Corner of Berkshire & Fairfax Message Board

General Category => Investment Ideas => Topic started by: Nell-e on February 07, 2018, 12:47:29 AM

Title: JD - JD.COM
Post by: Nell-e on February 07, 2018, 12:47:29 AM
JD, the Chinese e-commerce, company created a new separate platform for luxury apparel.  It's at www.toplife.com .   I'm not sure when the website went up but most likely in the past 2 months since I checked the site late last year and it was under construction.

Any Chinese consumers here have an opinion of the site and the brands/products that it carries?  Are the brands highly desirable or are they more 2nd tier brands?

Also, would be interested in getting overall thoughts about JD and Chinese e-commerce sector.


 

Title: Re: JD - JD.COM
Post by: Liberty on February 07, 2018, 05:28:02 AM
JD was mentioned in a recent Saber Capital presentation at Google (John Huber):

sabercapitalmgt.com/wp-content/uploads/2018/02/Saber-Capital-Talk-at-Google.pdf

More John can be found here:

basehitinvesting.com
Title: Re: JD - JD.COM
Post by: randallchsu on February 07, 2018, 07:39:22 AM
So I am sharing this as a layman user of JD and ecommerce in China. I am a JD plus member (JD plus is similar to Amazon prime) and 12K points in 京享值 (a system JD uses to rank its users based on spending/activity/credit worthiness) so that puts me in the top quartile for all JD users. I use JD pay for Apple pay and JD credit products, so I am immerse in their offerings, but this is first time I heard of toplife.com.

But I do know luxury is a segment that JD wants to grow, they have a division on their site called JD Luxury, and I bought a few eye frames via the JD luxury channel only because it was cheaper than getting them from optic stores.

For me, JD's strength is in its logistic. As a plus member, I get free same delivery for many of the products and JD warehouses are like 60-100km out from where I am. Most of the time, I only look at items that can be fulfilled by JD.

For none time-sensitive items, I still get from taobao because it usually have the lower price for the same product.

I buy from Netease and Xiaomi too, and Wechat is gaining traction as well after Tencent launched "little app". But I am just one sample size and perhaps only represent those that live in tier one cities. China is huge and consumers are way too diverse to draw general representation at this time due to huge variance in wealth/class/education/up-bring.
Title: Re: JD - JD.COM
Post by: Liberty on February 07, 2018, 09:42:15 AM
Thanks for sharing your experience, randallchsu. Always nice to hear directly from a customer of the company.
Title: Re: JD - JD.COM
Post by: racemize on February 07, 2018, 09:53:39 AM
Yes, very good to hear from you.  Could you provide any input on how much of a moat or stickiness of consumers there are for these various Chinese ecommerce companies?

E.g., Amazon has a lot of stickiness here, but it seems like China has a lot more competition in this space.  I understand it is anecdotal, but any general information would be helpful.
Title: Re: JD - JD.COM
Post by: Nell-e on February 07, 2018, 01:08:09 PM
Thanks for replies.

randallchsu, did you view the toplife.com website?  It's in Chinese so I'm not able to navigate around since I don't read Chinese.  On front page, they are featuring brands like Hogan, Pomellato, Perrin, Shiatzy Chen, Atelier Swarovski, TOD's, etc.

I'm wondering if toplife caters to ultra rich or upper middle class.  One of the Hogan sneakers on the front page retails for 4300 RMB which is ~$685 USD.  That seems pretty expensive.

Title: Re: JD - JD.COM
Post by: randallchsu on February 07, 2018, 11:11:09 PM
I don't spend in the luxury segment. So those brands on toplife.com probably tier one brands , but I really have no clue.

What I can share is even tho 4.3k rmb sounds a lot, you would be surprised at the number of 8-15K rmb monthly salary people buying these kind of brands.

Have a look at Sandro, a public company listed in Paris. Their average price tag is 2-3k+ rmb and most of their Chinese customers are middle class at best. Sandro is doing well in China with over 200+ locations, maybe partly because it was 50%+ owned by a Chinese company.

http://www.smcp.com/en/finance/publications/

And if you look at the new Starbucks reserve roastery in Shanghai, average spending is 110 rmb per person and that location gets a huge foot traffic.

Thanks for replies.

randallchsu, did you view the toplife.com website?  It's in Chinese so I'm not able to navigate around since I don't read Chinese.  On front page, they are featuring brands like Hogan, Pomellato, Perrin, Shiatzy Chen, Atelier Swarovski, TOD's, etc.

I'm wondering if toplife caters to ultra rich or upper middle class.  One of the Hogan sneakers on the front page retails for 4300 RMB which is ~$685 USD.  That seems pretty expensive.
Title: Re: JD - JD.COM
Post by: randallchsu on February 07, 2018, 11:31:41 PM
I believe they are trying to build moat/stickiness around the Costco or SPG/Marriott/Visa/Mastercard kind of membership experiences.

Taobao gives prime-like membership based on spending/activity/credit worthiness called 淘气值 (SVIP). JD has the plus program. Xiaomi and Netease are luring customers with a brand experience similar to MUJI at a better price.

There seems to be a first mover advantage. Taobao is the first place to check for products/services. I will be able to find something on taobao at a great price, but I am just unsure of the quality. JD, Xiaomi and Netease solved this pain point and took market share.

And they are all using technology to give a better experience. Returning products have become so easy on any of the above platforms. For example, if you are a taobao SVIP member, you get one free return shipping each week. You just click return, and taobao, using their cainiao system, will arrange a carrier to come based on the date and time you requested. You don't need to shipping label, call anyone, or write anything. When the pickup guy comes, you give him a 4 digit pin code you get from taobao to complete the pickup. And if you have high sesame credit rating, taobao will give you a refund immediately before seller gets the package and complete product verification.

So my point is, if return is so easy and free, I am incline to buy on taobao for things that are less brand/quality/time sensitive.

Yes, very good to hear from you.  Could you provide any input on how much of a moat or stickiness of consumers there are for these various Chinese ecommerce companies?

E.g., Amazon has a lot of stickiness here, but it seems like China has a lot more competition in this space.  I understand it is anecdotal, but any general information would be helpful.
Title: Re: JD - JD.COM
Post by: Nell-e on February 08, 2018, 12:07:21 AM
randallchsu

-That's very interesting feedback about Chinese consumer spending behavior.  Can you further explain?  What's the demographic/age group that spends like this?  Are these people living beyond their means?  Who do they get credit from?  I'm Chinese American and the stereotype is Chinese people are savers. 

-Aren't fake products a huge issue in China?  The narrative is that JD has a much better reputation than other suppliers when it comes to authenticity.  Can you comment on that?  How much more likely do you think people are to use JD because of trust issues?

-What's Richard Liu's image in China like?  IMHO- Alibaba's stock price has been greatly helped by Jack Ma's evangelism.  I don't even think his English speeches are that insightful.  There's a lack of English speaking Chinese CEO's therefore retail investors default to BABA for their China exposure.  Richard Liu's English interviews are way too stiff.  I'm wondering if he's more charismatic when speaking Chinese. He's young so plenty of time to improve his English.

-I'm going to start another thread on a company called, Jupai (JP).  It's a wealth mgmt company.  Their competitor is Noah.  The need for retirement planning in China is massive.  It would be great if you could comment on that thread too even if you don't know about Jupai.  Would be great to get perspective on retirement planning attitudes in China.
Title: Re: JD - JD.COM
Post by: randallchsu on February 08, 2018, 12:49:53 AM
China is too big and diverse, so I think it would be better to discuss about spending behaviour within different regions or tier 1/2/3 cities in that context. Also, Chinese consumes are not really homogeneous, each region speaks their own dialogue and have different culture norms.

So I don't know to be honest, but one primary reason I suspect for tier 1 citizens are strong income growth coupled with rising asset prices. This has been going on for the last ten years and looks sustained at the moment. Once you extrapolate that to the future, even though you might be overspending now, you feel like your future income/asset growth will make up for it.

A lot of people are savers because of real estate. Someone argued why the previous generation were able to save so much was because the Chinese government owned all properties, and the government privatized these housing units to its citizens in the 1980's at below market value (there was no such thing as market value), so almost everyone had some equity built-up via housing and removed a major expense which is housing. There was no such thing as a real estate agent back in the 60s or 70s.

randallchsu

-That's very interesting feedback about Chinese consumer spending behavior.  Can you further explain?  What's the demographic/age group that spends like this?  Are these people living beyond their means?  Who do they get credit from?  I'm Chinese American and the stereotype is Chinese people are savers. 

Title: Re: JD - JD.COM
Post by: tol1 on February 08, 2018, 02:51:31 AM
Would be keen to hear about key metrics /drivers and how the current high NTM valuation can be justified accordingly.
Title: Re: JD - JD.COM
Post by: one-foot-hurdles on June 01, 2018, 03:54:41 PM
Notes from HK Sohn conference:
Quote
Kok Hoi Wong (APS Asset Management):  Short: JD.com (JD).  This has been a consensus long among many managers but argues that it's already priced for perfection.  Thinks impairment losses coming.  Company made bad investments (PaiPai and QQ Wanggou, Bitauto, Tuniu, Yihaodian).  Thinks a big impairment is possible from Yihaodian.  Management is "investing recklessly."  Says to be weary as company can't make a profit in highly competitive Chinese e-commerce market.  Business model is misunderstood.

Also see attachment for more detailed analysis

From what I know these guys have been short since 2016(since $25)
Title: Re: JD - JD.COM
Post by: Spekulatius on June 02, 2018, 06:13:23 AM
Gross margins have been increasing from 8.4% in 2012 to >14% in 2018, if you include the higher margin service revenues. The man bull thesis is that JD creates a better customer experience because they own their logistics network. I have not seen nothing in the this short thesis to refute this.

The thesis makes some points that are fair, but th same could have been made about AMZN, which started out as a book retailer and does not resemble anything to what it is right now.

it is a question of management being able to adapt and invest smartly and creating a better customer experience. if JD can do they, they should be able to succeed and it should pay out handsomely, if no t this will fail.

I have a small position in JD, which I regard as an option play of sorts and as that, I think it is pr9bably undervalued right now.
Title: Re: JD - JD.COM
Post by: Liberty on June 02, 2018, 11:13:42 AM
ShawSpring Partners presentation from august 2016 (attached).
Title: Re: JD - JD.COM
Post by: lucasnascimento on June 06, 2018, 10:27:33 PM
Attached a document I made compiling responses to APS' short thesis made by Richard from https://oraclefromomaha.wordpress.com and Lester from https://wondurrrrboy.wordpress.com/. Also attached APS' reports.
Title: Re: JD - JD.COM
Post by: atbed on June 07, 2018, 12:35:05 AM
I'm currently spending some time in China, and have spent the last few weeks in Shanghai/Beijing. Naturally, I've been hearing a ton on JD and BABA. Here's an interesting POV: Both sites have fakes, because they are extremely difficult to get rid of. People expect this. JD talks a lot about getting rid of fakes, but some actually believe they talk the talk more than they can walk the walk. In comparison, Taobao is very open about the existence of fakes on their platform. The view is that Taobao will do what it can, but that consumers need to be careful. I'm also hearing that Taobao's customer service is better. In fact, I've heard horror stories about JD bullying their customers. Now none of this information was gathered through a formal survey, so take it with a large grain of salt.
Title: Re: JD - JD.COM
Post by: Liberty on June 07, 2018, 07:13:36 AM
Attached a document I made compiling responses to APS' short thesis made by Richard from https://oraclefromomaha.wordpress.com and Lester from https://wondurrrrboy.wordpress.com/. Also attached APS' reports.

Thank you, lucasnascimento, I appreciate it.
Title: Re: JD - JD.COM
Post by: oddballstocks on June 07, 2018, 07:58:02 AM
Interesting thread, the short rebuttal was a good read.  Both sides seem to have good points.

I haven't followed this name closely, I know it's a hedge fund hotel, but a short based on valuation seems a little shaky here.

China is an interesting market.  Before the 08 crash there was a LOT of China hype too, no one could go wrong buying Chinese equities.  It's a strangely fascinating thing, I get that it has 1b+ people and is undeveloped.  But so is India, and India gets zero investment attention.  I understand that non-Indians can't buy Indian equities, but China is the same.  You're buying into a VIE that has a contractual relationship with the underlying entity.  Why can't they do this in India?


Do longs look at this as a buy and hold forever deal? Or is it more of a growth isn't being valued, so you buy until it's valued?
Title: Re: JD - JD.COM
Post by: Jurgis on June 07, 2018, 08:20:38 AM
China is an interesting market.  Before the 08 crash there was a LOT of China hype too, no one could go wrong buying Chinese equities.  It's a strangely fascinating thing, I get that it has 1b+ people and is undeveloped.  But so is India, and India gets zero investment attention.  I understand that non-Indians can't buy Indian equities, but China is the same.  You're buying into a VIE that has a contractual relationship with the underlying entity.  Why can't they do this in India?

Maybe it's a good business to start. Indian VIEs. Assuming Indian government would not put their foot on it. Though maybe it's been done or been tried.

There are clearly other reasons of India vs China attractiveness that may or may not make sense.

Quote
Do longs look at this as a buy and hold forever deal? Or is it more of a growth isn't being valued, so you buy until it's valued?

