CITIC Securities: Government subsidies boost demand during Double 11, e-commerce growth heats up, trend stabilizes.

CITIC SEC released a research report stating that after the end of the 2024 Double 11 promotion, combined with third-party data platforms and sales data from various companies, the GMV of the e-commerce market during Double 11 is expected to increase by +10% to +12% year-on-year, performing better than the same period last year. On the platform side, it is expected that the GMV growth rates of Taobao, Tmall, and JD.com will be between +10% and +15%, Pinduoduo will be between +20% and +25%, and Douyin e-commerce will be between +25% and +30%. In the past 3 promotions, the industry has shown a clear trend of convergence in cross-platform growth rates. During the promotion period, consumer electronics and home categories stimulated by national subsidies have shown outstanding performance, while optional consumption categories such as beauty and clothing have also seen a rebound, indicating an overall improvement in consumer demand. Key points from CITIC SEC: Overview of data: Market performance improving, convergence of growth rates across platforms. Based on data from Fudan Consumer Big Data Lab, Xingtu Data, Analysys, and various platform reports, the bank predicts that the overall retail sales growth of the e-commerce industry during the 2024 Double 11 promotion will be between +10% and +12%, similar to the growth during the 2024 618 promotion (estimated by the bank at around +10% to +12%), and better than the performance during the 2023 Double 11 promotion (estimated by the bank at around +7% to +9%). An analysis of the GMV growth rates of various platforms during the past 3 promotions shows a clear trend of convergence in growth rates. Review of strategies: Extended promotion period, increased subsidies for members. 1) In terms of time span, during the 2024 Double 11 promotion, Tmall and JD.com both started on October 14, about 10 days earlier than in 2023. The promotions on Pinduoduo, Douyin, and Kuaishou also started significantly earlier, extending the promotion period by about a month. 2) In terms of pre-sale modes, Tmall reinstated pre-sales for the Double 11 promotion this year after canceling them for the 618 promotion. This may be aimed at boosting the enthusiasm of merchants to participate in the promotion. In comparison, platforms such as JD.com, Pinduoduo, and Douyin all focus on spot sales. 3) In terms of platform operations, basic discount levels remain the same (e.g., a discount of $50 for a purchase of $300). JD and Alibaba have increased subsidies for VIP users, achieving impressive results (according to the Alibaba official website, the number of orders placed by Alibaba's 88VIP during this Double 11 promotion has increased by over 50%). Category performance: Strong performance in subsidized categories, beauty rebounding, and stable clothing. 1) In the area of home appliances and furniture, driven by the national subsidy for trade-ins, the performance of the appliances and furniture categories has been impressive. According to the VAT invoice data disclosed by the State Administration for Taxation, in October, the sales revenue growth of the retail industry by category: audio-visual equipment +43.2%, daily household appliances +63.5%, furniture +16.9%, sanitary ware +23.0%. During the Double 11 promotion, as the core online platforms for appliances and furniture sales, JD.com is expected to benefit more compared to other platforms. 2) In the clothing category, overall performance is stable, with JD.com standing out. According to Fudan Consumer Big Data Lab, regarding the sales growth of the clothing industry during the 2024 Double 11 promotion, JD.com is up 88% year-on-year, Pinduoduo is up 16%, Douyin is up 12%, and Tmall Taobao is up 9%. During the Double 11 promotion, JD.com issued multiple batches of "50% discount coupons" that could be used in combination, driving rapid growth in clothing sales. 3) In the beauty category, industry growth is picking up, with Taoten leading in terms of both market share and growth rate. According to Qingyan Intelligence data, the estimated GMV for online channel beauty and cosmetics during this Double 11 promotion is nearly 120 billion yuan, up 22.4% year-on-year. In terms of GMV market share, Taoten accounts for 50.6%, Douyin 26.6%, JD.com 11.8%. In terms of platform GMV growth rates, according to the Fudan Consumer Big Data Lab, Taoten is up 31% year-on-year, Pinduoduo is up 18%, JD.com is up 14%, Douyin is up 10%. Tmall Taobao, as the main platform contributing to the sales of beauty and personal care products, also leads in growth rate. Investment recommendation: The e-commerce sector has both consumer and internet attributes, making it a rare high-quality track with strong performance realization capabilities (combined offensive and defensive platform model) and performance elasticity (the core channel for receiving consumer stimulus policies). It is recommended to focus on this sector in the current market sentiment. With the economic stimulus policies introduced since the end of September, consumer sentiment and purchasing power are expected to recover, and the performance of core consumer internet targets is worth looking forward to. As the competition landscape evolves, with the slowdown of Douyin's e-commerce business, concerns about sector competition are easing, and overall valuation attractiveness is expected to increase. In terms of stock selection, it is recommended to focus on stocks with room for valuation multiples recovery and those more sensitive to consumer stimulus policies. Risk factors: Risks associated with stricter regulation of internet platforms; risks of consumer sentiment recovery falling short of expectations; risks of intensified industry competition exceeding expectations; risks of consumer stimulus policy effects falling short of expectations.