossesof3-5pptsin2021-23.Shortvideoandlivestreamingcommerceisstillgainingshare,butwebelievethepaceofdisruptionisslowing.

Table1:Chinaecommercemarketshare(%ofonlinephysicalgoodsretailGMV)

Platforms

2019

2020

2021

2022

2023

2024

2025

2026E

Taobao/Tmall

64%

57%

48%

42%

38%

36%

34%

33%

JD

20%

20%

20%

20%

17%

17%

17%

17%

Pinduoduo

10%

13%

15%

17%

19%

20%

20%

20%

Vipshop

2%

1%

1%

1%

1%

1%

1%

1%

Traditionalsubtotal

95%

90%

85%

80%

75%

73%

71%

71%

Kuaishou

1%

3%

4%

5%

6%

6%

6%

6%

Douyin

3%

7%

11%

14%

15%

17%

18%

Weixin

0%

1%

1%

2%

2%

Shortvideolivestreamingsubtotal

1%

6%

11%

16%

20%

23%

25%

25%

Others

4%

4%

4%

4%

4%

4%

4%

4%

Source:Vipshop2019-25annualreports,J.P.Morganestimates.

However,Douyin’sreportedgrowthcouldtestthisview.36Krestimatesthat

Douyin’sGMVreachedroughlyRmb3.5tnin2024,upabout30%yoy.Itestimates34%growthfromAugust2024toJuly2025,withshelfGMVup49%.Our

reconciliationappliesacommondenominatorandadjustsforreturns.Wenotethat

third-partyfiguresaregenerallygrossofreturnsandcancellations.OurestimatesinTable1arenetofreturnsandusetheNationalBureauofStatistics(NBS)online

physicalgoodsretaildenominator.Content-commercereturnsarestructurallyhigher,particularlyinapparel,andwebelievesubsidieshavepartlysupportedDouyin’s

shelfgrowth.

Douyincontinuestogainshare,butitsannualgainshaveslowedtoroughly1ppt

from4-5pptsin2021-23.Growthisalsoshiftingfromlivestreamingintoshelf

infrastructure.ThisbringsDouyinintocategorieswheretrust,logistics,returnsand

assortmentmattermore,raisingthemarginalcostofadditionalGMV.Twofactors

supportthisview:1)Mostpotentialfirst-timelivestreamshoppershavealready

enteredthemarket,andacquisitioncostsareconverging.2)Categorieswithhigh

ASPremainbettersuitedtosearchplatformswithguaranteedlogisticsandafter-salesservice.Weestimatethatmorethan60%ofDouyinGMVisbelowRmb120ASP.

Rapidshelfgrowthneverthelessshowsthatthiscategoryboundarycanmove.

Withinthetraditionalset,Taobao/Tmallremainstheprimarysourceofshareloss,

fallingfrom67%in2017toanestimated33%in2026.JDhasheldnear17%since2023,supportedbyits1Pandlogisticsproposition,althoughstatetrade-insubsidiesimprovedits2024-25performance.PDDhasstabilizednear20%asmanagementhasshiftedattentiontowardTemuandoverseasmonetization.

Keytakeaway:Asmarketsharemovementsmoderate,sectoralphashiftsfromwhocapturesGMVtowhomonetizestrafficandoperatesatthebestmargin.

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Shoppingfestivalsnolongercreateincrementaldemand

Festivalswereeffectiveduringthepenetrationera.Double11and618educated

users,moveddemandonlineandgaveplatformsavisibleGMVcatalyst.Thosejobsarelargelycompletenowthatonlinepenetrationexceeds35%,discountsare

availableyear-round,andthepromotionalcalendarhasstretched.

Disclosureanddurationshowthedecline:Alibabastoppedreportingaggregate

Double11GMVaftergrowthslowedto8.5%in2021.Syntundatashow618GMVrisingfromRmb578.5bnin2021toRmb855.6bnin2025.Overthatperiod,theeventexpandedfrom19daysin2023to37daysin2025.Thatis95%moredaysforonly

7.1%moreGMV.Theextradaysgeneratedlessthanone-tenthofthe2023coredailyrunrate.GMVfell7%in2024,andmuchofthe2025reboundwethinkreflected

statesubsidies.

