Alibaba

(28-06-2021, 01:47 PM)Wildreamz Wrote:

(28-06-2021, 08:20 AM)Choon Wrote: How do you assess Alibaba current multiples?

I think Free-Cash-Flow yield (about 5-6%) for it's current growth rate (30-40%) in gross profit is good enough indication for me that it is cheap. Net profits will work itself out.

https://stockanalysis.com/stocks/baba/fi...ls/ratios/

I'm not an investor in Amazon, but been a long-time investor in it's competitor in the e-commerce space: Shopify (since 2017). I think Amazon's business model, doesn't benefit stakeholders (specifically, third-party sellers, if they keep using the platform) long-term. Eventually, successful sellers would want to move away from Amazon, and sell directly to consumers, and Shopify helps people do that; reference:

Shopify Is 40% As Big as Amazon Marketplace (https://www.marketplacepulse.com/article...arketplace)
15 Biggest Companies That Use Shopify (https://finance.yahoo.com/news/15-bigges...57960.html)

The 2020 FCF provided by the link is RMB232B deriving a FCF yield of 5-6%. [attachment=1790]

But even Baba's own version of non-GAAP FCF is RMB131B. [attachment=1789] 

The link has overstated FCF by about 2X.  

So Baba at current price is actually 2X more expensive than what you previously thought.

(28-06-2021, 10:20 PM)Choon Wrote: The 2020 FCF provided by the link is RMB232B deriving a FCF yield of 5-6%. 

But even Baba's own version of non-GAAP FCF is RMB131B.  

The link has overstated FCF by about 2X.  

So Baba at current price is actually 2X more expensive than what you previously thought.

I noticed several things here:

(1) You are using last year's financial report (FY ending 2020 March); Alibaba FCF was RMB131B. For FY ending 2021 March, Alibaba's FCF was RMB173B: https://www.alibabagroup.com/en/news/pre...210513.pdf

(2) Financial websites (e.g. ycharts, stockanalysis) define Operating Cash Flow as FCF, which causes a systematic over-estimation. Hence, FCF yield is actually approximately 4-5% based on recent price, on a trailing basis. Still cheap IMO.

Now I'm wondering if financial websites makes similar mistakes to other companies, haha.

Interesting. Probably appropriate here (source: https://www.pewresearch.org/fact-tank/20...s-rebound/):



Related: 

Quote:Singaporeans, Chinese nationals queue up for Sinovac vaccine, despite regulators’ concerns over efficacy

https://www.scmp.com/week-asia/health-en...ac-vaccine

(01-07-2021, 04:47 PM)Wildreamz Wrote: Interesting. Probably appropriate here (source: https://www.pewresearch.org/fact-tank/20...s-rebound/):



Related: 

Quote:Singaporeans, Chinese nationals queue up for Sinovac vaccine, despite regulators’ concerns over efficacy

https://www.scmp.com/week-asia/health-en...ac-vaccine

Very interesting and powerful chart.

In my view:
- shows the power of media
- shows how distorted the media in the West is
- shows how misinformed and unobjective (and perhaps fearful and racist) the West is
- also shows how quite objective and well-informed SG is

Quote:Very interesting and powerful chart.

In my view:
- shows the power of media
- shows how distorted the media in the West is
- shows how misinformed and unobjective (and perhaps fearful and racist) the West is
- also shows how quite objective and well-informed SG is

I'm sure non-Western territories like Japan, South Korea, Taiwan (listed above), as well as Hong Kong (not listed above) will agree with your opinion, lol.

On a more serious note, anecdotally, I have heard about pro-China fake news spreading on local social media (Whatsapp, Facebook etc.), among the "Baby Boomer" age-group. In the vein of this report: "Russia, China sow disinformation to undermine trust in Western Covid-19 vaccines: EU report" https://www.straitstimes.com/world/europ...eport-says

Finally, on Twitter, I have personally been tagged by pro-China Twitter accounts (https://twitter.com/NonghuaNews/status/1...70112?s=20); very strange and somewhat creepy (maybe? https://en.wikipedia.org/wiki/50_Cent_Party).

When I see opinions of china from Singapore. My immediate thought is always that Singapore is the only country other than China where majority are Chinese and not against China.

