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Alibaba Group Holding Limited (9988.HK)

HKSE - HKSE Delayed Price. Currency in HKD
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205.200-2.200 (-1.06%)
At close: 4:08PM HKT
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  • D
    Darius
    All the Alibaba shareholders should be glad that Daniel Zhang and the Ant management knows what they're doing. Can you imagine what would happen if Ant went on with their IPO in the same way that DiDi did? That could potentially destroy Ant as a company and definitely impact the sentiment towards BABA even more.

    This earnings release will have a huge impact on Alibaba for the long-term holders. Even though we might not see much in terms of shares upside, this release will clarify a lot of uncertainties heading into the fall which historically has been one of the best times for the Chinese tech to rally as we head over to the 11/11 festival.

    I figured I would list some things I always look forward to hearing about, and that help me a get a picture of how to valuate a company. My advice for you is, always create a spreadsheet that will do all the numbers work for you, so that you only have to plug them in.

    --> Cash Flow. This one is the most important measure in my eyes when looking at how a company operates. Last quarter Alibaba disappointed the analysts because of the $2.8bn fine they paid. This quarter they should hit a home run and exceed expectations.

    --> Revenue Growth. This one is a big one also. Alibaba has been investing in growth heavily which could affect its net income, however it has been acquiring a lot of other businesses, which I would like to see bring in revenue, not necessarily high margins or profits, just some revenue growth from the previous quarter. Core Commerce for Alibaba still has a lot of room to grow because, as a lot of you noted here, majority of sales from commerce comes from the 11/11 festival.

    --> Cloud. This segment is the most lucrative part of Alibaba in my eyes. They have the cash needed to make it work, now we just NEED to see the continuous growth and dominance in the Asia region. I don't count on them beating Amazon or Microsoft in the near future, but I would like to see them maintain that lead in the eastern regions.

    --> Ant Financial. This one I feel like will be the one pushing the price stock higher because that's where all the issues began. I don't see Ant as being as important to Alibaba, because I always evaluate business first. Ant is just a bonus you get from buying Alibaba.

    --> Groceries Businesses. With as many acquisitions as Alibaba has been making in this sector, this might be another big thing for this company. After all, people need to get food from somewhere. In china, you have over 1.4bn people who need to eat. I always liked Alibaba expanding and acquiring competition there, and I believe this will bring us some nice revenue and profit over the long term.
    Bullish
  • D
    Darius
    Just to follow up on my previous post related to their upcoming earnings, here is a breakdown for my actual valuation worksheet. Wish I could just upload a picture, but it is what it is.

    For the Core Commerce Segment:

    Implied growth for the year is about 34% on revenue. Net Earnings is 15%. With Optimized Margins 22%.
    I always do my valuations 5 years out. I used growth rate ranging from 15% (Low) 20% (Base) 25% (High)
    I assigned a multiple (P/E) of 20 - 25 - 30 respectively.

    This provides numbers in 2026: RMB 4T (Low) RMB 7T (Base) RMB 11.5T (High)

    Justification: I believe growth ranging from 15 - 25% on their core commerce is justifiable because of the sheer population size, and the fact that alibaba is expanding into other world wide markets, we aren't just dependent on the Chinese population.

    For the Cloud Segment:

    Implied Growth is about 50% for this quarter. Optimized Margins about 30%. (Cloud is a high margin business)
    For the Growth Rate I used 30% (Low) 35% (Base) 40% (High). It is cloud after all.
    I assigned a multiple (P/E) of 35 - 40 - 45. Since Cloud segments are always given higher multiple.

    This provides numbers in 2026: RMB 1.6T (Low) RMB 2.75T (Base) RMB 4.5T (High)

    Ant Financial Segment

    Since Alibaba owns 1/3 of Ant, that will give them a pretty decent boost, but we still don't know how much exactly Ant will be valued once it IPOs. Based on the different articles I've read, and different sources, I think they had it be worth somewhere between RMB 0.750 T and RMB 1.3T or something like that. Alibaba gets 1/3 so RMB 0.247 T -- RMB 0.429 T.

