updated the whole analysis and tables here:
JD is the leaders among other O2O platform in supermarket segment with a market shares of 27%. They also have now established partnership with 85 out of the top 100 supermarket chains in China. The gap between JDDJ and the second and third players remained wide at 11 and 18 % points respectfully. Thus, I believe that Dada will benefits from this overall trends as they are the leaders in the space.
Dada also posted a very good Q4 results with net revenues from Dada Now achieved a RMB718 million. This represent a pro forma revenue growth rate of 80.5% yearover-year, mainly driven by increases in order volume of intra-city delivery services to chain merchants. Net revenues from JDDJ also increased by 80.1% to RMB1.3 billion, mainly due to the increase in GMV, which was driven by increases in the number of active consumers and average order size. The increase in online marketing services revenues as a result of the increasing promotional activities launched also contributed to the revenue growth of JD.
In terms of the outlook, For the first quarter of 2022, Dada expect a total revenue to be between RMB2 billion and RMB2.05 billion, representing a pro forma growth rate of 72% to 76% The reason why the company used a pro forma growth rate to evaluate the company is because of effective from April 2021, the cost of riders for last-mile delivery services has been directly paid through third-party companies instead of through the Company. The Company no longer recognizes rider-related revenue and rider-related costs in the income statement for the last-mile delivery services.
Valuation
According to analyst estimates, even though the company is heavily burning money, but it was suprising that analyst is expected the company started to generate profit in 2023 and currently Dada has a forward 2023 PE ratio of 29.67. If the company were able to achieve those results and become profitable in 2023, I would believe that the company would be a good buy because of the big total addressable market and the high growth rate of the industry.
However, I remain sceptical about the company achieving profitability soon, as on the latest quarter results of the company, they are no sign of the company slowing its cash burning activities. The sector is very challenging and with a low switching cost if there are no offers or coupons made or given by the platform. This results in consistent cash burning in order to retain the consumer on the platform, thus I will wait until the company shows that it has the road to achieve profitability before I invest in the company.
Submitted March 24, 2022 at 02:45AM by EconomyRare480 https://ift.tt/XEPFDZY
