Alibaba

[dreamybear]

[quote pid="162963" dateline="1628006433"]

35% revenue growth, still in line with past trend. If this continue for a couple more years, we (investors), is expecting free cash flow (https://ycharts.com/companies/BABA/free_cash_flow_ttm) and finally market price to reflect that.

Barring further restrictions that changes the trajectory of the company. 

[/quote]

I think this is an interesting case study. Recently, I have read articles / watched videos discussing the intrinsic value of Alibaba.

Assuming the uninterrupted cash flow growth, what shd be the valuation of Alibaba in the face of the current operating environment (e.g. PDD pledges profit to help farmers) ?

Even if mkt participants are not pricing it as tech growth stocks, shd Alibaba be priced closer to stable blue chip companies' valuations ? For simplicity, perhaps the most straight fwd method is to factor in a certain percentage discount on its cash flow, based on the assumption that part of its cash flow will be used for social responsibility purposes ?

Maybe can ask CM in the face of current developments in China .... 

[Wildreamz]

@Dreamybear Personally don't know (hence sold). YMMV.

Here is an interesting observation: most big names investors (Pabrai, Guy Spier, Munger) that most recently invested in Alibaba don't seem like the type that typically invest in Chinese names.

This is Li Lu's most recent 13F (US Holdings): https://www.dataroma.com/m/holdings.php?m=HC 
HK Holdings: https://di.hkex.com.hk/di/NSSrchPersonLi...&g_lang=en

Maybe meaningful, maybe not meaningful.

Peace.

(NOT investment advise)

[CY09]

https://www.channelnewsasia.com/business...nt-2140236

This might spell how much limited growth Alibaba has in china. In other countries, government entities are known to do business with private providers for their data needs. One major beneficiary has been AWS which does business with multiple governments.

I think Alibaba and Tencent have to start looking global because their own provincials/central government are starting to forsake them. Pretty ironic that your own home communist government does not want to support local companies

[Wildreamz]

This is a doozy.

China Seeks to Ban Data-Rich Firms From U.S. IPOs, DJ Says
https://www.bloomberg.com/news/articles/...os-dj-says

Technology Tianjin asks govt firms to move data out of Alibaba, Tencent clouds-document
https://www.reuters.com/technology/tianj...021-08-27/

China Plans Control of Tech Algorithms U.S. Can Only Dream Of
https://www.bloomberg.com/news/articles/...y-dream-of

China’s Celebrity Culture Is Raucous. The Authorities Want to Change That.
https://www.nytimes.com/2021/08/27/busin...lture.html

China’s top court takes aim at ‘996’ overtime culture in blow to tech groups
https://www.ft.com/content/a794faf1-2ee9...620227396c

[Wildreamz]

https://www.channelnewsasia.com/business...nt-2140236

This might spell how much limited growth Alibaba has in china. In other countries, government entities are known to do business with private providers for their data needs. One major beneficiary has been AWS which does business with multiple governments.

I think Alibaba and Tencent have to start looking global because their own provincials/central government are starting to forsake them. Pretty ironic that your own home communist government does not want to support local companies

内忧外患。

https://www.fool.com/earnings/call-trans...rnings-ca/

Alibaba Cloud. The cloud revenue grew 29% year over year to RMB 16 billion. Similar to last quarter, the slower quarterly revenue growth is primarily due to the revenue decline from the top customer in the Internet industry that has terminated their relationship with respect to their international business due to nonproduct-related requirements.

To be fair, it's only the CCP government contracts, that will start to be rewarded to "state-backed cloud system" (Hwawei Cloud?). The total addressable market even within China only (ex-CCP), is still quite large. Their international business, still have room to grow (outside of government projects).

(not vested)

[dreamybear]

https://www.channelnewsasia.com/business...nt-2140236

This might spell how much limited growth Alibaba has in china. In other countries, government entities are known to do business with private providers for their data needs. One major beneficiary has been AWS which does business with multiple governments.

I think Alibaba and Tencent have to start looking global because their own provincials/central government are starting to forsake them. Pretty ironic that your own home communist government does not want to support local companies

Thanks for the article. I was trying to search for the reason why 9988.HK corrected today, perhaps this cld be one reason. Waiting for an opportunity to vest once I figure out how best to value it in such operating environment, with the fair assumptions / MOS. 

But I don't think it's because they do not want to support their local companies, but the govt may be uncomfortable for private enterprises to store so much data. Even for private enterprises' data, I wld assume it wld not likely be business as usual, moving fwd. I believe it is really not easy to run a communist country with such a huge population over such a large geographical area, especially if we look back at China's history to see its progress till today. I would imagine one of the key priorities is for stability and progress for all. 

Perhaps a way to value BABA is to assume low cash flow growth on its core e-commerce business, and assume its other businesses remain flat.

[Wildreamz]

Thanks for the article. I was trying to search for the reason why 9988.HK corrected today, perhaps this cld be one reason.

Check my post, there are at least 5 new reasons today alone (I probably did not cover all of them).

Trying times for Chinese investors.

[dreamybear]

@Wildreamz - many thanks for the tip. I was reading sequentially, now moving on to your post next. 

Already serious info overload with existing holdings(though trimmed to not a lot of counters) - maybe I shd control my FOMO and just skip the tech stks given the pace of rapid development ..... Sigh.

[Wildreamz]

Already serious info overload with existing holdings(though trimmed to not a lot of counters) - maybe I shd control my FOMO and just skip the tech stks given the pace of rapid development ..... Sigh.

lol, no prob. Just afraid you missed it (there were several posts after that).

Never FOMO into anything. Chinese tech really looks cheap. But need to fully understand the risks before taking a long term commitment. e.g., if they falls further 50%, will you continue to buy them? Why/Why not? etc.

[¯|_(ツ)_/¯]

OT but just wanted to chip in with something I am and planning to do.

The stock I'm looking at is 1833.hk Ping An Good Doctor.

https://drive.google.com/open?id=1hZfTR-...0otJTOLmTD

I first vested less than 2 months ago at 80+
2nd batch was purchase early this week at 60+
and today it closed at 53.30.

If it drops to 30+, I will definitely put in my 3rd batch.
wait, correction, if it drops to 40+, I will put in my 3rd batch. 


I could do this because, this is the first China Tech stock that I'm buying and also the amount that I had put in is as per my SOP, ie, I'm not over stretched.

If you recalled AK's youtube sharing his portfolio, he mentioned that BABA had already reached his position limit and despite the huge discount, he won't be topping up even if it drop further.  That, to be is a good reason, as AK assessed that one way he control risk is to limit a single stock to a certain percentage of his portfolio and he is sticking to his game plan.

My game plan is to buy on further dip. Drop 50% would be god-send.
I had just started my investment journey in China Tech and wish me luck.


For our valuebuddies, there is a chance that China Tech stock won't be rebouncing so fast or even bounced back to it's previous high point.  Pace yourself and don't be too greedy.

Meanwhile, I'm very excited about Hai Leck's 6 cents dividend and I'm equally excited on Micro-Mechanics FY2021 result releasing in the next few hours.

Thank you everyone for teaching me.
I learn a lot from you.
Gratitude.