I don't own JD. I'd say something like Tencent is hold forever, though possibly way too late after 400x bagger return. I've owned Chinese gaming companies and they seemed to be more "buy cheap, sell when not", since long term returns and business trajectories have been not great. There are exceptions maybe.
Title: Re: JD - JD.COM
Post by: Foreign Tuffett on June 07, 2018, 04:49:51 PM
Interesting thread, the short rebuttal was a good read.  Both sides seem to have good points.

I haven't followed this name closely, I know it's a hedge fund hotel, but a short based on valuation seems a little shaky here.

China is an interesting market.  Before the 08 crash there was a LOT of China hype too, no one could go wrong buying Chinese equities.  It's a strangely fascinating thing, I get that it has 1b+ people and is undeveloped.  But so is India, and India gets zero investment attention.  I understand that non-Indians can't buy Indian equities, but China is the same.  You're buying into a VIE that has a contractual relationship with the underlying entity.  Why can't they do this in India?


Do longs look at this as a buy and hold forever deal? Or is it more of a growth isn't being valued, so you buy until it's valued?

It amazes me how readily investors in Chinese companies via this structure disregard the risk of waking up one day to find that they now own nothing more than a tiny interest in a Cayman Islands PO box. Or, less flippantly, the principal-agent problem already looms large in investing, why invest in a situation in which the "agents" (management and the Chinese communist party) are completely beyond the reach of the "principals" (foreign investors)? 

Title: Re: JD - JD.COM
Post by: lucasnascimento on June 07, 2018, 05:00:02 PM
Interesting thread, the short rebuttal was a good read.  Both sides seem to have good points.

I haven't followed this name closely, I know it's a hedge fund hotel, but a short based on valuation seems a little shaky here.

China is an interesting market.  Before the 08 crash there was a LOT of China hype too, no one could go wrong buying Chinese equities.  It's a strangely fascinating thing, I get that it has 1b+ people and is undeveloped.  But so is India, and India gets zero investment attention.  I understand that non-Indians can't buy Indian equities, but China is the same.  You're buying into a VIE that has a contractual relationship with the underlying entity.  Why can't they do this in India?


Do longs look at this as a buy and hold forever deal? Or is it more of a growth isn't being valued, so you buy until it's valued?

It amazes me how readily investors in Chinese companies via this structure disregard the risk of waking up one day to find that they now own nothing more than a tiny interest in a Cayman Islands PO box. Or, less flippantly, the principal-agent problem already looms large in investing, why invest in a situation in which the "agents" (management and the Chinese communist party) are completely beyond the reach of the "principals" (foreign investors)?


To address this issue, take a look at https://www.wsj.com/articles/a-spark-that-could-light-up-chinas-internet-giants-1520247521, http://www.scmp.com/business/companies/article/2139703/beijing-fast-tracks-foreign-listed-chinese-tech-firms-share and today's https://www.ft.com/content/7e243658-6a0c-11e8-8cf3-0c230fa67aec

Since Chinese CDR investors will be subject to the same VIE structure, many US investors would be more comfortable investing in these companies (the thinking being that the Chinese government wouldnít do anything conniving to its own citizens). Also most people invest into what they know better. It is fair to say that one of the factors many of these Chinese US-listed tech companies are trading at lower multiples than they should be (Charlie Munger shares that thinking https://www.cnbc.com/2018/05/07/charlie-munger-chinas-best-companies-cheaper-than-us.html), is due to the fact their Chinese customer-base canít invest in these foreign-listed shares due to capital controls, and US investors have never used these platforms.

All in, this is likely to be a great catalyst for the stock going forward.
Title: Re: JD - JD.COM
Post by: LightWhale on June 17, 2018, 11:49:51 PM
https://www.reuters.com/article/us-jd-com-google/google-to-invest-550-million-in-chinese-e-commerce-giant-jd-com-idUSKBN1JE079
Title: Re: JD - JD.COM
Post by: atbed on June 21, 2018, 10:42:10 PM
https://www.ft.com/content/71e9b868-752e-11e8-aa31-31da4279a601

"China is preparing to pass a wide-ranging law that would hold ecommerce platforms run by Alibaba, JD.com and Tencent liable for fraudulent goods sold by vendors on their sites."

Does this reduce one of JD's advantages at a time when their biggest competitor is already investing heavily into logistics/fulfillment?
Title: Re: JD - JD.COM
Post by: Broeb22 on June 22, 2018, 06:48:31 AM
I personally believe anything that removes friction in the customer experience is a positive for eCommerce as a whole. And anything that makes people more likely to buy online should help JD in the long-term. 

Does it level the playing field for Alibaba relative to JD? Possibly, but this is a YUGE market. There is probably room for at least two players of scale. I'm more concerned about some better mousetrap coming out of the woodwork to displace JD than I am about Alibaba eating JD's lunch and putting it out of business.

Another perspective is generally that incumbents tend to benefit from regulation. If you're an upstart competitor to JD, how in the world are you supposed to ensure sellers on your platform are selling authentic goods? How much will it cost to do that? In my opinion, this probably benefits JD long-term.
Title: Re: JD - JD.COM
Post by: lucasnascimento on June 22, 2018, 08:39:01 AM
https://www.ft.com/content/71e9b868-752e-11e8-aa31-31da4279a601

"China is preparing to pass a wide-ranging law that would hold ecommerce platforms run by Alibaba, JD.com and Tencent liable for fraudulent goods sold by vendors on their sites."

Does this reduce one of JD's advantages at a time when their biggest competitor is already investing heavily into logistics/fulfillment?

This is way more negative for BABA compared to JD. Don't even think that would be an issue for JD.
BABA will have to spend much more in authenticity control since JD is way ahead in terms of quality control. BABA's 3P Gross GMV is more than 4 times higher than JD's, what means BABA would have to spend 4x more at least.

Authentic products is JD's mantra. Richard Liu has anticipated this trend since the beggining of JD. The shift towards customer experience will be very costly to BABA, and it will take time.

Don't really believe this regulation will change much given the difficulty to track billions of orders and millions of merchants. And if you cut all the counterfeit today from BABA, a large piece of its GMV will be gone with the 3P fees and advertising revenue. Not sure if the Chinese government really wants to crush its major tech company and let millions of merchants unemployed.


Title: Re: JD - JD.COM
Post by: walkie518 on June 22, 2018, 02:22:26 PM
Interesting thread, the short rebuttal was a good read.  Both sides seem to have good points.

I haven't followed this name closely, I know it's a hedge fund hotel, but a short based on valuation seems a little shaky here.

China is an interesting market.  Before the 08 crash there was a LOT of China hype too, no one could go wrong buying Chinese equities.  It's a strangely fascinating thing, I get that it has 1b+ people and is undeveloped.  But so is India, and India gets zero investment attention.  I understand that non-Indians can't buy Indian equities, but China is the same.  You're buying into a VIE that has a contractual relationship with the underlying entity.  Why can't they do this in India?


Do longs look at this as a buy and hold forever deal? Or is it more of a growth isn't being valued, so you buy until it's valued?

It amazes me how readily investors in Chinese companies via this structure disregard the risk of waking up one day to find that they now own nothing more than a tiny interest in a Cayman Islands PO box. Or, less flippantly, the principal-agent problem already looms large in investing, why invest in a situation in which the "agents" (management and the Chinese communist party) are completely beyond the reach of the "principals" (foreign investors)?

My thinking is that if it looks like a duck, walks like a duck, and quacks like a duck...

there are no other options other than the VIE structure to transfer ownership of earnings rather than the ownership of Chinese-owned assets ... the most sophisticated attorneys and investors came together to make the vehicle for purpose of opening the US capital markets to Chinese companies; I think this is here to stay and investors either get comfortable or don't buy the shares

JD may have its own problems, maybe there's fraud, maybe tons of fake product, but these are company specific matters that should get ironed out by investor due diligence, I would think Google likely took a good look though, of course, validation doesn't mean verification
Title: Re: JD - JD.COM
Post by: Liberty on July 03, 2018, 09:47:01 AM
Wiedower Capital 1h18 letter, contains a long section about JD:

http://wiedowercapital.com/files/Letter1H18.pdf
Title: Re: JD - JD.COM
Post by: randallchsu on July 03, 2018, 07:44:38 PM
Wiedower Capital 1h18 letter, contains a long section about JD:

http://wiedowercapital.com/files/Letter1H18.pdf

JD is a pretty good place to buy things. I would continue to use their services, but I think the emphasis on logistic and customer satisfaction is overblown.

First of all, logistic infrastructure is crazy good in China, so the marginal benefit is at best like a domestic short-haul flight. Unless you are a higher tier frequent flyer member, you don't really care which carrier you fly with.

The most important thing is price and selection. I recently bought four pieces of apparel on Tmall from Massimo Dutti (a brand of Zara), and they arrived next day from Beijing to Shenzhen with impeccable packaging and delivery.

Although Alibaba doesn't control the logistic, built-in incentive structure will ensure the delivery experience is satisfactory. The Cainiao network is the Uber of courier delivery services, each delivery guy is responsible for his own P/L, and if he gets many poor ratings from customer feedback, that'll impact his income.

In terms of customer satisfaction, JD changed the T&C of the plus member program during my membership period, so I got less vaule than what was originally promised. It caused an uproar from many plus members and plenty reporting on this in Chinese, one example (https://www.ithome.com/html/it/348644.htm).

I got plenty of bad experience with JD. More than half a dozen of time, a JD delivery guy would just put my package outside my door without telling me (viewing it from the positive side, business is too good for delivery to handle). Item went missing, and I had to contact customer service multiple times for help. Every time the online CS promised someone will call me to follow up but never did. Finally after about a month, a JD delivery guy just showed up with the item.

The future of retail is evolving extremely quick in China. I used to order plenty of grocery using JD's on demand delivery Dao Jia. Ever since a Hema Supermarket opened up nearby, I moved all our household grocery spending to Hema.

So my point is probably there are plenty of bad experience to talk about with any of the retail platforms in China. In the end, the experience is not significantly different and the differentiation is quite small and could easily be disrupted. You can pretty much find all the SKUs that's on JD either on Taobao or Tmall.
Title: Re: JD - JD.COM
Post by: thowed on July 04, 2018, 04:51:34 AM
Many thanks for your personal insights - it's hugely valuable.

The JD.com story has been quite compelling, but I think a lot of people (including myself) are limited in our understanding by not being 'on the ground' and actually experiencing it.
Title: Re: JD - JD.COM
Post by: Liberty on July 19, 2018, 10:50:04 AM
11-minute interview with Richard Liu:

https://www.youtube.com/watch?v=z_jbICAhfTg
Title: Re: JD - JD.COM
Post by: hillfronter83 on July 19, 2018, 12:10:18 PM
An interesting article from New Yorker talking about JD and eCommerce in China.

https://www.newyorker.com/magazine/2018/07/23/how-e-commerce-is-transforming-rural-china
Title: Re: JD - JD.COM
Post by: randallchsu on July 19, 2018, 06:21:31 PM
iqiyi recently ran a promotion with JD.

For 89 rmb*, a buyer gets one year iqiyi gold vip and JD plus. And the buyer can purchase the promotion package twice, so that's two years of services for 178 rmb*. If the buyer already has JD plus and paid 178 rmb*, the plus membership will automatically extend for another 24 months.

iqiyi and JD are both likely to report skyrocketed membership level for this year.

*if the buyer purchased via cash-back sites, that's another 20% cash rebate
Title: Re: JD - JD.COM
Post by: blainehodder on July 20, 2018, 12:03:24 PM
I just don't get why this continually sells off. It trades sub 1x rev with massive growth and a massive runway.  Yes it is capital intensive but even with a tiny future margin they are worth min 2x the current mcap.  It can't all be explained away by trade/currency war fears.  Yes BABA is a huge competitor but JD is well financed and has the backing of Tencent and Walmart. It just doesn't make any sense to me. It doesn't look like a failing company, but it certainly trades like one.
Title: Re: JD - JD.COM
Post by: lucasnascimento on July 20, 2018, 12:08:33 PM
I just don't get why this continually sells off. It trades sub 1x rev with massive growth and a massive runway.  Yes it is capital intensive but even with a tiny future margin they are worth min 2x the current mcap.  It can't all be explained away by trade/currency war fears.  Yes BABA is a huge competitor but JD is well financed and has the backing of Tencent and Walmart. It just doesn't make any sense to me.

Me neither.
Title: Re: JD - JD.COM
Post by: Liberty on July 20, 2018, 12:19:59 PM
I just don't get why this continually sells off. It trades sub 1x rev with massive growth and a massive runway.  Yes it is capital intensive but even with a tiny future margin they are worth min 2x the current mcap.  It can't all be explained away by trade/currency war fears.  Yes BABA is a huge competitor but JD is well financed and has the backing of Tencent and Walmart. It just doesn't make any sense to me. It doesn't look like a failing company, but it certainly trades like one.

They are also backed by Google, with a recent investment of half a billion.

Shanghai's index is down about 20% year to date, so that certainly doesn't help.

Saw a rumor today that Hillhouse and Tiger Global sold out. No idea if true, but could explain some pressure on the price.

