Alibaba

[CY09]

https://www.businesstimes.com.sg/compani...stake-sale

Divesting in XPeng to raise money. Meanwhile alibaba invests in Lazada. It seems the strategy is for alibaba to go into where it knows best.

Personally while Alibaba has a large cash chest and free cash generating ability, it might be time to be more OPMI friendly and dedicate more to dividends and buybacks. I am hopeing for this

[ksir]

https://www.businesstimes.com.sg/compani...stake-sale

Divesting in XPeng to raise money. Meanwhile alibaba invests in Lazada. It seems the strategy is for alibaba to go into where it knows best.

Personally while Alibaba has a large cash chest and free cash generating ability, it might be time to be more OPMI friendly and dedicate more to dividends and buybacks. I am hopeing for this

Its 2023-Q3 is a long but good read to find out what the new CEO/Chairman are focusing on, below the transcript:
https://www.fool.com/earnings/call-trans...transcrip/

Their priorities of usage of cash are in below order:
1. Investing in their Core Businesses.
2. Buying back shares.
Since 1-Jul to 15-Nov, have repurchased approximately $3B, which accounted for 1.3% of total shares outstanding.
Chairman Joe: have $13B of dry powder left & will continue to execute that buyback.
3. Dividend.
First time ever dividend of $0.125 per share or $1 per ADS.
The aggregate amount of the dividend will be about $2.5B.

New management key focus:
1) Focus on growing core businesses (ie: eCommerce, Cloud, etc) >> Lazada likely fall under this bucket.
2) Monetize Non-core businesses (divest, spin-off etc) >> XPeng likely fall under this bucket.
3) Sharpen the focus of each Major Business, cases in point:
- Taobao to focus on putting customer first and expand to be Super App or to quote Trudy Dai (Taobao group CEO):
"As we said, there's no question that the Taobao app has everything you could want or need. The only question is, can you think of everything you need? Or going forward, even if you can't think of what you need, no matter, the Taobao app will help you do the thinking."
The above I personally feel Taobao improvement in their search & recommendation (eg: just search for japan street style and there you go, the clothes, pants and whatnot).
- Expand Ali Express Choice (AE Choice), to quote Jiang Fan (Int group CEO):
"Looking ahead, we see some high-confidence market opportunities, including further expansion of AE Choice and opportunities in some emerging markets. Over the next few quarters, our short-term business focus will be on rapidly expanding our business scale and market share."

To me, Bytedance & PDD are definitely eating away their shares, but with their valuation and urgency to CHANGE (recently Ma couldn't help but to "praise" PDD to rally his troops), I am willing to bet on this horse.

[dreamybear]

I may be thinking too much but I just can't help but wonder some actions(e.g. share purchases, dividends, agriculture) are motivated by self-interests or more in alignment with the country's direction ....

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Alibaba co-founders buy more than $200 million worth of shares, sending stock up
https://www.cnbc.com/2024/01/23/alibaba-...i-buy.html

China’s Stock-Market Rout Has Become a Political Problem
https://www.wsj.com/finance/stocks/china...m-f41ec826

SSE Refines Self-Regulation Rules for Share Repurchase and Dividends, Encouraging Listed Companies to Proactively Reward Investors
http://english.sse.com.cn/news/newsrelea...3621.shtml

Alibaba (BABA) Declares First Ever $1.00 Annual Dividend; 1.1% Yield
https://www.streetinsider.com/Dividend+H...22618.html

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Jack Ma continues to focus on agriculture, education as Alibaba undergoes sweeping changes
https://www.scmp.com/tech/big-tech/artic...ng-changes

Xi's words greatly encourage new wave of tech-savvy farmers to dedicate themselves to rural revitalization
https://www.globaltimes.cn/page/202303/1287873.shtml

[dreamybear]

In the recent earnings call, an interesting question was asked regarding the initiatives around returning value to shareholders.

Essentially, a combination of SBB + dividends => 10 year treasury bond yield with the bonus of potential upside for a good business. How does it compare to stocks like PingAn with a higher dividend yield and also potential upside ?

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https://seekingalpha.com/article/4668248...transcript
"...Math number two is 3% accretion a year plus a dividend of $1 per ADS. The dividend yield is about 1.4% and so combined with the buyback, accretion and the dividend yield, you're looking at about 4.4%, 4.5% which is actually quite close to the 10-year treasury yield. So if you buy Alibaba stock, it's like you bought a 10-year treasury bond with the upside of stock price appreciation...."

