Investment opportunities in pure on-liners
Existing pure on-liners should gain further traction as they can continue to impose new standards and technologies, thereby ring fencing their businesses from new entrants. Additionally, they are best positioned to scale up on the existing infrastructure, shipping facilities, volumes and prices as well as the development of new strategic locations.
| Company | Ticker | Sector | Upside Potential | Sharpe (FY01) |
| Amazon | AMZN | Broadline Retailers | 25 % | 4.13 |
| Investment case: Amazon is #1 in online retail in North America. The company offers a wide range of products including books, music, videotapes, electronic devices of all kinds, home and garden products, and numerous other consumer items. AMZN offers visitors a unique shopping experience, surrounded by complementary services such as credit card and transportation services. Sales in the US grew well above historic averages. All segments report good sales patterns for the remainder of this year. | ||||
| Company | Ticker | Sector | Upside Potential | Sharpe (FY01) |
| Tencent | 0700 | Internet | -15 % | 2.45 |
| Investment case: Tencent’s home market is the retail market in China. Apart from the online business, Tencent states that its mobile gaming platform is starting to capture paying users and is growing exponentially. The company has a number of collaborative projects in the pipeline which should all help monetize mobile traffic and increase traffic from related platforms. | ||||
| Company | Ticker | Sector | Upside Potential | Sharpe (FY01) |
| Rakuten | 4755 | Broadline Retailers | 15 % | 2.77 |
| Investment case: Rakuten states that it has more than 77 million users and is developing an aggressive expansion strategy. The company expanded into France (PriceMinister), the US (Buy.com), the UK (Play.com). The execution of these acquisitions was not risk free, the company produced a depreciation of USD 900 million in the 2nd quarter of 2014; additionally, the cost of running its e-book business is increasing faster than sales. | ||||
| Company | Ticker | Sector | Upside Potential | Sharpe (FY01) |
| eBay | EBAY | Spec. Consumer services | 19 % | 5.28 |
| Investment case: eBay’s services are available in more than 40 markets. It handles about 8% of the total e-commerce market worldwide, i.e. the overall gross value of the merchandise dealt with through its services exceeded $76 billion in 2013. eBay has about 145 million customers (buyers) and its business is relatively well ring fenced through attractive rates and a close collaboration with PayPal. eBay is expected to evolve into a global commerce hub. | ||||
| Company | Ticker | Sector | Upside Potential | Sharpe (FY01) |
| Asos | ASOS | Online retailer | 27 % | 2.3 |
| Investment case: ASOS is the reference for online apparel retailers. Over 145,000 items are available through its platform. ASOS applies and has mastered cross-subsidization perfectly; however, profit margins are diluted as a high volume approach is favored. | ||||
| Company | Ticker | Sector | Upside Potential | Sharpe (FY01) |
| Zalando | n/a | Clothing & Accessories | n/a | n/a |
| Investment case: Zalando is among the first-movers in the online retail apparel market. The company gained a strong reputation relatively rapidly due to its innovative marketing activities. Yet, although sales volumes grew by more than 200% in the last two years, the business is still not profitable, with operating margins at -7.5% and further margin pressure noticed this year. The upcoming IPO should value Zalando in excess of €3.9 billion. | ||||
| Company | Ticker | Sector | Upside Potential | Sharpe (FY01) |
| JD.com | JD | Online retailer | 12 % | 2.44 |
| Investment case: JD.com is an online direct sales company in China. Although sales volumes have risen by more than 50%, the company is still operating in negative territory. Once the management can eliminate the dilutive margins, JD could become a jewel for investors given the size of its market and the willingness of the Chinese population to adopt new technologies. | ||||