If you have conviction that it's worth a lot more than where it's trading at, it's an opportunity.
Title: Re: JD - JD.COM
Post by: winjitsu on July 20, 2018, 02:04:09 PM
No position, but I'll happily play the other side.

I think people think JD is the next Amazon platform play where one subscription gets you access to videos music shopping etc but in China, JD is just for commerce and I'd argue Tencent is the real platform play (you use the wechat portal to access music, videos, shopping, use wechat currency etc.). Also China is slightly different because we see federation of companies teaming up, so the value is spread between the members of the federation and you can't have certain segments like AWS subsidize money losers like Video / Alexa etc like Amazon. Result is a weaker flywheel.

Walmart is dumb e-commerce money. If anything this is a contra-indicator.

Market will be winner takes all, Alibaba is winning in that regard. I ask my Chinese national friends where they do their online shopping -- majority use Alibaba over JD.
Title: Re: JD - JD.COM
Post by: fareastwarriors on July 20, 2018, 07:43:14 PM
No position, but I'll happily play the other side.

I think people think JD is the next Amazon platform play where one subscription gets you access to videos music shopping etc but in China, JD is just for commerce and I'd argue Tencent is the real platform play (you use the wechat portal to access music, videos, shopping, use wechat currency etc.). Also China is slightly different because we see federation of companies teaming up, so the value is spread between the members of the federation and you can't have certain segments like AWS subsidize money losers like Video / Alexa etc like Amazon. Result is a weaker flywheel.

Walmart is dumb e-commerce money. If anything this is a contra-indicator.

Market will be winner takes all, Alibaba is winning in that regard. I ask my Chinese national friends where they do their online shopping -- majority use Alibaba over JD.


This is pure speculation. Doesn't Tencent own like ~18% of JD? Any chance Tencent takes out JD to compete directly with Alibaba? One stop shop.
Title: Re: JD - JD.COM
Post by: chrispy on July 22, 2018, 09:11:18 AM
Yes, they own an amount right around there
Title: Re: JD - JD.COM
Post by: petec on July 25, 2018, 02:52:00 AM
I just don't get why this continually sells off. It trades sub 1x rev with massive growth and a massive runway.  Yes it is capital intensive but even with a tiny future margin they are worth min 2x the current mcap.  It can't all be explained away by trade/currency war fears.  Yes BABA is a huge competitor but JD is well financed and has the backing of Tencent and Walmart. It just doesn't make any sense to me. It doesn't look like a failing company, but it certainly trades like one.

I'm new to the name. Mind if I ask how you value it? I get that it's <1x sales but that alone doesn't necessarily mean much. You have to make a margin assumption. If you assumed 2% net margin on RBM600bn of sales you're still on 29x. Should margins, or sales, be much higher than that any time soon? Genuine question - I don't know, I'm just reading as much as I can. But it's not immediately obvious how it's worth "min 2x" from here.
Title: Re: JD - JD.COM
Post by: blainehodder on July 25, 2018, 10:24:16 AM
I just don't get why this continually sells off. It trades sub 1x rev with massive growth and a massive runway.  Yes it is capital intensive but even with a tiny future margin they are worth min 2x the current mcap.  It can't all be explained away by trade/currency war fears.  Yes BABA is a huge competitor but JD is well financed and has the backing of Tencent and Walmart. It just doesn't make any sense to me. It doesn't look like a failing company, but it certainly trades like one.

I'm new to the name. Mind if I ask how you value it? I get that it's <1x sales but that alone doesn't necessarily mean much. You have to make a margin assumption. If you assumed 2% net margin on RBM600bn of sales you're still on 29x. Should margins, or sales, be much higher than that any time soon? Genuine question - I don't know, I'm just reading as much as I can. But it's not immediately obvious how it's worth "min 2x" from here.


Margin expansion should happen in the next 3-4 years to 4%+ in my opinion. While GMV is about 1/3 to 1/4 of the closest comp, ad rev is 1/10th - Ad revenue growth will drive material margin expansion. Further logistics margin on rapidly increasing 3p sales will again drive expansion. Combined with the rapid revenue growth, it is highly likely JD is trading with a large discount. Your 29x becomes more like 14x  for a company with an endless growth opportunity and revenue growth rates likely sustaining above 30% for years.


Title: Re: JD - JD.COM
Post by: lucasnascimento on July 25, 2018, 11:31:04 AM
I just don't get why this continually sells off. It trades sub 1x rev with massive growth and a massive runway.  Yes it is capital intensive but even with a tiny future margin they are worth min 2x the current mcap.  It can't all be explained away by trade/currency war fears.  Yes BABA is a huge competitor but JD is well financed and has the backing of Tencent and Walmart. It just doesn't make any sense to me. It doesn't look like a failing company, but it certainly trades like one.

I'm new to the name. Mind if I ask how you value it? I get that it's <1x sales but that alone doesn't necessarily mean much. You have to make a margin assumption. If you assumed 2% net margin on RBM600bn of sales you're still on 29x. Should margins, or sales, be much higher than that any time soon? Genuine question - I don't know, I'm just reading as much as I can. But it's not immediately obvious how it's worth "min 2x" from here.


Margin expansion should happen in the next 3-4 years to 4%+ in my opinion. While GMV is about 1/3 to 1/4 of the closest comp, ad rev is 1/10th - Ad revenue growth will drive material margin expansion. Further logistics margin on rapidly increasing 3p sales will again drive expansion. Combined with the rapid revenue growth, it is highly likely JD is trading with a large discount. Your 29x becomes more like 14x  for a company with an endless growth opportunity and revenue growth rates likely sustaining above 30% for years.

This. And you didn't even mention the product mix away from electronics.

JD doesn't need to destroy BABA for the thesis to play out. Both will do fine.

JD's margin expansion is a secular tailwind that will reward the patient investors, given today's multiples.
Title: Re: JD - JD.COM
Post by: Jurgis on July 25, 2018, 11:40:53 AM
company with an endless growth opportunity

Jedi will crush the Galactic Empire and expand beyond!  8)




Sorry, not picking on you.... well maybe a bit.  8)

Title: Re: JD - JD.COM
Post by: lucasnascimento on July 25, 2018, 01:38:46 PM
https://www.forbes.com/sites/lukeschiefelbein/2018/07/25/is-jd-com-the-future-of-chinese-e-commerce/#7321585737db
Title: Re: JD - JD.COM
Post by: peluche on September 02, 2018, 11:55:31 PM
JD.com Chairman Richard Liu Arrested in U.S. in Sexual Misconduct Case

https://www.nytimes.com/2018/09/02/business/richard-liu-arrest-minnesota-china.html
Title: Re: JD - JD.COM
Post by: Liberty on September 03, 2018, 08:17:43 AM
Possibly more detail... Things still unclear.

https://twitter.com/wondurrrrboy/status/1036580012919382016?s=21

https://twitter.com/wondurrrrboy/status/1036618211502907393?s=21
Title: Re: JD - JD.COM
Post by: lucasnascimento on September 04, 2018, 07:22:13 AM
Valuation is just madness.

JDF valued at 20B (36.4% profit sharing to JD, convertible to equity interest or one time market value payment), JDL valued at 13.5B (JD owns 81.4%); JD Mall (core business) then is valued at 42B-13.5*0.814-20*0.364 = 23.7B or 0.33X 2018E SALES (IT IS GROWING 31%) and 9.5X FCF (if you think 2017 FCF is the normalized one - in my view normalized CAPEX is half than that given high investments in land).

I mean...Don't know what to say anymore...
Title: Re: JD - JD.COM
Post by: SnarkyPuppy on September 04, 2018, 09:51:11 AM
Valuation is just madness.

JDF valued at 20B (36.4% profit sharing to JD, convertible to equity interest or one time market value payment), JDL valued at 13.5B (JD owns 81.4%); JD Mall (core business) then is valued at 42B-13.5*0.814-20*0.364 = 23.7B or 0.33X 2018E SALES (IT IS GROWING 31%) and 9.5X FCF (if you think 2017 FCF is the normalized one - in my view normalized CAPEX is half than that given high investments in land).

I mean...Don't know what to say anymore...

There's a lot of incredible value in China - but it's just much more difficult to get comfortable as a minority shareholder.

Two examples that are immediately obvious:
-  YY is growing at 10-20% a year and trades between 2x to 3x (depending on assumptions) FY2019 free cash flow.
-  SINA owns a 56% stake in WB (weibo).   Weibo is publically traded for ~$17bn.   SINA trades at ~$5bn.   Sina's ownership of Weibo alone is almost 2x the market cap of Sina.  In addition, you get $1bn of cash and a handful of chinese investments (including Alibaba investment made in 2011). 

Just absurd valuations all over the place.  In some ways it feels like Buffet describing his early days of flipping through handbooks and just finding solid businesses trading at 2-4x price.   In other ways, it's obviously different given the corporate governance issues over in China.   With that said, Munger and Li Lu are very transparent about the prospects of China right now.   
Title: Re: JD - JD.COM
Post by: cameronfen on September 04, 2018, 10:16:40 AM
There are people that claim even BABA have inflated GMV and other factors.  Thus it's not clear you are getting what you are are listed in the financials even with a company like BABA much less JD. 

Another note: YY is a very sketchy company.  If you visit the site, it's obvious that the company makes most of its money from people paying women to flirt and undress themselves on video.  Do you trust a Chinese business like that to accurately state its financials?  I dont know, so it's in the too hard. 
Title: Re: JD - JD.COM
Post by: mwtorock on September 04, 2018, 10:53:18 AM
no position

For every buyer, there is a seller. In the case of JD, the sellers are tiger and hillhouse. Rumor has it that they both are out of JD position in Q3, but hillhouse really started dumping in Q2. So anyone buying now is confident that he or she knows better about JD than hillhouse?
Title: Re: JD - JD.COM
Post by: SnarkyPuppy on September 04, 2018, 11:07:45 AM
There are people that claim even BABA have inflated GMV and other factors.  Thus it's not clear you are getting what you are are listed in the financials even with a company like BABA much less JD. 

Another note: YY is a very sketchy company.  If you visit the site, it's obvious that the company makes most of its money from people paying women to flirt and undress themselves on video.  Do you trust a Chinese business like that to accurately state its financials?  I dont know, so it's in the too hard.

That's an inaccurate statement - but variant perception is where money is made and the headline is partially why you can buy a growing business for 3x FCF.   There are issues with the company, both idiosyncratic and regulatory, but they do not make the majority of their money paying women to flirt/undress.   And if they did - I'm not entirely sure that is directly related to their financial disclosures.   

Sorry to derail - there's a separate thread on YY if you would like to discuss further.
Title: Re: JD - JD.COM
Post by: Broeb22 on September 04, 2018, 11:15:37 AM
Tencent was also a big buyer during the quarter, and Hillhouse (which is no longer a big holder in JD anyways) invested in JD Logisitics' financing round earlier this year, so I'm not sure you can take a lot of information out of that statement in isolation.


Title: Re: JD - JD.COM
Post by: lucasnascimento on September 04, 2018, 11:23:16 AM
no position

For every buyer, there is a seller. In the case of JD, the sellers are tiger and hillhouse. Rumor has it that they both are out of JD position in Q3, but hillhouse really started dumping in Q2. So anyone buying now is confident that he or she knows better about JD than hillhouse?

This is a very compelling point. I indeed feel that some people are selling because they (Hill & Tiger) are selling. Don't know if I should sell just because they are selling, given what I wrote about valuation. I see everybody commenting that they are selling but nobody talks about WHY they are selling. I mean, what is the argument?

And why have Hillhouse invested ~1B in JD Logistics in the beginning of the year? What happened since then that made they sell JD if that is the case? They are still growing, users are growing, cash generation is on track. Hillhouse knew that margins would come lower bc of logistics because well they had access to the JDL financials, and even so they decided to invest.

Very strange. But after all, investing is an act of arrogance. Hope to be right.





Title: Re: JD - JD.COM
Post by: BG2008 on September 04, 2018, 11:43:49 AM
When you invest in China, you have to keep an eye on how the Chinese government will react to the recent news.  There were a few high flyers like Anbang and HNA that were forced to unwind.  Granted they tend to be de-leveraging actions.  From my experience, the Chinese government does not view headlines like arrested for sexual misconduct favorably.  If the CEO is the quasi Jeff Bezos of China and he is forced out, then what do you have as your investment?   
Title: Re: JD - JD.COM
Post by: lucasnascimento on September 04, 2018, 12:00:31 PM
When you invest in China, you have to keep an eye on how the Chinese government will react to the recent news.  There were a few high flyers like Anbang and HNA that were forced to unwind. Granted they tend to be de-leveraging actions.  From my experience, the Chinese government does not view headlines like arrested for sexual misconduct favorably.  If the CEO is the quasi Jeff Bezos of China and he is forced out, then what do you have as your investment?

Got your point, but in this case Liu didn't commit any crime. However, any sanction by the Chinese government would be a killer to the stock.
Title: Re: JD - JD.COM
Post by: mwtorock on September 04, 2018, 12:44:11 PM
no position

For every buyer, there is a seller. In the case of JD, the sellers are tiger and hillhouse. Rumor has it that they both are out of JD position in Q3, but hillhouse really started dumping in Q2. So anyone buying now is confident that he or she knows better about JD than hillhouse?