Figure1:618GMVandGMVperday(Rmbbn)

1,200

1,000

800

600

400

200

-

37days37days856864

799

696

42

37

32

2323

18days

579

30days743

19days

19days

25

202120222023202420252026

618GMVGMVperday

60

50

40

30

20

10

-

Source:Syntundata(asofSep4,2026),J.P.Morgan.Note:promotionwindowisSyntun’smonitoringperiod.

The2026eventprovidesfurthersupport.JD’sfestivalwindowstretchedto46days,platformsagainavoidedreportingheadlineGMV,andpromotionsshiftedtoward

simplerdirectdiscounts.SyntunmeasuredplatformGMVofRmb863.6bnfrom13Mayto18June,representingroughly1%comparablegrowth.QuickcommercewasdisclosedseparatelyatRmb62.8bn.

Webelievethefestivalremainsrelevant,butitisnolongerthesector’smaingrowthmechanism.Wehighlightfourfactorsbehindthedecline:

•Extendeddurationremovedurgency.Consumersspreadthesamewalletacrossmoredaysratherthanexpandingthebasket.

•PDDnormalizedeverydaylowprices.Consumersnolongerneedtowaitforafestivaltoaccessdiscounts.

•Merchantreturnoninvestment(ROI)deteriorated.Advertisingcostsrosewhilediscount-drivenmarginsandrepeatratesweakened.

•Contentcommercecreatedadailydiscoverychannel.Douyinisrelativelylessdependentoneventconcentration,althoughitisstillsubjecttothePriceConductRulesanditsshelfgrowthhasalsoreliedonsubsidies.

Festivaldeclinehasmixedimplications.Itreducescostlypromotionanddiscounting,supportingmargins,butalsolowerstheconcentratedauctiondemandthathistoricallyboostedBABA’shighest-marginadvertisingrevenue.Thekeyquestioniswhether

year-roundmonetization–

e.g.software

fees,AIadtools,membershipsandhigher-

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frequencytraffic–morethanoffsetsweakerfestivaldensity.WethinkitdoesforBABAinFY27E,asshowninTable4.

Statetrade-insubsidiesmanufacturedpartof2025growth

Theconsumer-goodstrade-inprogramwasthelargestexternalboostto2025

ecommercegrowth,inourview,andJDwasmostimpacted.Theprogramwas

fundedwithRMB300bnofultra-longspecialtreasurybonds.NDRCdisclosedmorethan360mnsubsidyclaimsandoverRmb2.6tnofrelatedgoodssales.Itestimatedthattheprogramcontributedapproximately0.6ppttototalretailsalesgrowth.

Theonlineeffectwaslargerbecausethesubsidizedcategories(appliances,

smartphones,digitalproductsandautos)arehigh-ASPandhighlyonline-penetrated.Platformswithinvoicing,installation,deliveryandold-unitrecoverycaptured

demand.JD’scategoryshareduringDouble112025–of42.8%inappliancesand56.9%inmobilephones,accordingtothird-partytracking–illustratetheskew.PDD’s3Pstructurelimiteditsparticipation,whichpartlyexplainsits

relativedomesticdeceleration,inouropinion.

The2026trade-inprogramissmallerandnarrower.StatefundingfallstoRmb250bn,appliancecoverageisreducedtosixtier-oneefficiencycategories,andtheauto

subsidyshiftsfromflatamountstoprice-proportionalsupport.Atthe2025realizedmultiplierofroughly8.7xsalespersubsidyyuan,theRmb50bnfundingreductionaloneimpliesroughlyRmb430bnlesssales.Wealsoexpectalowermultiplier

becausereplacementdemandwaspulledforwardin2025.

Ourbasecaseimpliesthatsubsidy-drivensalesfallroughlyRmb725-850bnyearonyear,acrosstheretailsector,withRmb400-550bnofthedeclineoccurringonline.

Thecontributiontoonlineretailgrowththereforeswingsbyroughly1.5-2pptsbetween2025and2026,frommeaningfullypositivetoapproximatelyneutral.