    Add all those segments up and convert to USD and you get a valuation in 2026 ranging from $900BN (Low) $1.55T (Base) $2.56T (High).

    Which makes the share price range between $330.79 (Low) -- $575.15 (Base) -- $945.70 (High)

    *** I have excluded the Digital Streaming segment because of the controversies alibaba had recently, and the possibility of that segment being highly regulated due to the authorities.

    *** My Core Segment Analysis might be a little optimistic, and that could impact the share price projections give or take about $50 from each estimate. But then again, I do believe that BABA could have its core segment valued at a multiple ranging from 20 - 30.

    I feel like this is how people should pose their arguments, both for Bear/Bull scenarios. Not just bash or pump. Let's learn more from one another.
    Bullish
  • I
    IronMan
    Couple hedge fund holdings
    Ray Dalio’s Alibaba holding is worth $318 million, and accounts for about 2.8% of his portfolio. Alibaba Group shares are down over 9% YTD, and over 8% in the last three months. The company reported revenue of $571.88 billion for 2020.
    Conifer Management, a New York hedge fund with $7.7 billion in AUM, has more than a fifth of its portfolio invested in Chinese e-commerce giant Alibaba (BABA, $213.96).
    This is & will be a power play
    soon
    Bullish
  • I
    IronMan
    Amongst all the bad news & it’s very very very low sentiment when a full reversal happens little news like this, which secures buying opportunities, BABA will be dominant in the investment arena again
    Baird Capital stated recently

    Sebastian reiterated a Buy rating on the stock, and declared a price target of $270. This target suggests a possible 12-month upside of 30.73%.

    The five-star analyst added that domestic political tension and higher operating expenses have also been posing as challenges for the stock. In his opinion, however, initiatives such as investments in physical retail stores can be seen as beneficial to long-term growth.
    Furthermore, Sebastian expects Alibaba to "reinvest substantially all incremental profits in FY22” so as to stay on top of competition and continue capturing market share.
    China's National Bureau of Statistics reported an expected slowdown of retail sales for the past quarter. Thus, Sebastian's bullishness is geared less toward short-term potential.
    While maintaining an eye on Chinese regulators and their distaste for monopolistic behavior, Sebastian noted that the company is massive, and most likely would not face the same level of threats made to Didi. He mentioned that Alibaba generates profits surpassing those of both Amazon (AMZN) and eBay (EBAY) combined, and currently stands as the "world’s largest online ecommerce business.”
    There are a lot of core platform reasons to hold the stock as a long-term growth opportunity.
  • R
    Ravi
    Ok allow me to put some perspective here to what happened today. China is struggling with Aging Population concerns due to their 1 Child Policy from past so many years. Not Govt wants to curb this growing concern that is why they have changed it to 3 Child Policy already. These private tutorial companies were adding financial and mental pressure on parents resulting discouraging them from having bigger families. Also growing number of suicides due to stress among teenagers and kids is a problem. Hence the Govt crackdown on such private tutor companies to convert them in non-profit. Now all of this has nothing to do with EV, Ride sharing or E-Commerce. Yes Baba will have a small set back as they have also invested in such educational ventures but at the end of the day its a cash making machine. Sentiment is negative around because of blabbering western media but smart ones will find the logic and do the right thing. If you can’t but atleast just hold !!
    Bullish
  • J
    John
    The China govt playing favorites!! Baba gets a fine of 2.8billion and Tencent music gets a fine of 77k!!! Hahahahahah TME gonna prob pop Monday because that share price got taken down because investors were expecting a huge fine!
    Bullish
  • C
    CanAm
    On May 14/21 Morgan Stanley cautioned against investing in Chinese ADR's due to NYSE delisting concerns.
    They did however continue to recommend those eligible for a Hong Kong listing.
    On July 6/21 MS lowered their BABA price target from $300 to $270, but kept their "overweight" share rating.