This is a very compelling point. I indeed feel that some people are selling because they (Hill & Tiger) are selling. Don't know if I should sell just because they are selling, given what I wrote about valuation. I see everybody commenting that they are selling but nobody talks about WHY they are selling. I mean, what is the argument?

And why have Hillhouse invested ~1B in JD Logistics in the beginning of the year? What happened since then that made they sell JD if that is the case? They are still growing, users are growing, cash generation is on track. Hillhouse knew that margins would come lower bc of logistics because well they had access to the JDL financials, and even so they decided to invest.

Very strange. But after all, investing is an act of arrogance. Hope to be right.

In the same Q2 13f of hillhouse, one can see that they increased BABA holdings 300%+ (1b usd investment). maybe they just think BABA is a better platform business for eCom, and they got JD's best part/future in JDL?
Title: Re: JD - JD.COM
Post by: Liberty on September 04, 2018, 01:01:53 PM
no position

For every buyer, there is a seller. In the case of JD, the sellers are tiger and hillhouse. Rumor has it that they both are out of JD position in Q3, but hillhouse really started dumping in Q2. So anyone buying now is confident that he or she knows better about JD than hillhouse?

This is a very compelling point. I indeed feel that some people are selling because they (Hill & Tiger) are selling. Don't know if I should sell just because they are selling, given what I wrote about valuation. I see everybody commenting that they are selling but nobody talks about WHY they are selling. I mean, what is the argument?

And why have Hillhouse invested ~1B in JD Logistics in the beginning of the year? What happened since then that made they sell JD if that is the case? They are still growing, users are growing, cash generation is on track. Hillhouse knew that margins would come lower bc of logistics because well they had access to the JDL financials, and even so they decided to invest.

Very strange. But after all, investing is an act of arrogance. Hope to be right.

In the same Q2 13f of hillhouse, one can see that they increased BABA holdings 300%+ (1b usd investment). maybe they just think BABA is a better platform business for eCom, and they got JD's best part/future in JDL?

I saw some speculation that BABA might have forced them to sell JD if they wanted to have a chance to invest in Ant Financial. No idea if there's any truth to it, but that seems to be a fairly common practice in China (ie. as a third party, you can be part of team Tencent or Team Alibaba, but it's hard to do business with both).
Title: Re: JD - JD.COM
Post by: mwtorock on September 04, 2018, 01:18:55 PM
no position

For every buyer, there is a seller. In the case of JD, the sellers are tiger and hillhouse. Rumor has it that they both are out of JD position in Q3, but hillhouse really started dumping in Q2. So anyone buying now is confident that he or she knows better about JD than hillhouse?

This is a very compelling point. I indeed feel that some people are selling because they (Hill & Tiger) are selling. Don't know if I should sell just because they are selling, given what I wrote about valuation. I see everybody commenting that they are selling but nobody talks about WHY they are selling. I mean, what is the argument?

And why have Hillhouse invested ~1B in JD Logistics in the beginning of the year? What happened since then that made they sell JD if that is the case? They are still growing, users are growing, cash generation is on track. Hillhouse knew that margins would come lower bc of logistics because well they had access to the JDL financials, and even so they decided to invest.

Very strange. But after all, investing is an act of arrogance. Hope to be right.

In the same Q2 13f of hillhouse, one can see that they increased BABA holdings 300%+ (1b usd investment). maybe they just think BABA is a better platform business for eCom, and they got JD's best part/future in JDL?

I saw some speculation that BABA might have forced them to sell JD if they wanted to have a chance to invest in Ant Financial. No idea if there's any truth to it, but that seems to be a fairly common practice in China (ie. as a third party, you can be part of team Tencent or Team Alibaba, but it's hard to do business with both).

i actually heard about the same thing :). the fact that hillhouse chose team baba though in this case does sound like picking a winning platform in China eCommence.
Title: Re: JD - JD.COM
Post by: lucasnascimento on September 04, 2018, 01:42:20 PM
Do you guys remember some cases in which big investors dumped positions but stock trended higher monhts/years later? Peter Thiel on Facebook is the only that came in my mind.
Title: Re: JD - JD.COM
Post by: Liberty on September 04, 2018, 05:03:59 PM
https://www.bloomberg.com/news/articles/2018-09-04/arrest-of-jd-s-billionaire-ceo-connected-to-suspected-rape
Title: Re: JD - JD.COM
Post by: sleepydragon on September 04, 2018, 07:07:28 PM
what a shame!
Title: Re: JD - JD.COM
Post by: Happy on September 04, 2018, 11:17:59 PM
Tiger Global didn't sell in Q2. Is there any real evidence that they actually sold out in Q3?

It seems much more likely to me that the rape allegations are a false accusation. He always seemed like a man of high integrity to me. But if it turns out to be true, I would sell my stock even at a lower price.
Title: Re: JD - JD.COM
Post by: kab60 on September 05, 2018, 03:37:21 AM
No horse in this race, and all is speculation at this point, but this part would make me a bit uneasy as an investor (if one prefers a CEO that doesn't fuck around):

The arrest comes shortly after Mr. Liu was in the spotlight for another incident involving sexual misconduct. He tried to distance himself from a sexual assault that was said to have taken place after a 2015 party at his penthouse in Australia. A guest at the party, Longwei Xu, was found guilty this July of seven charges, including having sex with his accuser without her consent. (https://www.nytimes.com/2018/09/02/business/richard-liu-arrest-minnesota-china.html)

I mean, what kind of party was that? (this gives one an idea: https://www.smh.com.au/national/nsw/longwei-xu-found-guilty-of-sexually-assaulting-model-after-exclusive-dinner-party-20180723-p4zt4h.html)
Title: Re: JD - JD.COM
Post by: Spekulatius on September 05, 2018, 04:07:11 AM
When you invest in China, you have to keep an eye on how the Chinese government will react to the recent news.  There were a few high flyers like Anbang and HNA that were forced to unwind.  Granted they tend to be de-leveraging actions.  From my experience, the Chinese government does not view headlines like arrested for sexual misconduct favorably.  If the CEO is the quasi Jeff Bezos of China and he is forced out, then what do you have as your investment?

In addition, since R Lui holds 80% of the vot8ng rights and seems firmly in control, you own an IOU on an ownership stake in a leaderless company.
Title: Re: JD - JD.COM
Post by: Foreign Tuffett on September 05, 2018, 06:37:41 AM
News services are reporting that the victim/accuser here is a Chinese national. I bet there's been a frenzy of activity in China over the last few days as various parties attempt to contact her family and influence them.

Rape is a criminal charge, so ultimately it's the prosecutor's office that will decide to proceed with the case. I linked below to a case where a foreign national was raped by a US citizen on US soil. A jury convicted him even though the foreign national did not return to the US to testify at the trial. While this is unusual, it can happen.

http://www.sandiegouniontribune.com/news/courts/sd-me-skorniak-notebook-20170623-story.html (http://www.sandiegouniontribune.com/news/courts/sd-me-skorniak-notebook-20170623-story.html)



Title: Re: JD - JD.COM
Post by: Broeb22 on September 05, 2018, 06:59:52 AM
Regardless of whether the allegations are true, it is hard to avoid that he was most likely cheating on his wife with a college student, which is damaging on its own.

As a shareholder, I am extremely disappointed.

The primary reason I have not sold yet is that any large business is more than one person, although it becomes more difficult to make that argument when that one person holds 80% of votes.

I am trying to assess what JD would be without Richard Liu, which I still believe would be a formidable company.
Title: Re: JD - JD.COM
Post by: Foreign Tuffett on September 05, 2018, 07:07:57 AM
Regardless of whether the allegations are true, it is hard to avoid that he was most likely cheating on his wife with a college student, which is damaging on its own.

As a shareholder, I am extremely disappointed.

The primary reason I have not sold yet is that any large business is more than one person, although it becomes more difficult to make that argument when that one person holds 80% of votes.

I am trying to assess what JD would be without Richard Liu, which I still believe would be a formidable company.

Could have said the same thing about the Warren Buffett-Kathleen Graham situation back in the day.

http://www.nydailynews.com/entertainment/gossip/warren-buffett-opens-love-life-snowball-article-1.326077 (http://www.nydailynews.com/entertainment/gossip/warren-buffett-opens-love-life-snowball-article-1.326077)
Title: Re: JD - JD.COM
Post by: wachtwoord on September 05, 2018, 07:20:23 AM
I started a position today.

I don't like the dual class stock structure but decided the risk this causes to minority shareholders is sufficiently compensated by today's price.
Title: Re: JD - JD.COM
Post by: KCLarkin on September 05, 2018, 08:35:02 AM
Do you guys remember some cases in which big investors dumped positions but stock trended higher monhts/years later? Peter Thiel on Facebook is the only that came in my mind.

Not sure exactly what you are asking but this happens every day. A few prominent recent examples off the top of my head: Icahn selling Netflix and Apple; Ubben selling Adobe.

Knowledge that a big investor is selling has no actionable value. Once they have sold, that information is already in the price of the stock. By the time you've found out about the sale, the market impact will change the investment thesis.

There are very, very few cases where a big investor selling is meaningful information. Buffett selling FNMA might be one example, but is that just hindsight bias? And there are countless examples when Buffett sold and the stock still did great (Disney is a famous example).

--
Tiger selling would have zero impact on my approach to any investment. In this specific case, Hillhouse selling might have some impact since they are unquestionably more knowledgeable about Chinese internet than I am.
Title: Re: JD - JD.COM
Post by: Liberty on September 05, 2018, 10:32:17 AM
https://www.wsj.com/articles/arrest-of-chinese-billionaire-came-after-night-of-wine-and-japanese-food-in-minneapolis-1536143960
Title: Re: JD - JD.COM
Post by: Foreign Tuffett on September 05, 2018, 11:35:34 AM
Here's a timeline based on the reporting by various American news outlets:

Thursday night until ~9:00PM - Liu and large entourage ate dinner and drank heavily at Minneapolis restaurant

~1:00AM Friday morning - rape allegedly occurrs

Unclear - rape reported to authorities

Friday night - Liu arrested on business school campus

~11:30PM Friday night - Liu booked at jail

~4:00PM Saturday - Liu released from detention


Two questions for anyone familiar with these types of situations:

1) Why the time lag between the alleged crime and Liu's arrest? Were the police slow to move, or was there a delay before the alleged crime was reported?

2) Why no bail or travel restrictions? Presumably everyone involved in the situation was aware that Liu would be returning to China imminently. Also, China doesn't have an extradition treaty with the US.



Title: Re: JD - JD.COM
Post by: hillfronter83 on September 05, 2018, 11:58:33 AM
Here's a timeline based on the reporting by various American news outlets:

Thursday night until ~9:00PM - Liu and large entourage ate dinner and drank heavily at Minneapolis restaurant

~1:00AM Friday morning - rape allegedly occurrs

Unclear - rape reported to authorities

Friday night - Liu arrested on business school campus

~11:30PM Friday night - Liu booked at jail

~4:00PM Saturday - Liu released from detention


Two questions for anyone familiar with these types of situations:

1) Why the time lag between the alleged crime and Liu's arrest? Were the police slow to move, or was there a delay before the alleged crime was reported?

2) Why no bail or travel restrictions? Presumably everyone involved in the situation was aware that Liu would be returning to China imminently. Also, China doesn't have an extradition treaty with the US.

From the WSJ article, it seems the alleged rape happened around 1am on Friday but the party at Japanese restaurant ended around 9pm. This is the detail I didn't read any where before. So they probably left the restaurant and went some where else, which the alleged rape occurred. It couldn't happen at the restaurant which closes at 10:30pm.

An early report read "a girl left restaurant crying", which is probably not true anymore. Certainly a lot of detail waiting to be discovered.
Title: Re: JD - JD.COM
Post by: Foreign Tuffett on September 05, 2018, 12:12:42 PM
Here's a timeline based on the reporting by various American news outlets:

Thursday night until ~9:00PM - Liu and large entourage ate dinner and drank heavily at Minneapolis restaurant

~1:00AM Friday morning - rape allegedly occurrs

Unclear - rape reported to authorities

Friday night - Liu arrested on business school campus

~11:30PM Friday night - Liu booked at jail

~4:00PM Saturday - Liu released from detention


Two questions for anyone familiar with these types of situations:

1) Why the time lag between the alleged crime and Liu's arrest? Were the police slow to move, or was there a delay before the alleged crime was reported?

2) Why no bail or travel restrictions? Presumably everyone involved in the situation was aware that Liu would be returning to China imminently. Also, China doesn't have an extradition treaty with the US.

From the WSJ article, it seems the alleged rape happened around 1am on Friday but the party at Japanese restaurant ended around 9pm. This is the detail I didn't read any where before. So they probably left the restaurant and went some where else, which the alleged rape occurred. It couldn't happen at the restaurant which closes at 10:30pm.

An early report read "a girl left restaurant crying", which is probably not true anymore. Certainly a lot of detail waiting to be discovered.

Yeah, I saw that too. The same article also misreported the type of restaurant. Clearly not a credible source.
Title: Re: JD - JD.COM
Post by: Spekulatius on September 05, 2018, 12:23:08 PM
In my opinion, itís better to buy the ďcollateral damageď in stocks like BABA or Tencent etc rather than JD, if interested in a trade. Much less risk and they probably will recover faster.
Title: Re: JD - JD.COM
Post by: Jurgis on September 05, 2018, 12:40:55 PM
In my opinion, itís better to buy the ďcollateral damageď in stocks like BABA or Tencent etc rather than JD, if interested in a trade. Much less risk and they probably will recover faster.

