Hazelle
in Memos & Musings · 3 min read
This article was created in partnership with Societe Generale (Singapore branch), but the opinions are our own.
China’s tech stocks have staged a steady rebound over the past year, lifted by firmer sentiment, clearer regulatory direction and government stimulus. With share prices recovering, the focus has shifted to whether the fundamentals are improving at the same pace. The latest earnings from JD.com and Alibaba provide a clearer read on how the sector is holding up beneath the surface, and whether the recovery in market performance is matched by an earnings turnaround.
JD.com Q3 2025 Overview
JD.com delivered a stronger-than-expected top line, with net revenues rising 14.9% year on year to RMB299.1 billion. The growth was fuelled by a mix of government-backed consumer subsidies and new business lines that broadened JD’s reach beyond its traditional core. However, profitability suffered under the weight of a deepening price war, leading net income to fall 55% to RMB5.3 billion.
Government initiatives aimed at stimulating spending played a role, and JD.com emerged as one of the direct beneficiaries. The recent rounds of consumption vouchers and appliance trade in programmes were channelled heavily through major e-commerce platforms, and JD’s scale, nationwide logistics network and strong relationships with brands made it a preferred partner for these campaigns. This meant that more subsidy driven purchases flowed through JD’s ecosystem, especially in categories like electronics, home appliances and daily essentials. The combination of platform wide discounts and state-backed incentives helped lift order volumes, supporting JD’s revenue growth during the quarter.
The Downside of Expansion: Margin Pressure
Beyond the boost from appliance-related subsidies, JD.com has also been expanding into food delivery since February this year, which has seen a sharp erosion in its overall margins. To attract merchants onboard, JD.com offered commission-free services and fast delivery within an hour.
What began as JD.com’s entry into food delivery quickly escalated into a sector-wide price battle as Meituan and Alibaba’s Ele.me rolled out their own incentives to defend market share. The heavy discounting across platforms initially drove higher order volumes, but the benefits have started to fade as it clashes with softer consumer demand, putting pressure on margins across the industry.
The race to capture incremental market share has contributed to deflationary pressure within the digital economy in China. With consumption growth slowing to its weakest pace since the post Covid recovery, the sustainability of such tactics has come under question. Investors are also reassessing the trade-off between short-term user growth and long-term profitability.
In particular, while JD.com’s revenue has grown tremendously in the recent Q3 2025, the new businesses segment which includes the food delivery business saw intensifying operating losses.
Credit: JD.com Investor Relations (The information relating to past performances is for illustrative purposes only, and is not a reliable indicator of future performance.)
Regulatory Scrutiny and Policy Backdrop
The government has taken a firmer stance in recent months. Regulators summoned major platforms, including JD.com, to reinforce requirements for orderly competition and sustainable pricing practices. New measures were announced to curb below-cost bidding and prevent practices that could distort market dynamics.
These interventions reflect a broader policy effort to stabilize prices, protect income levels and nudge tech platforms toward healthier business models. JD’s participation in the food delivery space is therefore unfolding at a moment when policymakers are attempting to realign incentives across the sector.
Expanding into Food Delivery: What It Means for JD
Our house view is that JD.com’s retail business continues to be a strong cash generator, supported by years of steady growth in operating cash flow and free cash flow (refer to the charts below). The recent push into food delivery has temporarily weighed on cash generation as the company stepped up promotions and invested heavily in user acquisition. We see this impact as short lived. As JD.com gradually scales back spending on discounts and sales initiatives once the initial market share grab stabilises, overall cash flows and profitability should recover.
The strategic purpose behind JD Food Delivery is to build a tighter ecosystem that increases user stickiness. By tapping on JD’s proven logistics capabilities, the service enhances convenience for consumers and strengthens synergies with the core retail business through higher user growth, more frequent shopping activity and broader cross category spending.
Credit: JD.com Investor Relations (The information relating to past performances is for illustrative purposes only, and is not a reliable indicator of future performance.)
Alibaba Q2 2026 Overview
As JD navigates its reinvestment phase, Alibaba’s latest results reveal a parallel story unfolding across China’s largest tech ecosystems.