Interesting survey results.

If it truly reflect reality, the only reason I can think of to explain why Singaporean are agreeable to XJP's style/method is because Singaporeans themselves have been conditioned by their leaders to embrace such styles/methods.

Any why not? Even in a world changing event such as this pandemic, SG and PRC's authoritarian leadership has yet again proven to be effective.

SG doesn't have very many world changing innovations, but it has done reasonably well.

===

As for Alibaba, I find the distance between itself and its competitors is not as wide as it is for other tech companies, such as Google, Apple, Facebook, and Microsoft.

Even as it had a head start building its user base, and enjoying its network effects, its competitors are coming up aggressively, and there is nothing material which it can do while its competitors cannot (i.e. does it have a moat?).

As I recall, Yahoo had a very strong start in the search engine space with the index page as its USP. But Google caught up with its plain vanilla but superior search engine, and have now cemented their position as the only search engine provider. Does Alibaba have the kind of moat that Google has over its competitors?

JD and PDD are small now, but they are catching up. So how do we know they will not overtake Alibaba in the future? How can (prospective) investors have certainty that Alibaba will still be the top trading platform?

(04-07-2021, 11:07 AM)karlmarx Wrote: Interesting survey results.

If it truly reflect reality, the only reason I can think of to explain why Singaporean are agreeable to XJP's style/method is because Singaporeans themselves have been conditioned by their leaders to embrace such styles/methods.

Reminds me of this article by George Yeo: https://www.thinkchina.sg/former-singapo...-continues

Quoting directly from the article will probably violate some forum rules (IMHO), so I will leave it for curious people to read for themselves. But I do applaud his candidness.

Singaporean investors in Alibaba (and other Chinese companies) perhaps need to check their biases; perhaps our views on China may not represent expectations of reasonable standards (with regards of fair trade, intellectual property rights protection, data security, human rights etc.) by the international community (potential business partners and customers of Alibaba).

Of course, there are other issues, regulatory overhang, potential US sanctions, data security laws etc. that would further limit Alibaba's expansion overseas (particularly AliCloud).

An excellent YouTube video (in my view) reviewing the threat posed by Meituan to Ali.

https://www.youtube.com/watch?v=YgH71zypiqg

Chinese YouTubers are providing impressive analysis on Chinese companies.

My takeaways from the video are:

• As China becomes wealthier, a larger share of income will be spent on consumers services than goods.
  
• Meituan is the largest platform for consumer services today. It could slowly pull consumers away from and may even eventually displaces Ali's platform (largely consumer products based).
  
• Ali thus needs to contest with Meituan in the consumer services space to defend its larger ecosystem.
  
• Ali acquired Koubei and Ele, merged them,  and supported them with Alipay and Taobao. But was still unable to win market share from Meituan, instead continued to lose market share.
  
• Given the potent risk posed by Meituan to Ali's ecosystem, Ali will continue its contest with Meituan for the forseeable future.
  

The video prompted my following thoughts/questions:

• On one hand, Meituan poses a risk to Ali's ecosystem.
  
• But on the bright side,  China's consumer services market also presents a growth opportunity for Ali.
  
• An interesting question is why Amazon does not seem to need to defend against other e-commerce providers. Why Amazon's competitive position in US appear so much stronger than Ali in China?
  

(12-07-2021, 10:16 PM)Choon Wrote: ..

An interesting question is why Amazon does not seem to need to defend against other e-commerce providers. Why Amazon's competitive position in US appear so much stronger than Ali in China?

I guess you missed my previous post; check out Shopify:

https://www.marketplacepulse.com/article...arketplace
https://www.forbes.com/sites/petercohan/...4755887d9d

And Shopify is just the tip of the iceberg (Amazon's serious competition includes, Costco, Facebook, Pintrest, Google and more (Facebook, Google and Pintrest are all collaborating with Shopify)).

With regards to Alibaba; let's ignore the e-commerce business for a moment. It currently holds 40% of China's cloud market share (https://www.chinainternetwatch.com/30820...-services/). If this lead holds, then it doesn't matter who "wins" China ecommerce (I think it will likely be a oligopoly).

(vested in Alibaba and Shopify)