I'm not sure BABA/Tencent are dropping because JD is dropping. I am not even sure JD is dropping because of the CEO/rape (although it could be part of the reason). A lot of US tech stocks are dropping for whatever reasons. And a lot (?) of China shares are dropping because of tariffs (?), EM crisis (?), game approval stoppage, etc.

You do your DD and you make your choices.

Did you sell your JD position or still holding?
Title: Re: JD - JD.COM
Post by: Foreign Tuffett on September 05, 2018, 03:09:22 PM
New article from Bloomberg that (somewhat) echoes one of the questions I posed earlier today:

https://www.bloomberg.com/news/articles/2018-09-05/jd-com-ceo-s-release-from-u-s-jail-suggests-police-lacked-proof (https://www.bloomberg.com/news/articles/2018-09-05/jd-com-ceo-s-release-from-u-s-jail-suggests-police-lacked-proof)

Obviously tremendous uncertainty surrounds the entire situation at this point.
Title: Re: JD - JD.COM
Post by: Lakesider on September 05, 2018, 04:05:02 PM
New trading strategy.

Take short position, Accuse CEO of serious crime. Police will arrest CEO despite lack of evidence, Stock falls = Profit
Title: Re: JD - JD.COM
Post by: Jurgis on September 05, 2018, 04:33:24 PM
New trading strategy.

Take short position, Accuse CEO of serious crime. Police will arrest CEO despite lack of evidence, Stock falls = Profit

Right. Shorts planted an unscrupulous woman to seduce and then yell rape on a poor CEO with outstanding moral character.

The conspiracy theories of investment discussion boards.  ::)
Title: Re: JD - JD.COM
Post by: Spekulatius on September 05, 2018, 07:25:35 PM
In my opinion, itís better to buy the ďcollateral damageď in stocks like BABA or Tencent etc rather than JD, if interested in a trade. Much less risk and they probably will recover faster.

I'm not sure BABA/Tencent are dropping because JD is dropping. I am not even sure JD is dropping because of the CEO/rape (although it could be part of the reason). A lot of US tech stocks are dropping for whatever reasons. And a lot (?) of China shares are dropping because of tariffs (?), EM crisis (?), game approval stoppage, etc.

You do your DD and you make your choices.

Did you sell your JD position or still holding?

I sold my Jd at a small profit, dipped my toes into YY,  it didnít like the water and sold. I looked at BABA, but the hodgepodge balance sheet concerns me, so I am out of the Chinese growth stocks for now.

FWIW, I donít think the rape allegations to JDís CEO are the only reason for the Chinese Internet socks falling,  it I think they contribute to souring the sentiment.
Title: Re: JD - JD.COM
Post by: Liberty on September 06, 2018, 07:00:01 AM
https://www.bloomberg.com/news/articles/2018-09-05/jd-com-ceo-s-release-from-u-s-jail-suggests-police-lacked-proof

https://www.wsj.com/articles/billionaire-founder-locked-up-jd-coms-board-cant-meet-without-its-mighty-boss-1536225892

https://twitter.com/wondurrrrboy/status/1037334400478924807
Title: Re: JD - JD.COM
Post by: TheAiGuy on September 06, 2018, 07:27:37 AM
Some thoughts:

I don't know what happened but there is a real possibility that the CEO raped someone. Discounting this as a false accusation without evidence, IMHO, makes you a bad person.

As for the business:
1) The economics of this business are very compelling.
2) This is a consumer facing business where the CEO is a celebrity. Public perception of the incident, true of false, may adversely affect the long term prosperity of business
2a) It probably won't, though.
3) There is, and always has been, a mountain of idiosyncratic risks to this particular company.  Key man risk, governance, VAE structure, political risk, etc.  Caveat emptor.

This once was my largest position, before market declines made it my 4th largest. I'm not happy about the accusations and am very unlikely to sell in the medium term.


Title: Re: JD - JD.COM
Post by: rkbabang on September 06, 2018, 08:03:43 AM
Some thoughts:

I don't know what happened but there is a real possibility that the CEO raped someone. Discounting this as a false accusation without evidence, IMHO, makes you a bad person.

As for the business:
1) The economics of this business are very compelling.
2) This is a consumer facing business where the CEO is a celebrity. Public perception of the incident, true of false, may adversely affect the long term prosperity of business
2a) It probably won't, though.
3) There is, and always has been, a mountain of idiosyncratic risks to this particular company.  Key man risk, governance, VAE structure, political risk, etc.  Caveat emptor.

This once was my largest position, before market declines made it my 4th largest. I'm not happy about the accusations and am very unlikely to sell in the medium term.

There is, of course, the possibility that he raped someone.  In that case there is still the possibility that there isn't enough evidence to charge him.
There is the possibility that he is being falsely accused because he's rich.   There are a lot of possibilities.  The only one that really affects the company are the ones where he is charged with the crime and convicted.  Also even in the case that he is charged, being in China, he can choose to not travel to the US to stand trial.

I bought more yesterday, but it is still a small position for me.

Title: Re: JD - JD.COM
Post by: lucasnascimento on September 06, 2018, 08:05:40 AM
After reading the attorneys opinions, common outcomes of rape allegations and Liu's/JD approach to the story, I feel confused. I think if it the allegation was a nonsense, Richard Liu should have already talked about it publicly or showed to the public that he is confident that nothing will happen.

The worst part for me is that even if police don't charge him, there will always be uncertainty regarding to what really happened that night and therefore the trust on him will never be the same (assuming he remains silent about the case, which is probable). Also, the reflexitivity regarding the stock price on the business can be relevant. For those who don`t know, all the management (12 people) receives USD1.8mn in cash bonuses altogether. This is just 150k per individual per year. The remaining is share-based. Liu receives no cash bonus. I mean, this is a serious incentive problem (when share prices fall abruptely in one year; the structure itself is very good).
Title: Re: JD - JD.COM
Post by: Liberty on September 06, 2018, 09:18:16 AM
http://jdcorporateblog.com/minnesota-updates/
Title: Re: JD - JD.COM
Post by: TheAiGuy on September 06, 2018, 09:28:10 AM
There is the possibility that he is being falsely accused because he's rich.

Look, accusation isn't proof but the base-rate that he was treated with kid gloves because he's a rich important businessman is a hell of a lot higher than the base-rate of some random conspiracy.
Title: Re: JD - JD.COM
Post by: Spekulatius on September 06, 2018, 09:33:12 AM
Some thoughts:

I don't know what happened but there is a real possibility that the CEO raped someone. Discounting this as a false accusation without evidence, IMHO, makes you a bad person.

As for the business:
1) The economics of this business are very compelling.
2) This is a consumer facing business where the CEO is a celebrity. Public perception of the incident, true of false, may adversely affect the long term prosperity of business
2a) It probably won't, though.
3) There is, and always has been, a mountain of idiosyncratic risks to this particular company.  Key man risk, governance, VAE structure, political risk, etc.  Caveat emptor.

This once was my largest position, before market declines made it my 4th largest. I'm not happy about the accusations and am very unlikely to sell in the medium term.

What makes the economics of JD so compelling? To me BABA‘s economics look much more compelling and they have stronger growth and more scale.
Title: Re: JD - JD.COM
Post by: rkbabang on September 06, 2018, 10:40:57 AM
There is the possibility that he is being falsely accused because he's rich.

Look, accusation isn't proof but the base-rate that he was treated with kid gloves because he's a rich important businessman is a hell of a lot higher than the base-rate of some random conspiracy.

I didn't put likely-true percentages next to my possibilities.  I said that "There are a lot of possibilities".  I'm not claiming to know what happened.

I do think, however, that whatever really happened that it is not very likely that he ends up in jail.  Maybe because there is no evidence, maybe because the accusations are false, maybe because he gets treated with kid gloves because he is a billionaire CEO.  It is also almost certain that you and I will never know the truth about what happened.
Title: Re: JD - JD.COM
Post by: TheAiGuy on September 06, 2018, 11:50:37 AM
There is the possibility that he is being falsely accused because he's rich.

Look, accusation isn't proof but the base-rate that he was treated with kid gloves because he's a rich important businessman is a hell of a lot higher than the base-rate of some random conspiracy.

I didn't put likely-true percentages next to my possibilities.  I said that "There are a lot of possibilities".  I'm not claiming to know what happened.

I do think, however, that whatever really happened that it is not very likely that he ends up in jail.  Maybe because there is no evidence, maybe because the accusations are false, maybe because he gets treated with kid gloves because he is a billionaire CEO.  It is also almost certain that you and I will never know the truth about what happened.

These there are actually statistics on: according to RAINN, about 1/10 people arrested for sexual assault end up in jail, and he's a Chinese national in China, so that probably is more like close to zero.

That said, many of the public accusations of the rich and powerful have been followed up by further allegations (e.g. Dominque Strauss-Kahn, Weinstein, Cosby, ...). There maybe cultural/legal differences that prevent that, for example libel and slander laws can limit accusations (e.g. France), so who knows.
Title: Re: JD - JD.COM
Post by: TheAiGuy on September 06, 2018, 12:09:56 PM
What makes the economics of JD so compelling? To me BABAĎs economics look much more compelling and they have stronger growth and more scale.

I don't have an opinion on BABA for a variety of reasons but one doesn't preclude the other. Duopolies can be very profitable.

I think of JD.com as an asset play -- the longer their revenue grows at a rapid pace, the larger, more ingrained and more valuable the infrastructure related to the distribution of merchandise.  That is to say, I view their revenue growth as fueling the growth of physical infrastructure and the margins will work them selves out overtime if that revenue basis is sufficiently large. It's hard to see economies of scale for things like fulfillment, as this is pretty labor intensive, but marketing, technology and general administration should require less as a percentage of revenue as revenue grows. There is also an argument to be made about gross margins as well.
Title: Re: JD - JD.COM
Post by: lucasnascimento on September 06, 2018, 12:31:05 PM
What makes the economics of JD so compelling? To me BABAĎs economics look much more compelling and they have stronger growth and more scale.

I don't have an opinion on BABA for a variety of reasons but one doesn't preclude the other. Duopolies can be very profitable.

I think of JD.com as an asset play -- the longer their revenue grows at a rapid pace, the larger, more ingrained and more valuable the infrastructure related to the distribution of merchandise.  That is to say, I view their revenue growth as fueling the growth of physical infrastructure and the margins will work them selves out overtime if that revenue basis is sufficiently large. It's hard to see economies of scale for things like fulfillment, as this is pretty labor intensive, but marketing, technology and general administration should require less as a percentage of revenue as revenue grows. There is also an argument to be made about gross margins as well.

There is a big argument on gross margins: 3P and Advertising mix improving (70/80% GM growing at ~30/40%)
Title: Re: JD - JD.COM
Post by: Liberty on September 12, 2018, 06:05:57 AM
This guy spoke with JD IR:

https://twitter.com/sharogradskym/status/1039444502283517952
Title: Re: JD - JD.COM
Post by: zhengmit on September 12, 2018, 06:33:00 AM
Latest report from China: under the involvement of the Ministry of Foreign Affairs, the girl returned to China.  You can interpret this news in many angles.
Title: Re: JD - JD.COM
Post by: Zorrofan on September 12, 2018, 07:18:12 AM
After reading the attorneys opinions, common outcomes of rape allegations and Liu's/JD approach to the story, I feel confused. I think if it the allegation was a nonsense, Richard Liu should have already talked about it publicly or showed to the public that he is confident that nothing will happen.

The worst part for me is that even if police don't charge him, there will always be uncertainty regarding to what really happened that night and therefore the trust on him will never be the same (assuming he remains silent about the case, which is probable). Also, the reflexitivity regarding the stock price on the business can be relevant. For those who don`t know, all the management (12 people) receives USD1.8mn in cash bonuses altogether. This is just 150k per individual per year. The remaining is share-based. Liu receives no cash bonus. I mean, this is a serious incentive problem (when share prices fall abruptely in one year; the structure itself is very good).

Might his silence about the matter be cultural? While it may be typical to proclaim one's innocence in North America perhaps in Chinese culture one doesn't speak out publicly?
Title: Re: JD - JD.COM
Post by: Liberty on September 20, 2018, 09:48:33 AM
"Prosecutors are weighing whether to bring charges against Chinese businessman Richard Liu after the Minneapolis Police Department turned over the findings of its initial investigation"

https://www.reuters.com/article/us-jd-com-ceo/minneapolis-prosecutors-weighing-evidence-in-jd-com-ceo-case-idUSKCN1M02EF
Title: Re: JD - JD.COM
Post by: siddharth18 on September 20, 2018, 12:29:56 PM
"Prosecutors are weighing whether to bring charges against Chinese businessman Richard Liu after the Minneapolis Police Department turned over the findings of its initial investigation"

https://www.reuters.com/article/us-jd-com-ceo/minneapolis-prosecutors-weighing-evidence-in-jd-com-ceo-case-idUSKCN1M02EF (https://www.reuters.com/article/us-jd-com-ceo/minneapolis-prosecutors-weighing-evidence-in-jd-com-ceo-case-idUSKCN1M02EF)

Any idea what's the worst case scenario as far as the case is concerned? Let's say he's charged with rape and doesn't show up to his trial and is found guilty and there's warrant out for his arrest. Then what? There's no extradition treaty between US and China, so he stays in China and lives the good life and denies the accusation. Some believe he's a rapist, some don't, but life goes on for the average JD shopper.

