The destiny of the global technology giant: slowdown
The author of this article | Tiancheng henry
First, the fate of the global technology giant: slowdown
Unconsciously, the mighty technology stock market has been going on for ten years. In the past decade, the Nasdaq index has risen by 400%.
Source: Futu Niu Niu
The Nasdaq 100 Index, which is more representative of the US stock market technology stocks, rose more than 500%.
Source: Futu Niu Niu
However, just as the railway revolution and the electrical revolution have long since become the past, the Internet industry has penetrated into every aspect of our lives. Whether we are willing or not, we must accept the fact that the Internet is no longer a “rich and handsome” industry. The global Internet giant is facing a common problem – slowdown.
In the second quarter of 2019, Apple’s revenue growth rate was only 1%, net profit growth rate of -13%, and if you only see the iPhone sales revenue growth rate is even worse, -13%; Google? Advertising revenue growth of 16% also hit a new low for many years; Microsoft’s total revenue increased by 12% year-on-year, thanks to 64% growth of Azure cloud business, let it retain the trillion market value; Amazon revenue growth also fell to 20%, including AWS cloud business grew by 37%, for the first time below 40%.
After all, the growth rate of a company cannot always be higher than the growth rate of GDP. Otherwise, one day, this company will be bigger than the country. In this context, especially when the traditional Internet business is stagnant, Internet giants are bound to find new growth points to meet their growing ambitions, such as Amazon and Microsoft successfully found the breakthrough of cloud computing, while Apple and Google appear Relatively outdated.
The two major Internet giants in China have of course already realized this problem. How to spend the winter? Nothing more than two ways:
1, reducing food and clothing, reducing costs and increasing efficiency;
2, looking for a new breakthrough.
Second, Tencent VS Ali, the difference between the financial report and the same return
At present, the two major Internet giants in China, Ali and Tencent have announced the 2019 second quarter earnings.
2019 Tencent’s second-quarter earnings report showed that Tencent’s second-quarter revenue was 88.82 billion yuan, up 21% year-on-year, lower than expected; adjusted net profit was 23.5 billion yuan, up 19% year-on-year, slightly exceeding expectations.
Alibaba’s second-quarter revenue was RMB 114.924 billion, a year-on-year increase of 42%; under US non-GAAP, net profit was RMB 30.949 billion, a year-on-year increase of 54%. Both revenue and profit exceeded market expectations.
After the financial report was released, the capital market made a clear judgment on these two results. After the earnings report, Tencent’s share price fell nearly 4% in two days, and Ali’s share price rose nearly 8% two days after the earnings report. Obviously, for this performance competition, the market is voting with the feet.
A comparison of the stock price trend between Ali and Tencent this year:
Image Source: Wonders
In fact, this trend differentiation (the dotted line) began on August 5, and because of this, Ali’s market value once again opened a gap with Tencent.
Compared with the market value of Tencent and Ali this year:
Image Source: Bloomberg
It is clear that the market’s judgment on the differentiation of the two financial statements has led to the differentiation of stock price movements.
From the data point of view, Alibaba has achieved rapid growth in core e-commerce and cloud computing business revenues, significantly exceeding market expectations – core e-commerce business revenue of 99.5 billion yuan, achieving a year-on-year growth of 43.9%, including The Chinese retail business of Taobao, Tmall, Juhua, Yintai and Boxma achieved a revenue of 75.6 billion yuan, a year-on-year increase of 40.1%. The rookie network revenue was 5.01 billion yuan, up 50.4% year-on-year; cloud computing revenue increased 65.8% year-on-year to 7.79 billion yuan.
Relatively, Tencent’s 21% revenue growth in this quarter was lower than market expectations, and revenue from various businesses.It’s not too amazing – the game business revenue was 27.3 billion yuan, up 8% year-on-year, of which mobile game revenue was 22.2 billion yuan, up 26% year-on-year; advertising revenue increased 16% year-on-year, of which social and other advertising revenue was 12 billion yuan. The year-on-year growth was 28%, media advertising revenue was 4.4 billion yuan, down 7% year-on-year; financial technology and corporate services revenue was 22.9 billion yuan, up 37% year-on-year. Excluding interest income from reserve balances, revenue increased 57% year-on-year.
Data Source: Company Financial Report, Futu Securities
From the perspective of revenue growth, Tencent is inferior, and it is not easy for Ali to maintain a growth rate of more than 40% in such a large volume.