Alibaba posted a modest headline revenue increase of 5% year over year for the quarter. On a like-for-like basis, excluding divested units such as Sun Art and Intime, revenue would have grown 15%, reflecting healthier underlying momentum across its core operations.
A key highlight this quarter was the continued strength of Alibaba’s Cloud Intelligence Group. Revenue climbed 34%, driven by robust demand for AI infrastructure. Alibaba Cloud maintained its position as the top player in China’s AI cloud market with a 35.8% share, according to management. This leadership is underpinned by the group’s full stack AI capabilities, which remain a core competitive advantage as enterprises accelerate digital adoption.
The Alibaba China E-commerce Group also delivered a solid performance with revenue growth of 16%.
Within this segment:
- E-commerce (Taobao, Tmall, Fliggy, Xianyu) recorded a 9% increase in revenue;
- China Commerce Wholesale (1688) revenue grew 13%; and
- Quick Commerce (Taobao Instance Commerce, Ele.me) revenue surged 60%.
Quick Commerce benefited from strong order growth following the launch of Taobao Instant Commerce in late April 2025. The service offers consumers one hour delivery for groceries, electronics, apparel and more. This resurgence places Alibaba in direct competition with JD.com and Meituan in the fast growing on demand segment.
Alibaba’s reorganisation to integrate Ele.me and Fliggy into its core e-commerce operations reflects a broader strategic shift. The group is consolidating platform resources to strengthen its position as a full spectrum consumer ecosystem. This tighter integration is intended to improve user experience, increase cross platform engagement and enhance customer lifetime value.
Credit: Alibaba Investor Relations (The information relating to past performances is for illustrative purposes only, and is not a reliable indicator of future performance.)
Profitability Impact: Investment Cycle in Full Swing
The rapid expansion in quick commerce and ecosystem integration has come with a rising cost burden. Alibaba has been reinvesting a significant share of its profits and operating cash flow to widen its consumer reach and reinforce competitiveness. Sales and marketing expenses (excluding SBC) rose to 26.6% of revenue compared to 13.5% a year ago, showing how much the group is pushing to drive user acquisition and merchant activation.
Income from operations fell 85% year over year for the quarter. The decline was driven mainly by extensive investments in quick commerce, logistics capabilities and user experience upgrades. These costs were partly offset by stronger results from the China E-commerce Group, the improved performance in Cloud, and better operating efficiencies across selected business units.
Strategic Direction: Building a Unified Consumption Platform
Alibaba has placed increasing emphasis on building synergies between quick commerce and its broader ecosystem. The company accelerated the onboarding of Tmall brands to its on demand channels to widen product selection and better serve time sensitive consumer demand. As of October 2025, around 3,500 Tmall brand offline stores had been integrated into the quick commerce network. This move deepens Alibaba’s omni channel strategy and enhances its ability to serve customers across multiple touchpoints, from traditional e-commerce to local retail to instant delivery.
Both JD.com and Alibaba are moving along a similar strategic path. Both are prioritising faster fulfilment, broader product coverage and stronger ecosystem stickiness, which has led to heavier reinvestment across logistics, merchant services and user acquisition. These initiatives have supported healthier topline trends but have also placed pressure on near term profitability. The strategic direction is clear for both companies. They are choosing to build durability and market relevance, even if it means accepting lower margins today.
What are your options as a China investor?
✅ Ride It Out: Long-term investors can continue holding quality China tech names like JD.com and Alibaba, accepting short-term earnings volatility while staying invested in the broader China tech growth story.
✅ Trade or hedge the Swings Proactively: For those who prefer a more active approach with China stocks to position tactically and to capitalize on both upside opportunities or to mitigate downside risks, there’s another option with Daily Leveraged Certificates (DLCs) listed on SGX.
3x/5x/7x DLCs: A flexible tool to navigate market swings
Daily Leveraged Certificates (DLCs) offer a dynamic and flexible way to trade volatility for some of these China H shares. Whether it’s to tactically hedge part of your portfolio during earnings season, express short-term views around tariff headlines, or capitalize on rate-driven swings, DLCs can help investors stay agile without abandoning long-term positions.
