It's easy to take shortcuts in investing and to make conclusions based on patterns, trends, or what the consensus is or isn't. It's something we talk about on Behind the Idea a lot, and something we do from time to time too.
In his work on JD.Com, Lester Goh has gone well beyond the headlines and basic analysis, and he shares the reasons he is bullish in the e-commerce titan despite its rough year. We get into the details, the headline thoughts, and why investing in Chinese companies really isn't that different than anywhere else.
Topics covered
3:00 – Summing up the JD bull case: low-cost operator, runway for reinvestment, and compelling valuation 11:30 - Assessing e-commerce vs physical retail 16:15 - How is valuation affected by investment in entities not related to JD's core business? 22:15 - Time frame for normalization of JD's EBIT and free cash flow Thunder round on JD 29:15 – Whether JD is a "crowded" trade and whether that matters 32:30 - Threat of China/US trade war on stock – auditor oversight as a secret effect 35:30 - How important is US listing to JD's business? 37:30 – JD vs. Alibaba 51:30 – How big an effect did the Richard Liu accusations have on JD, and the risk of investing based on management 1:02:30 – China concerns valid or? 1:10:00 – Taking a fresh look at JD, and the distinction between being right and making money
