Alibaba

[CY09]

I have more than that to live. Not to be viewed that pessimistic.

It just means I am confident DBS and ST will be very relevant to Singapore within the next 20 years. But i cant vouch for its economic importance after 20 years

[CY09]

https://www.channelnewsasia.com/business...co-2860921

I guess the best venture to do in Singapore are properties. Pretty weird for Alibaba to launch such a big mixed development at Tanjong Pagar. Yes a few floors of AXA tower was filled by Lazada, but not sure if it justifies going into properties at such a massive scale

[CY09]

http://scg8866tstockinvesting.blogspot.c...wB2WnZBy3A

Interesting article. Based on a Sum of parts with current known valuation, Alibaba is valued at a market value which assumes is China's e commerce segment is zero value. I truly think this is the risk premium that the market is pricing.

Alibaba's e commerce segment is a gem which produces RMB $150 billion (USD $22 billion) in profits. The segment itself should be worth US$220 billion in market value which means Alibaba is definitely worth double its price.

Unfortunately, the presence of Xi Jinping likely means the market is discounting Alibaba by half. This applies to Tencent as well. The presence of just one man is wiping out the value of the china tech sector and possibly resulting in large retrenchments and unemployment in one country. However, this underscores the political risk of investing in china

[Wildreamz]

If one believes that President Xi is the only major obstacle to Chinese Big Tech's long term success (which I do), then the 20th National Congress of the Chinese Communist Party is one to look out for.

Many rumours and speculation on Chinese social media that pro-economic growth Li Keqiang, would be the black horse to become the next president/general secretary of the CCP. I put the probability at 20% (just a hunch based on what I know).

(not vested)

[BlueKelah]

http://scg8866tstockinvesting.blogspot.c...wB2WnZBy3A

Interesting article. Based on a Sum of parts with current known valuation, Alibaba is valued at a market value which assumes is China's e commerce segment is zero value. I truly think this is the risk premium that the market is pricing.

Alibaba's e commerce segment is a gem which produces RMB $150 billion (USD $22 billion) in profits. The segment itself should be worth US$220 billion in market value which means Alibaba is definitely worth double its price.

Unfortunately, the presence of Xi Jinping likely means the market is discounting Alibaba by half. This applies to Tencent as well. The presence of just one man is wiping out the value of the china tech sector and possibly resulting in large retrenchments and unemployment in one country. However, this underscores the political risk of investing in china

Recent revenue shows negative growth for the first time, this is a big no no for tech stocks and valuations that are based on growth.

The big negative now is the likely delisting from US markets to hongkong. Not a big thing just a change of stock exchange. BUT for american investors it means there may be a lag period when that happens which the stock will be unable to be bought or sold. Funds may also have to divest a stock that is going to be delisted. 

Might be a good stock to invest after the relisting in HK if it starts paying dividends to show the cash is actually there and earnings start to stabilise. I think its growth in china is more or less peaked for the near future but longer term will still be a cash cow with minimal growth as china's economy has probably peaked and unlikely to grow much now with dropping population growth which will impact consumer spending. 

Softbank apparently is also going to divest its holdings which should put further pressure on stock price. 
https://www.reuters.com/business/finance...8-11/using some derivatives method.

[Squirrel]

http://scg8866tstockinvesting.blogspot.c...wB2WnZBy3A

Interesting article. Based on a Sum of parts with current known valuation, Alibaba is valued at a market value which assumes is China's e commerce segment is zero value. I truly think this is the risk premium that the market is pricing.

Alibaba's e commerce segment is a gem which produces RMB $150 billion (USD $22 billion) in profits. The segment itself should be worth US$220 billion in market value which means Alibaba is definitely worth double its price.

Unfortunately, the presence of Xi Jinping likely means the market is discounting Alibaba by half. This applies to Tencent as well. The presence of just one man is wiping out the value of the china tech sector and possibly resulting in large retrenchments and unemployment in one country. However, this underscores the political risk of investing in china

Recent revenue shows negative growth for the first time, this is a big no no for tech stocks and valuations that are based on growth.

The big negative now is the likely delisting from US markets to hongkong. Not a big thing just a change of stock exchange. BUT for american investors it means there may be a lag period when that happens which the stock will be unable to be bought or sold. Funds may also have to divest a stock that is going to be delisted. 

Might be a good stock to invest after the relisting in HK if it starts paying dividends to show the cash is actually there and earnings start to stabilise. I think its growth in china is more or less peaked for the near future but longer term will still be a cash cow with minimal growth as china's economy has probably peaked and unlikely to grow much now with dropping population growth which will impact consumer spending. 

Softbank apparently is also going to divest its holdings which should put further pressure on stock price. 
https://www.reuters.com/business/finance...8-11/using some derivatives method.

