From the perspective of the next two years, which the most valuable investment to BAT three?
January 29, Alibaba announced 2015 fiscal third-quarter earnings, due to lower-than-expected data and another dispute with administration for industry and Commerce recently the commodity rate of quality issues, its share price fell sharply once again raises concern. Set aside “war” and is not available on the other factors, let the data speak, looking at the 2014, including Ali BAT do something? How is expected in the new year?
Lateral correlation
Table is the BAT on three 2014 earnings revenue figures were released, seen from the diagram, on the total revenues and net profits, Tencent has maintained very high over the long term quotas and stable upward trend. But in terms of revenue growth, Baidu’s revenue growth is high, it may indicate that Baidu’s profit “capacity” to improve faster. Overall, Alibaba is in between.
How earn money?
Baidu’s revenue is the main source of network marketing, this part of the revenue accounts for Baidu, 98% per cent of total revenue, it can be said that Baidu has been supported by Internet marketing revenues.
Alibaba’s revenue comes primarily in four areas: commercial retail business, China wholesale, China wholesale and retail business, international business international business operations.
The 2014 according to published second-quarter results, Alibaba’s retail operations in China is the main source of revenue, 75.88% per cent of total revenue, revenue from other wholesale and retail business contributed 14.3%, yet there is 9.82% of revenues of unpublished sources. Alibaba’s revenue structure has not changed in the third quarter, but in the context of total revenues surged, only China’s retail business has dramatically increased, other businesses fell compared with the previous quarter.
There are three main sources of revenue for Tencent: value-added services, online advertising and e-commerce transactions.
Tencent’s income from value-added services including online games and social network revenues, Member of which is social networking revenue Tencent QQ, QQ services such as ordering and super affiliate revenue. Mainly depends on the media platform of Tencent online advertising business, especially video advertising business, with most of the other media platforms QQ space effect advertising mobile advertising and social networking. Noteworthy is that the 2014 of Tencent’s revenue from electronic commerce transactions show a very obvious decline, this is due to March 2014, Tencent’s strategy deals with the East, the shift in deal flow of e-commerce Tencent Jingdong, Yi Xun from proprietary business into a trading platform.
From a revenue point of view, Alibaba is primarily a retail service fees, while Tencent’s main source of income is the game, member services and advertising, Baidu, which mainly relies on revenues from its Internet marketing. In 2014, while the BAT is a full court press of momentum, but in the new areas in the input layout stage, revenue structure compared to 2013 is not much changed.
Earn money in where?
2014 Alibaba IPO, along with a series of acquisitions and mergers, only second-quarter cash flows used for investments and acquisitions activities amounted to 15.912 billion yuan, while overall investment activities reached 32.555 billion yuan. Besides investment, Alibaba’s main spending is cost of revenue, research and development, sales and marketing, General and administrative expenses and equity awards. Seen from the data in the third quarter, Alibaba among sales and marketing expenditure increased slightly, and other expenditure as a share of income have fallen, on the one hand it’s revenue for the quarter increased sharply, on the other hand indicate that Alibaba in the past quarter increased spending on sales and marketing. Alibaba’s third-quarter revenue rise should be “double 11” and other marketing activities.
2014 released third-quarter earnings at Baidu, Baidu traffic acquisition cost is 12.9% per cent of total revenues, which mainly reflects the context advertising, mobile advertising, and Baidu Baidu hao123 promotions for the network’s contribution to growth. Followed by bandwidth, depreciation, and other routine expenses, all have reported total expenditure total revenue 60.93%. from the overall point of view, Baidu, all expenditures have increased compared with the previous year.
Tencent’s public earnings only released two items of expenditure: expenditure on remuneration and capital expenditure. 2014 for the first three quarters, its these two expenses added up to a total of 4.968 billion yuan, of which capital expenditure of 3.115 billion yuan.
Only from the public data view, BAT’s main expenditures are used for operational support, followed by investment activities.
Next two years are worthy of who?
Although BAT overlap more in a business area, business ideas and priorities are completely different.
In 2014, the Alibaba and Tencent in various industries and fields have been put, and Baidu also invested in many areas, but investment styles tend to complement existing business and technical inputs.
From the market point of view, only expanding Alibaba’s overseas market breakthrough direction.
Tencent may face in the next two years the ceiling dilemma. Along with the prosperity of the domestic gaming market on the one hand, and Tencent QQ and the app game market benefits of social networking will be slashed, more gaming products appeared on the market will bring a certain amount of pressure to Tencent’s gaming business, which is the reason why Tencent has little revenue growth over the past year. The other hand, QQ micro-letter subscriber growth is slowing, member services and other value-added revenue is difficult to achieve significant growth. Positive aspect is the advertising business has the potential to become a revenue increase of positions. In fact, the percentage of company’s total revenue of online advertising is also improved. Of course, the well known micro-letters, but that external things are so complicated, says recent bad.
Long-term online marketing support revenue of Baidu and Tencent’s strategy, on the contrary. Baidu’s advantage hard to replicate PC-side entrance on the mobile side, its search business has been split by diverse mobile APP, still no product or service can, such as PC-side that will search for “clean sweep.” but in 2014, Baidu continues to increase the input in the field of mobile O2O and layout, in return has received some reflected in Baidu’s revenue growth. In addition, Baidu reported a large number of Internet-based technology-related research and development programmes and projects, including artificial intelligence.
Alibaba’s inertia is to expand business for the next two years, Tencent is digging in the direction of its own resources, while Baidu’s investment in science and technology will be key. Although some technologies in the short term won’t show too much power, but in the long run they will bring more commercial energy. Therefore I think that Baidu’s investment potential is relatively larger, followed by Tencent, is not optimistic about Alibaba.
Note: the article data from the public in BAT’s results.