8

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Table2:National

trade.in

program,2025vs2026

2025

2026

Readacross

Centralfunding

RMB300bnultra-longspecialtreasurybonds

RMB250bn

-17%

Disbursement

Fourquarterlytranches;finalRMB69bnreleasedOctober

Quarterlytranches;firstRMB62.5bnpre-issued30Dec2025

Earlierstart,flattermonthlypacingmandated

Costsharing

Central-local

9:1overall;central85/90/95%foreast/central/west

Localtop-upsnowexplicitlyoptional

Areascovered

5(autos,appliances,digital,homerenovation/kitchen/bath,e-bikes)

4nationallyunified(autoscrappage,autoreplacement,appliances,digital/smart)

Homerenovationande-bikesdropoutofcentralfunding

Appliances.scope

12categories,tier-2efficiencyandabove

6categories(fridge,washer,TV,AC,PC,waterheater),tier-1only

Narrowestcutintheprogram

Appliances.rate

15%,plusextra5%fortier-1;capRMB2,000

15%flat;capRMB1,500;1unitpercategory

Effectiverate-5ppts,cap-25%

Digital/smart.scope

3categories(phone,tablet,smartwatch/band)

4categories(addssmartglasses)

Onlyexpandingarea

Digital/smart.rate

15%,price<RMB6,000,capRMB500

Unchanged

Neutral

Autos.scrappage

Flat:RMB20,000NEV/RMB15,000ICE<2.0L

12%ofprice,capRMB20,000NEV;10%,capRMB15,000ICE

Fullsubsidyonlyabove~RMB167kNEV

Autos.replacement

Locallyset,typicallyRMB15,000NEV/RMB13,000ICE

8%ofprice,capRMB15,000NEV;6%,capRMB13,000ICE

Nationallyunified;localvariationprohibited

Localdiscretion

Wide(owncategories,ownstandards)

Limitedtosmarthomeandself-fundedcategories

Fragmentationreduced

Drivensales

>RMB2.6tn;360mnperson-times

RMB1.1tnin1H26;150mnperson-times

-

Leverageratio

1:7.8

1:10.3YTD

Ratecutraisesmultipliermechanically

Source:2025NDRC/MoFNoticeonScalingupEquipmentUpgradesandConsumerGoodsTrade-ins(link),2026NDRC/MoFNoticeonEquipmentUpgradesandConsumerGoodsTrade-ins(link),J.P.Morgan.

JDfacestheheaviestyear-on-yearcomparisonsin2Q26and4Q26.These

comparisonsmaytemporarilymasktheunderlyingoperatingimprovement,inour

view,andweadviseseparatingpolicy-drivencategorydemandfromunderlying

shareandmargin.MonthlyNBSapplianceandcommunicationsequipmentsales,

comparedwithannouncedfundreleases,provideacheckpoint.Tmallis

meaningfullyexposedbutmorediversifiedacrosscategories;PDDfacesthesmallestchangecomparisonbecauseitcapturedtheleastbenefitin2025.

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Quickcommerce:assessingtheRmb180-200bninvestment

Thecompetitiveintensityseeninthequickcommercesegmentover2025-26wasthelargestdiscretionaryinvestmentinChinaconsumerinternetsincethelaunchof

communitygroupbuyingin2016,inouropinion.From2Q25through1Q26,

Alibaba,MeituanandJDconsumed(throughinvestment)roughlyRmb180-200bnofprofitrelativetothepre-campaignbaseline.Thecostincludedconsumersubsidies,

merchantincentives,riderpaymentsandincrementalfulfillment.Regulationmakes

anothercampaignatthesamescalelesslikely.Theremainingquestioniswhetherthespendingcreateddurabletraffic,defendedvaluableusers,orbuiltareusablelogisticsasset.

Basedonourassessment,ourrankingofthewinnerssofaris:Alibabafirst,MeituansecondandJDthird.Alibabahasproducedthemostobservablemonetizationinputs,Meituandefendedthemostvaluableordercohortsatthelowestabsolutecost,whileJD’spayoffremainstheleastmeasurable.

Table3:QuickcommerceROIscorecard

Platform

EstimatedP&Limpact

Whatitbought

Evidence

Missingproof

Alibaba

Rmb85.7bnFY26EBITAdecline

Traffic,frequency,share,ecosystem

DAUfrom375mnto437mn,fromAprtoSep

2025(Questmobile);100mn+newordersfromquickcommerceusersduringDouble11in2025(link)

CMRconversionatnormalrates

Meituan

~Rmb59bnswingtolossin2025

Defenseofpremiumorders

>2/3shareaboveRmb15;>70%aboveRmb30,accordingtocompany

Post-subsidyretention

JD

>Rmb40bnfull-cycleloss

Riderdensity,last-milelogistics

25mn+peakdailyorderswithpresencein350cities,accordingtocompany

Profitableretailshare

Source:AlibabaFY26annualreport,Meituan2025annualreport,JD2025annualreport,Questmobile(link)(asof2026-02-04),J.P.Morganestimates.

