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<Research>JPM Expects JD-SW (09618.HK) to gain ~5% Mkt Shr in CN Food Delivery Mkt in 2025/ 2026; Subsidy Strategy Won't Be Sustainable
Recommend 7 Positive 12 Negative 9 |
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Shares of MEITUAN-W (03690.HK) and JD-SW (09618.HK) have underperformed the KraneShares Trust KraneShares CSI China Internet ETF (KWEB.US) benchmark over the past month, due mostly to investor concerns about JD-SW's aggressive entrance into China's food delivery market and potential reaction from MEITUAN-W, in its view, JPMorgan released a research report saying. The broker expected JD-SW's entry to have minimal impact on the current market structure, where MEITUAN-W/ Ele.me currently hold 75%/ 25% of the market share each. JPMorgan also estimated JD-SW's entrance to China's food delivery market to gain about 5% market share in 2025 and 2026, with delivery volume/ market share increasing to 10% by the end of 2025 but dropping in 2026. Therefore, JPMorgan kept ratings at Overweight on MEITUAN-W and JD-SW, but preferred MEITUAN-W in the short term. The broker slashed its target prices for MEITUAN-W/ JD-SW from $190/ $215 to $165/ $180. Although JD-SW quickly grabbed a 5% market share in China's food delivery market in just two months, JPMorgan believed that JD-SW's deeply subsidized growth strategy is unsustainable due to the relatively large losses from food delivery business to its group profit; and the difficulty in fully offsetting the loss of food delivery from cross-sell activities. AAStocks Financial News |
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