In short, DLCs allows traders and investors to:
Magnify Returns: Capture short-term trends with 3x/5x/7x daily leveraged exposure to the underlying asset’s performance, for both Long and Short directions.
Hedge Downside Risks: Mitigate portfolio risk with Short DLCs, which gain value as the underlying stock price falls.
What are DLCs?
Daily Leverage Certificates (DLCs) are exchange-traded instruments that offer investors leveraged exposure to an underlying asset, such as a stock index or an individual stock. DLCs track the daily performance of the underlying asset relative to its previous closing price.
A bullish investor who thinks that the underlying asset is set to rise over the trading day can select, for example, a 5x Long DLC, which will rise in value by 5% for each 1% rise in the underlying asset (before cost & fees).
A bearish investor who expects the underlying asset to fall can instead select, for example, the 5x Short DLC, which will rise in value by 5% for every 1% fall in the underlying asset (before cost & fees).
At the same time, if the market moves against the investor, the DLC will amplify losses in the same way. For example, if the underlying asset falls by 1%, the value of the 5x Long DLC will decrease by 5% (before cost & fees). The investor’s entire invested capital is at risk but the maximum total loss will not be more than the total invested capital.
To explore some scenarios that traders or investors can possibly tap on the use of DLCs is available in this previous article as well.
Visit the issuer Societe Generale’s DLC website for the full list of DLCs – Click here.
Source: DLC.socgen.com
Risks and what DLCs should not be used for:
Daily Leverage Certificates (DLCs) are leveraged financial instruments that carry a high level of risk—including the potential loss of your entire capital if the market moves against your position.
These products are primarily designed for short-term trading, allowing investors to capitalize on rapid market movements. However, they are not intended for long-term holding, as the compounding effect of daily leverage can cause returns to deviate significantly from the expected multiple over time. Additionally, holding DLCs over extended periods may lead to higher costs due to accumulated fees.
In summary, while DLCs can be powerful tools for enhancing returns, their leveraged nature and the mechanics of daily rebalancing introduce complexities and risks. If you’re looking to participate in the tech rally or other fast-moving sectors, it’s essential to fully understand how DLCs work and ensure they fit within your overall investment strategy.
Disclaimer
This advertisement has not been reviewed by the Monetary Authority of Singapore. The views expressed under this article represent the personal and independent views of the author and do not constitute investment advice. The content of this article does not form part of any offer or invitation to buy or sell any daily leverage certificates (the “DLCs”), and nothing herein should be considered as financial advice or recommendation. The price may rise and fall in value rapidly and holders may lose all of their investment. Any past performance is not indicative of future performance. Investments in DLCs carry significant risks, please see dlc.socgen.com for further information and relevant risks. The DLCs are for specified investment products (SIP) qualified investors only.
About Hazelle
Chief trainer of The Moneyball Investors Playbook program and founder of The Joyful Investors, a financial education firm that seeks to help avid investors learn to invest better and make the journey a joyful one. I graduated with a first class honors in Bachelor of Accountancy from Nanyang Technological University (NTU) and started my auditing career in one of the Big Four. I believe that once we know how to build our wealth sustainably, we can then live our best lives ever.
Important Information
This document is for information only and does not constitute an offer or solicitation nor be construed as a recommendation to buy or sell any of the investments mentioned. Neither The Joyful Investors Pte. Ltd. (“The Joyful Investors”) nor any of its officers or employees accepts any liability whatsoever for any loss arising from any use of this publication or its contents. The views expressed are solely the opinions of the author as of the date of this document and are subject to change based on market and other conditions.
The information provided regarding any individual securities is not intended to be used to form any basis upon which an investment decision is to be made. The information contained in this document, including any data, projections and underlying assumptions are based upon certain assumptions and analysis of information available as at the date of this document and reflects prevailing conditions, all of which are accordingly subject to change at any time without notice and The Joyful Investors is under no obligation to notify you of any of these changes.
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