I don't see how the average JD consumer, 3 years from now, ordering a camera due to JD's low price, guaranteed authenticity and fast delivery would refuse to shop at JD, because JD's founder was accused of rape in a foreign land few years ago.
Title: Re: JD - JD.COM
Post by: Foreign Tuffett on September 20, 2018, 01:13:31 PM
"Prosecutors are weighing whether to bring charges against Chinese businessman Richard Liu after the Minneapolis Police Department turned over the findings of its initial investigation"

https://www.reuters.com/article/us-jd-com-ceo/minneapolis-prosecutors-weighing-evidence-in-jd-com-ceo-case-idUSKCN1M02EF (https://www.reuters.com/article/us-jd-com-ceo/minneapolis-prosecutors-weighing-evidence-in-jd-com-ceo-case-idUSKCN1M02EF)

Any idea what's the worst case scenario as far as the case is concerned? Let's say he's charged with rape and doesn't show up to his trial and is found guilty and there's warrant out for his arrest. Then what? There's no extradition treaty between US and China, so he stays in China and lives the good life and denies the accusation. Some believe he's a rapist, some don't, but life goes on for the average JD shopper.

I don't see how the average JD consumer, 3 years from now, ordering a camera due to low prices and fast delivery will refuse to do so because JD's founder was accused of rape in a foreign land.

I don't think you're framing this correctly. JD.com is solely traded on the NASDAQ, a US-based exchange. It doesn't take much imagination to see that the stock would be complete anathema if the CEO became a fugitive from justice. It would be an almost unprecedented situation, especially given the already tenuous ownership structure.

I don't think Liu will be charged with rape. It's more likely he will be charged with a lesser crime, maybe some kind of aggravated sexual conduct. Overall though, I think the most likely outcome is that he won't be charged with anything.

Why do I think this? I would direct your attention to the 2011 case of Dominique Strauss-Kahn, the last very high profile foreign national arrested in the US for rape. Arrested on May 14th (step #1), he was denied bail and charged on May 16th (step #2), and indicted by a grand jury on May 19th (step #3).

Compare that timeline to the Liu situation, which is still, 20 days after the alleged crime, on step #1.

Title: Re: JD - JD.COM
Post by: Cevian on September 20, 2018, 02:39:57 PM
Foreign Tuffett I agree with your logic.

(step #4) After completing a lengthy investigation, prosecutors filed a motion to drop all charges against Strauss-Kahn
Title: Re: JD - JD.COM
Post by: siddharth18 on September 20, 2018, 02:52:19 PM


I don't think you're framing this correctly. JD.com is solely traded on the NASDAQ, a US-based exchange. It doesn't take much imagination to see that the stock would be complete anathema if the CEO became a fugitive from justice. It would be an almost unprecedented situation, especially given the already tenuous ownership structure.

I don't think Liu will be charged with rape. It's more likely he will be charged with a lesser crime, maybe some kind of aggravated sexual conduct. Overall though, I think the most likely outcome is that he won't be charged with anything.

Why do I think this? I would direct your attention to the 2011 case of Dominique Strauss-Kahn, the last very high profile foreign national arrested in the US for rape. Arrested on May 14th (step #1), he was denied bail and charged on May 16th (step #2), and indicted by a grand jury on May 19th (step #3).

Compare that timeline to the Liu situation, which is still, 20 days after the alleged crime, on step #1.



As far as stock being an anathema because a fugitive is a CEO...can't he'd just nominate a puppet/proxy, or even his wife to be the chairperson/CEO and still maintain defacto control of the company and execute his vision?

I'm not saying him becoming a fugitive would be a good thing for the stock (in the short term)...but long term I don't understand how it would break JD's business or affect their future cash flows. The tailwinds propelling JD's business forward (GDP growth, rise of middle class, increasing demand for authentic products) are so obvious and inevitable.

The average consumer is China that's about to order his camera is not going to change his/her behavior because the founder and former CEO is deemed a fugitive in foreign land. If Jeff Bezos was similarly accused in China or Russia would American consumers refuse to shop at Amazon? No, why would they? They just care about cheap prices, fast delivery and great customer service.

So I'd like to focus just on the question that ultimately matters: How does this case at all affect JD's competitive positioning, or cash flows or its future success 3 years from now even if he IS deemed a fugitive?
Title: Re: JD - JD.COM
Post by: Foreign Tuffett on September 20, 2018, 03:58:38 PM

I don't think you're framing this correctly. JD.com is solely traded on the NASDAQ, a US-based exchange. It doesn't take much imagination to see that the stock would be complete anathema if the CEO became a fugitive from justice. It would be an almost unprecedented situation, especially given the already tenuous ownership structure.

I don't think Liu will be charged with rape. It's more likely he will be charged with a lesser crime, maybe some kind of aggravated sexual conduct. Overall though, I think the most likely outcome is that he won't be charged with anything.

Why do I think this? I would direct your attention to the 2011 case of Dominique Strauss-Kahn, the last very high profile foreign national arrested in the US for rape. Arrested on May 14th (step #1), he was denied bail and charged on May 16th (step #2), and indicted by a grand jury on May 19th (step #3).

Compare that timeline to the Liu situation, which is still, 20 days after the alleged crime, on step #1.



As far as stock being an anathema because a fugitive is a CEO...can't he'd just nominate a puppet/proxy, or even his wife to be the chairperson/CEO and still maintain defacto control of the company and execute his vision?

I'm not saying him becoming a fugitive would be a good thing for the stock (in the short term)...but long term I don't understand how it would break JD's business or affect their future cash flows. The tailwinds propelling JD's business forward (GDP growth, rise of middle class, increasing demand for authentic products) are so obvious and inevitable.

The average consumer is China that's about to order his camera is not going to change his/her behavior because the founder and former CEO is deemed a fugitive in foreign land. If Jeff Bezos was similarly accused in China or Russia would American consumers refuse to shop at Amazon? No, why would they? They just care about cheap prices, fast delivery and great customer service.

So I'd like to focus just on the question that ultimately matters: How does this case at all affect JD's competitive positioning, or cash flows or its future success 3 years from now even if he IS deemed a fugitive?

I disagree with your premise. There are serious corporate governance issues here that pose risks to shareholders regardless of the operational performance of the company.

Picture it this way: You're happily riding along in your wagon full of stock certificates until your horse (JD.com) and jockey (Richard Liu) break free of the faulty harness (a Cayman Islands holding company) and run off. Now you have to go to the sheriff (the Chinese Communist Party) to try and get recompense. Better bring your Colt .45 because it might get ugly.

An actual example of something like this happening was Yukos in 2003. Putin basically took the company away from shareholders in response to a political dispute.

Title: Re: JD - JD.COM
Post by: Spekulatius on September 20, 2018, 03:58:51 PM


I don't think you're framing this correctly. JD.com is solely traded on the NASDAQ, a US-based exchange. It doesn't take much imagination to see that the stock would be complete anathema if the CEO became a fugitive from justice. It would be an almost unprecedented situation, especially given the already tenuous ownership structure.

I don't think Liu will be charged with rape. It's more likely he will be charged with a lesser crime, maybe some kind of aggravated sexual conduct. Overall though, I think the most likely outcome is that he won't be charged with anything.

Why do I think this? I would direct your attention to the 2011 case of Dominique Strauss-Kahn, the last very high profile foreign national arrested in the US for rape. Arrested on May 14th (step #1), he was denied bail and charged on May 16th (step #2), and indicted by a grand jury on May 19th (step #3).

Compare that timeline to the Liu situation, which is still, 20 days after the alleged crime, on step #1.



As far as stock being an anathema because a fugitive is a CEO...can't he'd just nominate a puppet/proxy, or even his wife to be the chairperson/CEO and still maintain defacto control of the company and execute his vision?

I'm not saying him becoming a fugitive would be a good thing for the stock (in the short term)...but long term I don't understand how it would break JD's business or affect their future cash flows. The tailwinds propelling JD's business forward (GDP growth, rise of middle class, increasing demand for authentic products) are so obvious and inevitable.

The average consumer is China that's about to order his camera is not going to change his/her behavior because the founder and former CEO is deemed a fugitive in foreign land. If Jeff Bezos was similarly accused in China or Russia would American consumers refuse to shop at Amazon? No, why would they? They just care about cheap prices, fast delivery and great customer service.

So I'd like to focus just on the question that ultimately matters: How does this case at all affect JD's competitive positioning, or cash flows or its future success 3 years from now even if he IS deemed a fugitive?
I donít think that the average shopper in China cares about what the CEO of JD did or didnít do. i a: pretty sure that Liu would need to give up control or delist from Nasdaq. I donít know of any case, where a fugitive is the CEO of a publicity trades company in the US. Then there is also the heavy headed hand of the Chinese government. They have a way to get people back in the line, although it is unclear, if this would apply to Liu in this situation. it is something to consider however.
Title: Re: JD - JD.COM
Post by: Jurgis on September 20, 2018, 04:14:09 PM
Then there is also the heavy headed hand of the Chinese government. They have a way to get people back in the line, although it is unclear, if this would apply to Liu in this situation. it is something to consider however.

Chinese government response would depend a lot on where Liu stands in respect to them at given time. But this really is a risk with any Chinese company not just JD. Alleged crime in US may or may not influence local response. (Hey, look at what's happening with video game approvals in China - huge businesses can be just nuked by govt decisions.)

I agree though that most likely outcome is: nothing happens.

I was just reading an unrelated article about incident of rape and how things went. And it talked about how some grand jury refused to indict even clear cut cases. So likely we won't get to #2 or #3 even if there was a crime committed.
Title: Re: JD - JD.COM
Post by: siddharth18 on September 20, 2018, 06:17:23 PM

Picture it this way: You're happily riding along in your wagon full of stock certificates until your horse (JD.com) and jockey (Richard Liu) break free of the faulty harness (a Cayman Islands holding company) and run off. Now you have to go to the sheriff (the Chinese Communist Party) to try and get recompense. Better bring your Colt .45 because it might get ugly.



But Richard could have done it in the past, and can in future do it, even if we assume that the sexual assault incident hadn't happened. So in your view does this event, or will an indictment increase the likelihood of Richard doing what you just described?

From Richard's point of view - he'd not just be a rapist in the eyes of public, but also a thief which means he can never raise capital again. Plus, the number of investors who would give capital to Richard accused of a shaky sexual assault case is likely larger, because investors only care about execution and return, compared to zero investors who'd give him capital after Richard is accused of theft/fraud.

A very likely scenario is him making his wife or a trusted family member or a trusted employee the CEO/Chair but still be involved in leading JD forward due to his substantial economic interest.

Also I'm not sure how Chinese government would allow a single and relatively small company stiffing American investors when there are hundreds of billions of dollars invested by Americans in Chinese companies collectively and these companies collectively benefit from having American investors around. The needs of the many (Chinese companies needing American shareholders' trust) outweigh the needs of the one company - JD (that is angry at America). So, logically, wouldn't Chinese government be against JD cheating American shareholders and damaging China's reputation and increase cost of capital for all Chinese companies? I'm not saying Chinese government would send your investment back to you on a silver platter, but there's a chance that Chinese government acts rationally and acts in a way to keep the trust alive and prevent the trust in the ecosystem from plummeting.

Based on Richard's previous conduct I think he does deserve the benefit of the doubt as far as integrity involving matters of money is concerned. He refused to sell counterfeits, refused to renege on a verbal promise with Tiger Capital, refused to dilute Capital Today's stake.
Title: Re: JD - JD.COM
Post by: Spekulatius on September 21, 2018, 04:04:41 AM
I do think that the key man the ist here is real. A conviction of the CEO in the US would not be relevant, but I think the Chinese government will investigate on its own and the outcome of this might well be.

Note that the accuser appears to be a chinese national and returned to China. I also think that if Liu indeed atttempted to rape, it would not have been the first time either and he has done similar things in China. So, the key is not what happens in the US, the key is what the Chinese government makes of this. They have put other prominent people in line before and they could do so with Richard.
https://www.cnn.com/2018/09/14/asia/fan-bingbing-china-celebrity-intl/index.html (https://www.cnn.com/2018/09/14/asia/fan-bingbing-china-celebrity-intl/index.html)

I really donít know how to handicap this, but ther so canít be ignored and needs to be discounted, which appears to be what Mr. Market is doing.
Title: Re: JD - JD.COM
Post by: Broeb22 on September 21, 2018, 06:23:17 AM
What is interesting to me is to think about JD without Liu. Without Liu, you still own a business with a lot of tailwinds, and let's be honest, the reinvestment choices at this point are probably executable by someone else (build more delivery infrastructure, and develop website functionality). On top of this, the valuation of the business is significantly cheaper on a P/S basis than Walmart or Amazon have been in the last 10 years.
Title: Re: JD - JD.COM
Post by: IanBezek on September 21, 2018, 07:51:12 AM
I agree key man risk is quite real here. I will likely sell my JD stock if Liu is forced to step down. I don't see a replacement being able to fill in easily, especially given how tightly Liu controls the company and board now. I'm a fairly longtime holder (cost basis in the 20s from 2016 rode it up and back down now)... it's compellingly priced compared to peers, but with any sort of stock with 3-5x potential over the next few years, it could easily drop another 33% as well. Not for the feint of heart.
Title: Re: JD - JD.COM
Post by: siddharth18 on September 21, 2018, 11:50:37 AM

I do think that the key man the ist here is real. A conviction of the CEO in the US would not be relevant, but I think the Chinese government will investigate on its own and the outcome of this might well be.

