--- title: "JPM: Structural Shift in Profit Margins Emerging in China's E-commerce Sector; Top Picks BABA-W , JD-SW" type: "News" locale: "en" url: "https://longbridge.com/en/news/298691532.md" description: "JPMorgan reports a structural shift in China's e-commerce profit margins as key growth drivers weaken by mid-2026. New regulations curb subsidies and festival promotions, redirecting competition toward efficiency. JPM upgrades Alibaba (BABA) and JD.com to Overweight with target prices of $210 and $38 respectively, citing their ability to monetize traffic and leverage logistics moats. PDD receives a Neutral rating ($95 TP), while Vipshop is Overweighted ($17 TP)." datetime: "2026-09-11T06:55:10.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/298691532.md) - [en](https://longbridge.com/en/news/298691532.md) - [zh-HK](https://longbridge.com/zh-HK/news/298691532.md) generator: "portal-rs" --- # JPM: Structural Shift in Profit Margins Emerging in China's E-commerce Sector; Top Picks BABA-W , JD-SW JPMorgan published a report stating that the three growth engines that drove China's e-commerce platforms over the past 15 years - market share competition, demand concentration during shopping festivals, and subsidies (initially funded by platforms and later by the state) - are all weakening simultaneously during the period from April 2025 to June 2026. The bank said traditional platforms' market share losses have slowed to around 1 ppt annually, compared with 3-5 ppts during 2021-2023; GMV growth during the 618 shopping festival slowed to around 1% even after the event period was extended to 37 days; the "Price Conduct Rules" restricted platforms' subsidy and promotional tools for shopping festivals; and the state's trade-in subsidy program has also been scaled back and redesigned. The bank believes the market sees a growth problem, while it sees a structural shift in industry profit margins. At a mature penetration stage, subsidies largely only shift demand among platforms, placing the industry in a dilemma: all platforms benefit from lower spending, but no platform can cut spending unilaterally without risking market share losses. The bank believes regulation provides an external enforcement mechanism that platforms themselves cannot create, and will redirect competition toward monetization, services, and supply chain efficiency. In terms of stock implications, the bank's top picks are BABA-W (09988.HK) +0.300 (+0.281%) Short selling $663.62M; Ratio 21.449% and JD-SW (09618.HK) +0.900 (+0.853%) Short selling $87.68M; Ratio 25.970% . The bank believes Alibaba has the clearest path to converting lower competitive spending and traffic obtained through quick commerce into higher-margin customer management revenue (CMR); meanwhile, JD.com should benefit from less disruptive reductions in direct-sales discounts and the re-emergence of the value of its logistics and service moat, although difficult YoY comparisons related to state subsidies may mask improvements in 2Q26 and part of 2H26. PDD Holdings Inc. (PDD.US) faces the lowest downside risk from weaker shopping festivals, but new rules restrict several mechanisms of its domestic model, while outcomes for Temu remain highly uncertain. Vipshop Holdings Limited (VIPS.US) , with its discount flash-sale model, relies less on China's 618 and Singles' Day than larger platforms, making its 2026 YoY comparisons more reflective of its own operating fundamentals rather than government support. The bank favors the two incumbent leaders, Alibaba and JD.com, as it believes the market perceives them as the most disrupted. The bank noted that June 2026 marked the first 618 shopping festival fully regulated under the new "Price Conduct Rules". The event period was extended, overall GMV data was no longer disclosed, mechanisms were simplified, and comparable platform GMV growth was only around 1%. Competition in quick commerce, a market sized at RMB180 billion to RMB200 billion, has shifted from a cash-burning phase to evaluating profit-and-loss impact. Starting from the September 2026 earnings season, the first clean quarters after subsidies will test whether acquired traffic can be retained, monetized, and converted into better profit margins. The bank assigned TPs of USD210 and HKD205 respectively to Alibaba Group Holding Limited (BABA.US) and its Hong Kong shares, with an Overweight rating. It assigned TP of USD38 and HKD148 respectively to JD.com, Inc. (JD.US) and its Hong Kong shares, with an Overweight rating. The bank assigned a TP of USD95 to PDD Holdings Inc. (PDD.US) with a Neutral rating, and a TP of USD17 to Vipshop Holdings Limited (VIPS.US) with an Overweight rating. (da/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-09-11 12:25.) 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