In episode three of our fortnightly COVID-19 webinar series, portfolio manager Sunny Bangia and Jacob Mitchell discuss Chinese retail and the secular trends being accelerated by the coronavirus pandemic.
In this highlight, Sunny Bangia explains why he believes Alibaba is at the centre of the new retail phenomenon in China.
This webinar was recorded on 23 April, 2020. To view the full webinar, including comprehensive insights into where Antipodes sees compelling investment opportunities, click here.
You can register for upcoming webinars in the series here.
Episode 3 Part 2 – Transcript:
Sunny Bangia:
We kind of see Alibaba as the centre of this “new retail” phenomenon that’s occurring in China. Whilst they’re very dominant online, they’ve done incredibly important partnerships and built ancillary businesses that will facilitate this trend.
We know they’re a very big payments business in China, they have the leading payments wallet, called Alipay, with 960 million users. But also, they’re facilitating some of the trends that we’re seeing in FMCG (Fast Moving Consumer Goods) and grocery.
They have the leading grocery network being built out, called Hema Fresh, which is an online/offline grocery experience and they’ve made some key valuable partnerships with leading players in that space to be a platform to direct traffic and then do delivery – they also own the nation’s second largest delivery network called LMR.
So, when you think about the management team’s focus, they’re really taking the whole Chinese retail offline and online as the opportunity to grow.
Now in terms of regulatory, one thing we’ve highlighted in the take rates is firstly that there’s still a lot of late-term pricing power in the business model, which is fantastic. But we can also see that the regulatory framework… you know, you can’t accuse them of gauging. In a way they’re facilitating this e-commerce growth and there’s still a lot of monetisation left in the business model.
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