Note that the accuser appears to be a chinese national and returned to China. I also think that if Liu indeed atttempted to rape, it would not have been the first time either and he has done similar things in China. So, the key is not what happens in the US, the key is what the Chinese government makes of this. They have put other prominent people in line before and they could do so with Richard.
https://www.cnn.com/2018/09/14/asia/fan-bingbing-china-celebrity-intl/index.html (https://www.cnn.com/2018/09/14/asia/fan-bingbing-china-celebrity-intl/index.html)

I really donít know how to handicap this, but ther so canít be ignored and needs to be discounted, which appears to be what Mr. Market is doing.


Seems like the random actress in the article was accused of tax-fraud and the evidence was brazen and obvious so the authorities were compelled to act to save face and maintain a semblance of law & order. Notwithstanding the alleged rape, I think Liu has enhanced the image of China by providing employment, bringing technology, progress and foreign investment to China (from WMT & GOOG). Are they willing to take him down based on a shaky allegation that even American prosecutors didn't find credible? Another difference is that JD provides provides direct employment to 150k people, so the economic impact of the JD engine slowing or dying is different compared to a random actress goes down.


Also to note is that Chinese government is not a fan of #metoo and feminism, for what that's worth:
https://www.theverge.com/2018/2/9/16897048/metoo-china-feminism-activism (https://www.theverge.com/2018/2/9/16897048/metoo-china-feminism-activism)


I'm trying to imagine how flimsy the evidence must have been for the police, prosecutor and judge to allow Liu's (who btw is the textbook definition of a flight risk) to be released earlier than necessary for the sole purpose of letting him fly back to (one of the only few places on Earth) where he's literally out of reach.

stock with 3-5x potential over the next few years, it could easily drop another 33% as well. Not for the feint of heart.

Seems like the perfect setup to buy LEAPs.
Title: Re: JD - JD.COM
Post by: Liberty on September 24, 2018, 03:44:07 AM
https://wondurrrrboy.wordpress.com/2018/09/24/an-update-on-jd-com/

https://www.reuters.com/article/us-jd-com-ceo-insight/the-night-a-chinese-billionaire-was-accused-of-rape-in-minnesota-idUSKCN1M40EQ
Title: Re: JD - JD.COM
Post by: pcm983 on September 24, 2018, 10:56:35 AM
that reuters article certainly makes it seem like there could definitely be something to the allegations
Title: Re: JD - JD.COM
Post by: Spekulatius on September 24, 2018, 01:19:44 PM
that reuters article certainly makes it seem like there could definitely be something to the allegations

Looks like too much boozing is a bad idea altogether , see Kavanaugh, Lui.... who would have thought?
Title: Re: JD - JD.COM
Post by: rogermunibond on September 24, 2018, 01:26:31 PM
Too much booze and you start thinking with the wrong brain.
Title: Re: JD - JD.COM
Post by: siddharth18 on September 24, 2018, 03:45:34 PM
Does not look good at all for Liu. It's also a bit strange though. If someone's in fear of their life do they text their friend abroad or do they call police/911 ?


But no matter what the truth is, if they did in fact sleep together, what's keeping Richard from writing a $50M check to the girl so that she recants the accusation and essentially says it was consensual ?

$50M is a rounding error in his net worth - so what's he waiting for?
Title: Re: JD - JD.COM
Post by: lucasnascimento on September 24, 2018, 04:51:27 PM
Does not look good at all for Liu. It's also a bit strange though. If someone's in fear of their life do they text their friend abroad or do they call police/911 ?


But no matter what the truth is, if they did in fact sleep together, what's keeping Richard from writing a $50M check to the girl so that she recants the accusation and essentially says it was consensual ?

$50M is a rounding error in his net worth - so what's he waiting for?

Imagine if she reports it... extreme downside risk
Title: Re: JD - JD.COM
Post by: kh812000 on September 24, 2018, 05:29:39 PM
What is ironic is that all this distraction around Richard Liu has made people overlook the fact that JD's ecommerce biz in China has fundamentally shifted massively to  their benefit based on the new chinese ecommerce law.  If this CEO thing gets cleared, JD should be off to the races....


https://pandaily.com/how-would-the-new-chinese-e-commerce-law-change-taobao/
Title: Re: JD - JD.COM
Post by: Spekulatius on September 24, 2018, 06:09:29 PM
What is ironic is that all this distraction around Richard Liu has made people overlook the fact that JD's ecommerce biz in China has fundamentally shifted massively to  their benefit based on the new chinese ecommerce law.  If this CEO thing gets cleared, JD should be off to the races....


https://pandaily.com/how-would-the-new-chinese-e-commerce-law-change-taobao/

Very interesting and timely. Thanks for posting!
Title: Re: JD - JD.COM
Post by: Happy on September 25, 2018, 01:31:49 AM
I agree the article doesn't sound good. That he was seen with the girl before and was at her appartment in the morning should push the probability to like 99% that he slept with her. I don't like that given that he is married but it probably wouldn't fully disqualify his integrity as a CEO. If he in fact raped her on the other hand I would not trust him at all. That is so bad, who knows what other shady things he is doing then?
What seems really weird to me though is that the girl apparently sent messages throughout the night and was able to call the police. If Liu really raped her, he would have to be totally insane to sleep there and allow her to send messages multiple times and call the police someway and let him find him there. Especially given that he is a public figure and married. And it's also weird that the police initially didn't arrest him and she didn't accuse him although she apparently called the police.
The only way I can explain this is that he thought it was consensual and she did not. Or that he in the end was so drunk that he passed out. But why wouldn't she just leave then?
Title: Re: JD - JD.COM
Post by: lucasnascimento on September 25, 2018, 10:31:08 AM
I agree the article doesn't sound good. That he was seen with the girl before and was at her appartment in the morning should push the probability to like 99% that he slept with her. I don't like that given that he is married but it probably wouldn't fully disqualify his integrity as a CEO. If he in fact raped her on the other hand I would not trust him at all. That is so bad, who knows what other shady things he is doing then?
What seems really weird to me though is that the girl apparently sent messages throughout the night and was able to call the police. If Liu really raped her, he would have to be totally insane to sleep there and allow her to send messages multiple times and call the police someway and let him find him there. Especially given that he is a public figure and married. And it's also weird that the police initially didn't arrest him and she didn't accuse him although she apparently called the police.
The only way I can explain this is that he thought it was consensual and she did not. Or that he in the end was so drunk that he passed out. But why wouldn't she just leave then?

Good points. However I think you cannot assume that they were still married in the moment he was in Minnesota. You can see that his wife hasnt been posting on Instagram about them since June. A marriage can end overnight and people can get to know it long time later.

This whole story is confusing AF
Title: Re: JD - JD.COM
Post by: koshigoe on October 13, 2018, 04:26:29 PM
https://aibusiness.com/ai-future-chinese-retail-jd/?utm_content=buffer7b0a0&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
Title: Re: JD - JD.COM
Post by: Spekulatius on November 29, 2018, 09:34:30 AM
Hopefully not a snarky question, but at which point do consider the investors here the thesis is broken. The last quarterly results were nothing to write home about - slowing revenue growth and the growth (25% compared to 30%+) and the improvement in gross margins has stalled too. It looks like they are falling further and further behind Alibaba.

I donít follow this very closely, so I may have overlooked something.
Title: Re: JD - JD.COM
Post by: _JJ_ on November 29, 2018, 09:54:08 AM
Hopefully not a snarky question, but at which point do consider the investors here the thesis is broken. The last quarterly results were nothing to write home about - slowing revenue growth and the growth (25% compared to 30%+) and the improvement in gross margins has stalled too. It looks like they are falling further and further behind Alibaba.

I donít follow this very closely, so I may have overlooked something.

From the Q3 earnings call:
Quote
Gross margin was relatively stable year-over-year, thanks to the gross margin expansion from the core JD Mall business offset by JD Logistics which is in an investment phase, but has seen sequential improvement in unit economics over the past three quarters.

Non-GAAP gross margin in the third quarter was 15.2% compared to 15.3% in the same quarter last year. If we look at JD Mall, gross margin on our direct sales business improved 15 basis points on a year-over-year basis on top of a very strong third quarter last year, driven by continuous increase in economies of scale across all key categories.
Title: Re: JD - JD.COM
Post by: Broeb22 on November 29, 2018, 10:39:59 AM
Hopefully not a snarky question, but at which point do consider the investors here the thesis is broken. The last quarterly results were nothing to write home about - slowing revenue growth and the growth (25% compared to 30%+) and the improvement in gross margins has stalled too. It looks like they are falling further and further behind Alibaba.

I donít follow this very closely, so I may have overlooked something.

Why would one quarter of data suggest a thesis is broken? Can you point to something more enduring (and concerning) suggesting the company's competitive position is actually eroding?
Title: Re: JD - JD.COM
Post by: Spekulatius on November 29, 2018, 11:16:05 AM
Hopefully not a snarky question, but at which point do consider the investors here the thesis is broken. The last quarterly results were nothing to write home about - slowing revenue growth and the growth (25% compared to 30%+) and the improvement in gross margins has stalled too. It looks like they are falling further and further behind Alibaba.

I donít follow this very closely, so I may have overlooked something.

Why would one quarter of data suggest a thesis is broken? Can you point to something more enduring (and concerning) suggesting the company's competitive position is actually eroding?

Itís not one quarter, itís a string of quarters. There is no evidence that the often cited ďflywheelĒ is actually happening. A stable gross margins is bad news, because the gross margin should have increased with the changes in merchandise and increasing service  revenue, but it doesnít.

The gap to Alibaba is widening, not getting smaller.
Title: Re: JD - JD.COM
Post by: oddballstocks on November 29, 2018, 11:39:42 AM
I have always wondered when do you pull the plug on busted growth? How long until you know growth is dead or the compounding isn't happening?
Title: Re: JD - JD.COM
Post by: Gregmal on November 29, 2018, 11:40:12 AM
Hopefully not a snarky question, but at which point do consider the investors here the thesis is broken. The last quarterly results were nothing to write home about - slowing revenue growth and the growth (25% compared to 30%+) and the improvement in gross margins has stalled too. It looks like they are falling further and further behind Alibaba.

I donít follow this very closely, so I may have overlooked something.

Why would one quarter of data suggest a thesis is broken? Can you point to something more enduring (and concerning) suggesting the company's competitive position is actually eroding?

Itís not one quarter, itís a string of quarters. There is no evidence that the often cited ďflywheelĒ is actually happening. A stable gross margins is bad news, because the gross margin should have increased with the changes in merchandise and increasing service  revenue, but it doesnít.

The gap to Alibaba is widening, not getting smaller.

The thesis IMO was flawed to begin with. This is a classic value investor investment. They want to own AMZN or BABA but are too cheap to pay up for quality so a second rate knock off version like JD with enough of an optically pleasing fundamental profile fits the bill. But at the end of the day it will always be priced at a discount to BABA and for good reason. Better off just paying for quality...
Title: Re: JD - JD.COM
Post by: nkp007 on November 29, 2018, 12:02:42 PM
The thesis IMO was flawed to begin with. This is a classic value investor investment. They want to own AMZN or BABA but are too cheap to pay up for quality so a second rate knock off version like JD with enough of an optically pleasing fundamental profile fits the bill. But at the end of the day it will always be priced at a discount to BABA and for good reason. Better off just paying for quality...

Really well said.
Title: Re: JD - JD.COM
Post by: Aqul on November 29, 2018, 12:17:48 PM
BABA bulls should really take a look at the company's accounting before claiming it is "high quality."

Much of JD's CapEx currently is going towards building out the Logistics assets. So, on an FCF basis, the core JD Mall appears somewhat cheap, with free call options on JD Finance and Logistics. Moreover, JD Mall is clearly under-earning (large investments in technology initiatives, 3P delivery operating at break-even, etc.).

Obviously, it is tough to separate Mall, Finance, and Logistics, as they all support each other. I'm still doing more work on whether the SOTP analysis makes sense or not. Still, JD is starting to look interesting at these levels.
Title: Re: JD - JD.COM
Post by: lucasnascimento on November 29, 2018, 04:04:15 PM
JD story turned into a disaster this year because of the unexpected depth of Logistics losses and the much higher than expected R&D investments, which are masking the underlying margin improvement of the business. IMO, it was a execution flaw within JDL (management clearly didn't anticipate the struggle they would have in the first years of operation in convincing sellers to adopt their solution) and also there was a serious communication error, as they could have better communicated the rapid R&D ramp-up and most importantly the insane CAPEX ramp-up for this year. Core business thesis is intact (shift to 3P/Ad which are growing faster, is really driving higher margins), but JDL/R&D led to significant earnings revisions for the next 1-3 years.