    As I have noted elsewhere, PriceWaterhouseCoopers, the firms auditors, are registered with the US regulatory authority, the Public Company Accounting Oversight Board.
  • A
    AvastYe
    Tencent order seems legit. You can't own 80-90% of the music market and require exclusive streaming of the content. How can any other streaming service compete against that? So, they have to allow other companies to stream their content as well, but hey -- they will get paid for the music they own, so not that bad and the fine was just $77K USD. I don't think that news should move the market. The education crackdown is the one that has market shaking implications. China has yet to confirm or deny the reports. If they deny it, then it's game on. If they say nothing, then it's more of the same, and if it's true... look out below!
  • A
    Anonymous
    Truly amazing what the Chinese government has done to companies. Baba should be no less than 300$ and here we see it near approaching 200$. It makes no sense to any longer own Chinese stocks.
  • 1
    13.8
    South China Morning Post article on how Baba is launching its largest-ever recruitment drive to enable expansion into new verticals and regions ... IMHO, selling your shares before Aug 3 ER is not the right call, especially with 6/18 numbers and likely Ant news ... hear the ER, then decide

    https://www.scmp.com/tech/big-tech/article/3141861/e-commerce-giant-alibaba-kicks-largest-ever-recruitment-drive-new
  • J
    Jerry
    BABA’s valuation now is unbelievably cheap and actually it’s supposed to be easily over $300 a share if there has not been any political influence or threats from both US and Chinese government. The company is also a Money Machine that plays Monopoly in China. I will be moving my investment money to HK market if it is delisted from US market.
    Bullish
  • E
    Eric
    well, if they can make a company nonprofit just like that, then every adr is in danger...if that really happens, will blow a lot people's mind, what does that mean for baba is not sure...the assurance of ant ipo news just fades away in this messy rumor...not ccp here, dont know what is the true intention, this can be the last chance to cash out or the last chance to jump on before the ER, my thought is rational gov wont do that to a firm like baba imo, otherwise, they wont have a chance to compete with us
    Neutral
  • D
    Darius
    “HONG KONG -- It will "not be too long" before Ant Group is able to resume its suspended initial public offering, according a member of the Chinese financial technology group's board of directors.” NikkeiAsia

    Sounds like great news and I bet you it will be mentioned during their earnings report. This might be the reason they moved it 2 weeks early.
  • m
    meltdownBC
    A big round of applause to the market makers for keeping the stock price at precisely 214 for 4 hours in a row.
  • N
    Nate
    CCP does alot of bad things but holding companies accountable for market manipulation shouldn't be one of them. Look at the us markets, short squeezes, bubbles, trading freezes, pumps and dumps etc everywhere. China is being a referee like every government should instead of taking bribes to run for election.
    You have to visit china within the last 10 years to realize how efficient and strong the economy is. GDP means nothing when its completely funded by debt. If you subtract government spending, our GDP haven't been moving since 2017-2018.
  • m
    myturn_5
    Baba should go up next week :
    " U.S. to stress need for 'guardrails' in Sherman's talks in China"

    She's going to underscore that we do not want that stiff and sustained competition to veer into conflict," one senior U.S. administration official said ahead of the first high-ranking, face-to-face contact between Washington and Beijing in months as the two sides gauge how they can salve festering ties.
    Bullish
  • r
    ryan
    Had every reason to retest its strong 200 support today, instead it bounced off the weaker 204 with volume. Will close the gap next week that was created today
  • M
    M
    In case you are wondering why this is tanking pre-market. China is considering forcing Education companies, like EDU and TAL to become non-profit and delist. This is a buying opportunity because its not happening to e-commerce.
  • C
    CanAm
    Alibaba will not be delisted in NY.
    PriceWaterHouseCooper have been auditing their GAAP statments annually.
  • J
    Jonathan Dhandho
    13F is out just now. Uncle Charlie holding $37,491,000 of $BABA in his legendary diamond hands.
    Bullish