[weijian]

------------
https://seekingalpha.com/article/4668248...transcript
"...Math number two is 3% accretion a year plus a dividend of $1 per ADS. The dividend yield is about 1.4% and so combined with the buyback, accretion and the dividend yield, you're looking at about 4.4%, 4.5% which is actually quite close to the 10-year treasury yield. So if you buy Alibaba stock, it's like you bought a 10-year treasury bond with the upside of stock price appreciation...."

It will sound credible if it were to come from an executive from Berkshire Hathaway, a diversified conglomerate with >120bil cash (or ~15% market cap in cash) operating in country that exemplifies capitalism at its best.

Alibaba operates in a relatively narrow tech space with lower cash holdings. m\Minorities who hold ADS (American Depository Shares) indirectly owns Alibaba via a VIE structure that is not recognized by Alibaba's regulator. Pretty cute to compare your risk levels to that of 10year treasuries.

[dzwm87]

In the recent earnings call, an interesting question was asked regarding the initiatives around returning value to shareholders.

Essentially, a combination of SBB + dividends => 10 year treasury bond yield with the bonus of potential upside for a good business. How does it compare to stocks like PingAn with a higher dividend yield and also potential upside ?

Given where HK market has been, probably 80% of all dividend payment has such a profile (bond-like + upside of stock price appreciation). The key is on the "potential downside from equity depreciation" which was of course omitted

Actually the 3% share count reduction is on an "at least basis" and based on outstanding repurchase amount, it is averaging around 6% p.a. Of course, none of this is guaranteed until it's actually repurchased and cancelled. And at today's price performance, investors only prefer it to be even bigger and even faster.

The other part on buybacks is that if you think earnings will resume its growth, there is a compounding effect - on EPS as well as incremental ROIC improvement - from the capital utilized as compared to a straightforward dividend payment.

[weijian]

In Western capitalism, you get big (and stay there) for some time, and get better/stronger over time. But in capitalism with Chinese characteristics, it seems like you get big but don't stay there for long. In short time, your competitor/s copy you and then overtake you.

Is this a Chinese thing? Or is it just vaguely proving that e-commerce has no moat in this part of the world?

Alibaba, navigating sea change, reorients business towards bread-and-butter e-commerce and AI, pares down overhaul

Alibaba has made dramatic changes to its corporate restructuring plan as founders Jack Ma and Joe Tsai return to the driver’s seat

“We have fallen behind because we forgot who our real customers are,” Tsai said. “Our customers are the users who use our apps [for] shopping, and we did not give them the best experience. In a way, we stepped on our own foot and did not focus on where we can add value.”

In addition to impressing investors, PDD has also proved popular among consumers for the attractive pricing of its products. “Alibaba realised that its bread-and-butter business was under serious threat,” according to a source who was briefed on internal discussions.

“Alibaba didn’t have a solid track record under the previous leadership of Daniel Zhang,” said Chelsey Tam, a senior analyst at Morningstar. “For example, the firm wasn’t able to prevent PDD Holdings from overtaking Taobao and Tmall Group as the largest Chinese e-commerce platform by annual customers transacting on a platform.”

https://www.scmp.com/tech/big-tech/artic...d-ai-pares

[CY09]

Updates for Alibaba Group.

Firstly Lazada will be paying more for Singapore retrenchment benefits

https://www.channelnewsasia.com/singapor...ed-4360346

Secondly, is the convertible bond, which does not bode well. Implicitly mgmt is telling us its target price is in the US$160 range

https://www.scmp.com/tech/big-tech/artic...fund-share

[dreamybear]

I guess there is only so much a consumer wants/needs/is tempted to buy; a consumer's wallet can afford to buy ....
https://www.straitstimes.com/business/ch...ver-before

Seen in the context of the following current circumstances where luxury brands are doing unthinkable and there's even a push to upgrade appliances, what should one make of the consumer spending in China ?
https://www.straitstimes.com/business/do...0-in-china
http://ningbo.chinadaily.com.cn/2024-03/20/c_972653.htm

What does the future hold for Alibaba's growth trajectory ?

[weijian]

hi dreamybear,

For a start, those are just premium brands. Luxury brands do not cut prices to sell, they raise prices to sell.

If China's economic downturn is attributed to the authorities, then it is just logical that any recovery will be attributed to the authorities too. My original thesis is that CCP is apt at copying and learning from history - ditto Obama's Cash for Clunkers in 2009.

Looking forward to Keyes' economics working it's "magic" in China.