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<Research>M Stanley: JD-SW Dabbles in Food Delivery; MEITUAN-W's Dominance Under Limited Impact
Recommend 53 Positive 107 Negative 43 |
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JD-SW (09618.HK)(JD.US) announced its foray into the food delivery market. Morgan Stanley issued a research report on this, expecting the launch of food delivery business of JD-SW to have limited impact on MEITUAN-W (03690.HK)'s dominant market position, citing high entrance barriers, stricter requirements for users, and the fact that the company will have to make a long-term investment as it will incur an immense loss in the early stage of the business. Morgan Stanley said food delivery is a duopoly market in China with MEITUAN-W owning about 70-80% market share and BABA-W (09988.HK)’s Ele.me capturing the remaining. Food delivery requires a strong network of merchants, consumers and riders, as well as extensive and strong fulfillment capabilities. Over the years, MEITUAN-W has built up a strong enough business “moat”, with the largest team of riders in the country and a network of close to 10 million merchants, which is difficult to be imitated by newcomers, such as Douyin and Alibaba, both of whom have failed to successfully expand their market share. Morgan Stanley lately rated MEITUAN-W Overweight, with a target price of $200. AAStocks Financial News |
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