Those who invested late 2017/early 2018 with the core margin improvement thesis were not wrong. Those unexpected losses, the consumption slowdown and moreover Liu's arrest (!!) have come at the same time. Really really unfortunate.

On the flipside, seems like JDL will turn profitable on a gross basis next year (from ~ -20% GM this year - bizarre margin take off) and R&D will stabilize and bear fruit in the coming quarters. Logistics moat seems mostly intact. JDL monetization fund will also begin to yield returns. From a macro level also, the only way for China is up. Consumption rebound will help 3C/electronics.

SOTP, P/Sales and P/FCF also point to significant misprice. If JD delivers 80% of FCF they did in 2017 (w/ some capex normalization and no one-offs in CFO like this year), you have a FCF Yield of 8% 2019E. Worth taking a look.
Title: Re: JD - JD.COM
Post by: Aqul on November 30, 2018, 09:41:37 AM
JD story turned into a disaster this year because of the unexpected depth of Logistics losses and the much higher than expected R&D investments, which are masking the underlying margin improvement of the business. IMO, it was a execution flaw within JDL (management clearly didn't anticipate the struggle they would have in the first years of operation in convincing sellers to adopt their solution) and also there was a serious communication error, as they could have better communicated the rapid R&D ramp-up and most importantly the insane CAPEX ramp-up for this year. Core business thesis is intact (shift to 3P/Ad which are growing faster, is really driving higher margins), but JDL/R&D led to significant earnings revisions for the next 1-3 years.

Those who invested late 2017/early 2018 with the core margin improvement thesis were not wrong. Those unexpected losses, the consumption slowdown and moreover Liu's arrest (!!) have come at the same time. Really really unfortunate.

On the flipside, seems like JDL will turn profitable on a gross basis next year (from ~ -20% GM this year - bizarre margin take off) and R&D will stabilize and bear fruit in the coming quarters. Logistics moat seems mostly intact. JDL monetization fund will also begin to yield returns. From a macro level also, the only way for China is up. Consumption rebound will help 3C/electronics.

SOTP, P/Sales and P/FCF also point to significant misprice. If JD delivers 80% of FCF they did in 2017 (w/ some capex normalization and no one-offs in CFO like this year), you have a FCF Yield of 8% 2019E. Worth taking a look.

Really well said.
Title: Re: JD - JD.COM
Post by: koshigoe on December 05, 2018, 05:46:02 PM
But at the end of the day it will always be priced at a discount to BABA and for good reason. Better off just paying for quality...


Oh the irony! Sounds like someone doesn't really understand either business. Perhaps you'd like to read this:
https://deep-throat-ipo.blogspot.com/search?q=baba

And what are those good reasons? Perhaps you'd like to see this:

just search back two years and you see JD taking search share from Taoabao/Tmall

http://index.sogou.com/index/searchHeat?kwdNamesStr=京东,天猫,淘宝网&timePeriodType=MONTH&dataType=SEARCH_ALL&queryType=INPUT

Why did Walmart and Google and Tencent invest in JD and not BABA? Oh because they didn't take your advice, right?
Title: Re: JD - JD.COM
Post by: Jerry Capital on December 06, 2018, 05:19:18 AM
Salty AF
Title: Re: JD - JD.COM
Post by: Broeb22 on December 06, 2018, 06:17:07 AM
Is there any significant difference between the VIEs JD uses versus the ones BABA uses?

Are there any more thorough resources on the legal structures that members of the board have come across?
Title: Re: JD - JD.COM
Post by: koshigoe on December 06, 2018, 08:09:29 PM
Salty AF

so edgy
Title: Re: JD - JD.COM
Post by: Spekulatius on December 06, 2018, 08:30:00 PM
Is there any significant difference between the VIEs JD uses versus the ones BABA uses?

Are there any more thorough resources on the legal structures that members of the board have come across?

BABA has more of them. BABA has the most Byzantine structure that I have seen.
Title: Re: JD - JD.COM
Post by: Aqul on December 06, 2018, 09:57:51 PM
But at the end of the day it will always be priced at a discount to BABA and for good reason. Better off just paying for quality...


Oh the irony! Sounds like someone doesn't really understand either business. Perhaps you'd like to read this:
https://deep-throat-ipo.blogspot.com/search?q=baba

And what are those good reasons? Perhaps you'd like to see this:

just search back two years and you see JD taking search share from Taoabao/Tmall

http://index.sogou.com/index/searchHeat?kwdNamesStr=京东,天猫,淘宝网&timePeriodType=MONTH&dataType=SEARCH_ALL&queryType=INPUT

Why did Walmart and Google and Tencent invest in JD and not BABA? Oh because they didn't take your advice, right?

Really well said.
Title: Re: JD - JD.COM
Post by: Liberty on December 10, 2018, 06:25:53 AM
https://www.wsj.com/articles/prosecutors-to-decide-soon-whether-to-charge-chinese-billionaire-over-rape-allegations-1544437831
Title: Re: JD - JD.COM
Post by: Liberty on December 21, 2018, 11:47:46 AM
https://twitter.com/CNBCnow/status/1076202167286022144

Quote
JD.com  shares jump sharply higher after Minnesota prosecutor says that the company's founder Liu Qiangdong will not be chared in sexual assault case brought against him in August.
Title: Re: JD - JD.COM
Post by: Liberty on January 30, 2019, 08:08:41 AM
https://seekingalpha.com/article/4236331-market-value-jd-coms-non-consolidated-equity-stakes-reveals-extreme-mispricing

Quote
JD's non-consolidated equity stakes are worth about $13.0 billion at current market prices.

That suggests core JD including 81% of JD Logistics is being valued in the market at $14.9 billion. That is 0.2x this year's revenue.

Further backing out the $10.9 billion value of 81% of JD Logistics reveals that the core online retail business, with its ~300 million customers, is being valued at $4 billion.

(https://static.seekingalpha.com/uploads/2019/1/28/773464-1548703775173022.jpg)
Title: Re: JD - JD.COM
Post by: Aqul on January 30, 2019, 08:40:00 AM
https://seekingalpha.com/article/4236331-market-value-jd-coms-non-consolidated-equity-stakes-reveals-extreme-mispricing

Quote
JD's non-consolidated equity stakes are worth about $13.0 billion at current market prices.

That suggests core JD including 81% of JD Logistics is being valued in the market at $14.9 billion. That is 0.2x this year's revenue.

Further backing out the $10.9 billion value of 81% of JD Logistics reveals that the core online retail business, with its ~300 million customers, is being valued at $4 billion.

(https://static.seekingalpha.com/uploads/2019/1/28/773464-1548703775173022.jpg)

Good points. I would say it's tough to separate the value of JD's Logistics and Finance assets from the core JD Mall asset. A better framework might be to look to buy JD Mall at a fair price (which the current price likely is), and receive the other assets for free.
Title: Re: JD - JD.COM
Post by: Liberty on January 30, 2019, 08:47:44 AM
Good points. I would say it's tough to separate the value of JD's Logistics and Finance assets from the core JD Mall asset. A better framework might be to look to buy JD Mall at a fair price (which the current price likely is), and receive the other assets for free.

You can't separate it if you're doing a thought-experiment of a runoff/bankruptcy, but if you're thinking of it as an ongoing operating business, I think you can think of them that way.
Title: Re: JD - JD.COM
Post by: Broeb22 on January 30, 2019, 08:53:50 AM
Why can't you separate the logistics business from the JD Mall business? Amazon and Fedex/UPS are separate companies. Alibaba and Cainiao are separate companies. While they share a lot of volume with one another, JD Logistics is now sending non-JD orders across China. Over time, JD Logistics will likely have much lower customer concentration than it currently does, and will be able to function as a stand alone company.
Title: Re: JD - JD.COM
Post by: Aqul on January 30, 2019, 08:56:23 AM
Good points. I would say it's tough to separate the value of JD's Logistics and Finance assets from the core JD Mall asset. A better framework might be to look to buy JD Mall at a fair price (which the current price likely is), and receive the other assets for free.

You can't separate it if you're doing a thought-experiment of a runoff/bankruptcy, but if you're thinking of it as an ongoing operating business, I think you can think of them that way.

Sorry if that was unclear. JD Finance and Logistics definitely have value independently of Mall. It's probably tougher to determine that value, and I'm not sure that relying on inflated private market valuations is necessarily the best method.

Either way, I think we both agree that this is pretty cheap even after the recent move.
Title: Re: JD - JD.COM
Post by: Liberty on February 28, 2019, 04:36:40 AM
Q4:

http://ir.jd.com/node/8101/pdf

Stock up 13.25% pre-market.
Title: Re: JD - JD.COM
Post by: Liberty on May 10, 2019, 06:26:45 AM
Q1:

https://ir.jd.com/static-files/e65cc95b-0650-41f8-aa1a-a44e6ccf58c0

https://ir.jd.com/static-files/7fc991e7-c54a-40e1-ad77-906953751239
Title: Re: JD - JD.COM
Post by: TheAiGuy on May 22, 2020, 07:13:32 AM
https://www.bloomberg.com/news/articles/2020-05-20/senate-passes-bill-to-delist-chinese-companies-from-exchanges


This ~was~ a 20% position for me until this morning, when I fully exited the position. I've held this for ~3.5 years, with an IRR of ~20%, but I am quite concerned about this new escalation. I should say that I'm heavily restricted and this is my first trade in several years, and I'm I have to get (rarely granted) approval to buy or sell a security.
Title: Re: JD - JD.COM
Post by: winjitsu on May 22, 2020, 11:46:51 AM
https://www.bloomberg.com/news/articles/2020-05-20/senate-passes-bill-to-delist-chinese-companies-from-exchanges

This ~was~ a 20% position for me until this morning, when I fully exited the position. I've held this for ~3.5 years, with an IRR of ~20%, but I am quite concerned about this new escalation. I should say that I'm heavily restricted and this is my first trade in several years, and I'm I have to get (rarely granted) approval to buy or sell a security.

Will be very interesting to watch how this plays out. There already have been grumbles from founders in China that the communist party is installing lackeys at each company and slowly taking over control under the guise of "Chinese Socialism"

Secondly, the VIE structure is BS anyways and I suspect we'll see this with LK, which in theory has plenty of value left, but post de-listing I doubt shareholders will have claims to anything meaningful.
Title: Re: JD - JD.COM
Post by: TheAiGuy on May 22, 2020, 12:29:39 PM
https://www.bloomberg.com/news/articles/2020-05-20/senate-passes-bill-to-delist-chinese-companies-from-exchanges

This ~was~ a 20% position for me until this morning, when I fully exited the position. I've held this for ~3.5 years, with an IRR of ~20%, but I am quite concerned about this new escalation. I should say that I'm heavily restricted and this is my first trade in several years, and I'm I have to get (rarely granted) approval to buy or sell a security.

Will be very interesting to watch how this plays out. There already have been grumbles from founders in China that the communist party is installing lackeys at each company and slowly taking over control under the guise of "Chinese Socialism"

Secondly, the VIE structure is BS anyways and I suspect we'll see this with LK, which in theory has plenty of value left, but post de-listing I doubt shareholders will have claims to anything meaningful.

I actually doubt de-listing in and of itself is all that meaningful to the value of the shares (you still get to keep the shares, even if they have to move to the pink sheets or a different exchange; e.g. hong kong, london), but my concern is that if both the US and Chinese Govt's escalate, both will be willing to screw over US investors down the line.  My previous thesis was that the Chinese Govt wouldn't want to harm access to capital markets, but I think that argument is weak now.
Title: Re: JD - JD.COM
Post by: winjitsu on May 22, 2020, 02:30:17 PM

I actually doubt de-listing in and of itself is all that meaningful to the value of the shares (you still get to keep the shares, even if they have to move to the pink sheets or a different exchange; e.g. hong kong, london), but my concern is that if both the US and Chinese Govt's escalate, both will be willing to screw over US investors down the line.  My previous thesis was that the Chinese Govt wouldn't want to harm access to capital markets, but I think that argument is weak now.


Thinking specifically of Sinoforest as a counter-point, but agree with you on the later. There's a big narrative change with Xi ... I think the HK case is dying as well if China continues to exert legislative influence there. End game is probably just directly opening up Shanghai / Shenzhen.
Title: Re: JD - JD.COM
Post by: TheAiGuy on May 22, 2020, 04:56:23 PM

I actually doubt de-listing in and of itself is all that meaningful to the value of the shares (you still get to keep the shares, even if they have to move to the pink sheets or a different exchange; e.g. hong kong, london), but my concern is that if both the US and Chinese Govt's escalate, both will be willing to screw over US investors down the line.  My previous thesis was that the Chinese Govt wouldn't want to harm access to capital markets, but I think that argument is weak now.


Thinking specifically of Sinoforest as a counter-point, but agree with you on the later. There's a big narrative change with Xi ... I think the HK case is dying as well if China continues to exert legislative influence there. End game is probably just directly opening up Shanghai / Shenzhen.

I realize I misread what you originally wrote.  I canít say that I have enough information to agree or disagree but that sounds plausible.