Source: Company Announcement, Tianfeng Securities(9.070,-0.15,-1.63%) Institute
On the other hand, from the growth of users, Ali’s sinking dividend continues. In the second quarter, Taobao Tmall mobile terminal monthly activity was 755 million, an increase of 121 million and 34 million compared with the same period of last year and the previous fiscal year. The growth rate and the growth rate of the chain were 19.1% and 4.7% respectively. In the first half of 2019, Ali has accumulated a cumulative growth of 56 million in half a year. The continued growth of users is mainly due to the sinking market. More than 70% of Taobao’s new users come from sinking markets such as the 3rd and 5th tier cities and rural areas. Compared with the bottleneck of Tencent’s user growth, Ali is still in the e-commerce field, which is really amazing.
It seems that Tencent has been crushed by Ali in the income side, but is Ali life really so moist?
Alibaba’s high-speed revenue growth this quarter is inseparable from Ali’s new retail business (up to 134% growth) and other businesses. If you look at Ali’s traditional revenue pillars, merchant service revenue growth and Commission revenue growth rate was 27% and 23%, respectively.Below the total revenue growth rate.
Alibaba Cloud Computing business as the pillar of Ali’s future? In fact, the performance is not so good. The revenue in this quarter was almost the same as that in the previous quarter. The growth rate of the chain was close to 0, and the growth rate continued to decline.
Data Source: Corporate Financial Report, Tianfeng Securities
In addition, Tencent’s 21% revenue growth this quarter means no improvement in the future?
Data Source: Company Financial Report, Futu Securities
The answer is no. Not to mention that Tencent Games was launched in May this quarter in “Peace Elite” in May, and the contribution to the second quarter revenue is limited. Tencent’s mobile game growth rate is still 26%. Looking forward to the second half of the year, Tencent’s various games will continue to triumph. According to the forecast data of Sensor Tower, Tencent’s mobile game revenue in July 2019 increased by 39% year-on-year in July 2018, an increase of 27% from the previous month. Although the advertising revenue is not ideal, it is subject to macro factors, and the potential for realizing WeChat advertising is still great.
Next, from the profitability of Tencent and Ali.
Data Source: Company Financial Report, Futu Securities
The size of the operating profit indicates the ability of a company to make a profit from its normal operations. The above picture shows that Tencent’s operating profit has actually been higher than that of Ali, except for the fourth quarter of each year, which was affected by Ali Double 11. In the quarter, Ali’s operating profit increased significantly year-on-year, mainly due to the large decline in the expense ratio (caused by the impact of equity incentives related to Ant Financial), if in accordance with the Non GAAP caliberThe three expense ratios of the company in the quarter were 19.3%, up 1.3 percentage points year-on-year and 3.0 percentage points lower than the previous month.
Data Source: Company Financial Report, Futu Securities
For Ali and Tencent, operating margin is also a very important indicator, reflecting the company’s ability to turn revenue into profit. The comparison of operating profit margins above shows that Tencent’s operating profit margin has been higher than that of Ali, proving its good profitability.
The above analysis shows that Ali has shown amazing income growth, which means that Ali always tries fresh business to gain future growth momentum, but the profitability of these fresh businesses is not good, so Ali’s Profitability is not as good as Tencent.
Therefore, from the style point of view: Tencent VS Ali, a “stable word”, on the basis of ensuring that they do not make big mistakes, use their strong resource integration capabilities to catch up; the other is always “very restless” Even if you make a mistake, you will always go out and preemptively make sure you are ahead of your opponent in various strategic areas and not give your opponent any chance.
At the same time, before the common proposition of “traditional business slowdown”, Tencent and Ali’s financial report revealed a commonality: cost reduction and efficiency.
Tencent and Ali have worked hard on cost and expense control this quarter. For example, we look at Tencent’s sales and marketing expenses for the quarter, down 26% year-on-year. The improvement of Ali’s profit mainly relies on the control of cost and expense. The two expenses accumulate in the total revenue accounted for 79%, far lower than 91% in the previous quarter and 91% in the same period last year. Among them, the cost reduction of the digital entertainment business has been indispensable (saving about 900 million costs), and the adjustment of the format of the box horse has helped the profit margin. From the perspective of its own store, the net increase of the box store in the current quarter. Only 15 homes, the lowest since 2018. In contrast, the net increase in the first three quarters was 32, 32, and 26, respectively, and this quarter was close to the waist.
So, in the case that the overall economic environment in the country is facing great uncertainty, even the gold masters like Ali and Tencent have chosen to “eat and shrink” and get through the difficulties, even if they are better than other companies. too much.
Three, Tencent VS Ali, cycle waiting and aggressive
A few years ago I said that if you compare Ali as the vane of China’s real economy, then Tencent is the representative of China’s virtual economy, Ali VS Tencent is the physical retail VS virtual economy.
Ali and Tencent