Alibaba:Theclearestevidenceofinvestmenttraction

Alibabawasthelargestspender.AdjustedEBITAfortheChinaecommercegroup

felltoRmb107.5bninFY26fromRmb193.2bninFY25.Managementattributed

mostoftheRmb85.7bndeclinetoquickcommerceinvestment.Third-partyestimates(Analysys)placeTaobaoShangou’s(formerEle.me)marketshareatmid-40%in

4Q25(link),whichweestimatehasdeclinedsequentiallyin1H26.

Thestrategicoutputisclearerthantheprecisesharefigure.Taobaodailyactiveusers(DAU)rosefromroughly375mninApril2025to437mninSeptember2025.

Double11in2025generatedmorethan100mnordersfromnewShangouusers.

Managementtargetsroughly20mndailyretailordersexcludingmeals,positiveuniteconomicswithinFY27,andFY27investmentatabouthalftheFY26level.

BABA’sROIthereforedependsonmonetizationconversion,inourview:canhigherfrequencyandnewusersfeedCMR,softwarefeesand88VIPeconomicsafter

couponsandothersubsidiesfade?WewilllookforanswersduringtheSeptemberreportingseason.

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Meituan:Expensivedefense,butfocusedonvaluableorders

Meituan’sgroupadjustedearningsmovedfromaRmb35.8bnprofitin2024toaRmb23.4bnlossin2025,aroughlyRmb59bnswing.CorelocalcommercemovedfromRmb52.4bnofoperatingprofittoaRmb6.8bnloss.Yetmanagementdata

indicatethatMeituanretainedabovetwo-thirdsshareofordersaboveRmb15andmorethan70%aboveRmb30.

WeconcludethatMeituanpaidtoconcedepartofthelow-value,subsidy-seekingtailwhiledefendingthepremiumcohort.Thiscouldberationaliforderfrequencyand

merchanteconomicsnormalizeaftersubsidiesend,althoughthecompanydoesnotdisclosecohortretention.

JD:Thelogisticsvaluebeyondfooddelivery

JD’snewbusinesssegmentrecordedaRmb14.8bnoperatinglossin2Q25and

Rmb9.9bnin2Q26,andweestimatefull-cyclelossesaboveRmb40bn.Itsquick

commercesharesettlednear10%onourrider-appestimates,indicatingthesteepestburnratepersharepointgainedamongpeers.

JD’sspendingalsobuiltriderdensityandlast-milelogisticsacross350cities,withanetworkthatcansupportitsexistingstrengthsinappliances,electronicsand

supermarket.Forexample,Greehasbrought13,000storesontoinstantplatforms,

whilemajorsmartphonelaunchesarenowavailableacrossinstant-deliverynetworks.WeseethisasJDhavingacquiredanoptiontoextendits1Pservicepropositionintoachannelwherehigher-valuegoodsarebeginningtomigrate.However,theearningspayoffremainsunproven,whichranksJDthirdoncurrentmeasurability.

Howwewilljudgethereturns

Wemonitorthreemetricstojudgethereturnsonquickcommerceinvestments:

1.Costpersharepoint:cumulativeprofitdeltadividedbymarketsharegainedordefended.Methodologycaveat:profitdeltaincludesbothdirectsegmentlossesandestimatedcannibalizationofcoreretailmargin,makingthisanupper-boundestimate.

2.Costperincrementalengageduser:profitdeltadividedbyincrementalDAUoractivebuyers,comparedwithecommercecustomer-acquisitioncostsofroughly

RMB150-300.

3.Monetizationconversion:whetheracquiredtrafficproducesadrevenue,coreGMVandpositiveuniteconomicsatnormaltakerates.

Weuse12-monthretentionscenariosof25%inthebearcase,45%inthebasecaseand60%inthebullcase.Twotothreecleanquartersshouldrevealwhethertrafficpersists.Inourview,Alibabacurrentlyhastheclearestobservableoutput.Meituandefendeditsvaluablecore,whileJDbuiltanassetwhosereturnremainsunproven.

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Thenextearningsdrivers

Thesector’snextearningsphasewilldependonyear-roundmonetization,service

differentiationandoperatingefficiency.Anotherfestivalorbroadsubsidycycleisunlike