Internet Profits Up 16.6%, But Don't Go All In Yet: Three Structural Opportunities I See

Last week I had dinner with a friend who runs a tool company expanding overseas. Last year around mid-year, he cut his team from 100 people down to 40, yet profits nearly tripled in the first half of this year. He said peers nowadays don't ask about DAU when they meet; instead, they ask "how many months until cash flow turns positive." At the table, a notification popped up on his phone—it was that MIIT data point: In the first half of the year, total profits of above-scale internet enterprises reached 98.99 billion yuan, up 16.6% YoY. He glanced at it and said, "That number is way lower than my company's profit margin."