Some quick notes.

Alibaba is already listed in HK. The ticker is 9988 HK. The listing took place a while back. I am not sure what you are referring to for a “relisting in HK”.

And secondly, funds don’t need to divest the US ADRs even if they get delisted. These ADRs can be swapped into the HK Listed shares anytime they want to. Temasek has already been doing so for a while. This feature is present in multiple dual listed shares such as BYD for example. It’s also a strategic route for companies delisting from US to take. Companies such as Momo are also looking to do the same.

In my opinion, one should not view Baba as a tech growth darling, because it has evolved into a behemoth cash generating machine. And current market value doesn’t look demanding at all.

[Scg8866t]

Alibaba's June quarter 2022 result is out, lets revisit the sum of parts again.


Liliani in her substack did provide some numbers on Alibaba's sum of parts basing on their latest financing round. You can read her full article herehttps://lillianli.substack.com/p/state-o...corns-2021). I think we should be more conservative.

Alibaba's market cap as of today is 240.29 bil usd.

Net cash: 50.8 bil usd

Use their cash + short term investments + escrow receivables + restricted cash minus all their borrowings.

Share investment equity value: 66 bil usd

"Equity securities and other investments" + "Investment in equity method investees"

Cainiao(63% stake): 17.64 bil usd

Latest cash injection valuation done by Alibaba and size it to 63% stake, article here. That was in 2020, it should be worth more now due to its growing topline and shrinking ebita losses. To be conservative we will use its 2020 valuation. The valuation of 28bil is lower than Liliani's valuation. 28bil is 3.8x Cainiao's topline. Cainiao is close to ebita profitability.

Alicloud + Dingtalk: 53bil usd

Annualized its revenue this quarter and give it a conservative 5x multiple. 1/3 of what Liliani's article is valuing it at. Almost half of Goldman Sachs' valuation in 2020(article here). Alicloud is ebita profitable, close to being operationally profitable.

Ant Group(33% stake): 22bil usd

This is dependent on the market cap they can IPO Ant Group at. The most bearish valuation I can find is Fidelity, article here at 67bil usd. At the peak of its IPO in 2020, Ant was valued at 313bil usd.

International Commerce(Lazada, Aliexpress, Trendyol): 20bil usd

From the latest financing round in 2021, during the peak of covid, Trendyol is already valued at 16.5bil usd, article here. Annualize this segment's revenue for this quarter and give it a conservative 2x multiple.

Reason I give a 2x multiple is because Alibaba already has the experience paving a path to profitability for their domestic ecommerce. So despite the competition and difficulty in adapting to different cultures and languages, the potential to profitability is still there.

Ele.me, Amap, Fliggy, Digital media, Innovation: 11bil usd

These businesses have unsubstantial revenue and unlikely to turn profitable anytime soon. I group their revenues together for this quarter, annualize it and give it a 1x multiple.

Meituan accounts for 67 per cent of the total market in China, while Ele.me has a 31 per cent share base on this article. Meituan is valued at 135bil usd so I am sure market has a value for Ele.me in the future.

Total sum of parts ex core business(Taobao, Tmall, Taocaicai, Taobao Deal) is 50.8 + 66 + 17.64 + 53 + 22 + 20 + 11= 240.44 bil usd(more than its market cap)

Despite being conservative, there might still be overestimation or errors in my calculation, but using a back of the envelop calculation, current price is valuing their core business(most prominent free cash flow churner) at zero. Own view.

full article here: http://scg8866tstockinvesting.blogspot.c...wNkBnZBzMY

[snowballwisdom]

Many years back, Jack Ma took Alipay away from Alibaba, to put under his own name, because of concerns of regulation. (However, Tencent pay also own by foreign shareholders but no issue)

In 2018, Jack Ma return 33% Ant back to Alibaba.
So Ant now is consider its investee.

What happens to the remaining shares approx 50 to 60% still in Jack Ma's hand? (Over the years, the fund raising from outsiders did dilute, but likely not more than 10%?)

Anyone knows he will return back the remaining Ant shares (currently under personal name) back to Alibaba?

[CY09]

In the 1990s and 2000s, we had the home shopping channels which used TV to sell products and behind them an efficient logisitcs channel to deliver the good to homes.

In 2020s, the home shopping channels are now replaced by streaming networks with marketters selling their goods on livestreams. Alibaba is taking the same route as Bytedance now but with an added advantage of having cainiao in its stable.

https://technode.com/2022/12/09/alibaba-...icipation/

[Behappyalways]

U.S., UK export controls hit China's access to Arm's chip designs -FT
https://www.reuters.com/technology/expor...022-12-14/