DADA.US (DADA.US) is a leader in the two major growth track segments of instant delivery and supermarket delivery. The company relies on JD's ecological drainage at the front end. The middle end relies on order density, intelligent systems, and advanced management to build an efficient and high-quality crowdsourced capacity network, and the back end binds the core KA through instrumental output supply chain capabilities

Resources have established high barriers, and are expected to take the lead in enjoying the dividends of the rapid expansion of the industry. Revenue is expected to be +60.9% CAGR over the next three years and is expected to be profitable in 2022. Covered for the first time, giving it a “buy” rating.

Company Overview: Two-wheel drive to help grow together.Dada Group is a leading instant delivery provider and supermarket delivery service provider in China. In 2019, it completed 750 million orders and achieved revenue of 31.0 million

100 million yuan. Among them, Dada Express achieved revenue of 2.0 billion yuan, +79.7% year-on-year; JD Home GMV reached 12.21 billion yuan, +66.4% year-on-year, achieving revenue of 11.0

100 million yuan, corresponding to a monetization rate of 9.0%. In 2019, the company's overall gross margin and non-GAAP net interest rate were +8.2%/-45.8%, respectively, and operating cash flow -13.0

100 million yuan, a significant improvement over the previous year.

The instant retail industry: The space is vast, and there is an urgent need for refined operations.Instant retailers surpassed the O2O market size in 2019 by 467

At 100 million yuan, market penetration is only 1.4%. In the future, under the joint impetus of increasing online penetration in core categories (fresh food, FMCG, etc., online penetration rate is still low) and consumption habit development (health event catalysis & intergenerational preferences), five-year CAGR

It is expected to reach 69.5%. Major players in the industry build their core competitiveness from the three dimensions of traffic operation, transportation capacity organization, and supply chain construction.

Dada Express:Affordable end of the line delivery plan provider.20Q2 Quarterly Revenue 8.4

100 million (YOY +90.4%). It serves four types of users: JD Logistics, Nagao Merchants & Individual Users, JD Home, and a small amount of KA. Compared with JD Logistics Terminal Distribution Costs, Dada has a significant cost advantage (average single cost 3.1

RMB vs. 5.8 yuan), the price and timeliness of personal items have a competitive advantage, and it is not economical for merchants to build their own logistics. It is expected that JD's landing distribution and KA merchant delivery will drive the Dada express delivery sector to continue to expand.

JD comes home:A pioneer in supermarket delivery.20Q2 (TTM) GMV183

100 million yuan (YOY +98.2%). The core of JD's evolution is user habit development & scale expansion. Moreover, compared to takeout, there is room for a unit price increase from supermarkets to furniture: 1) Backed by JD's ecological drainage, user growth is strong (as of 20Q2)

JD Home has 32.3 million active users, yoy +71.8%); SKUs for all stores have been launched, high-priced products such as 3C have been introduced, and there is room for improvement in customer orders (20Q2, the customer unit price reached 140

Yuan); 2) As an important starting point for JD FMCG and Walmart's online volume expansion, future order growth can be expected. Combined with integrated order delivery, the continuous increase in order density will reduce distribution costs; 3) Combining retail and Internet genes, systematize the output of digital supply chain capabilities, and deeply bind high-quality KA through full-process solutions.

Risk Factors:Demand for home delivery services has declined, market competition has intensified, and cost optimization has fallen short of expectations.

Investment advice:A leader on the growth track, and profit can be expected in three years. The instant retail industry is on the rise. As an industry leader, the company has established barriers in the three areas of traffic operation, capacity organization, and merchant empowerment. Dada Express contributed to stable profits, and JD grew rapidly from home. Expected 2020-2022

Annual revenue was 54.2/86.2/12.92 billion yuan, up 74.8%/59.0%/50.0% year on year; net profit attributable to non-GAAP -11.4/-8.1/3.4

100 million yuan, corresponding to a non-GAAP net interest rate of -21.1%/-9.4%/2.6%. Segment valuation. We determined that the company has a reasonable market value of 48.7 billion yuan, corresponding to a target price of 32

USD/ADS. Covered for the first time, giving it a “buy” rating.